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

June 13, 2023 

Dana Coale Deputy Administrator 

USDA-AMS Dairy Programs 

Stop 0225 

Room 2968- South 

1400 Independence Ave. SW 

Washington DC 20250-0225 

Dear Ms. Coale 

I am writing in response to the National Milk Producers Federation (NMPF) request for the Department 

of Agriculture (USDA) to hold a national hearing on changing provisions of the current Federal Milk 

Marketing Orders (FMMO). 

All Though I do agree with some of the proposed changes such as addressing the component values 

used in the base pricing of milk and to a degree even addressing the make allowances, I strongly oppose 

the proposal for increasing the class 1 differentials across the board. 

In NMPF proposal they address raising the class 1 differential. The only reason I can see for this is the 

fact that by increasing the make allowance it lowers the base price to producers and to help offset that 

decrease they want to take the money from the class 1 market to make up the loss. For a Cooperatives 

who have fluid plants along with manufacturing plants this is not a big deal because essentially the 

money goes from one pocket into the other. How ever for fluid plants who do not have manufacturing 

facilities the increase falls directly on the consumer. In Federal Order 30 where fluid milk consumption 

has been in steady decline, increasing the class 1 differential will just exacerbate that trend. 

What needs to be remembered here is the original intent of the class 1 differential. That intent was to 

ensure that there was a sufficient supply of fluid milk for the consumer. In Federal Order 30 for example, 

fluid milk represents approximately 6 per cent of the milk pooled on the Order. There is no justification 

for a $3.00 class 1 differential, and yet 6 per cent is subsidizing 94 per cent of the make. 

The Class 1 differential should not be used to artificially prop up the price to the producer at the 

expense of the fluid consumer. Maybe the USDA should consider looking at all cheese product values to 

determine a base price and eliminate all de-pooling. Either a handler is in the pool or out. 

One of the provisions of the Agriculture Marketing Agreement Act (AMAA) of 1937 under terms 

common to all Orders is the "prohibition of unfair trade practices". Increasing the class 1 differentials to 

the levels proposed is an unfair trade practice. It artificially raises the price to the consumer and class 1 

handler. 

Phone: 920-830-0980 • Fax: 920-830-1418 • www.lamersdairyinc.com 
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• Lamers Dairy. Inc.• N410 Speel School Road• Appleton, WI 54915 

If the USDA is going to make changes to the FMMO, I believe it would be prudent to delay a hearing so 

that a more comprehensive look at all aspects of FMMO be made. For years the consumption of fluid 

milk has been in decline. The FMMO system should be one that is equitable to all consumers of dairy 

products. There needs to be a more level playing field for all, fluid plants and manufacturing plants alike. 

If this can be achieved, I believe it would go a long way in sustaining the dairy industry across the nation. 

If the USDA decides to hold a national hearing, I respectfully request the attached proposal which I 

submitted on May 4th • 2021 (which was a request for all handlers with route distribution sales of less 

than 3 million lbs. a month be exempt from pooling the same as a Producer Handler) be included in the 

hearing. 

Actions under the FMMO are subject to the Regulatory Flexibility Act which is to consider what the 

impact of any legislation would have on small business. Truly if the proposed changes by NMPF were 

adopted the impact on a small company such as ours would be devastating. 

Mark Lamers 

President Lamers Dairy Inc. 

920-830-0980 

e-mail 

mark.lamers@lamersdairyinc.com 

Phone: 920-830-0980 • Fax: 920-830-14 l 8 • www.lamersdairyinc.com 
May 4, 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.,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., 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 of a Producer Handlers. 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 process that the Class Ill price exceed the Class I price creating a negative ppd. This 

would create a condition buy 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, which Lamers Dairy Inc. is a part of, 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 a greater 
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 negative ($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). One has to keep in mind that 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 is 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 of proposed 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 thru 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 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. I believe that part of the 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 if the proposal were to be granted. In 

fact there is more 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 7 per cent of all the milk in the order. 7 per cent 

subsidizes 93 per cent. Think about it. 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 handles is just undeniable. This is an unfair trade practice as prohibited under Agriculture 

Marketing Agreement under Terms Common to all Orders. 

The Federal Milk Marketing Orders has an obligation to protect ALL small handlers not just Producer 

Handlers. 

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 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, Administrator 

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

producer milk, completion for that milk remains the same. Federal Order pricing would see little change 

if any. Most all plants pay Federal Order minimum prices along with some kind of premiums. There 

would be no effect on the consumer and the Market Administrators office would probably benefit from 

not have to figure these exempt plants utilizations into the pricing calculations and finished product 

testing if it is being done. Again as illustrated in exhibit B, only 1% of the milk in the ent ire country would 

be affected by granting the proposal. A very insignificant amount. 

Summary/conclusion 

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

granted. In exempting all class I handlers whose monthly class I route sale 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, provide 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 rational of an exempt plant that has less 

than 3 million pounds of Class I route distribution. That is that 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 (S 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. 

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

accommodate. 

Mark Lamers 

President 

Lamers Dairy Inc.