USDA milk-powder auction postponed

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The National Milk Producers Federation (NMPF) successfully prevented the USDA from allowing, through private auction, the sale of nonfat dry milk powder at prices below the level specified in the Farm Bill. USDA, facing legal action brought by NMPF, agreed not to submit any of the product for auction.

NMPF had sought a Temporary Restraining Order Dec. 8 against the USDA to block the agency from allowing The Seam, a private marketing entity, from auctioning off nonfat dry milk this week at prices that are below the congressionally-mandated minimum level.

The USDA and Seam entered into a court-ordered agreement not to hold any milk-powder auctions until NMPF's full complaint and motion can be heard on Jan. 22, 2009. This decision has the same effect as the Temporary Restraining Order originally sought by NMPF.

The Honorable John W. Darrah, U.S. District Judge in Chicago, oversaw the proceedings and sided with NMPF on the issue, requesting USDA to postpone the auction.

“NMPF moved quickly and decisively to defend the integrity of the Farm Bill Provisions, and we are extremely pleased that Judge Darrah recognized the critical nature of NMPF’s request,” said Jerry Kozak, president and CEO of NMPF.

At issue was the Dairy Product Price Support Program provision of the newly adopted 2008 Farm Bill, which stated that USDA cannot sell nonfat dry milk stocks at less than 110 percent of the price at which it purchased the product. Under this rule, USDA is forbidden to sell the milk powder back to the market at less than 88 cents per pound, in order to keep prices from being further driven down. Since the price received by dairy farmers reflects commercial dairy product prices, the auction scheduled by USDA would have resulted in a reduction in dairy producer income. For more details, click here.



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