[Federal Register Volume 64, Number 63 (Friday, April 2, 1999)]
[Proposed Rules]
[Pages 16026-16296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6547]
[[Page 16025]]
_______________________________________________________________________
Part II
Department of Agriculture
_______________________________________________________________________
Agricultural Marketing Service
_______________________________________________________________________
7 CFR Part 1000, et al.
Milk in the New England and Other Marketing Areas; Decision on Proposed
Amendments to Marketing Agreements and to Orders; Proposed Rule
Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed
Rules
[[Page 16026]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 1000, 1001, 1002, 1004, 1005, 1006, 1007, 1012, 1013,
1030, 1032, 1033, 1036, 1040, 1044, 1046, 1049, 1050, 1064, 1065,
1068, 1076, 1079, 1106, 1124, 1126, 1131, 1134, 1135, 1137, 1138
and 1139
[DA-97-12]
Milk in the New England and Other Marketing Areas; Decision on
Proposed Amendments to Marketing Agreements and to Orders
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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7 CFR Part Marketing area
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1000............................. General Provisions of Federal Milk Marketing Orders.
1001............................. New England.
1002............................. New York-New Jersey.
1004............................. Middle Atlantic.
1005............................. Carolina.
1006............................. Upper Florida.
1007............................. Southeast.
1012............................. Tampa Bay.
1013............................. Southeastern Florida.
1030............................. Chicago Regional.
1032............................. Southern Illinois-Eastern Missouri.
1033............................. Ohio Valley.
1036............................. Eastern Ohio-Western Pennsylvania.
1040............................. Southern Michigan.
1044............................. Michigan Upper Peninsula.
1046............................. Louisville-Lexington-Evansville.
1049............................. Indiana.
1050............................. Central Illinois.
1064............................. Greater Kansas City.
1065............................. Nebraska-Western Iowa.
1068............................. Upper Midwest.
1076............................. Eastern South Dakota.
1079............................. Iowa.
1106............................. Southwest Plains.
1124............................. Pacific Northwest.
1126............................. Texas.
1131............................. Central Arizona.
1134............................. Western Colorado.
1135............................. Southwestern Idaho-Eastern Oregon.
1137............................. Eastern Colorado.
1138............................. New Mexico-West Texas.
1139............................. Great Basin.
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SUMMARY: This final decision consolidates the current 31 Federal milk
marketing orders into 11 orders. This consolidation complies with the
1996 Farm Bill which mandates that the current Federal milk orders be
consolidated into between 10 to 14 orders. This decision also conforms
to the Omnibus Consolidated and Emergency Supplemental Appropriations
Bill, which requires that this decision be issued between February 1
and April 4, 1999, and extends the time for implementing Federal milk
order reform amendments to October 1, 1999. This decision sets forth a
replacement for the Class I price structure and replaces the basic
formula price with a multiple component pricing system. This decision
also establishes a new Class IV which would include milk used to
produce nonfat dry milk, butter, and other dry milk powders;
reclassifies eggnog; and addresses other minor classification changes.
Part 1000 is expanded to include sections that are identical to all of
the consolidated orders to assist in simplifying and streamlining the
orders.
This decision does not provide for conducting referendums of
producers to determine if they approve of the issuance of the
consolidated orders.
DATES: A notice to conduct a referendum on each of the consolidated
orders will be published separately at a future date.
FOR FURTHER INFORMATION CONTACT: John F. Borovies, Branch Chief, USDA/
AMS/Dairy Programs, Order Formulation Branch, Room 2971, South
Building, PO Box 96456, Washington, DC 20090-6456, (202) 720-6274, e-
mail address John__F__Borovies@usda.gov (after
[[Page 16027]]
April 19, 1999, the e-mail address will change to
John.Borovies@usda.gov).
