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USDA Received: July 19, 2021

June 04, 2021 

Dana Coale Deputy Administrator 

USDA-AMS Dairy Programs 

Stop 0225 

Room 2968 - South 

1400 Independence Ave. SW 

Washington, DC 20250-0225 

RE: Proposal to amend Federal Milk Marketing Order No. 30 

Dear Ms. Coale 

Please find attached Lamers Dairy, lnc.'s petition with the support of Ronnybrook 

Farms, Highland Farms LCC., Broadacre Dairies, Calder Brothers Dairy, Snowville 

Creamery LLC., Farmers All Natural and Toft Dairy, request an amendment to expand 

and clarify the regulatory exemption of small distributing plants through the informal 

rulemaking procedure under 553 of Title 5 of the United States Code. 

We believe that the exemption for small distributing plants can be expanded to mirror 

the producer handler exemption. This will reduce the regulatory burden - for small 

handlers and for USDA - without having a significant impact on orderly marketing and 

Federal order pool values. 

Thank you for your consideration on this important issue, and please feel free to contact 

me if you have any questions. 

Sincerely, 

Mark J. Lamers, President 

Lamers Dairy, Inc. 
Dear Ms. Coale 

Lamers Dairy Inc. Appleton, WI., with the support of, Ronnybrook Farms Ancramdale, NY. High Lawn 

Farms LLC Lee MA., Broadacre Dairies, Powel, TN.,Calders Brothers Dairy Lincoln Park Ml., Snowville 

Creamery LLC Pomeroy OH., Farmers All Natural Wellman, IA. and Toft Dairy Inc. Sandusky OH. hereby 

submit this proposal to exempt all Class I handlers from pooling obligations under the Federal Milk 

Marketing Orders whose monthly route distribution sales are below three millions pounds per month. 

Proposal 

To change Federal Milk Marketing Language of exempt plants to include all pool distributing plants 

whose monthly route distributions are under 3 million pounds. 

The purpose of the change would be to grant relief from pooling obligations under the Federal Milk 

Marketing Order System to be the same as that ofa producer-handler's. It is widely accepted that 

producer-handlers who have less than three million pounds of route distribution do not have a 

significant impact of the orderly marketing of milk. Put another way, producer-handlers who produce 

under three million pounds of route sales under the classified pricing system does not cause enough of a 

difference in the Class I pricing structure. Therefore they are exempt from Federal Order participation. 

(United States Department of Agriculture, Agriculture Marketing Service (7 CFR. Chapter X) part 1030.10 

Milk in the Upper Midwest Marketing Area). Granting the proposal would create a marketing situation 

were-by producer-handlers and pool distributing plants whose monthly class I pounds are under 3 

million would be treated the same. 

Current Law and conditions 

Current Federal Milk Marketing Orders regulations requires all Class I distributing plants whose monthly 

route distributions sales are above 150,000 pounds per month be required to participate in the 

Producer Settle Fund known as the pool. There is also Language within the FMMO exempting Producer 

Handlers whose monthly route distributions are under three million pounds per month. 

Under the classified pricing structure of the FMMO, fluid milk sales classified as Class I, is priced higher 

than Class II, Ill and IV. Under normal marketing conditions this would cause the Class I handler to have 

to pay monies into the producer settlement fund, creating what is known as the Producer Price 

Differential or a positive PPD. Over the past 10 month there has been so much volatility of the pricing in 

the manufacturing market that the Class Ill price exceeded the Class I price creating a negative ppd. This 

created a condition by which the manufacturing plants would have to pay into the pool and Class I 

handlers would get a draw. However because of provisions under the law that allows Class Ill milk to be 

de-pooled from the market, Class I handlers still had to pay into the pool. (See exhibit A attached, a 

letter dated 12/24/20 to Victor Halverson, Market Administrator of F.O. 30.} 

Disorderly Marketing Conditions. 

