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OTA Proposes Alternative Mechanism For Organic Milk Handlers To Meet Federal Order Price Obligations
The Organic Trade Association (OTA) this week requested that the US Department of Agriculture (USDA) call a hearing to amend all federal milk marketing orders to provide organic milk handlers who make an annual election with an alternative mechanism, based upon the historical “Wichita Option,” for meeting their producer-settlement fund obligations.
In 2011, at member request, the OTA set up a working group of organic fluid milk members interested in federal order issues. Today the organic fluid milk working group’s member companies are: Aurora Organic Dairy, CROPP Cooperative (Organic Valley), and WhiteWave Foods. This federal order working group has met periodically to monitor the development of this proposal.
Though defined differently and not interchangeable by law, organic and conventional Grade A milk has been and remains treated identically for minimum price and pooling purposes by federal orders, OTA noted.
Given the lack of interchangeability of conventional milk for USDA certified organic milk, if an organic milk processor is short of organic milk, it cannot just supplement with conventional milk from the federal order because that milk may not be sold as organic or co-mingled with organic milk.
The Class I differential and federal order shipping requirements “are meaningless” when it comes to an organic processor obtaining milk, OTA stated. Thus, federal orders “currently fail to ‘bring forth an adequate supply’ of USDA certified organic milk.”
Even though organic processors cannot use federal orders to obtain additional supplies of USDA certified organic milk, most organic processors must still contribute to the federal order producer settlement funds. “This result is not fair,” OTA said.
As approximately 65 percent of organic milk is processed into organic fluid milk (Class I) products, organic processors generally pay into the federal order producer settlement funds each month, OTA noted. These monies are shared with conventional dairy farmers even though those conventional farmers cannot, by law, make their milk available to organic dairy processors as needed.
These payments to the producer settlement fund cost the organic industry (dairy farmers and processors alike) tens of millions of dollars per year, money that could be spent on further developing a sustainable organic milk supply desired by consumers, OTA said.
OTA’s proposal seeks to remedy what it calls the “current disorderly marketing conditions” that result from USDA certified organic milk contributing money to producer settlement funds without any evidence that the federal orders can provide an adequate supply of organic milk to organic processors.
The proposal would not exempt organic milk from the federal orders, but rather provide for an alternative, audited mechanism for USDA certified organic milk Send me more information