FSMA Food Safety Regs Going Local

Starting September 17, 2018, all “very small business“ (roughly defined as business with less than $1 million in annual sales1) manufacturing, processing2 or holding food must be in compliance with applicable federal regulations issued pursuant to the FDA Food Safety Modernization Act (FSMA) that govern “Current Good Manufacturing Practices, Hazard Analysis and Risk-Based Preventive Controls for Human Food.”3 These regulations break down into two different requirements: first, that the food business be in compliance with current good manufacturing practices (CGMPs) and, second, that it develop and implement a food safety plan that effectively performs a hazard analysis and designs risk-based preventive controls for human food (HARPC, Hazard Analysis and Risk-based Preventive Controls).4

The way FDA is interpreting these regulations, many local food producers will be under FDA‘s jurisdiction and subject to inspection by the agency, possibly even including a home kitchen producing cottage foods. The biggest potential problem for local food producers is not going to be the HARPC requirements but rather the CGMP mandate.

HARPC–Who Is Exempt?
HARPC does not apply to any business manufacturing, processing, packing or holding food that is not required to register with FDA as a “food facility.” There are a number of exemptions from the registration requirements; the exemption most applicable to local food producers would be the one for “farms” and “retail food establishments.“5

“Farm” is defined, in part, as “an operation under one management in one general physical location devoted to the growing of crops, the harvesting of crops, the raising of animals (including seafood) or any combination of these activities.6 The term “farm“ also includes “packaging and labeling raw agricultural commodities when these activities do not involve additional manufacturing/processing. Farmers growing/raising and selling raw milk, eggs, raw honey7, whole fruits and vegetables8, meat from amenable species (cattle, hogs, sheep, goats and poultry)9 or any combination of the above foods would qualify as a farm and be exempt from the registration requirement. The farmer/producer selling any processed fruits and vegetables (with one exception)10, any products processed from raw milk, maple syrup11 or any meats from non-amenable species (e.g., rabbit, bison, deer, elk)12 would result in the loss of the “farm“ exemption from registration.

If the farm business doesn’t qualify as a “farm“, it can still be exempt from the registration requirement if it qualifies as a retail food establishment. A business qualifies as a retail food establishment if over half of the “annual monetary value of its sales of food products are direct to consumers.13 This would include sales of all food products sold by the farmer/artisan not just food products that the business produced.

For those not aware of the “farm” or “retail food establishment” exemption who have registered with FDA, it is recommended—if your business qualifies as a farm or retail food establishment—that you contact FDA and request that it cancel your registration. If FDA independently verifies that your business is not required to register, it will cancel your registration.14

Those registering with FDA as a food facility with less than $1 million in annual sales are eligible for a “qualified facility” exemption from the HARPC requirement.15 To obtain the exemption, eligible facilities must submit form FDA 3942a to the agency by December 17, 2018 (those facilities starting up their business after September 17, 2018, must submit the same form before beginning operations).16 According to FDA’s Outreach Info Center, form 3942a will be available September 19; currently, only a draft version of the form is in circulation.

On the form, those seeking the exemption must attest that they are a qualified facility17 (e.g., a “very small business“) and either that they “have identified the potential hazards associated with the food being produced, are implementing preventative controls to address the hazards, and are monitoring the performance of the preventative controls to ensure that such controls are effective“18 or that they are in compliance with state or other applicable non-federal laws and include evidence of regulatory oversight19 (e.g., licenses, permits). Beginning in 2020, those seeking the exemption must submit form 3942a every two years.20 Under certain circumstances, FDA can revoke the qualified facility exemption.21

CGMPs
The CGMP requirements are where FDA will directly regulate local food producers. FDA has been low-key about to whom it will apply the CGMP requirements22, but a read of the regulations indicates that FDA can apply them to local food. Unlike the HARPC requirement, small farms and local artisan producers will have no exemption from the CGMP mandate based on their revenues. Among those exempt from the CGMP are: producers exclusively under USDA jurisdiction (e.g., producing and selling only beef, pork, lamb, goat and poultry products); and farms meeting the “farm” definition discussed above. It appears all, or nearly all, other local food producers will be subject to the CGMPs. According to FDA, the CGMP requirements apply even to businesses operating only in intrastate commerce.23

CGMPs are a one-size-fits-all regulatory scheme–easily subject to varying interpretation by inspectors–that contain requirements for personnel24, plants and grounds25, sanitary operations26, sanitary facilities and controls27, equipment and utensils28, processes and controls29, warehousing and distribution30, holding and distributing distribution of human food by-products for use as animal food31, and the defect action levels32. These are requirements that state legislatures should be determining but FDA wants to regulate as much food and as many food producers as possible. Value-added products are where the money is; FDA wants to have jurisdiction over all of these products, no matter how small the food producer is.