Federal Order 30, of which Lamers Dairy Inc. is a part, has seen great volatility in the Class Ill price over 

the past 10 month. Over that time period over 2 billion pounds of milk was de-pooled. The PPD over 

that time same period had one month with a positive PPD and the remaining month saw a negative PPD 

ranging from a-$.46 to a -$5.43. When that amount of milk is pulled from the pool, it puts agreater 
burden on the Class I handler as well as the consumer. The effect on the Producer was that there was a 

significantly higher negative PPD than there would have been if the 2 billion lbs. of milk were not depooled. This is taking monies out of the hands of the producer. 

In November 2020 in Federal Order 30 there was a -$5.43 PPD. Running a hypothetical analysis as if the 

2 billion pounds of milk were not de-pooled, the PPD would have been an approximate negative -$2.05 

(See exhibit C). The whole premise of the Federal Milk Marketing Order is that all producers can share 

in the higher value of the milk in the market. This cannot happen when the Class Ill price is higher than 

the Class I and billions of pounds of milk are not pooled on the Order. Subsequently the Class I Handlers 

still had to pay into the Pool to subsidize the Class Ill price. This is not Orderly Marketing. 

We recently had to replace some of our milk supply because a few of our farm families were getting out 

of the milking portion of their operation. When soliciting other farms and comparing pricing I found that 

other plants were deducting the negative PPD then turning around and adding a plant premium or 

bonus. That premium was generally about half of the Negative PPD. Logic would have it that the plants 

were able to do that because they had the money not only from the sale of the cheese in a high price 

market, but also with the money they saved from avoiding to pay into the Producer Settlement Fund 

along with funds received from the Producer Settlement Fund via Class I Handlers. This puts Handlers 

such as us who buy milk directly from the Farmers at a great competitive disadvantage. 

Impact ofproposed change 

Attached Exhibit B is a study conducted by my office with the help from the USDA-AMS-Dairy Program 

Office. In that study I looked at the time period of 4 month beginning with December 2020 through 

March of 2021. The study shows the total Class I pounds of all Federal Orders, the number of pool plants 

with Class I sales under 3 million pounds, the average sales of those same plant and the percentage of 

sales those plants represent against the whole. The average is just over 1%. It is reasonable to assume 

that over a longer time period the same would hold true. Clearly this volume, if exempt from pooling, 

would have practically no impact on the pricing of Class I milk in the market. Over the past several years 

there has been a significant decline in the number distributing plants across the country. Federal Order 

30 alone went from 24 pool distributing plants in 2010 to 14 plants today. Part ofthe reason for this is 

the burden that the Federal Order Pooling System has put on the Class I handlers. What remains today 

are very large high volume plants and a number of small plants under 3 million lbs. These small plants 

generally serve niche markets and are not set up to handle a large volume of milk and are in no way 

capable of competing for higher volume of sales. Volume pricing seen in today's market is just not 

attainable for the small plants. In fact in some markets as our own, retailers put a higher percentage of 

markup on our product because they know they can get it from the consumer because of the demand 

for our product. I think that would hold true in other markets as well. 

As for the producers, there would be virtually no effect on pricing ifthe proposal were to be granted. In 

fact there is more financial harm done to the producer when de-pooling occurs than there would be if 

the proposal was adopted. 

Impact on small business 

The Regulatory Flexibility Act (5 U.S.C. 601-612) requires that any Federal program has to consider what 

impact a Federal regulation would have on a small business. Clearly the Federal Order Pooling system 

puts a great burden on small business. As an example, under normal milk pooling conditions in Federal 

Order 30, Class I sales account for approximately seven percent of all the milk in the order. Seven 
percent subsidizes 93 percent. Now when 2 billion lbs. of milk is allowed to be de-pooled as it was in the 

month of November 2020, the financial impact on not just the small Class I handler but all Class I 

handlers is just undeniable. This is an unfair trade practice as prohibited under Agriculture Marketing 

Agreement Act under Terms Common to all Orders. 

The Federal Milk Marketing Orders has an obligation to protect ALL small handlers, not just producerhandlers. 

