NEWS RELEASE
For Immediate Release

Contact:     Susan Ruland
(202)737-4332

IDFA Sends Letter to USDA Secretary Veneman Urging Change
in Milk Support Price Program

Letter Responds to Proposed Legislation
Imposing Tariffs on MPC Imports

(Washington, D.C. - May 22, 2001) The International Dairy Foods Association (IDFA) sent a letter to U.S. Secretary of Agriculture Ann Veneman yesterday asking her to immediately move to correct the purchase prices tilt favoring butter and powder. The letter was sent in response to proposed legislation recently introduced in both the House and Senate that would impose substantially higher tariffs on imports of milk protein concentrate (MPC), casein and casein derivatives. IDFA suggests in the letter that a better approach is for the Secretary to make a correction in the dairy price support program, which would make it more economically feasible for U.S. dairy processors to produce MPC for dairy and food companies; and would also make domestic nonfat dry milk more competitive.

The letter presents a simple pricing table that shows that if there were a 10-cent reduction in the CCC purchase price for nonfat dry milk, domestically produced nonfat dry milk and imported MPC would be about equal in price, on a price-per pound of protein basis.

"One of the primary reasons that imports of MPC have increased is that for the past two years, the CCC purchase price for nonfat dry milk has been set at a higher level than was appropriate," the letter states. "This has favored the value of milk used to make butter and powder, far out of sync with the marketplace. As a result, domestically produced milk proteins are more costly than imported milk proteins contained in MPC."

The letter lists four other reasons why the U.S. Department of Agriculture (USDA) should move now to correct the tilt:

1. Current high purchase prices for nonfat dry milk are creating serious regional distortions in prices paid to dairy farmers.



2. Maintaining high CCC purchase prices is unnecessarily costing consumers millions of dollars in the form of higher prices. The prices paid for milk used to make beverage milk, ice cream, cottage cheese, yogurt and numerous other dairy products has been unnecessarily boosted as a result of the high CCC purchase prices.



3. Correcting the tilt would save the federal government millions of dollars, and even more so if USDA acts now and sells its large inventory of nonfat dry milk in international markets while the international market is strong.



4. Correcting this problem will help stimulate a viable and potentially very important industry for producing MPCs here in the United States, without the need to import these valuable food ingredients.

"Realigning the purchase price won't just cut down on imports - it will stimulate domestic production of MPC, which has enormous value to the dairy industry as an ingredient in a myriad of food products.... The United States can produce the same products that are currently being imported to satisfy this market demand. The only thing standing in the way is the tilt in USDA's purchase prices," the letter states.

Because milk prices paid to farmers have recovered significantly in the past several months, now is a good time for USDA to act.

"There are many strong reasons to correct this situation today. We urge you to act immediately," the letter concludes.

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IDFA is the Washington, DC-based organization representing the nation's dairy processing and manufacturing industries, and their suppliers. IDFA is composed of three constituent organizations: Milk Industry Foundation (MIF), National Cheese Institute (NCI) and International Ice Cream Association (IICA). Its 600-plus members range from large multinational corporations to single-plant operations, and represent more than 85% of the total volume of milk, cultured products, cheese, and ice cream and frozen desserts produced and marketed in the United States, an estimated $70-billion industry.