The FDA Bootstrap
As far as is known, Congress never brought up CGMPs when the Food Safety Modernization Act was under consideration but FDA took advantage of the broad power the Act gave it to issue regulations and bootstrapped the CGMP requirements into FSMA. FDA had long contended that FDA could regulate intrastate food commerce under powers granted it by the Public Health Service Act (PHSA) to regulate communicable disease; it wasn’t until FSMA became law that the agency had the traction to do so (the CGMPs had their own Part in the Code of Federal Regulations, 21 CFR 110; FDA used FSMA to insert the CGMPs into Part 117 and 21 CFR 110 will be repealed on September 17, 2018).

The PHSA provides that:

    “The Surgeon General, with the approval of the Secretary [of Health and Human Services] is authorized to make and enforce such regulations as are necessary to prevent the introduction, transmission, or spread of communicable disease from foreign countries into the states or possessions, or from one state or position into any other state or possession. For the purposes of carrying out and enforcing such regulations the Surgeon General may provide for such inspection, fumigation, disinfection, sanitation, pest extermination, distraction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings, and other measures, as in his judgment may be necessary.”33

That this power authorizes FDA to inspect home kitchens making cottage foods is definitely a reach. There is nothing in the PHSA or in its legislative history indicating FDA has the authority to inspect an intrastate food business when there is no credible evidence that the business is producing food under unsanitary conditions or is responsible for a foodborne illness outbreak. FDA has claimed that “due to the nationwide interrelated structure of the food industry, communicable disease may, without proper intrastate food controls, easily spread interstate.“34 That statement describes the industrial food system, not the local food system. FDA should recognize the difference between the two and leave the latter alone.

In addition to being beyond its power, enforcing the CGMPs against local food is a waste of resources if FSMA is about improving food safety. Instead of spending whatever money FDA intended to budget towards inspections of intrastate food producers, why doesn’t FDA put its resources towards areas of the food sector where there are actually food safety problems, like imported food?

There are built-in incentives for small farmers and local artisans to produce safe food; those producers are feeding the same food to their families, one product recall can put them out of business, one case of foodborne illness can put them out of business. Legislatures in nearly all states have recognized this with the passage of cottage food bills that allow the direct-from-producer-to-consumer sale of a variety of foods with little or no regulation. Four states have passed food freedom bills and other legislation that allow the unregulated sale from producer to consumer of nearly all foods other than meat. There have been few, if any, cases of foodborne illness attributed to producers operating under cottage food or food freedom laws.

Will FDA actually inspect private home kitchens to make sure that the kitchens are in compliance with applicable CGMP requirements? If there were inspections, they would likely be conducted by state agencies pursuant to a cooperative agreement with FDA. So, state legislators who voted on behalf of their constituents who want to deregulate local food transactions between consumers and producers are now being told by FDA that the same state agencies that the legislators didn’t want inspecting local food producers will now be inspecting them; this even though there is little or no evidence that Congress wanted FDA to inspect these same producers for compliance with CGMPs.

FDA might not have the resources to carry out widespread inspections of local food producers, but the threat is that FDA can create a chilling effect on local food production with a small number of inspections of small farms and cottage food operations; convincing some local food producers to get out of business while deterring others from starting up operations.

There are ways to fight against FDA’s attempt to regulate all local food production. For starters, having Congress deny FDA funding to conduct inspections of those in the food business who are not required to register with the agency as a food facility. State legislatures could also require that any FSMA cooperative agreements between state agencies and FDA exclude in the agreement inspections of businesses not required to register as food facilities. Congress could also amend FSMA to clarify that those not required to register as a food facility be exempt from the CGMP requirements. Those processing, manufacturing, packing or holding food for animal consumption not required to register with FDA don’t have to comply with the CGMP mandate35; FDA can apply the same standards to human food.

An immediate move FDA can make is to include additional kinds of manufacturing/processing under the definition of “farm”, enabling farmers to produce more value-added products while still remaining under the “farm” exemption. The agency is currently in the process of amending that definition.36

The more local food producers there are the safer food will be in this country; applying the CGMPs to small farmers and local artisan producers is a big step in the wrong direction.

Those with questions about food facility registration or exemptions from the HARPC and CGMP requirements can email Pete Kennedy at pete@realmilk.com.