For specific information on the Final Regulatory Impact Analysis
and the Civil Rights Impact Analysis contact: John R. Mengel, Chief
Economist, USDA/AMS/Dairy Programs, Office of Chief Economist, Room
2753, South Building, PO Box 96456, Washington, DC 20090-6456, (202)
720-4664, e-mail address John__R__Mengel@usda.gov (after April 19,
1999, the e-mail address will change to John.Mengel@usda.gov).
SUPPLEMENTARY INFORMATION:
Major changes from the proposed rule issued on January 21, 1998,
are as follows:
1. Consolidation of Marketing Areas
(a) The Western New York State order was removed from the proposed
Northeast marketing area.
(b) Six currently-unregulated counties were removed from the
consolidated Central marketing area.
(c) The current Western Colorado order was moved from the
consolidated Western order to the consolidated Central marketing area
along with 7 currently-unregulated Colorado counties.
2. Basic Formula Price Replacement
(a) The proposed Class III and Class IV pricing formulas are
revised to adjust for product yields and make allowances that result in
lowering the Class III and IV prices.
(b) Barrel cheese prices (NASS survey) are included in the Class
III price formula.
(c) The basis for measuring the protein content in milk is changed
from a test for total nitrogen to a test for true protein.
(d) Advance pricing for Class I will continue to be provided, but
with a shorter time period (7 days vs. 25 days) prior to the effective
month. The proposed rule had suggested a 6-month declining average
mover.
(e) Provides for advance pricing for skim milk in Class II uses in
the same manner as for Class I.
3. Class I Price Structure
Adopts a Class I price structure that uses the generally higher
differential levels as proposed in Option 1A while retaining the
pricing surface of the Department's preferred option.
4. Classification
(a) Cream cheese is moved from Class II to Class III.
(b) Shrinkage calculations are revised.
Table of Contents
I. Prior documents
II. Legislative and Background Requirements
Legislative Requirements
Background
Actions Completed During Developmental Phase
Actions Completed During Rulemaking Phase
Public Interaction and Input
Executive Order 12988
Executive Order 12866
Civil Rights Analysis Executive Summary
The Regulatory Flexibility Act and the Effects on Small
Businesses
Paperwork Reduction Act of 1995
Request for Public Input on Analyses
Preliminary Statement
III. Discussion of Material Issues and Proposed Amendments to the
Orders
Consolidation of marketing areas
Basic formula price replacement and other class price issues
Class I pricing structure
Classification of milk and related issues
Provisions applicable to all orders
Regional Issues:
Northeast Region
Southeast Region
Midwest Region
Western Region
Miscellaneous and Administrative
Consolidation of the marketing service, administrative expense,
and producer-settlement funds
Consolidation of the transportation credit balancing funds
General findings
IV. Order Language
General provisions
Northeast order provisions
Appalachian order provisions
Florida order provisions
Southeast order provisions
Upper Midwest order provisions
Central order provisions
Mideast order provisions
Pacific Northwest order provisions
Southwest order provisions
Arizona-Las Vegas order provisions
Western order provisions
V. Appendix
A: Summary of Preliminary Suggested Order Consolidation Report
B: Summary of Pricing Options
C: Summary of Classification Report
D: Summary of Identical Provisions Report
E: Summary of Basic Formula Price Report
F: Summary of Revised Preliminary Suggested Order Consolidation
Report
I. Prior Documents
Prior documents in this proceeding include:
Proposed Rule: Issued January 21, 1998; published January 30, 1998
(63 FR 4802).
Correction: Issued February 19, 1998; published February 25, 1998
(63 FR 9686).
Extension of Time: Issued March 10, 1998; published March 13, 1998
(63 FR 12417).
