NASS Reviews Nonfat Dry Milk Data; Five Companies Make Revisions
The U.S. Department of Agriculture (USDA) last week published the results of its two-month review of nonfat dry milk price and sales volume data reported by processors during the past year. According to USDA, five companies made revisions to their previously reported data, which resulted in understating the value of farm milk by nearly $50 million, or an average of four cents per hundredweight of milk. USDA anticipates no impact on processors, however, because the previously reported minimum milk prices will remain unchanged.
The data reported is used by USDA's Agricultural Marketing Service (AMS) to determine the minimum milk prices that processors regulated by the Federal Milk Marketing Orders must pay dairy farmers for their milk. Each week, dairy manufacturing plants report their total sales volume and average price received for nonfat dry milk, butter, cheddar and dry whey to the USDA's National Agricultural Statistics Service (NASS). This information is published in the aggregate every Friday morning at 8:30 a.m. ET in Dairy Products Prices, a NASS price sheet.
After confirming in April that one plant made errors in its reporting for the weeks ending March 17, 24 and 31, NASS began reviewing all nonfat dry milk price and sales volumes data submitted during those weeks. According to USDA, the plant reported data for some sales that did not meet NASS established rules and shouldn't have been included. As a result, NASS issued revisions on April 13 to the previously published data for the three weeks in March.
To determine whether others in the industry may have misreported data, NASS conducted a special data-validation review of all nonfat dry milk plants in the United States. During the two-month process, NASS reviewed the plants' reporting criteria, verified data the plants reported from April 29, 2006, to April 14, 2007, and ultimately made revisions to data submitted by five companies. These revisions resulted in changes ranging from -0.8 cents to 8.5 cents per pound in the NASS-reported weekly average price of nonfat dry milk.
Using the data revisions, AMS calculated that the initial data used during the past year to set federal minimum milk prices understated the value of farm milk by nearly $50 million, or an average of four cents per hundredweight of milk. However, AMS states in its report that this update will have no impact on processors regulated by federal orders from the price revisions reported by NASS.
"All FMMO (federal order) pools for the period covered by the NASS revisions have been settled, and all revenues have been distributed. The previously announced FMMO minimum prices remain unchanged. There are no milk order provisions that could generate additional revenues for these settled pools," the report states.
The AMS report, "Impacts of NASS Nonfat Dry Milk Price and Sales Volume Revisions on Federal Order Prices," is available online by clicking here.
To read the NASS price revision report, click here.
To read the notice announcing the review, click here.
For more information, contact Bob Yonkers, IDFA chief economist, at email@example.com or 202-220-3511.
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Posted July 2, 2007