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Dairy Facts 2016

USDA Terminates Proceedings on Class I and II Milk Prices

Jan 05, 2009

The U.S. Department of Agriculture delivered some good news to IDFA members late last month by terminating the proceedings for considering an increase to Class I and II milk prices.

This final decision was based on an emergency hearing held in December 2006 to consider five proposals submitted by National Milk Producers Federation to modify the Class I and II price formulas. NMPF had asked USDA to decouple these formulas from changes in the Class III and IV price formulas, and to increase the Class I price by 77 cents per hundredweight and the Class II price by 3 cents per hundredweight. IDFA and member companies vigorously opposed the proposals.

"Even though we had to wait two years for the right results, it's a victory to get the announcement that USDA has terminated the proceeding for consideration of increasing the Class I and II prices," said Connie Tipton, IDFA president and CEO.

IDFA witnesses at the December 2006 hearing included Vice President and Chief Economist Bob Yonkers and expert witness Dr. Ron Knutson, assisted by outside legal counsel Steve Rosenbaum.

In its final decision, USDA agreed with the IDFA witnesses that "proponents do not provide adequate data to justify" the changes sought and "proponents do not reasonably analyze the actual impacts" of the cost differences that NMPF cited as justification for the changes sought.

IDFA member companies that testified at the hearing in opposition to any changes included Nestle USA and Dreyer's Grand Ice Cream, Prairie Farms, H.P. Hood, Wells Dairy, Kraft Foods, Dean Foods, Galloway Company, Smith Dairy, Queensboro Farm Products and New York State Dairy Foods Association.

Others testifying in opposition included Lamars Dairy, Mid-West Dairymen's Company, Manitowoc Milk Producers Cooperative, Milwaukee Cooperative Milk Producers, Lakeshore Federated Dairy Cooperative, Associated Milk Producers, Inc (AMPI), Citizens Against Government Waste and Dr. Brian Gould of the University of Wisconsin-Madison.


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