NCI Asks USDA for Immediate Attention on Updating Cheese Make Allowances
On November 10, the National Cheese Institute (NCI) submitted a petition asking the U.S. Department of Agriculture (USDA) to update, on an expedited basis, the make allowances used in Federal Milk Marketing Orders (FMMO) pricing formulas. NCI is asking for this action to "relieve the economic hardships on cheese manufacturers due to the dramatically higher costs of manufacturing cheese" since USDA last established make allowances in May 2000, using cost data from 1998-1999."Actual cheese plant manufacturing and related costs have risen significantly in the last six years," notes IDFA Chief Economist Bob Yonkers, PhD, in the petition. "Without any mechanism to adjust the make allowance in response to changes in industry costs, manufacturers are trapped into either losing money on every pound of product produced or stopping production entirely."
The petition asks USDA to update the formulas by using the most recent data from the same sources used previously, namely an audit done by the California Department of Food and Agriculture (CDFA) and a survey from USDA's Rural Business Cooperative Service (RBCS). Both data sets are expected to have updated figures available next month. NCI is not proposing a change in the methodology used to set minimum prices or in the formulas themselves.
NCI is asking for USDA to take action on an expedited basis due to the intense pressure that higher energy costs and other input factors are currently placing on cheese manufacturers. In the petition, the association outlines some of the additional costs — including higher electric power, natural gas, petroleum products and employee costs — that are weighing upon the cheese industry under the fixed FMMO pricing that uses outdated data.
"NCI's proposal is very straightforward and can be accommodated through a very short hearing," Yonkers states in the petition. "The proposed method for determining make allowances is identical to that supported by most dairy producer groups during the May 2000 hearing. NCI urges that USDA hold a hearing as soon as the updated CDFA and RBCS data is available and move expeditiously to a decision."
To read NCI's full petition, click here. (.pdf) For more information, contact Bob Yonkers at byonkers@idfa.org, 202/220-3511.
Posted November 14, 2005