Another example of the Class I handler large or small being unduly affected by policy is that in Federal 

Order 30 when the majority of the Class Ill milk was de-pooled, it also affected the amount of money 

going to the Market Administrative Fund. Lamers Dairy was notified by the Market Administrator that 

the assessment rate was going to be doubled to make up for the lost revenue because of the amount of 

milk that was de-pooled. Again an unfair trade practice that the Class I handler has to endure. This is not 

protecting the Class I handler large or small. The Class I Handler has to make up for this, and the only 

way that can be done is to pass that cost on to the consumer. 

Granting the request of the stated proposal will go a long way to protect the small Class I handler and 

ensure that they are able to continue to thrive in an ever-changing dairy industry. 

Impact of proposal on producers, handlers. Consumer's, and administrators 

The adoption of the proposal would have very little if any impact on all parties involved. When 

procuring producer milk, competition for that milk remains the same. Federal Order pricing would see 

little change if any. Most plants pay Federal Order minimum prices along with some kind of over Order 

premiums. There would be no effect on consumers and the Market Administrator's office would 

probably benefit from not having to figure these exempt plants' utilizations into the pricing calculations 

and finished product testing. Again, as illustrated in exhibit B, only 1% of the milk in the entire country 

would be affected by granting the proposal, a very insignificant amount. 

Summary/conclusion 

Lamers Dairy Inc., along with the proponents of this proposal fully request that this proposal be granted. 

In exempting all Class I handlers whose monthly Class I route sales are below 3 million pounds per 

month, the USDA will have taken steps to ensure that small Class I handlers have a place in this dairy 

economy. Small independent handlers serve a need in their local economy, providing a living for their 

employees along with providing a market for the producer's milk from whom they buy their milk. 

Granting this proposal will bring into line the reasoning and rationale of an exempt plant that has less 

than 3 million pounds of Class I route distribution. A Plant of that size does not have a significant impact 

in the classified pricing structure and would not cause disorderly marketing conditions. 

All Federal Milk Marketing Orders are bound by the Regulatory Flexibility Act (5 U.S.C. 601-612) to 

ensure that all Federal regulations be studied as to the impact that a particular regulation would have on 
small business. Clearly granting the proposal would bring uniformity of the treatment of small handlers 

under the Federal Milk Marketing Order System. 

We feel that this change could be made through the informal rule making process. The small plants 

impacted by this proposal do not have the financial resources or the man power to address this in a 

formal national hearing. This modest change does not rise to the level of requiring a national hearing. 

Ifthe USDA would like to have a meeting to consider this proposal I would be more than happy to 

accommodate. 

~ 1 etfu~y, /~

w1;'t,,k,_,?"' 

Mark Lamers 

President 

Lamers Dairy Inc. 
Lamers Dairy, Inc.• N410 Spee! School Road• Appleton, WI 54915 

7/12/21 

Ms. Dana Coale 

Dear Ms. Coale 

Please find enclosed the exhibits for my petition to amend the Federal Order. 

There was an oversite on my part and the exhibits were supposed to be included with the 

early mailing you should have received. 

Regards. 

Mark Lamers 

President 

Lamers Dairy Inc. 

1-920-83 

0-0980 

Phone: 920-830-0980 • Fax: 920-830-1418 • www.lamersdairyinc.com 
Exhibit A 

12/24/20 

Dear Mr. Halverson 

I am writing this letter as a follow up to our phone conversation dating 12/18/20. There is growing 

concerns about the recent negative PPD that have been occurring over past few months, particularly 

with our producers that supply us with milk. As you know there has been a great surge in Class Ill 

pricing starting back in June and has continued to this date causing large negative PPD'S. 

