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Via U.S. Mail and Email to

FMMOhearing@usda.gov

June 20, 2023

Ms. Dana H. Coale

USDA/AMS/Dairy Programs

U.S. Department of Agriculture

STOP-0225 Room 2530

1400 Independence Avenue, S.W.

Washington, D.C. 20250-0225

Re: Modified Petition of the International Dairy Foods Association for a Hearing to Amend

Federal Milk Marketing Order Make Allowances

Dear Deputy Administrator Coale:

By letter dated March 28, 2023, as supplemented by letters dated April 3, 2023, May 8, 2023 and

May 30, 2023, the International Dairy Foods Association (“IDFA”) petitioned the Secretary of

Agriculture to institute a proceeding to amend all current Federal Milk Market Orders (FMMOs), 7

C.F.R. Parts 1000–1135, by updating the current manufacturing cost factors (make allowances),

which were established based on industry cost data from 2005–2006, so that the make allowances

will reflect current manufacturing costs. This petition was in keeping with USDA’s consistent

practice of holding hearings to update make allowances when so requested, which USDA had done

on four prior occasions since product formulas, including make allowances, were first implemented

in 2000.

USDA raised certain points of clarification regarding IDFA’s proposal during the June 16, 2023 PreHearing Information Session. Consistent with the schedule set by the Secretary, IDFA by this letter

is modifying its make allowance proposal, to address the following issues:

1. We have modified the IDFA proposal so that it now amends the existing make allowance

provisions to substitute “AMS” for “NASS” wherever “NASS” appears, in order to reflect that AMS

now conducts the product pricing surveys.

2. We have modified the IDFA proposal to make clear that the "audited surveys" that would

replace IDFA's proposed make allowances (if authorized by Congress), would be paid for by

“additional” funding, not by existing funding, and would extend to all manufacturers of products

used to set Class III and Class IV prices.

3. We have modified the IDFA proposal to add $0.0015 to the make allowances, to reflect

marketing costs that are not reflected in the 2023 Stephenson cost study and the 2022 Schiek cost

study.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. We are confirming that the make allowances as set forth in the IDFA proposal reflect a

simple average of the costs of manufacture as determined by the 2023 Stephenson study and the 2022

Schiek study.

IDFA’s modified proposal is as follows (inclusive of all proposed revisions):

Amend 7 C.F.R. § 1000.50(l), (m), (n), (o), and (q), and add a new subsection 1000.50(r), applicable

to all federal milk marketing orders, to provide (deletions appear as strike-throughs; additions

appear in red font):

§ 1000.50 Class prices, component prices, and advanced pricing factors.

* * * * *

(l) Butterfat price. The butterfat price per pound, rounded to the nearest one-hundredth cent, shall be the

U.S. average NASS AMS AA Butter survey price reported by the Department for the month, less 17.15

cents 22.51 cents effective January 1, 2025, 24.28 cents effective January 1, 2026, 26.07 cents effective

January 1, 2027, and 27.85 cents effective January 1, 2028, with the result multiplied by 1.211.

(m) Nonfat solids price. The nonfat solids price per pound, rounded to the nearest one-hundredth cent,

shall be the U.S. average NASS AMS nonfat dry milk survey price reported by the Department for the

month, less 16.78 cents 21.98 cents effective January 1, 2025, 23.70 cents effective January 1, 2026,

25.44 cents effective January 1, 2027, and 27.16 cents effective January 1, 2028 and multiplying the

result by 0.99.

(n) Protein price. The protein price per pound, rounded to the nearest one-hundredth cent, shall be

computed as follows:

* * * * *

(1) Compute a weighted average of the amounts described in paragraphs (n)(1)(i) and (ii) of this

section:

(i) The U.S. average NASS AMS survey price for 40-lb. block cheese reported by the Department

for the month; and

(ii) The U.S. average NASS AMS survey price for 500-pound barrel cheddar cheese (38 percent

moisture) reported by the Department for the month plus 3 cents;

(2) Subtract 20.03 cents 24.22 cents effective January 1, 2025, 25.61 cents effective January 1, 2026,

27.01 cents effective January 1, 2027, and 28.40 cents effective January 1, 2028 from the price computed

pursuant to paragraph (n)(1) of this section and multiply the result by 1.383;

(3) Add to the amount computed pursuant to paragraph (n)(2) of this section an amount computed as

follows:

(i) Subtract 20.03 cents 24.22 cents effective January 1, 2025, 25.61 cents effective January 1, 2026,

27.01 cents effective January 1, 2027, and 28.40 cents effective January 1, 2028 from the price computed

pursuant to paragraph (n)(1) of this section and multiply the result by 1.572; and

* * * * *

(o) Other solids price. The other solids price per pound, rounded to the nearest one-hundredth cent, shall

be the U.S. average NASS AMS dry whey survey price reported by the Department for the month minus

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19.91 cents 25.82 cents effective January 1, 2025, 27.78 cents effective January 1, 2026, 29.76 cents

effective January 1, 2027, and 31.72 cents effective January 1, 2028, with the result multiplied by 1.03.

* * * * *

(q)(3) An advanced butterfat price per pound rounded to the nearest one-hundredth cent, shall be

calculated by computing a weighted average of the 2 most recent U.S. average NASS AMS AA Butter

survey prices announced before the 24th day of the month, subtracting 17.15 cents 22.51 cents effective

January 1, 2025, 24.28 cents effective January 1, 2026, 26.07 cents effective January 1, 2027, and 27.85

cents effective January 1, 2028 from this average, and multiplying the result by 1.211.

* * * * *

(r). The increase in the amounts subtracted from the AMS survey prices effective January 1 of each year

as set forth in 7 C.F.R. § 1000.50(l), (m), (n), (o), and (q) shall not become effective if prior to January 1

of that year the United States Department of Agriculture has been provided authority and additional

funding to conduct audited dairy product cost studies of all manufacturers of products used to set

Class III and Class IV prices, has promulgated regulations implementing that authority, and adopted

make allowances pursuant thereto.

Respectfully Submitted,

Mike Brown

Chief Economist

International Dairy Foods Association

1250 H Street NW, Suite 900

Washington, DC 20005

202-737-4332

cc: Bruce Summers, Administrator, Agricultural Marketing Service, USDA

Erin Taylor, Director, Order Formulation and Enforcement Division, USDA/AMS/Dairy

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