USDA to Issue Final Rule on Class III, IV Price Formula

US - More than four years after the interim rule comment period closed, the U.S. Department of Agriculture has announced it will issue this week a final rule amending the Class III and Class IV product price formulas in all federal milk marketing orders.
calendar icon 8 February 2013
clock icon 2 minute read

The decision will finalize the interim partial final rule with no changes to the price formulas that USDA announced in August 2008 and implemented two months later. The 2008 decision amended the make allowances for cheese, butter, nonfat dry milk and dry whey powder.

Specifically, the decision adopted the following make allowances: cheese at $0.2003 per pound, butter at $0.1715 per pound, nonfat dry milk at $0.1678 per pound and dry whey at $0.1991 per pound. The decision also increased the butterfat yield factor in the butterfat price formula to 1.211, up from 1.20.

"The partial part of the rule implemented in October 2008 meant that three proposals were to be addressed in a separate decision," explained Bob Yonkers, IDFA vice president and chief economist. "This rule will terminate any further action on the three proposals that were not addressed."

IDFA had opposed the three proposals, which were seeking to establish a manufacturing cost survey, an energy cost adjustor and a cost add-on.

  1. Proposal 2 sought to update annually the manufacturing allowances using an annual manufacturing cost survey of cheese, whey powder, butter, and nonfat dry milk plants located outside of California
  2. The proposed amendments would have granted authority to USDA's Market Administrator to administer the survey, select the sample plants and collect, audit and assemble cost information.
  3. Proposal 17 sought to incorporate a monthly energy cost adjustment based on monthly changes in the manufacturing price indices for industrial natural gas and industrial electricity as published by the Bureau of Labor Statistics.
  4. Proposal 20 sought to establish cost-of-production add-ons that manufacturers could include in the selling price of their products but would not be included in the determination of USDA's National Agricultural Statistics Service survey prices.

USDA will conduct a referendum of dairy producers on the final rule in the coming month to complete the process.

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