Since April 2020 there has been over 2 billion lbs. of milk being de-pooled on FMMO 30 because of the 

negative PPD"S. Because we are a pool plant we are put at a competitive disadvantage because we are 

not allowed to de-pool the majority of our milk as the cheese plants do when the Class Ill price exceeds 

the Class I price. In November of 2020 there was a negative $5.43 PPD and because over 2 billion lbs. 

milk being de-pooled, Class I handlers still had to pay into the pool putting more burden on the 

consumer whose price is affected by these actions This is disorderly marketing to the utmost effect. 

Cheese plants not only received the benefit of the high Class Ill market price they also avoided paying a 

portion of their monies into the pool because of the amount of De-pooling that has occurred. When it 

came to paying the farmers, cheese plants did not deduct the full amount of the negative PPD from the 

producers because of the amount of money they saved from not having to pay into the pool. In some 

cases this amounted to $2.00 cwt. This puts us at a competitive disadvantage when it comes to producer 

pay prices. 

Back in February 2019, CMPC and UMMA petitioned to have the shipping requirements lowered 

because they claimed that a portion of their members were not able to participate in the pooling of 

milk. That petition was granted. We response to that petition dated March 27th of 2019. Our response 

may have seemed irrelevant at the time but under today's circumstances however I find it very relevant 

because now when there is a price inversion between the Class Ill price and the Class I price I find it 

ironic that they now choose not to participate. 

Furthermore on December 23, 2020 your office granted a request by DFA and others to allow milk to be 

dumped at the farm for a period starting December 23rd lasting through January 4th of 2021 and still be 

pooled under the order when the milk would never hit the market. How is this fair to distributing plant 

that pay into the pool? 

Mr. Halverson, The whole pooling system is fundamentally flawed and has been for some time. If Class 

Ill and Class IV plants want to partake in the pooling of milk to take advantage of the revenue sharing of 

the Class I market then the same should hold true in times of price inversions. No de-pooling should be 

allowed, then you would have a more equitable system. 

The Small Business Act from the Small Business Administration, requires that Government Agencies 

need to govern in such a way as to protect small business. Federal Order language does that to a certain 

degree with the Producer Handler exemption of 3 million lbs. or less. The reasoning for this is that 3 

million lbs. of product on the market for any given month does not significantly affect orderly marketing 

conditions. I believe that that provision should apply to all handles. I believe that through the informal 
.... . :;.. 

rule making process you have the ability to make this change. There needs to be protection for small 

business such as ours. 

I have enclosed some text from the Regulatory Flexibility Act that re-enforces Government Agencies to 

consider the impact of government regulations on Small Business. In light of this past years events 

surrounding the volatile pricing in Federal Order 30 along with the massive amount of de-pooling that 

has taken, I believe it is time for you to take action to protect Small business by granting my request for 

Lamers Diary to be exempt from the mandatory pooling requirement beginning January 1st 2021 based 

on the same protection allowed to a producer handler whose production is under the 3 million lbs. per 

month. 

Respectfully 

Mark Lamers 

President: Lamers Dairy Inc. 
-

EXHIBIT B 

. 

Class I Pounds~ 

Federal Order # 20-Dec 21-Jan 21-Feb 21-Mar Total Lbs 12/20 - 3/21 

·----··-··· ... . 

1 

----- ..... •-- - - ·-· 

727,078,088 705,627,274 

•--• ... ·- -· 

652,242,437 

·-- ··-· ·--··· . 

716,400,018 

•· .···-· . . 

2,801,347,817 

. . . 5 . .. .. -··· . J41?,9_9_Q,039 .. 3_2~7}1,31Q 306,769,5}_8_ _ J22,819,6~.4. __,._, .. ·-- ),302,350,581 

6 174,889,681 175,808,318 161,089,985 173,604,577 685,392,561 

7 280,090,102 268,924,985 253,449,691 271,840,744 1,074,305,522 

30 227,905,266 212,446,180 200,722,091 219,159,910 860,233,447 

32 411,274,964 396,252,491 377,068,324 388,153,091 1,572,748,870 

33 587,945,745 578,536,359 532,400,723 578,737,874 2,277,620,701 

51 438,202,821 413,621,598 389,554,873 429,764,940 1,671,144,232 

124 -· 146,5.56,899 137,397,400 129,470,073 139,197,875 - .... 552,622,247. 

