ADC just made it easy to follow the formula and see the value shift

The American Dairy Coalition has released a new educational visual titled “Where the Value Goes: Make Allowances, Cost Surveys, and Milk Pricing” to help dairy farmers, policymakers, and industry stakeholders understand how make allowances function within federal pricing formulas and why the design of USDA’s future mandatory processing cost survey matters to dairy farmers.

 The one-page graphic was developed to illustrate ADC’s March 30 public comment submitted to the USDA Agricultural Marketing Service in response to its Advance Notice of Proposed Rulemaking (ANPR). It highlights the impact of updated formula assumptions implemented in 2025, showing substantially higher processor margins alongside lower minimum milk values paid to dairy farmers.

“The graphic shows how increased make allowances shifted nearly two decades of modest minimum and mailbox milk price progress from farms to processors virtually overnight,” said Sherry Bunting, Dairy Market Analysis and Policy Advisor for ADC. “Mailbox price data also indicate the promised return of premiums to producers did not broadly materialize after implementation of the higher make allowances.”

The visual also highlights how higher component milk produced on farms today have dramatically increased product yield gains, reducing the amount of milk needed to manufacture a pound of cheddar cheese, for example.

ADC also raises concerns about the design of a mandatory cost survey, cautioning that survey structures should reflect basic cost factors for manufacturing the dairy commodities included in federal pricing formulas. The coalition further urges careful consideration of costs associated with non-price-reported products and exclusion of sustainability programs, ESG reporting, compliance systems, branding, and broader business strategies from survey calculations.

In the ANPR published Feb. 27, USDA AMS stated that comments received would be considered during development of any future proposed rulemaking. The notice further stated: “Should AMS subsequently publish a proposed rule, AMS will address the statutes and Executive Orders applicable to that proposed rule.”

ADC filed two comments during the 30-day ANPR period — a March 17 request for a comment period extension and a detailed March 30 comment presenting dairy farmer concerns, research, and recommendations regarding the proposed mandatory processing cost survey and embedded make allowances.