II. Legislative and Background Requirements
Legislative Requirements
Section 143 of the Federal Agriculture Improvement and Reform Act
of 1996 (Farm Bill), 7 USC 7253, required that by April 4,
1999,1 the current Federal milk marketing orders issued
under the Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674), be consolidated into between 10 to 14 orders
2. The Secretary of Agriculture (Secretary) is also directed
to designate the State of California as a Federal milk order if
California dairy producers petition for and approve such an order. In
addition, the Farm Bill provided that the Secretary may address related
issues such as the use of utilization rates and multiple basing points
for the pricing of fluid milk and the use of uniform multiple component
pricing when developing one or more basic prices for manufacturing
milk.3
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\1\ Section 143(b)(2) requires that a proposed rule be published
by April 4, 1998, and Section 143(b)(3) provides that ``in the event
that the Secretary is enjoined or otherwise restrained by a court
order from publishing or implementing the consolidation and related
reforms under subsection (a), the length of time for which that
injunction or other restraining order is effective shall be added to
the time limitations specified in paragraph (2) thereby extending
those time limitations by a period of time equal to the period of
time for which the injunction or other restraining order is
effective.''
\2\ Since this proceeding was initiated on May 2, 1996, the
Black Hills, South Dakota and the Tennessee Valley orders have been
terminated. Effective October 1, 1996, the operating provisions of
the Black Hills order were terminated (61 FR 47038), and the
remaining administrative provisions were terminated effective
December 31, 1996 (61 FR 67927). Effective October 1, 1997, the
operating provisions of the Tennessee Valley order were terminated
(62 FR 47923). The remaining administrative provisions of the
Tennessee Valley order will be terminated before this consolidation
process is completed.
\3\ The Omnibus Consolidated and Emergency Supplemental
Appropriations Bill, passed in October 1998, extended the time frame
for implementing Federal milk order reform amendments from April 4,
1999, to October 1, 1999. The extension specifies that the final
decision, defined as the final rule for purposes of this
legislation, will be issued between February 1 and April 4, 1999,
with the new amendments becoming effective on October 1, 1999. The
legislation also provides that California has from the date of
issuance of the final decision until September 30, 1999, to become a
separate Federal milk marketing order.
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Besides designating a date for completion of the required
consolidation, the Farm Bill further required that no later than April
1, 1997, the Secretary shall submit a report to Congress on the
progress of the Federal order reform process that included: a
description of the progress made toward implementation, a review of the
Federal order system in light of the reforms
[[Page 16028]]
required, and any recommendations considered appropriate for further
improvements and reforms. This report was submitted to Congress on
April 1, 1997.4
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\4\ Copies of the Report to Congress can be obtain- ed from
Dairy Programs at (202) 720-4392 or via the Internet at http://
www.ams.usda.gov/dairy/.
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Finally, the 1996 Farm Bill specified that USDA use informal
rulemaking to implement these reforms.
Background
The authorization of informal rulemaking to achieve the mandated
reforms of the Farm Bill has resulted in a rulemaking process that is
substantially different from the formal rulemaking process required to
promulgate or amend Federal orders. The formal rulemaking process
requires that decisions by USDA be based solely on the evidentiary
record of a public hearing held before an Administrative Law Judge.
Formal rulemaking involves the presentation of sworn testimony, the
cross-examination of witnesses, the filing of briefs, the issuance of a
recommended decision, the filing of exceptions, the issuance of a final
decision that is voted on by affected producers, and upon approval by
producers, the issuance of a final order.
The informal rulemaking process does not require these procedures.
Instead, informal rulemaking provides for the issuance of a proposed
rule by the Agricultural Marketing Service, a period of time for the
filing of comments by interested parties, and the issuance of a final
decision by the Secretary. Referendums will be conducted to determine
approval of the final decision by the requisite number of producers
before the new orders will become effective.
Full participation by interested parties has been essential in the
reform of Federal milk orders. The issues are too important and complex
to be developed without significant input from all facets of the dairy
industry. The experience, knowledge, and expertise of the industry and
public have been integral to the development of the rule. To ensure
that maximum public input into the process was received, USDA developed
a plan of action and projected time line. The plan of action developed
consists of three phases: Developmental, rulemaking, and
implementation.
