Editorial Comment Publisher/Editor

 

 

Another Federal Order Problem Area: Shipping Requirements

Dick Groves
Publisher/Editor
Cheese Reporter

Jly 1, 2022


In what might be a modern-day record, three federal milk marketing orders are currently reviewing requests to reduce, or continue at a reduced rate, the shipping percentages in their orders. This provides yet another illustration of the need to reform federal orders.

By “modern-day” record, we’re talking about federal orders here in the 21st century, when there have been either 10 or 11 federal orders at any given time, as opposed to, say, 1990, when there were 42 orders.

The three orders we’re talking about here are the Upper Midwest, the Northeast and the Pacific Northwest. It’s worth keeping in mind that two of these orders, the Northeast and the Upper Midwest, also happened to be, at least in 2021, the largest and third-largest orders, respectively, in terms of receipts of producer milk.

Taking a look at these shipping requirement proceedings in chronological order, the Northeast order in early May sought comments on a request from Queensboro Farm Products, a pool handler, to lower the shipping percentage for the months of September, October, and November from 20 percent to 10 percent until further notice.

In late May, the Pacific Northwest order invited comments on continuing the reduction of the percentage of producer milk that a cooperative association must ship to pool distribution plants in order to qualify its manufacturing plant(s) for pool status from 20 percent to 15 percent, effective July 1, 2022, until further notice.

And then in mid-June (as we reported last week), the Upper Midwest order is inviting comments, until July 5, on a request to reduce shipping requirements in the Upper Midwest order from 6.0 to 4.5 percent, beginning in August 2022.

There are a couple of points to keep in mind when looking over these requests to reduce shipping percentages, or continue them at a reduced rate. First, none of the requests made in recent months is new for its particular order; rather, each of these orders has previously dealt with one or more requests to reduce shipping percentages.

For example, pooling standards for the Upper Midwest order were reduced on May 1, 2019, from 7.5 percent to the current 6.0 percent, following a request from the same proponents who made the current request: Central Milk Producers Cooperative and Upper Midwest Marketing Association. Prior to that, also following a request from CMPC and UMMA, the shipping requirements for the Upper Midwest order were reduced from 10 to 7.5 percent, effective Apr. 1, 2017.

For the Northeast order, this isn’t the first time Queensboro Farms has requested that the shipping percentage for September, October and November be lowered from 20 percent to 10 percent for pool supply plants. A year ago a similar request was approved just for 2021, and two years prior to that, a similar request was approved for 2019 and 2020.

In fact, reductions in the shipping percentages for the months of September, October and November for the Northeast order date back to 2013, although that year and the following year the reduction was just from 20 to 15 percent; and in 2015 the shipping percentage for the months of June, July and August was reduced from 10 to 5 percent before it was reduced from 20 to 15 percent for September, October and November.

The shipping percentage was also reduced from 20 to 15 percent in 2016 and 2017, and then the percentage has been cut from 20 to 10 percent every year since then.

And the shipping percentage on the Pacific Northwest order was originally reduced from 20 to 15 percent from July 1, 2019, through June 30, 2020. This revision was continued in 2021 and 2022, and it appears that that reduction will continue in the future.

From this background we can conclude that, since these aren’t the first requests to reduce shipping percentages in these orders, they also won’t be the last.

The other point to keep in mind is what pretty much every one of these requests mentions: that Class I sales continue to decline. And also, at least for the Northeast and Upper Midwest orders, the number of Class I dealers is also declining.

Declining milk sales have been well-documented over the years; for example, in our Sept. 3, 2021 issue, we reported that fluid milk sales in 2020 totaled 46.36 billion pounds, the lowest level of fluid milk sales since 1958.

That point by itself is troubling, as indicated by the regular requests for shipping percentage reductions. What’s also troubling is the ongoing decline in the number of distributing plants. For example, when they submitted separate requests in December 2016 to reduce the shipping percentages on the Upper Midwest order, both CMPC and UMMA noted that, in 2008, there were 26 distributing plants in the order but as of October 2016 that number had fallen to 17.

In February 2019, in a joint request, CMPC and UMMA noted that in 2018, there were 15 pool distributing plants, and two plants are noted as closed.
And in their recent request, they noted that there were 12 distributing plants listed for April, but two plants, NDSM Chemung (Illinois) and NDSM DePere (Wisconsin) have announced July 8, 2022 as their last day for bottling milk.

Finally, all of these proceedings mention the concept of disorderly marketing or uneconomic shipments of milk.

Continuing declines in fluid milk sales, and in the number of Class I dealers, promise the continuing possibility of disorderly marketing if shipping percentages aren’t among the many issues that are addressed in any federal order reform undertaking...

 

Dick Groves

Dick Groves has been publisher/editor of Cheese Reporter since 1989. He has over 45 years experience covering the dairy industry. His weekly editorial is read and referenced throughout the world.
For more information, call 608-316-3791 dgroves@cheesereporter.com
https://twitter.com/cheesereporter.


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