—————–
FOOTNOTES

[1] The exact definition of “very small business” in 21 CFR 117.3 reads:

    Very small business means, for purposes of this part, a business (including any subsidiaries and affiliates) averaging less than $1,000,000, adjusted for inflation, per year, during the 3-year period preceding the applicable calendar year in sales of human food plus the market value of human food manufactured, processed, packed, or held without sale (e.g., held for a fee). [bolded emphasis added]

[2] The definition of manufacturing/processing is extremely broad; 21 CFR 1.227 and 21 CFR 117.3 state the same definition:

    Manufacturing/processing means making food from one or more ingredients, or synthesizing, preparing, treating, modifying or manipulating food, including food crops or ingredients. Examples of manufacturing/processing activities include: Baking, boiling, bottling, canning, cooking, cooling, cutting, distilling, drying/dehydrating raw agricultural commodities to create a distinct commodity (such as drying/dehydrating grapes to produce raisins), evaporating, eviscerating, extracting juice, formulating, freezing, grinding, homogenizing, irradiating, labeling, milling, mixing, packaging (including modified atmosphere packaging), pasteurizing, peeling, rendering, treating to manipulate ripening, trimming, washing, or waxing. For farms and farm mixed-type facilities, manufacturing/processing does not include activities that are part of harvesting, packing, or holding. [bolded emphasis added]

[3] 21 CFR Part 117
[4] The deadline for compliance with the CGMP and HARPC requirements is September 17, 2018, for those very small businesses that manufacture, process, pack and/or hold animal food. “Very small business”, in the case of animal food, is roughly defined as those businesses with under $2.5 million in annual sales. See 21 CFR 507.3 and 21 CFR 507.5
[5] 21 USC 350d(c)(1), 21 CFR 1.226(b) and (c)
[6] 21 CFR 1.227
[7] FDA, Questions and Answers Regarding Food Facility Registration (Seventh Edition): Guidance for Industry, August 2018, pp. 10-11. Last viewed 8/30/18 at https://www.fda.gov/downloads/Food/GuidanceRegulation/UCM332460.pdf
[8] Farms growing and selling vegetables could be subject to FSMA’s produce safety standards depending on their income levels and whether the vegetables are usually cooked before being consumed. See 21 CFR 112.1-112.5
[9] Meat from amenable species is not considered a raw agricultural commodity but, since it is under USDA’s jurisdiction, a farmer selling meat from amenable species the farmer raised would not cause the loss of “farm” status.
[10] “Drying/dehydrating raw agricultural commodities to create a distinct commodity (such as drying/dehydrating grapes to produce raisins), and packaging and labeling such commodities, without additional manufacturing/processing….” — from definition of “farm”, 21 CFR 1.227
[11] FDA, Questions and Answers Regarding Food Facility Registration (Seventh Edition): Guidance for Industry, August 2018, p. 9. Last viewed 8/30/18 at https://www.fda.gov/downloads/Food/GuidanceRegulation/UCM332460.pdf
[12] Ibid., p. 21
[13] 21 CFR 1.227
[14] 21 CFR 1.241(c)
[15] 21 CFR 117.3 contains definitions and 21 CFR 117.5 gives greater detail about exemptions.

    Qualified facility means (when including the sales by any subsidiary; affiliate; or subsidiaries or affiliates, collectively, of any entity of which the facility is a subsidiary or affiliate) a facility that is a very small business as defined in this part, or a facility to which both of the following apply:

      (1) During the 3-year period preceding the applicable calendar year, the average annual monetary value of the food manufactured, processed, packed or held at such facility that is sold directly to qualified end-users (as defined in this part) during such period exceeded the average annual monetary value of the food sold by such facility to all other purchasers; and
      (2) The average annual monetary value of all food sold during the 3-year period preceding the applicable calendar year was less than $500,000, adjusted for inflation. Qualified facility exemption means an exemption applicable to a qualified facility under § 117.5(a).

    [21 CFR 117.3, bolded emphasis added]

