Wisconsin Cheese Makers Association, 5117 West Terrace Drive, Suite 402, Madison, WI 53718

Phone (608) 286-1001 | Website www.wischeesemakers.org

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 Wisconsin Cheese Makers Association for a Hearing to 

Amend Federal Milk Marketing Order Make Allowances

Dear Deputy Administrator Coale:

In its March 28, 2023 Petition, as supplemented by letter dated April 14, 2023, the Wisconsin 

Cheese Makers Association (“WCMA”) requested that USDA hold a hearing to amend all 

make allowances in the Federal Milk Marketing Order (“FMMO”) program administered by 

Dairy Programs. We pointed out that accurate and up-to-date make allowances are absolutely 

critical to a properly functioning FMMO program, given that for Class III (cheese) and Class 

IV (butter and nonfat dry milk) products, a manufacturer is legally required by the FMMO to 

pay the farmers supplying it milk the money the manufacturer receives from selling its finished 

products to customers (as determined by monthly audited surveys of actual finished product 

prices for the core Class III and IV products), minus the cost incurred in making those products, 

as set forth in the FMMO regulations (the “make allowance”). 

Thus, it is critical that make allowances reflect the accurate, current cost of making these 

products. Yet the current make allowances were set in 2007 and 2008 based upon 2005 and 

2006 cost data. Actual manufacturing and other costs considered in make allowances have 

risen dramatically during the past 16 years, since make allowances were last revised. FMMO 

provisions have effectively stopped manufacturers from covering these higher costs through 

make allowances. 

We pointed out that this is a major problem for dairy product manufacturers like the plant 

operator members of WCMA, where the current make allowances are insufficient to cover 

plants’ costs. These everyday losses and significant cost increases are impossible to sustain. 

Farmer-owned cooperatives in this region are routinely returning dairy farmer payments with 

significant deductions from FMMO uniform minimum prices. Proprietary members of 

WCMA are absorbing losses, attempting to sell specialty cheeses at prices designed to mitigate 

losses, and/or otherwise failing to invest in plants and facilities. This is not sustainable for the 

plants, nor for dairy farmers who depend on these plants as outlets for their raw milk. 
WCMA Letter to Ms. Dana Coale

Page 2

Wisconsin Cheese Makers Association, 5117 West Terrace Drive, Suite 402, Madison, WI 53718

Phone (608) 286-1001 | Website www.wischeesemakers.org

WCMA’s proposal asked that USDA take the requisite “regulatory action” and amend the 

manufacturing allowances for Class III and Class IV product formulas, as enumerated in 7 

C.F.R. § 1000.50, in order to reflect the substantial increase in plant manufacturing costs since 

make allowances were last revised in 2008. WCMA indicated that the amendment should be 

based on record evidence that WCMA anticipates will include a new cost study that Dr. 

Stephenson was undertaking, and a study by Dr. William Schiek. 

By letter dated April 28, 2023, you indicated that USDA needed additional information 

regarding the specific make allowance values that WCMA is requesting that the Secretary 

consider for adoption. WCMA responded by letter dated May 8, 2023, stating that WCMA 

would comply with your request fully. We explained our understanding that Dr. Stephenson 

would soon complete his updated cost study, and that with that information in hand, WCMA 

would have the data sets necessary to provide the requested “specific make allowance values” 

that WCMA is asking the Secretary to consider for adoption. 

Dr. Stephenson has now completed that study. The 2023 Stephenson survey is especially 

robust, relying upon cost data from 18 cheese plants, 9 dry whey plants, 15 NFDM plants and 

13 butter plants. Dr. Stephenson’s determination of the cost of manufacture are comparable to 

the 2022 cost study by Dr. Schiek, which projected 2022 costs based upon California 

Department of Food and Agriculture audited costs surveys performed in 2016 and the changes 

in relevant cost factors since that time.

On May 30, 2023, based on these data sets from Dr. Stephenson and Dr. Schiek, WCMA asked

the Secretary to consider for adoption make allowances equal to the average of the costs of 

manufacture as determined by the 2023 Stephenson survey and the 2022 Schiek survey.

During the June 16, 2023, Pre-hearing Information Session, USDA raised certain points of 

clarification regarding WCMA’s proposed language changes for federal order milk pricing, 

Consistent with the schedule set by the Secretary, WCMA, by this letter, is modifying its make 

allowance proposal, to address the following issues:

1. We have modified the WCMA 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 WCMA proposal to make clear that the "audited surveys" that would 

replace WCMA'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 WCMA 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 WCMA proposal reflect a 

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

the 2022 Schiek study. 

WCMA’s modified proposal is as follows (inclusive of all proposed revisions): 
WCMA Letter to Ms. Dana Coale

Page 3 

Wisconsin Cheese Makers Association, 5117 West Terrace Drive, Suite 402, Madison, WI 53718 

Phone (608) 286-1001 | Website www.wischeesemakers.org

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 strikethroughs; 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 
WCMA Letter to Ms. Dana Coale

Page 4 

Wisconsin Cheese Makers Association, 5117 West Terrace Drive, Suite 402, Madison, WI 53718 

Phone (608) 286-1001 | Website www.wischeesemakers.org

* * * * * 

(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 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,

John Umhoefer, Executive Director 

Wisconsin Cheese Makers Association 

cc: Mr. Bruce Summers, Administrator, AMS/USDA 

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