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IDFA Supports Three Changes to Price Formulas in Comments to USDA

Sep 24, 2007

IDFA Supports Three Changes to Price Formulas in Comments to USDA

IDFA submitted comments last week to the U.S. Department of Agriculture (USDA), following the next step in the formal rulemaking process that is required for USDA to amend the Class III and Class IV pricing formulas for all Federal Milk Marketing Orders. In its comments, IDFA voices support for proposals that would update make allowances to reflect current cost-of-processing data, adjust the protein price used to establish Class III milk prices and eliminate an upward price adjustment for cheddar cheese in 500-pound barrels.

IDFA's comments echo statements made by Bob Yonkers, IDFA chief economist, and several IDFA member representatives during their testimony on Class III and IV price formulas at USDA's public hearings held earlier this year. (To read the previous News Update story, Yonkers Testifies at USDA Hearing on Price Formulas, click here.)

In the comments, IDFA supports Proposal 1, which recommends updating make allowance formulas with current data, and calls for emergency action "because make allowances provide the sole means by which manufacturers can attempt to cover the cost of manufacturing."

IDFA also supports Proposal 9, which suggests changes to correct the value and volume of whey cream in the current formulas, and Proposal 12, which asks USDA to eliminate the three cents currently added to the cheese barrel price used in the Class III formula. In the comments, IDFA argues that current formulas use incorrect whey cream data and the add-on to cheese barrel prices unfairly "double charges" processors.

The rulemaking process began in June 2006 when USDA issued a request for proposals to consider changes to the Class III and IV price formulas. The department then held a pre-hearing informational meeting in December to discuss the proposals and convened a public hearing in February that was reconvened in April and again in July.

After USDA reviews the post-hearing comments, it will decide whether to issue a recommended decision, followed by a comment period, or a tentative final decision, which would allow the department to implement changes during the open comment period.

All post-hearing comments were due September 14, but no timetable for a decision has been set. According to Yonkers, the Farm Bill version passed by the House of Representatives includes a provision to streamline the federal orders; if this provision is included in the final Farm Bill, it would set deadlines for recommended and final decisions following a federal order hearing.

To read IDFA's comments, click here. For more information, contact Yonkers at or 202-220-3511.

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Posted September 24, 2007

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