[16] 21 CFR 117.201(c)(2)(i)(A)(b)
[17] Applicants for the exemption must have financial records from 2016-2018 to show that they are a “very small business” as defined in 21 CFR 117.3
[18] 21 CFR 117.201(a)(2)(i)
[19] 21 CFR 117.201(a)(2)(ii)
[20] 21 CFR 117.201(c)(2)(i)(C)(ii)
[21] 21 CFR 117.251
[22] FDA states on its website, “It is important to note that applicability of the CGMPs is not dependent on whether a facility is required to register.” See “FSMA Final Rule for Preventive Controls for Human Food” webpage. Last viewed 8/30/18 at https://www.fda.gov/food/guidanceregulation/fsma/ucm334115.htm
[23] 78 FR 3646, 3651
[24] 21 CFR 117.10 – employee cleanliness and disease control
[25] 21 CFR 117.20 – plant construction, condition of the grounds
[26] 21 CFR 117.35 – general maintenance, cleaning food and non-food contact surfaces, storage of equipment and utensils
[27] 21 CFR 117.37 – water supply, plumbing, sewage disposal, toilet facilities, handwashing facilities, garbage disposal
[28] 21 CFR 117.40 – equipment design requirements
[29] 21 CFR 117.80 – operational requirements for food manufacturing, and food and ingredient storage
[30] 21 CFR 117.93 – sanitary requirements for storage and transportation of food
[31] 21 CFR 117.95 – includes requirements on containers, equipment, and labeling food by-products
[32] 21 CFR 117.110 – Defect action levels. Per 21 CFR 117.3, Defect action level means a level of a non-hazardous, naturally occurring, unavoidable defect at which FDA may regard a food product ‘adulterated’ and subject to enforcement action under section 402(a)(3) of the Federal Food, Drug, and Cosmetic Act.” [bolded emphasis added]
[33] 42 USC 264(a)
[34] 78 FR 3646, 3651 citing 44 FR 23238 at 33239
[35] 21 CFR 507.5(a)
[36] Letter from FDA Commissioner Gottlieb, July 31, 2018. Last viewed 8/30/18 at
https://www.fda.gov/downloads/Food/GuidanceRegulation/FSMA/UCM615393.pdf


Photo source at top of article: Sandrine Perez. Photo source at bottom: FSMA webpage on FDA website

The Planned Destruction of the American Dairy Farmer


A public hearing was held at the Fire Hall in Lairdsville, Pennsylvania, on July 24 to voice concern over the current financial crisis facing dairy farm families throughout America–aptly termed, the economic “Dairy Depression”. Organized by Farm Women United (FWU), the event called for similar hearings to be held across the countryside to gather testimonies that “Congress itself should be gathering but refuses to do so in what is the most outrageous and blatant example of dereliction of duty by federal legislators in modern American agricultural history that is patently undermining the Constitutional rights of American family dairy farmers.” The plea is for Congress and the current Administration to intervene with a “$20 Emergency Floor Price” for milk and mandatory federal hearings to investigate and resolve the crisis.

Gerald Carlin has authorized his written testimony to be published on RealMilk.com (reproduced here by permission with minor formatting and punctuation edits). In his closing, Gerald addresses the many politicians who have failed to respond to the dairy crisis, to whom he says, “Your silence and excuses are deafening and damning.”

Testimony for the Dairy Farm Family Crisis Hearing, Lairdsville, PA

July 18, 2018

I want to thank everyone for taking time out of your busy schedules to attend this important hearing. I also want to thank my wife Tina for all of her hard work in helping to organize this hearing.

My name is Gerald Carlin. My wife Tina and I are former dairy farmers and are now raising beef cattle and vegetables on our century farm in Susquehanna County, PA.

I was asked to speak today on some of the history of events leading to this dreadful state of affairs in the dairy farming business and farming in general. The list of events is too long to cover, but I will mention some of the important ones.

In the period following the Civil War, a number of industries became monopolized including: Railroads by Vanderbilt, Oil by Rockefeller, Steel by Carnegie, and there were efforts by some to take control of agriculture. The Sherman Anti-trust Act of 1890 made monopolizing trade a felony and gave the Attorney General and US Attorneys the responsibility to prosecute those who monopolize, attempt to monopolize, or conspire with others to monopolize trade among the several states. Enforcement of Anti-trust has been lacking at best.

Farm owners are not allowed to unionize but in 1922 Congress passed the Capper-Volstead Act which enabled farmers to form marketing cooperatives to market their products as a group and to bargain for fair prices. The farmer-owned co-ops were granted special protections. As cooperatives have merged and morphed into giant corporations–distant, detached, and unaccountable to their farmer-owner members–these giant co-ops now hide behind their protections granted to them by the Capper-Volstead Act, while they abuse their farmer-owner members with immunity.

In 1937, Congress passed the Agricultural Marketing Agreement Act (AMAA) which established the Federal Milk Marketing Orders (FMMO) that created equal pay for farmers through pooling within the orders to create a uniform price for milk regardless as to how the milk was used. The provision in 7 U.S.C. Section 608 (c) 18 of the 1937 AMAA mandated that the Secretary of Agriculture consider regional production costs in the raw milk pricing formula. FMMOs still exist as a result of the 1937 AMAA but the “cost of production” part has been ignored and scorned for the last 37 years.

