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Major Victory in Court Allows Implementation of Make Allowance Changes

Feb 26, 2007

Major Victory in Court Allows Implementation of Make Allowance Changes

A U.S. District Court judge in Ohio last Thursday refused to block implementation of the tentative decision to update make allowances announced by the U.S. Department of Agriculture (USDA) last December. The judge ruled in response to a lawsuit filed January 12 on behalf of Bridgewater Dairy, Arkansas Dairy Cooperative Association, Continental Dairy Products, Lone Star Milk Producers, Select Milk Producers, Bryan Wolfe and Zia Milk Producers seeking to block implementation.

Following the court decision, USDA immediately announced new pricing factors for Class I and Class II milk for March based on formulas using the updated make allowances cited in the tentative decision. The USDA announcement of the February Class III and IV prices, expected on March 1, also will be based on the updated make allowances.

"IDFA is pleased that manufacturers will finally get modest relief with implementation of the much-needed make allowance updates," said Chip Kunde, IDFA senior vice president. "We now urge USDA to revise the make allowances to reflect today's higher manufacturing costs in the final decision and to issue it without delay."

USDA issued the updated make allowances as a tentative decision, which allows the department to implement the decision while continuing to seek industry comments before issuing a final decision. In comments submitted in January, IDFA points out where USDA has misinterpreted testimony and hearing exhibits, and urges the department to increase the make allowances and move quickly to a final rule.

USDA delayed the scheduled February 1 implementation of the tentative decision by one month to allow the district court to consider the lawsuit.

The court refused to grant a preliminary injunction to block implementation of the tentative decision until a full legal hearing could occur. The plaintiffs have several options: they can appeal the refusal to grant the preliminary injunction to the U.S. Circuit Court of Appeals; they can seek to have the case considered at a full legal hearing by the U.S. District Court at a future date; or they may decide not to pursue the matter.

If no further legal activity occurs, USDA will continue to use the updated make allowances to determine all class minimum prices for future federal order price announcements until the department issues a final decision and holds another dairy producer referendum.

In related news, USDA began a formal hearing today to consider proposals to change factors in the product price formulas for all class minimum prices. IDFA and several member companies will submit detailed testimony and, if necessary, cross examine other witnesses during the week-long hearing.

In addition, USDA is still considering the testimony and exhibits presented at a hearing held the week of December 11, 2006, to consider a proposal to change the Class I and Class II price formulas, which would increase prices for Class I and Class II milk by 77 cents per hundredweight.

"IDFA will continue to vigorously oppose any attempts to amend Class I and II price formulas to the detriment of Milk Industry Foundation and International Ice Cream Association members," said Kunde.

For more information, click here.

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Posted February 26, 2007

Dairy Delivers