AMS: Forward Pricing 03-16-00 - Organic Trade Association
Organic Trade Association
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AMS: Forward Pricing 03-16-00


in reference to Docket Number DA-00-06

Organic Industry Supports Forward Pricing Pilot Program

March 16, 2000

The Organic Trade Association (OTA) supports the Proposed Rule for a forward pricing pilot program.

Organic dairies under the Federal milk order program could benefit greatly from being able to engage in a program which allows the flexibility anticipated by the framers of this Rule.  Many organic dairies are small businesses under the definition in the Rule, and the special requirements and unique niche of organic diaries have not always been recognized by Federal milk marketing orders.

OTA applauds the fact that the Rule is flexible, allowing handlers and farmers to determine how much milk to forward contract.  This will give dairy farmers another tool in stabilizing their farm economy and provides a useful experiment in allowing the market for organic milk to set the price.  OTA believes that the demand for organic milk will rise and that this pilot program can help establish the base of facts necessary for a broader program.

OTA agrees with USDA that the Rule, in providing a useful, creative tool to reduce price risk, will benefit small farmers rather than impair their ability to compete in the marketplace.  In order to secure this benefit, the Pilot Program Fact Sheet should state clearly the intent, requirements, and risks of the program.  This is especially necessary because this Rule represents a new, unfamiliar economic structure.

OTA also applauds USDA for recognizing the risk that handlers could coerce dairy farmers into signing unfavorable contracts.  While OTA believes that organic dairy farmers will be able to sell at higher prices, OTA hopes that an adequate monitoring system will be developed to guard against such a distortion of the intent of the Rule.

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