In July 1962, the Committee for Economic Development (CED)–made up of some 200 corporate executives, economists and other distinguished experts (not one farmer)–released An Adaptive Program for Agriculture with a stated goal of reducing the farming population by one third within five years. The report complained about wasted resources in farming, particularly labor, as technology increased productivity in agriculture and the large public expenditures for vocational training for young farmers in public schools. They proposed a policy of actively discouraging young people from getting into farming as well as actively trying to coax existing farmers to exit agriculture and even proposed public funds be spent to assist farmers in moving expenses to relocate their families off of the farm.

Kenneth E. Boulding, Ag Economist with the Department of Economics at the University of Michigan and member of the research advisory board for the CED, stated the following:

The only way I know to get toothpaste out of a tube is to squeeze, and the only way to get people out of agriculture is likewise to squeeze agriculture. If the toothpaste is thin, you don’t squeeze very hard, on the other hand, if the toothpaste is thick, you have to put real pressure on it. If you can’t get people out of agriculture easily, you are going to have to do farmers severe injustice in order to solve the problem of allocation.

Although this quote does not appear in the text of An Adaptive Program for Agriculture, the sentiment is still evident. The sentiment expressed by these distinguished experts was that farmers were merely disposable pawns in an economic plan. If the inefficient farmers would just leave farming, the farmers who are left will prosper. Efficient farmers will produce food more cheaply, people will spend less money for food, leaving more disposable income to spend on consumer goods, which will cause economic growth and increase income for all, or so the theory goes. Of course, consumer food prices have continued to rise even as farmers get less and less of the retail dollar. I guess there is a fly in the ointment somewhere.

There were 1.1 million farms with dairy cows in the United States in 1964, 600,000 in 1969, and some 40,000 today; so those who are left are really prospering, right? Oh wait, they are struggling more than ever before. Obviously there are still too many. You get the point.

The official belief that there are too many farmers has grown and become entrenched in public policy evidencing itself in numerous ways, not the least of which are burdensome and senseless regulations on many fronts. Technology, including patented GMO and Terminator seeds, limits farmers’ ability to preserve seeds while increasing the power and control of corporate seed giants. Food additives extend yields of “food” with less raw product. Irradiation and Ultra-pasteurization, along with other questionable practices, ruin the real nutrition of food while extending shelf life. The list could be endless, but the goal is to put food under corporate control, with as few farmers as possible. This, of course, is called “progress”.

The belief that farmers are not important is evidenced in the attitudes and actions of both co-ops and processors as they believe that they are turning worthless raw product into something of value–(Some believe that milk has no value until it is at least pasteurized). Dairy farmers are lucky that the milk truck stops at the farm, takes the hazardous material, and actually pays them for it. No wonder farmers are strapped with paying “make allowances” to insure that the processor can make a profit, and of course, farmers have to pay the hauling charges, advertising fees, and all other appropriate fees, as a co-op or processor sees fit. Countless rural communities that rely on agriculture and provide Ag-related services have been decimated. Social impacts are obvious.

On April 26, 1971, US Secretary of Agriculture Clifford M. Hardin announced the formation of the Young Executives Committee which consisted of 15 members, each of which represented an agency of the Department of Agriculture. They were asked by the Secretary to undertake a review of the farm income question. The following is quoted from their report:

Agriculture should be viewed as an industry which consumes resources, provides employment, and produces goods of value to society. The Committee believes that national agricultural policy should aim at creating an environment which would enable the industry to provide adequate supplies of food and fiber at reasonable prices to meet domestic needs and compete in world markets. The level of farm income earned from the production of agricultural commodities, either per farm or in aggregate, should not be an end in itself. That is, the Department’s objective should not be to assure any particular level of income from farming for the nation’s farmers. Income from farming should be of concern only to the extent that it affects the level of resources attracted to the industry, and, hence, the industry’s ability to produce efficiently, adequate supplies of food and fiber. The industry should not be evaluated on its ability to provide an adequate level of living for all participants regardless of the size of their operation or managerial ability. If adequate supplies of food and fiber are being made available at reasonable prices, we should conclude that the nation has a healthy, viable agricultural industry. . . Agricultural policy should be directed toward maintaining agriculture as a viable industry and not as a way of life . . . Given these conditions, agriculture cannot and should not be expected to provide employment opportunities sufficient to preserve the nation’s rural towns and communities. If these towns and communities are to grow, additional off-farm employment opportunities must be found.

The Committee also called for the elimination of parity pricing.