126 354,675,621 357,825,979 301,645,463 364,231,504 1,378,378,567 

131 111,028,771 104,599,482 94,827,385 113,088,091 423,543,729 

Total 3,806,646,997 3,676,811,376 3,399,231,623 3,716,998,278 14,599,688,274 

Pool Plants Under 3 

MM Lbs/Mo 41,100,000 39,500,000 46,300,000 37,200,000 164,100,000 

% of Total Pounds 

From Pool Plants 

Under 3 MM Lbs/Mo 1.08% 1.07% 1.36% 1.00% 1.12% 

# of Pool Plants Under 

3 MM Lbs/Mo** 40 39 43 40 

Average Lbs Per Pool 

Plant Under 3 MM 

Lbs/Mo 1,027,500 1,012,821 1,076,744 930,000 

*Source- Federal M ilk Marketing Order Monthly Online Report s 

**Source-Ms. Erin Taylor, Director, Order Formulation and Enforcement Division, USDA -AMS- Dairy Program 
UPPER MIDWEST MARKETING AREA 600 East Diehl Road, Suite l 00 USDA United States 

Naperville, IL 60563-4896 ~-- Department of Federal Order No. 30 ..... Telephone: (630) 810-9999 Agriculture Fax: (630) 810-1788 Agricultural Marketing Service 

1600 West 82od Street, Suite 200 Dairy Programs 4600 American Parkway, Suite 101 

Minneapolis, MN 55431-1420 Madison, WI 53718-8334 

Telephone: (952) 831-5292 Home Page: Telephone: (608) 242-1822 

Fax: (952) 83 I-8249 www.fmma30.com Fax: (608) 242-i846 

EXHIBIT C HYPOTHETICAL COMPUTATION OF PRODUCER PRICE DIFFERENTIAL 

FOR NOVEMBER 2020 

PER COREY FREIJE 

Utilization · product lbs Component lbs Rate Value 

Class I $3,686,39i .61 

7.36% 213,005,568 

skim 98.1 1% 208,984,763 12.78 $26,708,252.71 

bf 1.89% 4,020,805 1.6316 $6,560,345.44 

Class II 5.96% 172,642,728 

nfs 8.8776% 15,326,583 0.9667 $14,816,207.79 

bf 5.5907% 9,651,995 1.5623 $15,079,311.79 

Class Ill 80.56% 2,332,744,375 

pro 3.2136% 74,965,121 5.6226 $421,498,889.33 

OS 5.7979% 135,250,146 0.1894 $25,616,377.65 

bf 3.7783% 88,138,-104 1.5553 $137,081,193.15 

Class IV 6.12% 177,228,291 

nfs 8.8339% 15,656,208 0.9047 $14,164,171.38 

bf 5.8631% 10,391,072 1.5553 $16, 1_61,2}4.28 

SCC adjustment $1 ,640,036.92 

Total producer milk 2,895,620,962 $683,012,412.05 

Add Overage $32,805.53 

Inventory reclassified $53,021.17 

Other sources milk(.60(h)) $268.23 

Other sources milk(.60(i)) $0.00 

Subtract Transportation Credit $16,392.88 

Assembly $169,273.25 

Reconstituted FMP 

producer Milk Protein $5.62260 $525,411,351.69 

producer Milk other solids . $0.18940 $31,644,846.92 

producer Milk Butterfat $1 .55530 $184,221, 112.41 

producer Milk sec ac seasonal averages $2,137,871.81 

Total milk and valu,e -$60,502,341 .98 

Add location adj $2,094,564.55 

one-half unobligated balance psf $465,524.93 

Total Value -$2.001030 -$57,942,252.50 

Subtract: producer seitlement fund reserve $0.048970 $1,047,282.27 

Producer Price Differential -$2.0500 -$58, 989,534.78