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Legislation Aims to End Exemption for Large Milk `Producer-Handler'

Chicago Tribune
By Andrew Martin

WASHINGTON - It seems as if everyone in the dairy business is out to stop Hein Hettinga, a prosperous dairy farmer who just happens to sell about the cheapest milk in the nation.

First the U.S. Department of Agriculture passed regulations, effective April 1, that would effectively curtail Hettinga's business. And now, Congress is considering a bill that would do the same thing. It's scheduled for a vote Tuesday in the House, having already passed the Senate.

The government's actions have come at the behest of some of the nation's biggest milk bottlers and cooperatives who believe that Hettinga has an unfair advantage. Unlike most dairymen, Hettinga milks cows and bottles the milk himself, a sequence that usually involves a farmer, a cooperative and a bottler.

But where typical bottlers are regulated by the government, which requires them to pay dairy farmers a minimum price determined by the USDA, Hettinga and the few other "producer-handlers" in the nation have long been exempt.

The reason that Hettinga has caused such a stir is that unlike most other producer-handlers, who are relatively small and local, he is among the largest dairy farmers in the nation, with 15 massive dairies stretching from California to west Texas.

His five dairies in Arizona send milk to two bottling plants in Yuma, on the border of California, and they ship milk to Sam's Club, Costco and other retail outlets in Arizona and southern California. There, Hettinga's milk sells for about $1.99 a gallon, sometimes less.

By comparison, a USDA survey found that a gallon of milk in Chicago costs twice as much, $3.99 a gallon, making Chicago among the most expensive milk markets in the nation.

The vote in Congress is scheduled a day before Hettinga is scheduled to appear in federal court in Texas, where he has filed suit against the USDA to block their regulations from taking effect. In essence, Hettinga's lawsuit argues that the USDA doesn't have the authority to regulate him.

Alfred Ricciardi, Hettinga's attorney, argued that the timing of the vote isn't a coincidence. The bill is part of the House "suspension calendar," which is typically used for items that don't warrant debate. For instance, besides the milk bill, Tuesday's suspension calendar also includes a resolution recognizing "the life of Wellington Timothy Mara and his outstanding contributions to the New York Giants Football Club, the National Football League and the United States."

"It's an effort to slide this through without any floor debate, without any discussion whatsoever," Ricciardi said.

Andrew House, a senior policy adviser for Rep. Devin Nunes, R-Calif., the House sponsor of the bill, said they have been pushing to get the bill on the calendar for three years and scheduled it for Tuesday before they knew about the lawsuit.

In the lawsuit, Hettinga argues that the 1937 act that created milk regulation specifically refers to bottlers that "purchase" milk. Since Hettinga doesn't purchase milk from himself, the regulations shouldn't apply to him, the lawsuit says.

The bill in Congress would effectively render the lawsuit moot, Ricciardi said.

Opponents of Hettinga say the exemption for producer-handlers was intended for small mom-and-pop dairies. Hettinga's operation is so big that he has depressed annual revenue for other Arizona dairy farmers by $11,000 to $17,000 a year and made it difficult for other bottlers who have to pay the federal price to farmers to match his milk prices.

"It doesn't make sense to regulate everyone in the market but to allow a legally available loophole that allows him to out-compete everyone else in the market," said Dino Giacomazzi, a California dairy farmer.

House, the congressional aide, pointed out that Hettinga has exploited federal regulations to make millions of dollars at the same time he has been among the biggest recipients of federal dairy subsidies. According to a farm policy database maintained by the Environmental Working Group, a nonprofit organization that is pushing for farm policy reforms, Hettinga's dairy farms received $895,009 in subsidies from 1995 to 2004, the third highest in the nation.

But Hettinga says that there is so little competition in the dairy business these days that the major players such as Dean Foods and the Dairy Farmers of America are routinely overcharging consumers. If Hettinga's efforts to block the USDA's regulations are unsuccessful, he estimates that he would have to pay about $3.5 million a year into a federal pool of milk revenues, money that would essentially be split among his competitors.

Copyright © 2006, Chicago Tribune