The first phase of the plan was the developmental phase. The use of
a developmental phase allowed USDA to interact freely with the public
to develop viable proposals that accomplished the Farm Bill mandates,
as well as related reforms. The USDA met with interested parties to
discuss the reform process, assisted in developing ideas or provided
data and analysis on various possibilities, issued program
announcements, and requested public input on all aspects of the Federal
order program. The developmental phase began on April 4, 1996, and
concluded with the issuance of the proposed rule on January 21, 1998
(68 FR 4802).
The second phase of the plan is the rulemaking phase. The
rulemaking phase began with the issuance and publication of the
proposed rule. The proposed rule provided the public 60 days to submit
written comments on the reform proposals to USDA. On March 10, 1998,
(68 FR 12417) the comment period was extended for an additional 30 days
until April 30, 1998. In addition to requests for written comments,
four listening sessions were held to receive verbal comments on the
proposed rule. All comments were reviewed and considered prior to the
issuance of this rule.
The third and final phase of the plan is the implementation phase.
The implementation phase begins after this rule is published in the
Federal Register. This phase consists of informational meetings
conducted by Market Administrator personnel and
referendums.5 The objective of the informational meetings is
to inform producers and handlers about the newly consolidated orders
and explain the projected effects on producers and handlers in the new
marketing order areas. After informational meetings are held, the
referendums will be conducted. Upon approval of the consolidated orders
and related reforms by the required number of producers in each
marketing area, a final order implementing the new orders will be
issued and published in the Federal Register.
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\5\ As previously noted, this is also the time period in which
California can consider becoming a Federal order based on the
Omnibus Consolidated and Emergency Supplemental Appropriations Bill
provisions.
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Although all of the issues regarding Federal milk order reform are
interrelated, USDA established several committees to address specific
issues. The use of committees allowed the reform process to be divided
into more manageable tasks. The committees worked throughout the
developmental and rulemaking phases. The committees established were:
Price Structure, Basic Formula Price, Identical Provisions,
Classification, and Regional. The Regional committee was divided into
four subcommittees: Midwest, Northeast, Southeast, and West. Committee
membership consisted of both field and headquarters Dairy Programs
personnel. The committees were given specific assignments related to
their designated issue and began meeting in May 1996.
In addition to utilizing USDA personnel, partnerships were
established with two university consortia to provide expert analyses on
the issues relating to price structure and basic formula price options.
Dr. Andrew Novakovic of Cornell University led the analysis on price
structure and published a staff paper entitled ``U.S. Dairy Sector
Simulator: A Spatially Disaggregated Model of the U.S. Dairy Industry''
and a research bulletin entitled ``An Economic and Mathematical
Description of the U.S. Dairy Sector Simulator'' 6 Dr.
Ronald Knutson of Texas A&M University led the analysis on basic
formula price options and published three working papers entitled ``An
Economic Evaluation of Basic Formula Price (BFP) Alternatives'', ``The
Modified Product Value and Fresh Milk Base Price Formulas as BFP
Alternatives'', and ``Evaluation of `Final' Four Basic Formula Price
Options''. 7
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\6\ Copies of these reports may be obtained by contacting Ms.
Wendy Barrett, Cornell University, ARME, 348 Warren Hall, Ithaca, NY
14853-7801, (607) 255-1581,
\7\ Copies of these reports may be obtained by contacting Dr.
Ronald Knutson, Agricultural and Food Policy Center, Dept. of Ag.
Economics, Texas A&M University, College Station, TX 77843-2124,
(409) 845-5913.
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Actions Completed During Developmental Phase
USDA maintained frequent contact with the industry regarding the
reform process. To begin, on May 2, 1996, the Agricultural Marketing
Service (AMS) Dairy Division issued a memorandum to interested parties
announcing the planned procedures for implementing the Farm Bill
8. In this memorandum, all interested parties were requested
to submit ideas on reforming Federal milk orders, specifically as to
the consolidation and pricing structure of orders. Input was requested
by July 1, 1996.
