NEWS RELEASE For Immediate Release
Media Contact:	Marti Pupillo 202-220-3535

(Washington, D.C. — July 11, 2006) Top officers from 25 leading dairy companies and cooperatives pressed the U.S. Department of Agriculture (USDA) to rethink immediately its recent decision to delay much needed updates to "make allowances" in a letter delivered yesterday to U.S. Secretary of Agriculture Mike Johanns. Stressing the industry's dire need, the executives pointedly said any further delay could force some U.S. dairy product manufacturers to close their doors, and they pressed the secretary to issue new allowances on an interim basis.

Earlier this month, USDA shocked the dairy industry by announcing plans to reconvene a national public hearing to amend the Class III and Class IV milk price formulas. The International Dairy Foods Association (IDFA) estimates that the current formulas, which use manufacturing cost data from 1997-99, are causing companies in the dairy industry to lose $26 million a month.

"Given the potentially complex and divisive nature of the amendments that may now be proposed, this timetable will not allow for the implementation of new make allowances until well into calendar year 2007," the letter to Johanns states.

Make allowances establish fixed margins available to manufacturers under Federal Order classified pricing formulas to cover the costs of turning raw milk into finished dairy products. Without an update to reflect current manufacturing costs, many cheese, butter and powder plants are forced to operate at a loss, because they don't have the margins to cover the costs necessary to run their operations.

An emergency hearing was held by USDA in January in response to the dairy industry's urgent request for updates to the make allowances and relief from dramatic increases in energy and transportation costs. Updated cost information was provided at the hearing by the California Department of Food and Agriculture and USDA's Rural Business Cooperative Survey, the same sources used to establish the current make allowances in 2000.

After four days of testimony and six months of review, USDA abruptly announced it would delay a decision, saying it needed more time and data, including the results of a yet-to-be completed cost study by Cornell University, before issuing the updates.

"We are well aware that Cornell is in the middle of performing an extensive cost study that may prove useful in the future in establishing make allowances," the executives write in the letter. "We have, in fact, supported the conduct of that study, and many of our plants are participating in it. But current make allowances, and the losses they are causing, cannot be allowed to remain in place while the Cornell study is completed."

The executives are urging USDA to issue updated make allowances on an interim basis, pointing to the agency's history of implementing milk order amendments on an interim basis, most recently for make allowances in January 2001.

"The procedure is, therefore, clearly available, and the need is overwhelming," the letter concludes.

Executives who signed the letter are:

• Erick Boutry, president and chief executive officer, Sorrento Lactalis, Inc.
• Terry Brockman, president and chief operating officer, Saputo Cheese USA Inc.
• Mark Davis, president, Davisco Foods International, Inc.
• John Dilland, general manager, Michigan Milk Producers Association
• Larry Ferguson, president and chief executive officer, Schreiber Foods, Inc.
• John Fridirici, vice president, milk marketing and procurement, Grande Cheese Company
• David E. Fuhrmann, president and chief executive officer, Foremost Farms USA, Cooperative
• Mark Furth, general manager and chief executive officer, Associated Milk Producers, Inc.
• Stephen Gaddis, president, Pacific Cheese Co., Inc.
• Louis P. Gentine, chairman and chief executive officer, Sargento Foods, Inc.
• James B. Green, president and chief executive officer, Kemps, LLC
• Brian Haugh, president and chief operating officer, National Dairy Holdings, LP
• John Jeter, president and chief executive officer, Hilmar Cheese Company
• Mark G. Leddy, co-chief executive officer, Valley Queen Cheese Factory, Inc.
• Tim Omer, president, DCI Cheese Company, Inc.
• Chris Policinski, president and chief executive officer, Land O' Lakes
• Kevin Ponticelli, executive vice president and president, cheese and dairy, Kraft Foods, N.A., Inc.
• Mike Reidy, senior vice president, procurement, logistics and business development, Leprino Foods Company
• Steven Rowe, vice president, legal and public affairs, Darigold, Inc.
• Richard Scheuermann, president and chief executive officer, Alto Dairy Cooperative
• Dr. Richard Stammer, president and chief executive officer - Cabot, Cabot/McCadam
• Gary Vanic, president and chief executive officer, Great Lakes Cheese Co., Inc.
• Robert Wagner, chairman of the board, Trega Foods
• Douglas Wells, chief operating officer, Wells' Dairy, Inc.
• Jeffry O. Williams, president and chief executive officer, Glanbia Foods Inc.

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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 500-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 $90-billion a year industry. IDFA can be found online at www.idfa.org