CDC Urges Dairy Farmers to Oppose Make Allowance Increases

California Dairy Campaign urges dairy farmers to oppose the proposed make allowance increases that are part of the United States Department of Agriculture (USDA) Federal Milk Market Order recommended decision. 

Dairy farmers have until September 13th to submit comments. Dairy farmers can identify themselves by name or submit comments anonymously. 

Now is the time for dairy farmers to speak out in opposition to substantial and unprecedented make allowance increases. 

USDA recommends increasing the amount dairy farmers pay processors to process milk into dairy products. The federal order hearing process is in its end stages, and big increases in the make allowances are likely unless dairy farmers speak out in opposition. USDA is making these recommendations based on voluntary unaudited cost studies that represent a small fraction of the processing plants nationwide. 

The current Class III make allowance totals $3.17 per cwt and will increase to over $4 per cwt if USDA’s recommended increases are adopted. The Class IV make allowance totals $2.17 per cwt and will increase to nearly $3 per cwt if USDA’s recommendations are adopted. 

California Dairy Campaign has been actively involved in the USDA Federal Milk Market Order hearing process since it began last year. CDC strongly opposed any increase in the make allowances during its testimony before USDA last summer in Carmel, IN.

CDC proposed adding mozzarella to the Class III milk price formula so that dairy farmers’ milk checks include the higher value, yields, and volumes of mozzarella, the largest and growing segment of today’s cheese market. 

Below, please find an example comment, and feel free to include as much or as little of it as you see fit. The more you can personalize your comments, the greater the impact they will have. A single well-supported comment can have more impact than 1000 form letters. 

Example Comment to submit to USDA:

I am (name), a farmer from (town) and (background on your dairy operation). I oppose USDA's proposal to increase the federal milk marketing order (FMMO) make allowances because it poses a significant threat to the livelihood of dairy farmers. In the last twenty years, two of every three dairy farmers have gone out of business across the US, mainly due to roller-coaster milk prices. Increasing the make allowances, as recommended by the USDA, doubles down on a failing system that threatens dairy farmers and consumers because fewer and fewer farmers make the food supply less stable and secure. To make matters worse, higher make allowances will make milk processors less responsive to changes in market demand and stifle innovation because their costs are covered. When supply exceeds demand, dairy farmers pay the price in lower milk checks. 

Increasing make allowances takes money out of our milk checks and makes the milk processing sector less responsive to changes in the market because processing costs are covered. Higher make allowances will continue milk price volatility and depress milk prices paid to dairy farmers long-term, pushing many more out of business. This transfer of funds from farmers to processors could accelerate the wave of farm closures, further consolidating the dairy industry and diminishing competition, which is essential for a healthy, innovative market.

These changes risk creating a significant imbalance within the dairy supply chain, favoring processors at the expense of farmers. This imbalance not only threatens the economic stability of dairy farmers but also endangers the sustainability of the entire industry. Without fair and adequate compensation, farmers will have less capacity to invest in new technologies, sustainable practices, and efficiency improvements—investments that are crucial for long-term growth. The ripple effects of these changes could extend beyond individual farmers, impacting rural economies and food security. It is vital that the USDA reconsider these changes and prioritize FMMO changes that improve dairy farmer milk prices and foster financial viability for dairy farmers, who are essential to the nation's food supply and rural economy.

I urge USDA to adopt proposals to increase dairy farmer prices, including proposal #6 to add mozzarella to the Class III milk price. Since the hearing began, mozzarella has been added to the Global Dairy Trade Index and is trading today at $2.18 per pound. Additional types of mozzarella are being added because they are a key milk price indicator. Dairy farmers should be paid based on mozzarella prices, yields, and volumes. I support USDA's recommendation to update the milk composition standards, update the butterfat recovery factor, return to the "higher of" on ALL Class I milk, and update the Class I differentials. I thank you for the opportunity to comment on the USDA FMMO recommended decision.

If you would like more information on how to submit your comments to USDA, please contact 

Executive Director Lynne McBride at 925-639-3603. 

Please find the link to submit comments 

CDC positions on the USDA Recommended Decision:

1) Milk Composition Factors: Update the factors to 3.3 percent true protein, 6.0 percent other solids, and 9.3 percent nonfat solids. SUPPORT

2) Surveyed Commodity Products: Remove 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey and rely solely on the 40-pound block cheddar cheese price to determine the monthly average cheese price used in the formulas. OPPOSE – USDA SHOULD ADD MOZZARELLA AS CALLED FOR IN CDC'S PROPOSAL #6 TO INCLUDE MORE END PRODUCT PRICES IN THE END PRODUCT PRICING FORMULAS.

3) Class III and Class IV Formula Factors: Update the manufacturing allowances to: Cheese: $0.2504; Butter: $0.2257; NFDM: $0.2268; and Dry Whey: $0.2653. OPPOSE – IT EQUATES TO AN AVERAGE OF MORE THAN A 30 PERCENT INCREASE IN THE MAKE ALLOWANCES

Class III Make Allowances:

Cheese .2003 increased to .2504 (+.0501 or 25%)

Dry Whey: .1991 to .2653 (+.0662 or 33%)

Class IV Make Allowances:

Butter .1715 to .2257 (+.0542 or 32%)

Nonfat Dry Milk .1678 to .2268 (+.059 pr 35%)

The Recommended Decision also proposes updating the butterfat recovery factor to 91 percent from the current 90 percent. SUPPORT

4) Base Class I Skim Milk Price: Update the formula as follows: the base Class I skim milk price would be the higher-of the advanced Class III or Class IV skim milk prices for the month. In addition, adopt a rolling monthly Class I extended shelf life (ESL) adjustment that would provide for better price equity for ESL products whose marketing characteristics are distinct from other Class I products. SUPPORT RETURN TO “HIGH OF” ON ALL CLASS I MILK

5) Class I differentials: Update the Class I differential values to reflect the increased cost of servicing the Class I market. The decision specifies the county-specific Class I differentials. SUPPORT

6) Urge USDA to adopt California Dairy Campaign's proposal #6 to add mozzarella to the Class III milk price. Since the hearing began, mozzarella has been added to the Global Dairy Trade Index and is trading today at $2.18 per pound. This week, GDT announced additional types of mozzarella that will be traded. Dairy farmers should be paid based on mozzarella prices, yields, and volumes. SUPPORT

The U.S. Department of Agriculture (USDA) Recommended Decision includes across-the-board make allowance or manufacturing cost allowance increases. The make allowance is the amount that dairy producers pay milk handlers to process milk into dairy products. The 332-page decision includes changes to the formulas to increase the make allowances: 

· Increasing the Class I Make Allowance by 82 cents.

· Increasing the Class II Make Allowance by 74 cents.

· Increasing the Class III Make Allowance by 89 cents.

· Increasing the Class IV Make Allowance by 74 cents.

If the make allowances are increased as proposed by USDA, the Class III cheese make allowance will exceed $4 per cwt, and the Class IV Butter/ NFDM make allowance will reach nearly $3 per cwt. Almost 80 percent of all milk produced in California goes into Class II, III, or IV, so the impact of these significant make allowance increases is greatest here. The USDA economic analysis includes a chart (below) that shows California milk prices would have decreased by 20 cents if the recommended decision had been in effect from 2019 to 2023.

Until now, federal order make allowances have never increased by more than 35 cents per cwt at a time. The increases proposed by USDA and supported by processors raise make allowances by more than twice that much. USDA proposes increasing the make allowances based on voluntary unaudited processor cost surveys. The most recent and "comprehensive" voluntary cost survey included just 17% of all plants across the county, yet USDA plans to move ahead with hefty make allowance increases.