Do-it-yourself dairies no longer so small, exemption to be lifted

SILVERTON, Ore. (AP)--When Bob Mallorie started his dairy five decades ago on this land surrounded by corn fields, he milked the cows, bottled the milk, then jumped behind the wheel of his truck to deliver the fresh bottles.

Doing every step of the process was not unusual in the 1950s, when many dairy farms were self-sufficient. But farms have become increasingly specialized--and what was once done under one roof is now accomplished under several.

Today, there are fewer than 80 dairies nationwide that also bottle their milk, down from a high of 421 in 1969, according to the U.S. Department of Agriculture. That number could drop even more if the USDA does away with a law that has protected small, do-it-yourself farmers by allowing them to sell their milk at the price they choose.

Proponents of the move say dairies like the one now run by Mallorie's daughter are "factory farms"--so large that they no longer deserve the benefits of legislation meant to give mom-and-pop outfits a leg up.

"We're being called a 'factory farm' by some of the largest dairies in the nation, if not the world. It's really nonsense," Teri Mallorie said.

Since the 1930s, the price of a glass of milk has been strictly regulated in the United States.

Under the federal milk marketing system, farmers are required to sell their milk into a regional pool, which pays them a set price. The "grass-to-glass" dairies have been exempted on the basis that they were too small to affect the market.

But Dairy Farmers of America, which controls a third of the U.S. milk supply and is backing the USDA plan, says the average dairy milks just 700,000 pounds per month.

That means that Mallorie's farm is six times larger than average, said Elvin Hollon, the co-op's director of fluid marketing and economic analysis.

"They make themselves look like they're a small guy, a David up against Goliath," Hollon said. "Why should we be giving a price break to someone that's 10 times bigger than average? Or six times bigger than average? That doesn't seem reasonable."

Under the USDA plan, four do-it-yourself farmers in the Northwest and the Arizona regions who milk and bottle more than 3 million pounds of milk per month will have their exemptions removed.

But the dairy industry wants to have the exemptions removed nationwide, and hearings in other regions have already been held.

In testimony before the USDA, Dean Foods Co., the nation's largest dairy processors with 110 plants and annual sales of $10.8 billion, argued that the farms have been given an unfair advantage.

Kroger Co., the country's largest supermarket chain with sales of $56.4 billion, testified that the dairies were also cutting into their profits by underselling them.

Date: 8/22/05