Leveling The Playing Field
The Agriculture Department has announced a recommended decision that the International Dairy Foods Association said “made milk price regulations consistent for all dairy producers, including producer-handlers.”
National Milk’s Chris Galen called it a “very gratifying decision” in Thursday’s DairyLine but warned that it’s not yet final. The Federation had lobbied for this decision for most of 2009 and the issue is producer revenue, according to Galen.
He explained that, as farms become larger and some begin their own bottling operation, they’re able to enjoy an exemption from Class I regulations so producer-handlers don’t have to pay into the Class I pool which actually reduces revenue for all of the other farms in a given Federal market order.
USDA will maintain that exemption for bottlers that sell 3 million pounds per month or less, he said, but those who produce more will be treated like any other large bottler. “It’s not so much about regulating farms,” Galen argued, “It’s about regulating bottling operations that are so large that they’re only nominally farms.”
There’s only five or six such operations in existence today, Galen admitted, but “Because farms are getting larger and processors are getting larger, the potential is there for more of these producer-handlers to spring up, if we don’t change the regulations like USDA is going to do here to make certain that once they reach a certain threshold they’re treated like any other large fluid bottler.” “We’re just closing a loop hole and putting a more level playing field in place,” he concluded.
Check here tomorrow morning for the November Federal order Class I base milk price which will be announced tomorrow morning. Market analyst Alan Levitt predicts it will come in at $12.89 per cwt. That would be a 54 cent increase from October but would be $4.44 below a year ago.
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