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\8\ Copies of this announcement and all subsequent announcements
and reports can be obtained from Dairy Programs at (202) 720-4392,
any Market Administrator office, or via the Internet at http://
www.ams.usda.gov/dairy/.
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On June 24, 1996, USDA issued a press release announcing that a
public forum would be held in Madison, Wisconsin, on July 29, 1996. The
forum would address price discovery techniques for the value of milk
used in
[[Page 16029]]
manufactured dairy products. Thirty-one Senators, Congressmen,
university professors, representatives of processor and producer
organizations, and dairy farmers made presentations at the forum.
On October 24, 1996, AMS Dairy Division issued a memorandum to
interested parties requesting input regarding all aspects of Federal
milk order reform and specifically as to its impact on small
businesses. USDA anticipated that the consolidation of Federal orders
would have an economic impact on handlers and producers affected by the
program, and USDA wanted to ensure that, while accomplishing their
intended purpose, the newly consolidated Federal orders would not
unduly inhibit the ability of small businesses to compete.
On December 3, 1996, AMS Dairy Division issued a memorandum to
interested parties announcing the release of the preliminary report on
Federal milk order consolidation. The report suggested the
consolidation of the then current 32 Federal milk orders into ten
orders. (See Appendix A for report summary.) The memorandum requested
input from all interested parties on the suggested consolidated orders
and on any other aspect of the milk marketing order program by February
10, 1997.
On March 7, 1997, AMS Dairy Division issued a memorandum to
interested parties announcing the release of three reports that
addressed the Class I price structure, the classification of milk, and
the identical provisions contained in a Federal milk order. The price
structure report consisted of a summary report and a technical report
and discussed several options for modifying the Class I price
structure. (See Appendix B for report summary.) The classification
report recommended the reclassification of certain dairy products,
including the removal of Class III-A pricing for nonfat dry milk. (See
Appendix C for report summary.) The identical provisions report
recommended simplifying, modifying, and eliminating unnecessary
differences in Federal order provisions. (See Appendix D for report
summary.) Comments on the contents of these reports, as well as on any
other aspect of the program, were requested from interested parties by
June 1, 1997.
On April 18, 1997, AMS Dairy Division issued a memorandum to
interested parties announcing the release of the preliminary report on
Alternatives to the Basic Formula Price (BFP). The report contained
suggestions, ideas, and initial findings for BFP alternatives. Over
eight categories of options were identified with four options
recommended for further review and discussion. (See Appendix E for
report summary.) The memorandum requested input from all interested
parties on a BFP alternative and on any other aspect of the milk
marketing order program by June 1, 1997.
On May 20, 1997, AMS Dairy Division issued a memorandum to
interested parties announcing the release of a revised preliminary
report on Federal milk order consolidation. The revisions were based on
the input received from interested parties in response to the initial
preliminary report on order consolidation. (See Appendix F for report
summary.) Instead of suggesting 10 consolidated orders as in the first
report, the revised report suggested 11 consolidated orders and
suggested the inclusion of some currently unregulated territory. The
memorandum requested comments from all interested parties on the
suggested consolidated orders and on any other aspect of the milk
marketing order program by June 15, 1997.
To elicit further input on the role of the National Cheese Exchange
price in calculating the basic formula price, on January 29, 1997, the
Secretary issued a press release announcing steps being taken by USDA
to address concerns raised by dairy producers about how milk prices are
calculated. In the press release, the Secretary requested further
comments from interested parties about the use of the National Cheese
Exchange in the determination of the basic formula price, which is the
minimum price that handlers must pay dairy farmers for milk used to
manufacture Class III products (butter and cheese) and the price used
to establish the Class I and Class II prices. These comments were
requested by March 31, 1997, and were useful in analyzing alternatives
to the basic formula price in context of the order reform process.