In April 1973, Agricultural Trade and the Proposed Round of Multilateral Negotiations (aka the Flanigan Report) was published. This document basically sought the elimination of any and all protections and trade barriers for farmers domestically and worldwide. It was their dream and goal that eventually no country on earth would be able to offer any special protections for their farmers. Farmers would be forced to be “efficient” and would no longer be able to be such a pesky, if not powerful, lobbying force in Washington, DC, or any other country in the world. Eventually through a number of trade agreements, negotiated by “esteemed” and unaccountable experts, the farmer has essentially lost all protections and all rights to seek redress of wrongs because international trade agreements supersede farmers’ rights and domestic food policy. Politicians can throw their hands in the air and declare that there is nothing that they can do, or, as most have chosen, just ignore the concerns of farmers, because, after all, there are more important issues to deal with and more important people to talk to.

On April 1, 1981, President Ronald Reagan signed legislation that decoupled farm milk prices from parity and incrementally decreased the support price from $13.60 at that time down to $9.90 and eventually the support price was eliminated in the 2014 Farm Bill.

In 1996, the United States Congress instructed Secretary of Agriculture Dan Glickman to reform the Federal Milk Marketing Orders. In July 1999, USDA put their order reform up for producer referendum. Only Option 1B was offered. Although many did not like 1B, the referendum passed because cooperatives like Dairy Farmers of America (DFA) used the “block voting” option. Several dairy cooperatives sought an injunction against the proposed order reform on the basis that 1B would financially harm milk producers in most of the country. In the St. Albans Cooperative Creamery, Inc., et al., Plaintiffs versus Dan Glickman, Secretary of Agriculture, Defendant case an injunction was granted. U.S. District Judge William Sessions III did not focus on the merits of 1A vs. 1B but rather cited Dan Glickman for failure to consider dairy farmers’ cost of production. Judge Sessions made clear in his “Opinion & Order” that ”. . . this Court looks to the direct language of the statute to determine the sufficiency of the Secretary’s consideration, which makes no mention of indirect consideration being adequate in meeting the requirements of 608c(18). The record shows no direct consideration of regional costs in feed, feed availability, or other region specific economic factors.”

Judge Sessions also stated that “. . . the Court finds the Secretary’s Final Order and Decision violates Congress’ mandate under the 1937 Agricultural Marketing Agreement Act (AMAA) . . . “ and “. . . that Plaintiffs have a likelihood of success in their claim that the Secretary’s Final Order and Decision violates the AMAA by failing adequately to consider economic factors regarding the marketing of milk in the regional orders across the country.” Furthermore, Judge William Sessions found “. . . that the balance of hardship weighs heavily in favor of the Plaintiffs.” Judge William Sessions, III made no fewer than five references to USDA’s failure to act according to the 1937 Agricultural Marketing Agreement Act, section 608c(18). In his “Opinion and Order” statement, one such discussion spans seven pages. In late 1999, Congress instructed USDA to implement Option 1A. This satisfied the Plaintiffs, (were the Plaintiffs following the intent of the Capper-Volstead Act?) and the case was dropped without resolution of the cost of production issue.

In May 2000, USDA held hearings on Class III and IV pricing in which testimony was offered in support of implementing a cost of production factor in these formulas. In December 2000, USDA released the Tentative Decision on Proposed Amendments for Class III and IV pricing. Once again, USDA ignored the mandates of 7 U.S.C. 608 (c) 18 maintaining that the Class III and IV prices “. . . are such prices as will reflect the aforesaid factors. . .” [General Findings (b)]. This is ludicrous in light of the volatility of Class III and IV prices. However, USDA did concede that “if a sound mechanical concept could be advanced that overcomes the objections relative to supply and demand, it should be considered.”

United States Department of Agriculture issued an invitation for proposals on changing Class III and IV pricing in the summer of 2006. Approximately 40+ proposals for cost of production were submitted. National Family Farm Coalition submitted a somewhat detailed proposal to base Class III and IV pricing on a national average cost of production. In the pre-hearing, February 2006, USDA officials insisted that they do look at 608c (18) regularly and implied that they are following it. USDA turned down NFFC’s proposal. As a result, several members of the Dairy Sub-committee, particularly Arden Tewksbury and Gerald Carlin of Pro Ag, drafted legislation using the NFFC proposal as its basis. Senator Arlen Specter’s office put the draft into bill form, and it was introduced in the Senate on June 27, 2007, by Senator Arlen Specter and Senator Robert Casey, Jr. The bill is known as the Federal Milk Marketing Improvement Act of 2007 or S1722. Senator Casey, who is on the Senate Agriculture Committee, was unable to get support for S1722 to become part of the Farm Bill. The Bill was reintroduced in 2009 as S889 and then after a few changes introduced again as S1645. The Bill was introduced again in 2011 as S1640.

