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W15311 Franklin Road, Taylor, Wisconsin 54659 

Phone: 715-284-2590 • Fax: (715) 284-2591 • E-mail: dpainc@ceas.coop 

www.dairypricing.org • IJc'acebook: www.facebook.com/dairypricing 

Dairy Industry Framework for Self-Regulation Proposal 

By Thomas L. Olson 

Summary: This proposal seeks to eliminate all undercutting in the marketplace by milk handlers 

and the resulting race to the bottom in farm milk pricing through "re-blends", "market 

adjustments", pooling on distant Federal Milk Marketing Orders, and de-pooling. In return for 

this mandate on handlers, farmers will only supply the market with milk that is needed. 

Definition ofmilk handler for this document: 1.Any party that is buying milk from any farm or 

collectively from a number offarms 2. Any party that is buying raw or unfinished milk 

components that require additional processing before they are ready for retail from a dairy plant. 

This proposal will be implemented by the FMMO in which the milk is produced. If a milk 

handler is in a region not covered by a FMMO, rates will be set by the closest order to the plants 

location. 

The Class I milk price go back to the higher ofthe advanced Class 3 or Class 4 milk price. 

All milk handlers shall pay all producers the FMMO price on all milk components shipped by 

producer with no other deductions that lower the pay price. 

Any milk handler paying producers on a base price plus components are not allowed to deduct 

from components a higher rate than the federal order value ofsaid component. The base price 

formula will be paid on 3.5% butter fat, 3.0% protein, and 5.6% other solids. 

Make allowance for processors should be passed on to consumers and not deducted from 

farmers. 

All milk handlers will pay federal order rates on milk or separated milk components purchased 

from any other milk handler. All separated milk component buyers will give 7 day notice to milk 

component sellers of an oversupply of component before lowering amounts of components 

purchased. Right now as an example. Buyers of cream from plants that have extra cream may 

pay less than the FMMO rate. This will put all processors on a level playing field when it comes 

to competing for milk at the farm gate. 

PPD must be paid at FMMO rate. Handler may subtract any zone differential and fees charged by 

order. 

All milk will be pooled in the FMMO ofwhere it was produced. No exceptions--Even on milk 

moved to and sold in an Order other than where it was produced. This will bring financial 
security because they can set the rate on a fairly stable milk supply instead ofguessing on how 

much milk is de-pooled and having to constantly adjust rates to meet their operating costs. 

Grade B milk is not pooled and shall be paid at FMMo· minimums with no PPD. 

All milk handlers have the authority to balance their milk supply by disposing an equal 

percentage ofmilk on all oftheir fanns. Farms will be notified by handler at least seven days 

prior to this action and at what percent of a baseline production needs to be reduced and for how 

long. Fanners must make this reduction by dumping ( or not producing) raw milk at the farm. 

This milk may be used for animal feed or must be disposed ofin a sanitary manner. Milk hauler 

will have the authority to release milk to accomplish desired production. Fanners are not allowed 

to tum off cooling tank and let milk separate and release only skim milk. Farmers filling directly 

into tankers will be responsible for the disposal ofmilk by obtaining scale or meter tickets when 

tanker is unloaded. Milk handler may let direct ship loads meet their disposal amount by 

extending the period for one week to allow for complications that may arise from not being able 

to be weighed on the farm. Handler may@isposal action early iftheir milk supply is 

interrupted for any reason. 

Farmers' milk production can be based offthe previous month or the same month from the 

previous year in case ofseasonal freshening, grazing or on farm event that significantly lowered 

production for the previous month. 

Dairy plants may allow for new producers and/or expansions as their market determine the need. 

Milk hauling rates assessed by milk handler on producer will be assessed on a per hundred 

weight basis and may have a dollar amount cap per month. Hauling rates may not be used to 

discriminate against producers due to size or distance. Hauling rates may be adjusted from time 

to time due to increased cost ofoperating trucks. Hauling cost may not exceed actual cost by 

more than ten percent. Any hauling over charges must be refunded to producer as decided by the 

FMMO. FMMO shall allow co-mingling ofmilk among handlers to make transportation as 

efficient as possible. 

Milk handler will notify FMMO ofthis action so FMMO may audit milk handlers' farm records 

to ensure equal treatment offarms during their routine audits. 

All milk handlers buying milk will give their supplier a 45 day notice of changes to amount of 

milk they will accept during a Holiday schedule or a planned plant shut down. 

In the event of an emergency plant shut down where milk cannot be processed and must be 

moved to another plant the FMMO will oversee the transportation cost and may allow lower 

prices to be paid on this type distressed milk in the event that milk supply is long and milk is not 

needed at other plants. (Page 2 Self-Regulation Proposal by Thomas L. Olson)