Actions Completed During Rulemaking Phase
On January 21, 1998, USDA issued a proposed rule (68 FR 4802) that
recommended consolidating the current 31 orders into 11 orders,
proposed two options for consideration as a replacement for the Class I
price structure, and recommended replacing the basic formula price. The
proposed rule also recommended establishing a new Class IV which would
include milk used to produce nonfat dry milk, butter, and other dry
milk powders; recommended reclassifying eggnog and cream cheese,
addressing other minor classification issues; and recommended expanding
part 1000 to include sections that are identical to all of the
consolidated orders. A Preliminary Regulatory Impact Analysis (PRIA)
was also issued that evaluated the costs and benefits of the proposed
rule contents and alternatives. Comments were requested on the proposed
rule and the PRIA on or before March 31, 1998. An informational packet
describing the contents of the proposed rule was sent to interested
parties.
On March 10, 1998, USDA issued a document that extended the time
for filing comments on the proposed rule an additional 30 days, until
April 30, 1998. The document also announced that USDA would conduct
four listening sessions to assist interested parties in submitting
comments to USDA. The listening sessions were held on March 30 in
Atlanta, Georgia; Liverpool, New York; and Dallas, Texas; and on March
31 in Green Bay, Wisconsin.
On April 15, 1998, AMS Dairy Programs announced the issuance of a
report entitled ``Report on the Impacts of the Federal Order Reform
Proposals on Food and Nutrition Service Programs, Participants, and
Administering Institutions'' by the Food and Nutrition Service of USDA.
The report analyzed the potential impacts of the milk order reform
pricing proposals contained in the proposed rule on the Food Stamp
Program, the Women, Infants, and Children Program, and the National
School Lunch and Breakfast Programs.9 The report indicated
that adoption of the proposed rule with either Class I price structure
would have minimal economic impact on these programs. Comments on the
report were requested by April 30, 1998. No comments were received.
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\9\ Copies of this report can be obtained from Dairy Programs at
(202) 720-4392, or via the Internet at http://www.ams.usda.gov/
dairy/.
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Public Interaction and Input
As a result of the developmental phase announcements and forum,
more than 1,600 individual comments were received by USDA. In addition
to the individual comments, more than 2,000 form letters were received.
As a result of the rulemaking phase proposed rule and listening
sessions, nearly 4,500 additional comments were received. A further
breakdown of the rulemaking comments by issue is as follows: 1,273
consolidation; 376 basic formula price; 4,224 Class I price structure;
101 classification; and 79 provisions applicable to all orders.
The proposed rule provided interested parties an opportunity to
file comments until March 31, 1998. This period was later extended to
April 30, 1998. Over 205 comments were
[[Page 16030]]
postmarked after the April 30th deadline. Most of these comments did
not raise any issues that were not previously addressed by comments
timely submitted and considered in this rulemaking.
All comments that were reviewed by USDA personnel were available
for public inspection at USDA. To assist the public in accessing the
comments, USDA contracted to have the comments scanned and published on
compact discs. The use of this technology allowed interested parties
throughout the United States access to the information received by
USDA.
USDA also made all publications and requests for information
available on the Internet. A separate page under the Dairy Programs
section of the AMS Homepage was established to provide information
about the reform process. To assist in transmitting correspondence to
USDA, a special electronic mail account--
[email protected] opened to receive input on Federal
milk order reforms.
USDA personnel met frequently with interested parties from May 1996
through the issuance of the proposed rule to gather information and
ideas on the consolidation and reform of Federal milk orders. During
this time period, USDA personnel addressed over 250 groups comprised of
more than 22,000 individuals on various issues related to Federal order
reform.
USDA personnel also conducted in-person briefings for both the
Senate and House Agricultural Committees on the progress of Federal
milk order reforms. Since May 1996, nine briefings were conducted for
the committees. The briefings advised the committees of the plan of
action for implementing the Farm Bill mandates; explained the
preliminary report on the consolidation of Federal milk orders;
explained the contents of the reports addressing Class I price
structure, classification of milk, identical provisions and basic
formula price; discussed the congressional report; and explained the
proposed rule contents.