Forward Contracting appeared in the 2002 Farm Bill as a pilot program which was to expire on December 31, 2004. The industry and lenders continue to pressure farmers to forward contract in an effort to undermine Federal Orders and secure milk at lower prices.

In late 2004, a massive investigation of DFA and Dean Foods was launched by the United State Department of Justice in conjunction with over 20 state Attorneys General. The investigation focused mostly on abusive, anti-competitive market practices in the Southeast, where farmers were paid less than minimum FMMO prices. Small co-ops were coerced, gobbled up, or controlled by DFA and farmer members were sucked into DFA and its affiliates against their will. Some 200 file boxes of evidence were reportedly collected along with scores of sworn affidavits. The investigation ground to a halt in the fall of 2006. It may have been completed by that time but no action was taken by the Department of Justice in spite of numerous calls to do so from politicians and others.

Another investigation of dairy co-op Anti-trust issues was started during the Obama administration then promptly terminated.

The 2014 Farm Bill eliminated the MILC program and Dairy Price Supports and replaced them with the failed MPP Program and the meaningless Dairy Product Donation Program.

On January 8, 2018, the Report to the President of the United States from the Task Force on Agriculture and Rural Prosperity was released, with five main objectives related to agriculture: (1) increase e-connectivity, (2) improve H-2A visa program to facilitate more H-2A work visas, (3) expand biotechnology and public acceptance of genetically modified products, (4) increase ag exports, (5) increase access to capital. No mention of farm price or consumer choice in the report.

The 2018 Farm Bill continues the globalist agenda with apparently no intention of correcting low farm product prices and bad farm policy.

On the trade front, President Nixon pushed for expanded trade with China. Ag trade surpluses were to offset trade deficits in manufactured products. This never happened.

On January 1, 1994, NAFTA went into effect. US investment went south for cheaper wages and Mexican wages actually decreased as our trade with Mexico went into deficit.

In a 1994 lame duck session of Congress, the massive General Agreement on Tariffs and Trade (GATT) passed, putting more control of our economy in the hands of unelected and unaccountable people.

In 2000, the US Congress approved Permanent Normal Trade Relations (PNTR) with China, and as many predicted, our trade deficit with China exploded as companies invested in China for even cheaper labor. China has become a growing threat to our nation’s security even as we have lost our ability to produce basic necessities for our own people.

In dairy trade the United States imported far more dairy products than we exported from the late 1990s to early 2000s. The USDA has become much less transparent on dairy imports as they tout increased dairy exports. Even so, we are still importing a large amount of dairy products. The “oversupply” in dairy has been created in large part by the use of Milk Protein Concentrate (MPC), Milk Protein Isolate (MPI), and Ultra-filtered Milk (UF). I will talk more about MPC later.

So where does this leave dairy farmers? Dairy farmers have lost their equity, lost their retirement, lost their ability to pay their suppliers in a timely manner, lost their dignity, feel misunderstood, marginalized, and scorned. They have lost their next generation of dairy farmers, lost their hope, in some cases lost their marriages, and some have lost their lives. They have been scoffed at by their cooperatives and experts. They have been ignored by politicians. The list of politicians ignoring farmers is long, but to save time I will just say that not one of the 66 member of the House and Senate Ag Committees had the decency to respond to a thoughtful survey sent to them by Farm Women United (FWU). Also, Governor Wolf and Governor Cuomo have not had the decency to respond to letters sent to them by FWU. Agri-Mark was also sent letters, but they too have failed to respond. It doesn’t matter what a politician may say in private. If they do not openly and publicly declare their support for Dairy Farm Families and offer constructive solutions to this crisis, there is no other choice but to conclude that they simply do not care. If they cared, they would speak out. Further, if dairy cooperatives cared, they too would take constructive steps to solve this crisis. Your silence and excuses are deafening and damning.

We urge support for a $20 Emergency Floor Price and hearings to determine a path forward to create a sustainable future for the dairy farms that remain. Failure to act will result in the near total destruction of traditional family dairy farms as we have known them and the continued decline in access to locally produced wholesome food.

Thank you for your time and patience
Gerald Carlin, Meshoppen, PA
2 Attachments – see posted below

ATTACHMENT #1
How Much Milk is MPC/Ultra-filtered Milk Displacing

by Gerald Carlin – July 22, 2018

No one really knows how much milk MPC/Ultra-filtered Milk is displacing since the Federal Milk Marketing Orders (FMMO) do not collect data on MPC/Ultra-filtered Milk production and use. This is considered proprietary information. MPC and Ultra-filtered Milk are now being used in all four classes of milk products.

