USDA published a final rule last week in the Federal Register amending the uniform pricing formulas applicable in all 11 federal milk marketing orders. This comes after an almost 18-month-long process.
The rule includes the following pricing formula amendments:
- Returning the base Class I skim milk price formula to the higher-of the advanced Class III or Class IV skim milk prices for the month. In addition, adoption of a Class I extended shelf life (ESL) adjustment for all ESL products equal to the average-of mover plus a 24-month rolling average adjuster with a 12-month lag.
- Updating the Class III and IV manufacturing allowances for cheese, butter, nonfat dry milk and dry whey, and the butterfat recovery factor.
- Updating the Class I differential values to reflect the increased cost of servicing the Class I market.
- Updating skim milk composition factors, with implementation delayed six months.
- Removing 500 lb. barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey.
This new milk pricing system will take effect June 1, except for the changes made to the skim milk composition factors, which will be implemented December 1.
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