Weekly Digest: Small Class I milk handlers seek FMMO exemption

Digest Highlights

The USDA’s Agricultural Marketing Service has received a petition to amend the Federal Milk Marketing Order (FMMO) system. The request doesn’t, however, have to do with the “Class I mover” pricing formula generating so much discussion this year.

In the petition, Mark Lamers, president of Lamers Dairy Inc., Appleton, Wisconsin, requested that small Class I distributing plants (those with sales of under 3 million pounds of milk per month) be exempt from FMMO pooling obligations.

A similar exemption, approved in 2010, is already provided to producer-handlers with route sales of under 3 million pounds per month. Current FMMO regulations require all Class I distributing plants whose monthly route distributions sales are above 150,000 pounds to participate in the pool.

Lamers was supported in the request by several other smaller milk handlers, including Ronnybrook Farms, Ancramdale, New York; High Lawn Farms LLC, Lee, Massachusetts; Broadacre Dairies, Powel, Tennessee; Calders Brothers Dairy, Lincoln Park, Michigan; Snowville Creamery LLC, Pomeroy, Ohio; Farmers All Natural, Wellman, Iowa; and Toft Dairy Inc., Sandusky, Ohio.

While the request doesn’t have to do with the Class I mover pricing formula that has led to multiple FMMO reform proposals, it is related to milk marketing conditions seen during the COVID-19 pandemic. In the request, Lamers identified market volatility and conditions that moved the Class III milk price well above the Class I milk price, resulting in depooling and negative producer price differentials (PPDs). Those conditions put a greater financial burden on Class I handlers forced to remain in the pool.

Not only have those conditions impacted the Class I handler monies paid into the FMMO pool, but the situation has made Lamers less competitive when seeking to replace milk supplies lost through dairy farmer attrition, he wrote. Class III handlers who depooled and avoided paying into the FMMO pool deducted a portion of negative PPDs from producer milk checks but then offered plant premiums to some producers. The premiums, often one-half the value of the negative PPDs, in some cases amounted to $2 per cwt.

Due to depooling, Class I handlers are also forced to cover a great share of FMMO administration costs.

The request was accompanied by a study showing the milk sold by small Class I handlers during December 2020-March 2021 represented just over 1% of all Class I milk pooled in the FMMO system, suggesting the exemption would have no impact on pricing Class I milk for dairy farmers or consumers.

Due to the limited nature of its impact, the request says the change could be made through an informal rule-making process and not require a formal national hearing.

Idaho-based cooperative High Desert Milk announced a $50 million project will nearly double its annual butter output capacity and add a high-protein milk powder to its lineup. With the expanded processing capacity, daily milk intake will more than double – from the current 2.2 million pounds to 4.7 million pounds.

High Desert CEO Randy Robinson said the new production line, which is part of a 10-year growth plan, became operational in June and will reach processing capacity in mid-August.

The project will increase High Desert’s annual butter output from 45 million pounds to 85 million pounds and add the capacity to produce a 70% milk protein concentrate (MPC-70) to its lineup. The co-op will yield 36 million pounds of MPC-70 annually in addition to the 68 million pounds of nonfat dry milk it currently produces each year.

According to High Desert research scientist Dr. Brandon Carter, the co-op creates MPC-70 by removing most of the lactose from skim milk and concentrating the proteins via a filtration process. MPC-70 is often used in sports nutrition beverages, protein bars, icings, desserts, soups, sauces, baked goods and dairy foods. Robinson said 60% of its MPC-70 is earmarked for Latin America.

Dairy West CEO Karianne Fallow said High Desert’s current output represents 5% of the total milk processed in Idaho. Although a cooperative, High Desert recently began contracting milk supplies from non-members.

A half-dozen dairy farm families joined together in 2001 to establish High Desert Milk as a marketing cooperative. It built a milk powder plant in 2008 and began offering sweet cream in 2008 and butter in 2013.

Three of the Innovation Center for U.S. Dairy’s 2021 Sustainability Award recipients were in the news recently:

  • Goodrich Farm, a recipient of an Outstanding Dairy Farm Sustainability Award, celebrated the start of renewable natural gas (RNG) production at the on-farm anaerobic digester at Salisbury, Vermont. Vanguard Renewables completed construction on the facility in June; and Middlebury College will buy the majority of the RNG generated by the digester. Read: Long-term viability, sustainability are focus at Goodrich Farm.
  • Artisan cheesemaker Rogue Creamery, Central Point, Oregon, was recognized as a 2021 “Best for the World” B corporation for its environmental impact. The honor is presented to the top 5% of B corporations worldwide for positive impacts on people and the planet. Earlier this summer, Rogue Creamery was a recipient of the Innovation Center for U.S. Dairy’s Outstanding Dairy Processing and Manufacturing Award. Read: Rogue Creamery extends reach through mission of sustainability.
  • Grande Cheese, Lafayette Ag Stewardship Alliance and the Farmers for Sustainable Food (FSF) were recipients of a 2021 Supply Chain Collaboration Sustainability Award. They are involved a pilot project using a regional “milkshed” model to develop a framework that serves as a guide to jump-start on-farm sustainability practices and measure both environmental and financial impacts. In an episode of the Dairy Stream podcast, Lauren Brey, FSF managing director, and Doug Thomas, senior project manager at Houston Engineering, discussed the framework. Read: Creating a framework so others can share sustainability success.
  • National Milk Producers Federation (NMPF) executive committee member and Idaho dairy farmer Allan Huttema told members of the Senate Finance Committee that enforcement of the U.S.-Mexico-Canada Agreement (USMCA) enforcement is essential. Huttema operates an 800-cow dairy in Parma, Idaho, and serves as chair of the Darigold and Northwest Dairy Association boards, both of which are NMPF and U.S. Dairy Export Council (USDEC) members.
  • A recorded version of the latest Pennsylvania Center for Dairy Excellence ‘Protecting Your Profits’ webinar, held July 28, is online. The 13-minute video summarizes current market conditions and risk management tools.
  • In a letter, House Ag Committee Chair Rep. David Scott (D-Georgia) and ranking member Glenn “GT” Thompson (R-Pennsylvania) urged House leaders to bring H.R. 4374, the Broadband Internet Connections for Rural America Act, to the House floor for a vote. This bipartisan bill, passed out of the House Agriculture Committee on July 14, provides the USDA with an authorization of $43.2 billion to bring rural broadband internet connections to rural areas.
  • Tillamook County Creamery Association (TCCA) announced new packaging goals, committing 100% of its packaging to being recyclable, reusable or compostable by 2030. TCCA plans to increase recycled content to 20% (on average) in its plastic packaging by 2025 and eliminate use of all virgin plastic by 2035. Owned by almost 80 farming families, TCCA operates production facilities in Tillamook and Boardman, Oregon.
  • Vermont Law School’s Center for Agriculture and Food Systems (CAFS) and National Farm to School Network (NFSN) have released the State Farm to School Policy Handbook: 2002-2020. The comprehensive, 160-page state-by-state resource summarizes and analyzes every proposed farm to school bill and resolution introduced between 2002 and 2020 from all 50 states. Limited information related to dairy is available.  
Dave Natzke

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