MPC and Ultra-filtered Milk are not approved ingredients in standardized cheeses, but the Food and Drug Administration (FDA) has “exercised discretionary enforcement” in this area, as reiterated on August 11, 2017. FDA went further and stated, “. . . we do not intend to take action against companies that manufacture standardized cheeses and related cheese products that contain fluid Ultra-filtered Milk or fluid Ultra-filtered Non-fat Milk without declaring them in the ingredient statement, as long as their labels declare milk or non-fat milk in the ingredient statement.”

We can, however, look at cheese production compared to Class III utilization in the FMMOs and California Class 4b (cheese) utilization to gain some insight. The traditional yield factor for cheese is 10.01 lbs. per 100 lbs. of fluid milk containing 3.5% butterfat and 2.99% true protein. Higher average components may yield 11 lbs. of cheese per 100 lbs. of milk. National cheese production last year (2017) for cheese falling under Class III or California Class 4b was approximately 12.4 billion lbs. Class III utilization (weighted average) in all Federal Orders was 41%. If this rate of utilization is true nationally, the average cheese production would be 14.1 lbs. per 100 lbs. of milk. The Class 4b utilization in California for 2017 was 46.2%, making an average cheese yield of 13.66 lbs. per 100 lbs. of milk. Given this information, it seems unlikely that the national average cheese yield is less than 13.5 lbs. per 100 lbs. of milk. This translates into at least 20 billion pounds of farm milk being displaced by the use of MPC/Ultra-filtered Milk in cheese. Low-fat and Non-fat dairy products are being promoted. The fat that traditionally would go into these products is used with MPC/Ultra-filtered milk to produce substandard cheese. Much of this use violates cheese standards. How much milk is being displaced in other dairy products because of MPC/Ultra-filtered Milk? Prices are in the gutter because of a supposed 4 or 5 billion pound surplus.

How much effect does farm milk price have on retail price?

US City Retail Price
Natural Cheese August 2014 — $5.56#
Natural Cheese June 2018 — $5.23#

Ice Cream August 2014 — $4.75 ½ gal.
Ice Cream June 2018 — $4.66 ½ gal.

Whole Milk August 2014 — $3.67 gallon
Whole Milk June 2018 — $2.88 gallon

US Average FMMO Mailbox Milk Price
May 2014 — $24.37
March 2018 — $15.04

Source:
California Dairy Statistics Annual 2017
Market Summary and Utilization Report Agricultural Marketing Service
Dairy Products 2017 Summary USDA NASS
Milk cows and production by state and region NASS and ERS
Dairy Market News

The four classes of milk products are: (1) fluid milk, (2) soft dairy products like yogurt and cream, (3) cheeses, and (4) butter and dry milk products like nonfat dry milk.

ATTACHMENT #2
Thoughts Concerning Free Market in Dairy

By Gerald Carlin – May 6, 2018

In a functional free market system for dairy, dairy farmers form cooperatives to give them both bargaining power and marketing ability. The co-op would be owned by, and controlled by, its farmer-members.

Today, National Milk Producers Federation (NMPF) is the only voice for dairy farmers in Washington, as it claims to represent some 75% of the nation’s dairy farmers. NMPF is made up of “farmer-owned” co-ops and processors who are associate members.

Let’s examine the current “benefits” of being a farmer-owner of a large modern-day co-op. The farmer-owner, hereafter referred to as owner, pays the dairy cooperative management, hereafter referred to as employees, to market the owner’s milk. The employees are not required to pay the owner the Federal minimum milk prices.

  • The owner has no right to know what the employee’s salary is.
  • The owner has no right to know where his milk is going on any given day.
  • The owner has no right to know who all of the other co-owners are.
  • The owner can lose his market if he is critical of, or even questions his employees, therefore, most owners remain silent in fear of retaliation. Employees make examples out of owners who get out of line.
  • The employees vote in Federal Order referendums without the consent of the owner.
  • The employees have been seen at Federal Order hearings trying to get more money out of the owner without the owner’s knowledge.
  • The owner has no ability to call a meeting of fellow owners.
  • The owner has no practical ability to fire an employee.
  • The employees try to dictate how the owner runs his business.
  • The employees have plenty of lobbyists at all levels of government to ensure that their control over the owners continue.

This is the unseen and untold story of “farmer-owned” co-ops.

Farm Women United Mission Statement
Farm Women United seeks to maintain a serious, honest, and open dialogue, giving a voice to farmers who are the real stewards of the earth and the foundation of any free and civilized society. Farmers produce food that sustains life. We are a culture of life. Farm Women United seeks to restore cultural respect for farmers which will result in a just and equitable value being placed on the life sustaining food which we produce and allow farmers to continue to produce food with dignity.

Visit www.farmwomenunited.org