Proposed FMMOS amendments could hinder small dairy businesses
Posted by collegegreenou on July 31, 2009
By Rachel Ackerman and Becca Cochran
On May 4, Secretary of Agriculture Tom Vilsack faced a controversial matter about one of the most basic sources of nutrition: milk. Through proposed amendments to the Federal Milk Marketing Order System, or FMMOS, dairy lobbies are encouraging the United States Department of Agriculture (USDA) to tighten regulations on producer-handlers. (Handlers are any entity, other than the original dairy farmer, that processes and sells milk while producer-handlers produce, process and market milk within their own operation.) Such proposed amendments could have a negative effect on Meigs County’s Snowville Creamery.
FMMOS originated in 1933 with the passage of the Agricultural Adjustment Act, a government initiative to regulate agricultural production during the Great Depression. When the act’s constitutionality was questioned, Congress passed the Agricultural Marketing Agreement Act of 1937, or AMAA. The amendment’s purpose was “to establish and maintain such orderly marketing conditions for agricultural commodities in interstate commerce as will establish, as the prices to farmers, parity prices.” In other words, the new provisions gave the Secretary of Agriculture the power to set minimum prices of specified agricultural commodities when the handling of these commodities falls in the realm of interstate commerce.
Another provision of the AMAA made a distinction between handlers and producer-handlers. While handlers are required to pay the minimum price set for a particular type of milk, producer-handlers are exempt from the minimum price provision.
Although review of the AMAA has been suggested prior to 2009, for the past several months international dairy associations representing hundreds of milk processors have been lobbying with the goal of initiating a USDA dairy hearing to make further amendments to the act. The International Dairy Foods Association (IDFA) and the National Milk Producers Federation (NMRF) are two of the national organizations that have sent petitions to the Secretary of Agriculture calling for the elimination of the producer-handler exemption, as well as to “increase the size limit for exempt handlers.”
Currently, any plant that produces less than 150,000 pounds of milk in one month is exempt from price regulation. The NMFA has proposed increasing the size limit of exempt plants and producer-handlers to 450,000 pounds per month.
The IDFA and NMRF’s petitions are rooted in the claim that not all handlers are required to pay the minimum price for milk, giving some handlers a cost advantage of “as much as 15 cents per gallon” over those who are subject to the minimum price regulation. This cost advantage of both exempt handlers and producer-handlers is what the IDFA terms “disorderly marketing,” a direct rebuttal to the original purpose of the AMAA.
Also central to the IDFA and NMRF arguments are the changing market conditions. Since 2007, producer-handlers have grown in size, and according to the NMRF proposal, they are no longer in need of special regulation: “Whatever historical justification may have once existed for the producer-handler exemption, it clearly no longer applies in light of the substantial growth in some such producer-handlers, and the severe market disruptions that they now create.”
A future for small dairy farmers?
Warren Taylor, owner of Snowville Creamery, went to Washington, D.C., to discuss the issue with federal officials. “We were treated like we had pancreatic cancer,” he said. According to Taylor, his concerns were ignored and it was implied that producer-handlers were dead meat. With the bureaucrats of dairy lobbies and the USDA in control, there is no Congressional oversight to this momentous dairy decision. At the thought of his company going under due to the lobbies’ proposals, a poignant Taylor expressed, “This is worth dying for! And I don’t know much else that is.”
One of the groups against these proposals is the American Independent Dairy Alliance (AIDA), a recently formed cooperation of producer-handlers. Snowville Creamery, one of its members, is currently only an exempt plant but intends to produce higher quantities to become classified as a producer-handler. If the proposed amendments pass, it is likely that Snowville’s intended expansion will not prove feasible, meaning an uncertain future for Snowville and other smaller local dairies.
In the case of Snowville, the 15-cent cost advantage over larger competitors is necessary to cover the expense of raising pasture-grazed cows and using cardboard cartons for packaging rather than plastic containers. According to Taylor, such expenses are central to the creamery’s philosophy: “Milk is perfect when it comes from the cow, so we process it as little as necessary.”
However, with the past hearing, it appears as if the milk lobbyists for large corporations are well on their way to achieving their objectives. The days of seeing cartons with the Snowville label in Southeast Ohio’s grocery stores could be limited.
For more information,
visit the IDFA Web site.
Be sure to check out
Jessica Webb’s commentary piece on why you should buy milk from grass-fed cows.