Northeast processors express concerns about FFTF

Federal milk marketing order reform provisions in National Milk Producers Federation’s (NMPF) Foundation for the Future (FFTF) proposal are like “reordering the rules of the prison,” according to John A. Kaneb, CEO of HP Hood LLC.

“I think the industry could do very well without federal orders,” Kaneb said at the joint meeting of the Northeast Dairy Foods Association and the Pennsylvania Association of Milk Dealers. More than 115 processors and suppliers were represented at the meeting, Aug. 23-24 in Manchester, Vt.

He acknowledged that he has been in the dairy industry for only 15 years, expressing respect for processors and farmers who have been in dairy for generations.  He said doing away with the complex of regulations would be like opening the gates of the prison, but the inmates won’t leave because they’ve spent their whole lives there.

“If I had been raised in this industry, I would feel the same way,” he said.

Kaneb said Class I handlers have not been treated fairly under FMMOs, and those inequities are continued under the FFTF proposals.  He suggested one of the reasons for the flat line of fluid consumption for the past 50 years is the pricing disadvantage for Class I milk to processors, always the highest price, with no opportunity to forward contract with producers.

Also speaking in the panel discussion was William Byrne, chairman of Byrne Dairy, Inc., in Syracuse, N.Y.  He said producers and processors generally have enjoyed a successful industry for the past 15 years, and that there is much common ground among the proposals put forward by NMPF and the processor organization, the International Dairy Foods Association (IDFA), with the exception of the supply management program in FFTF.    

Byrne said the unprecedented damage caused by the huge producer price drop in 2009 is the reason why something needs to be done, but he doesn’t believe the supply management piece of FFTF would prevent another disaster.  He said farmers would pay into the program when prices are at their lowest, and that “it will take an army of USDA bureaucrats to run this thing.”

He opposed eliminating component pricing for farmers, saying that it had completely ended the problem of farmers adding water to their milk.

Byrne complimented a report on industry recommendations from USDA’s Dairy Industry Advisory Committee (DIAC), and agreed that “we need to do something to avoid another major league disaster.”

Speaking clearly in favor of FFTF was Dr. Robert Wellington, senior vice-president and economist for Agri-Mark Cooperative, Inc., in Lawrence, Mass.  He reviewed the elements of the plan and said his organization, as a member of NMPF, was in strong support of the total package, in spite of some aspects which were not especially appealing to his membership of primarily smaller producers, notably the elimination of the Milk Income Loss Contract (MILC) program.  But, he said, there needs to be a national program.

Wellington emphasized the alternative to FFTF is not the status quo.

“The world has changed. We now export 13% to 15% of production, and we need to support the ability of our members to stay in business,” he affirmed.