To ensure the involvement of all interested parties, particularly
small businesses as defined in the Initial Regulatory Flexibility
Analysis (IRFA), in the process of Federal order reform, three primary
methods of contact were used: direct written notification, publication
of notices through various media forms, and speaking and meeting with
organizations and individuals regarding the issue of Federal order
reforms. In addition, information has been made available to the public
via the Internet. USDA also made one written program announcement
specifically requesting information from small businesses. Comments
were also specifically requested on the IRFA published in the January
21, 1998, proposed rule. More than 1,000 comments were received from
interested parties that specifically stated or documented they were
small businesses. However, this number may not be fully representative
of the number of small businesses that actually submitted comments
because a majority of commenters did not indicate their size. A few
comments specifically addressed the IRFA, Executive Order 12866, and
the paperwork reduction analysis.
All announcements and an information packet summarizing the
proposed rule were mailed to over 20,000 interested parties, State
Governors, State Department of Agriculture Secretaries or
Commissioners, and the national and ten regional Small Business
Administration offices. In addition, most dairy producers under the
orders were notified through regular market service bulletins published
by Market Administrators on a monthly basis. Press releases were issued
by USDA for the May 2, 1996, December 3, 1996, January 29, 1997, March
7, 1997, and May 20, 1997, announcements; for the July 31, 1996, public
forum; for the January 21, 1998, proposed rule; and for the March 30
and 31, 1998, listening sessions and extension of time for submitting
comments.10 These press releases were distributed to
approximately 33 wire services and trade publications and to each State
Department of Agriculture Communications Officer. These methods of
notification helped to ensure that virtually all identified small
businesses were contacted.
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\10\ Copies of these press releases may be obtained from Dairy
Programs at (202) 720-4392, or via the Internet at http://
www.ams.usda.gov/news/newsrel.htm.
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Departmental personnel, both in the field and from Washington,
actively met with interested parties to gather input and to clarify and
refine ideas already submitted. Formal presentations, round table
discussions, and individually scheduled meetings between industry
representatives and Departmental personnel were held. Over 250
organizations and more than 22,000 individuals were reached through
this method. Of these individuals, approximately 13,400 were identified
as small businesses.
Executive Order 12988
This final decision has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have a retroactive
effect. If adopted, this rule will not preempt any state or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with the rule.
The Agricultural Marketing Agreement Act of 1937 (AMAA), as
amended, provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may request modification or
exemption from such order by filing with the Secretary a petition
stating that the order, any provision of the order, or any obligation
imposed in connection with the order is not in accordance with law. A
handler is afforded the opportunity for a hearing on the petition.
After a hearing, the Secretary would rule on the petition. The Act
provides that the district court of the United States in any district
in which the handler is an inhabitant, or has its principal place of
business, has jurisdiction in equity to review the Secretary's ruling
on the petition, provided a bill in equity is filed not later than 20
days after the date of the entry of the ruling.
Executive Order 12866
The Department is issuing the final decision in conformance with
Executive Order 12866. The final decision is determined to be
economically significant for the purposes of Executive Order 12866.
When adopting regulations which are determined to be economically
significant, agencies are required, among other things, to: Assess the
costs and benefits of available regulatory alternatives; base
regulatory decisions on the best reasonably-obtainable technical,
economic, and other information; avoid duplicative regulations; and
tailor regulations to impose the least burden on society consistent
with obtaining regulatory objectives. Therefore, to assist in
fulfilling the objectives of Executive Order 12866, the Department
prepared a final Regulatory Impact Analysis (RIA) for this action.
Information contained in the RIA pertains to the costs and benefits of
the revised regulatory structure and is summarized in the following
analysis. Copies of the RIA can be obtained from Dairy Programs at
(202) 720-4392, any Market Administrator office, or via the Internet at
http://www.ams.usda.gov/dairy.
