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USDA Issues Final Rule Defining Class I Products

Jun 11, 2010

The Agricultural Marketing Service of the U.S. Department of Agriculture today announced its final decision on a new definition for Class I milk under Federal Order regulations. Upon producer approval, the term "fluid milk product" will apply to any milk product, fluid or frozen, containing 6.5 percent or more of nonfat milk solids or 2.25 percent or more of true milk protein. The decision resolved several proposals intended to change USDA's definition of a fluid milk product in response to new products that have been introduced to the marketplace.

The final decision which will be published in Monday's Federal Register, also determines how milk and milk-derived ingredients should be priced under all federal milk marketing orders when they are used in products meeting the definition. It exempts drinkable yogurt products containing at least 20 percent yogurt (by weight), kefir, infant formulas, dietary products (meal replacements) and other products that may contain milk-derived ingredients from products meeting the fluid milk product definition.

Excellent Example of Need for Reform

"This is an excellent example of why we need to simplify and reform our milk pricing system," said Connie Tipton, IDFA president and CEO. "Several years ago, dairy processors began developing new, innovative dairy products in response to consumer demand. It has taken five years for the system to determine how much the government would require processors to pay for the farm milk used to make them. The entire dairy industry will benefit when decisions about product innovation and processing investments are made based on what consumers want when they want it, rather than based on how government regulations decide the costs involved."

As a next step, USDA must hold a producer referendum within the next 30 days in all marketing areas. IDFA expects that it will pass and be adopted, with an implementation date perhaps as early as August 1.

The decision stems from a June 2005 federal order hearing. More details and background are available here.


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