House Dairy Committee Chairman Presses for Interim Make Allowance Decision

Reacting to the U.S. Department of Agriculture's (USDA) recent decision to delay updates to milk pricing formulas for make allowances, the chairman of the House Agriculture Subcommittee for Dairy urged USDA last week to issue an interim decision while the agency continues it review. Chairman Gil Gutknecht (R-MN) agreed with IDFA and others in the industry, saying the issue needs to be addressed as soon as possible using currently available data.

IDFA commends Chairman Gutknecht for recognizing the importance of accurate make allowances to the health of dairy processors and manufacturing dairy farmer cooperatives, and appreciates his efforts to press USDA for a swift decision.

In a letter to U.S. Secretary of Agriculture Mike Johanns, Gutknecht thanked the secretary for responding to the industry's emergency request to review current make allowances by holding a hearing in January. He stressed the urgent need for updated formulas, noting that while energy and other manufacturing costs continue to escalate for dairy processors, the make allowances have remained unchanged for the past six years.

"It is my belief that if operations at dairy processing facilities are subject to these price formulas, then they should accurately reflect manufacturing costs," Gutknecht wrote.

In the letter, Gutknecht acknowledged USDA's plan to reconvene the January hearing to gather new information that Cornell University is compiling on make allowances. He encouraged USDA to use the data currently available and suggested making additional changes later when the Cornell data becomes available. To read the letter, click here.

IDFA is continuing its significant outreach efforts on this issue with Capitol Hill, federal agencies and the national and trade media. Reports on these efforts will be included in future issues of News Update.

Posted July 10, 2006