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Federal Court Affirms USDA's Decision to Increase Make Allowances

Jul 27, 2009

In a victory for IDFA, the U.S. Court of Appeals for the District of Columbia last Friday upheld the decision of the U.S. Department of Agriculture to increase the Class III and Class IV make allowances. IDFA had intervened in the original lawsuit, had argued in favor of the USDA's decision on appeal, and assisted in crafting the winning argument.

The lawsuit, filed by a group of dairy cooperatives, challenged the USDA tentative partial final decision, issued in July 2008, that amended the Class III and Class IV product price formulas in all federal milk marketing orders. After a three-judge panel denied the producers' request for a preliminary injunction last September, the cooperatives appealed to the U.S. Court of Appeals.

Although the positive outcome is the same, the appellate court took a different route than the district court to reach its conclusion. The lower court had held that farmers are not permitted to bring lawsuits challenging federal milk order amendments and that the 2008 Farm Bill amendments to the Agriculture Marketing Act did not apply to USDA's decision. The appellate court disagreed and allowed the farmers to proceed.

In addition, the appellate court agreed that USDA must consider feed and fuel costs as required by the new law, even though USDA had initiated the rulemaking long before the farm bill had been signed by the president. In the end, however, the differences didn't affect the outcome; the higher court decided that USDA had indeed considered the costs in its decision, and the rule was upheld.

"These make allowances will keep all segments of the industry healthy by maintaining a market for farm milk and ensuring the longer-term viability of dairy product manufacturers," said Bob Yonkers, IDFA vice president and chief economist.

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