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Industry Asks USDA to End NFDM/Livestock Feed Program Due to Violations

The U.S. Department of Agriculture (USDA) should allow the "nonfat dry milk (NFDM) for animal feed" drought assistance program to expire next month as scheduled due to several contract breaches that are resulting in the misuse of the product in the marketplace, according to 24 dairy companies and organizations -- including IDFA -- in a letter last week to USDA. In the letter, the coalition outlined its "grave concerns" about how the drought assistance NFDM "is displacing dry dairy products, reducing the milk price to dairy farmers and jeopardizing dairy exports." In fact, the agency's Office of the Inspector General is already investigating this program for fraud.

In addition to IDFA, the letter co-signers included: American Dairy Products Institute, U.S. Dairy Export Council, American Feed Institute Association, Davisco Foods, Inc., Hilmar Cheese Company, Foremost Farms USA, Glanbia Nutritionals, Alto Dairy Cooperative; and California Dairies, Inc., among others.

The drought assistance program is one of the vehicles USDA utilizes to help reduce its NFDM stocks resulting from purchases through the Dairy Price Support Program. The program's sales agreement between USDA's Commodity Credit Corporation (CCC) and the participating states mandates that the NFDM may only be used for feed foundation livestock herds, and may not be sold or exchanged for human consumption. The contract also states that, while producers may sell or exchange the product to acquire feed containing NFDM for their foundation livestock herd, those firms that barter the NFDM may only sell the product or animal feed made from the NFDM in the 12 program states, as long as it does not displace whey or whey products. The letter outlines three major violations to these mandates that are reportedly taking place within the industry:

  1. NFDM for drought relief is displacing whey and whey products. This is documented by USDA's "Dairy Market News" issue 51 under the comments for the Whey Protein Concentrate Market, "CCC N[F]DM for drought relief is reportedly available as a substitute to WPC 34% at some locations."

  2. Bartered NFDM for drought relief is now being used in feed products including calf milk replacers with approval by state and USDA officials, despite the mandate that the powder can only be used in foundation livestock, goat, sheep and bison herds.

  3. Industry participants report that NFDM for drought relief has surfaced in shipments of dry product blends intended for either human or animal consumption to Mexico and the Philippines.
To read the full letter, click here. (.pdf)

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Posted February 2, 2004