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IDFA Supports Mandatory Price Reporting Guidelines in Comments to USDA

Sep 10, 2007

IDFA Supports Mandatory Price Reporting Guidelines in Comments to USDA

In comments submitted last week to the U.S. Department of Agriculture (USDA), IDFA voiced its support for the department's new mandatory price reporting and auditing requirements that were issued as an interim rule in June. Because the reported data collected by the National Agricultural Statistics Service (NASS) is used to set milk prices, IDFA agrees that the proposed regulations are necessary to ensure that accurate information is provided for price announcements.

"IDFA is pleased that USDA has enacted the provisions on an interim basis," the comments state. "We urge the department to move to implement a final rule as expeditiously as possible."

Although mandatory price reporting has been required since the Dairy Market Enhancement Act of 2000, USDA had not issued any specific regulations until this year. Inaccurate reporting can result in significant changes to the prices paid for farm milk, by either reducing or raising the prices that processors pay to dairy farmers. This issue was raised in April when USDA realized that one plant unintentionally reported forward-priced nonfat dry milk prices to NASS. (See previous News Update story.)

The proposed Dairy Product Mandatory Reporting Program is designed to provide more timely, accurate and reliable pricing data in formulas that mandate the minimum prices processors must pay for farm milk.

In its comments, IDFA called for several additional steps to streamline the collection process and enhance the reliability of the data. Currently, NASS collects the data through its many state-level offices and then aggregates it nationally, while USDA's Agricultural Marketing Service (AMS) is charged with verifying the information. To speed collection time, IDFA recommends moving all program responsibility to AMS and requiring plants to submit information electronically.

"This would permit the department to analyze and summarize the survey data more quickly and publish the data sooner," the comments state.

Organic dairy products, often sold at a premium above minimum prices, present another price formula challenge. In its comments, IDFA recommends excluding sales of any organic dairy products, because they don't represent regular milk sales and could unfairly skew the pricing formulas.

In addition, IDFA asks USDA to stand firm in excluding transactions in which prices have been set more than 30 days in advance of the sale, because the Dairy Products Prices Survey is designed to reflect the current market price based on the current market environment.

In closing, IDFA urges USDA to address proposals for significant price reporting changes at a federal order hearing, so all industry participants would have the opportunity to discuss the impact that the proposed changes would have on federal order minimum prices in a formal rulemaking setting. To read IDFA's comments, click here.

Several IDFA member companies also submitted comments, including Dean Foods Company, Fonterra (USA) Inc., Leprino Foods Company and Nestle USA, Inc.

To read the interim rule, click here. For more information, contact Bob Yonkers, IDFA chief economist, at or 202-220-3511.

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Posted September 10, 2007

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