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Hearing Testimony Looks At How Much To Raise Make Allowances

Testimony at USDA’s federal milk marketing order (FMMO) hearing continued here last Friday and all this week on three proposals to increase make allowances in all FMMOs.

Earlier last week, Peter Vitaliano, vice president, economic policy and market research, at the National Milk Producers Federation (NMPF), testified in support of Proposal 7, submitted by NMPF, which would increase make allowances as follows: butterfat, from 17.15 to 21.0 cents per pound of butter; nonfat solids, from 16.78 to 21.0 cents per pound of nonfat dry milk; protein, from 20.03 to 24.0 cents per pound of Cheddar cheese; and other solids, from 19.91 to 23.0 cents per pound of dry whey.

Monty Schilter, senior vice president of Northwest Dairy Association (NDA, also known as Darigold), testified that NDA/Darigold supports NMPF’s proposal “as they are directionally correct with increased cost to operation of our manufacturing and balancing plants.

“We support the call to immediate action and also support the need for a formal, mandatory and audited regular update to the make allowances to stay in line with industry trends,” Schilter stated. “However, we do not support a significant change in year one as it would have devastating impacts to our producers.”

Mike John, executive vice president of milk marketing and ingredient sales for Maryland and Virginia Milk Producers Cooperative (MDVA), said MDVA “fully supports” the increases in the make allowances for butter and nonfat dry milk as outlined in Proposal 7. And MDVA supports NMPF’s phased implementation for make allowance increases.

Also, MDVA “fully supports” NMPF’s proposal that USDA be given the authority to conduct mandatory cost studies giving the industry more timely and accurate cost conversion information.

Cricket Jacquier, a third-generation dairy farmer and chair of the board for Agri-Mark, supports NMPF’s proposal to increase make allowances.

“As a cooperative owner, and board chair, I know all too well that inaccurate make allowances are significantly and negatively impacting the cooperative business that I and my fellow farmer-owners have worked hard building for over a century,” Jacquier said.

Today’s “inadequate make allowances have created a reality in which some farmers are already receiving reduced pay prices compared to their neighbors,” Jacquier continued. It is “imperative that we address make allowances and address them now.”

Catherine de Ronde, vice president of economics and legislative affairs for Agri-Mark, testified in support of NMPF’s proposal to increase make allowances.

“Increased costs of manufacturing must be addressed through FMMO make allowances now and often in the future to correct for cost discrepancies and maintain orderly markets,” de Ronde testified. Agri-Mark also supports NMPF’s legislative efforts to provide USDA with the authority to conduct mandatory and auditable costs of processing surveys every two years.

“Agri-Mark acknowledges, as does NMPF, that from a pure manufacturing perspective, the proposed make allowances are not adequate and will not cover the full increase in costs of processing Agri-Mark and many other Class III and Class IV manufacturers have incurred since 2008,” de Ronde said. “Agri-Mark views Proposal 7 as the first step in the right direction, providing some financial relief to manufacturers, while ensuring a reasonable producer impact.”

Paul Bauer, CEO and general manager of the Ellsworth Cooperative Creamery (ECC), noted that Ellsworth has the “unique position” of supplying information to USDA’s National Dairy Products Sales Report (NDPSR) on two products, barrel cheese and sweet whey powder.

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