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Dairy Groups Disagree Over Small Business Impact Of Federal Orders
IDFA Says Orders Hurt Fluid Milk Business; NMPF Says Orders Have Positive Impact; WCMA Criticizes Dry Whey Factor In Class III Price
Do federal milk marketing orders have a positive or negative impact on small businesses? The International Dairy Foods Association (IDFA) and Wisconsin Cheese Makers Association (WCMA) believe federal orders have a negative impact, while the National Milk Producers Federation (NMPF) believes they have a positive impact.
Two months ago, USDA’s Agricultural Marketing Service (AMS) announced a section 610 regulatory review of the federal order program. The review’s purpose is to determine whether the federal order program should be continued without change, amended, or rescinded to minimize any significant economic impact of rules upon a substantial number of small entities.
The deadline for submitting comments to USDA was Monday, April 13. The agency received more than three dozen comments, although none of them have yet been posted to the AMS website.
While only some of IDFA’s member companies are small entities, nearly all of them have customers that qualify as small entities, and federal order regulations have a “significant impact” on these customers and on IDFA’s small entity members, IDFA noted.
Under federal orders, USDA uses “complex price formulas” that require fluid milk processors (Class I) to pay more for the same milk that could be, and often is, used to make manufactured dairy products, IDFA stated. Also, the geographic location of each fluid milk plant determines the minimum price each company pays.
Federal orders were created to address the US dairy industry of the 1930s, and while “there may have been reasons at that time to impose market-intrusive regulations to address concerns of some industry sectors, those concerns no longer exist,” IDFA said.
Over 75 years ago, when federal order regulations were first imposed, farm milk and even processed dairy products in consumer packages rarely moved across more than one or two state lines due to lack of refrigeration in homes and a “woefully inadequate” transportation system, IDFA continued.
“While it may have made sense to impose regulations designed to ensure an adequate milk supply in every part of the country in 1937, today’s refrigerated supply chain allows milk and dairy products to move across the country and even increasingly around the globe,” IDFA said.
Another concern in the 1930s was the large seasonal swings in farm milk production, but today there is “little seasonality” in production, and there is “ample available milk” in the US to meet the needs of all dairy product manufacturers at all times, IDFA added.
“Simply put, there is no longer a need for the federal government to require fluid milk bottlers to pay a higher price for milk than manufacturers of other dairy products,” IDFA said. “From the perspective of small dairy processors, the current regulatory system unnecessar-
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