![](media/image1.jpeg){width="2.251388888888889in"
height="1.2194444444444446in"}

**Testimony of Dennis Donohue**

**General Manager, Manitowoc Milk Producers Cooperative**

**On behalf of the**

**Midwest Dairy Coalition**

**before the**

**Subcommittee on Livestock, Dairy and Poultry**

**Committee on Agriculture**

**U.S. House of Representatives**

**for a hearing on**

**"Review of Federal Milk Marketing Order Rulemaking Procedures"**

**April 24, 2007**

Chairman Boswell, Ranking Member Hayes, Members of the Subcommittee-

Thank you for the opportunity to testify today regarding federal milk
marketing order rulemaking procedures.

I am Dennis Donohue, General Manager of Manitowoc Milk Producer
Cooperative based in Manitowoc, Wisconsin. Manitowoc Milk Producers is a
Capper-Volstead Cooperative representing 2,900 dairy producers who ship
their milk to proprietary dairy plants. These producers produce over 4
billion pounds of milk. We are a bargaining cooperative representing our
producers under the federal milk marketing order system.

I offer this testimony today on behalf of my cooperative as well as the
Midwest Dairy Coalition, of which Manitowoc is a longstanding and active
member.

The federal milk marketing order system has been in existence since it
was created by the Agricultural Marketing Act of 1937. The number of
federal orders has ranged from a high of 83 in the mid-1960s to the
current low of 10 orders. While some of the reduction in the number of
orders has been a result of orders being voted out by the farmers and
cooperatives in the affected area, most of the reduction has been a
result of consolidation and mergers between orders. Even though the
number of orders have been consolidated and streamlined, the rulemaking
procedures for making changes are more time-consuming, convoluted, and
costly than ever.

It is no secret that federal milk marketing orders are controversial in
the Upper Midwest. Many producers and cooperatives in our part of the
country believe that the structure of the federal orders is biased in
favor of high Class I utilization regions and against regions, such as
ours, where the majority of the milk is used in manufacturing. Some
producers and producer groups argue that the federal orders should be
eliminated all together. My cooperative does not support the elimination
of federal orders, because we see them as beneficial to our producers.
However, we share many of the concerns about the need for a more
equitable structure for the federal orders.

Without a doubt, some of the frustration in the Upper Midwest regarding
the federal orders is related to cumbersome and uncertain procedures for
making changes to federal orders.

First, there appear to be no clear and consistent criteria for USDA to
use in determining whether or not a hearing request will be granted.
Some proposals that seem to have little merit are given full hearings,
seemingly for political reasons, even though they may be in conflict
with some of the basic principles of the Agricultural Marketing Act of
1937. This wastes time and money, both for taxpayers and for farmers,
cooperatives and processors.

Second, there are no clear and consistent criteria for how long it will
take USDA to respond to a request for a federal order hearing. For
example, in September of 2005 a significant portion of the dairy
industry requested an emergency hearing to adjust make allowances for
manufactured dairy products. A hearing was not held on this issue until
January 24, 2006, about 4 months after the initial request. In contrast,
in the case of the recent request by National Milk Producers Federation
for an emergency hearing to amend Class I and II price formulas, the
request was made on October 2, 2006 and the hearing was held on December
11 of 2006, roughly 2 months later.

Third, the timeline for how long a hearing will be held after it has
been formally announced is often too short. The process of preparing for
a federal order hearing is very involved and complicated. The affected
parties should be given adequate and consistent time to prepare.

Once a hearing starts, the process is much too time consuming and
costly. It is not uncommon for federal order hearings to last a week or
more, and for single witnesses to be on the stand presenting their
statements and being cross examined for three hours or more at a time.
As a result, the price tag for legal and technical representation often
runs into the tens of thousands of dollars for a single hearing subject.

After a hearing is completed, the delays before a decision is made are
excessively long. In the case of the Class III and IV make allowance
changes, the tentative final decision was issued on November 22, 2006,
roughly 10 months after the hearing began on the subject. And this was
designated an "emergency hearing."

Once a final decision has been announced, producers and cooperatives are
often given an inadequate amount of time to vote on the referendum on
this subject. Often, when a cooperative such as mine is involved, we
must discuss the subject at a board meeting before we make a decision on
the referendum. Yet in some cases, the referendum deadline is so soon
after the announced decision, there is no time for the board to meet on
the subject.

Many have pointed out that the procedures used in California's state
order are much more streamlined and standardized, and have suggested
that the federal order process should be modified to follow California's
model. In general, I agree. However, because of the multiple orders and
regions involved with the federal system, the inter-regional analysis
that USDA must conduct on each proposed order change may require
[slightly]{.underline} more time for decisions, relative to the
California system.

In light of these concerns, the federal milk marketing order rulemaking
procedures should be modified to:

1\) [Establish clear and objective criteria for determining whether or
not a hearing request will be granted.]{.underline}

> A burden of proof should lay with the party or parties requesting a
> hearing to show that the proposal is consistent with the requirements
> of the Agricultural Marketing Act of 1937, and that there is
> significant support for the proposal. In the absence of those criteria
> being demonstrated, USDA should not grant a hearing. In this manner,
> political pressure for USDA to move forward with a narrowly supported
> proposal that is inconsistent with the AMA of 1937 can be more readily
> denied, sparing a great deal of unnecessary time, expense and market
> uncertainty.

2\) [Establish clear timeline for how long USDA has to respond to a
hearing request.]{.underline}

> If clear criteria are established to govern USDA decision making about
> whether or not to grant a hearing request, it should pave the way for
> a more timely decision. USDA should be given a maximum of 2 or 3 weeks
> to grant or decline the hearing request.

3\) [Establish clear timeline for how much time needs to elapse between
the hearing announcement and the hearing date, to give the affected
parties adequate time to prepare for the hearing]{.underline}.

> Once a hearing is announced, the hearing should be held 45-50 days
> later, to give adequate time for the affected parties to prepare.

4\) [Establish clear procedures and time limits on presentations and
cross-examination during the hearing process]{.underline}.

5\) [Establish time limits for how long USDA will have to issue a
decision after the completion of federal order hearing.]{.underline}

> There should have no longer than 3 months for USDA to issue a decision
> after a hearing is completed. It may be possible to establish a
> shorter time limit for single-order decisions, relative to national
> hearings.

6\) [Establish timelines for how long the affected parties will have to
review a decision prior to the referendum deadline.]{.underline}

> Once a decision is announced, affected parties should have 45 days
> before the vote on the referendum. This will assure that most
> producer-owned cooperatives will be able to meet with their boards
> prior to the vote.

Each of us affected by federal orders have been on both sides of federal
order proposals. For those proposals we oppose, there is a tendency to
want the decision to be put off indefinitely. For those that we support,
we always want a quick decision in our favor. But by establishing clear
and objective procedures for federal milk marketing order rulemaking, we
all gain. It takes the guesswork out of the process, minimizes costs,
and assures that no one group has an unfair advantage.

[In Closing]{.underline}

The federal order rulemaking procedures are one small part of the
overall issues related to the federal milk marketing order system, and
even smaller still relative to the many dairy policy issues confronting
this Committee as you prepare to mark up the 2007 Farm Bill. Therefore,
it is important to reiterate that our main dairy policy priority for the
Farm Bill is to maintain and strengthen a credible safety net for dairy
producers, as reflected by a continuation of the Milk Income Loss
Contract (MILC) program and a reauthorization of the milk price support
program, with adequate changes to make it a true safety net.

Thank you for this opportunity to testify.