This regulatory action is in accordance with section 143 of the
[[Page 16031]]
Federal Agriculture Improvement and Reform Act of 1996, 7 U.S.C. 7253,
(the Farm Bill) which required the Secretary of Agriculture (Secretary)
to consolidate the existing 31 Federal milk marketing orders, as
authorized by the AMAA, into between 10 and 14 orders. The Farm Bill
further provided that the Secretary may address related issues such as
the use of utilization rates and multiple basing points for the pricing
of fluid milk and the use of uniform multiple component pricing when
developing one or more basic formula prices for manufacturing milk. The
Secretary was also directed to designate the State of California as a
Federal milk order if California dairy producers petition for and
approve such an order. Finally, the Farm Bill specified that the
Department of Agriculture use informal rulemaking to implement these
reforms.
The Farm Bill required that a proposed rule be published by April
4, 1998, and all reforms of the Federal milk order program be completed
by April 4, 1999. However, the Omnibus Consolidated and Emergency
Supplemental Appropriations Bill, passed in October 1998, extended the
time frame for implementing Federal milk order reform amendments from
April 4, 1999, to October 1, 1999. The extension specified that the
final decision, defined as the final rule for purposes of this
legislation, be issued between February 1 and April 4, 1999, with the
new amendments becoming effective on October 1, 1999. The legislation
also provides that California has from the date of issuance of the
final decision until September 30, 1999, to become a separate Federal
milk marketing order.
The final decision sets forth the consolidation of the current 31
Federal milk orders into 11 orders. The marketing areas are: Northeast,
Mideast, Upper Midwest, Central, Appalachian, Southeast, Florida,
Southwest, Arizona-Las Vegas, Western, and Pacific Northwest. Several
issues related to the consolidation of Federal milk orders are also
addressed. The final decision contains a replacement for the current
Class I price structure and the basic formula price (BFP). The final
decision adopts a Class I price structure that uses the proposed Option
1B price surface as modified to provide for better alignment of Class I
prices and increases the differential level by 40 cents. The current
BFP is replaced with a multiple component pricing system that derives
component values from surveyed prices of manufactured dairy products.
These changes set the stage for increasing efficiencies in supplying
the milk needs of Class I markets and address concerns that the BFP is
no longer a statistically significant measure of the value of
manufacturing milk.
The rule also classifies milk into four classes according to the
products made from such milk. Milk used to produce defined fluid milk
products is classified as Class I milk. Milk used to produce defined
soft manufactured products is classified as Class II milk. Class III
milk is milk used to produce cream cheese and defined hard manufactured
cheeses, and Class IV milk is milk used to produce butter and all milk
powders.
The minimum monthly price for milk classified as Class I is equal
to the Class I differential specified for each marketing order plus the
Class I price mover announced on or before the 23rd day of the month
preceding the month for which the price is being announced. The Class I
price mover is equal to the higher result from the formulas used to
establish Class III and Class IV prices using weighted average prices
for manufactured products as published by the National Agricultural
Statistics Service (NASS) for the most recent two weeks preceding the
23rd of the month. Weekly prices are weighted by sales volumes reported
by NASS.
Finally, this rule expands Part 1000 to include provisions that are
identical within each consolidated order to assist in simplifying the
regulations. These provisions include the definitions of route
disposition, plant, distributing plant, supply plant, nonpool plant,
handler, other source milk, fluid milk product, fluid cream product,
cooperative association, and commercial food processing establishment.
In addition, the milk classification section, pricing provisions, and
most of the provisions relating to payments have been included in the
General Provisions. These changes adhere with the efforts of the
National Performance Review--Regulatory Reform Initiative to simplify,
modify, and eliminate unnecessary repetition of regulations. Unique
regional issues or marketing conditions have been considered and
included in each market's order provisions.
In the summary of the initial RIA for the January 21, 1998,
proposed rule, the economic impact of certain individual sections of
the regulations were discussed that were considered to be economically
significant. Not all of the changes contained in the proposed rule were
considered economically significant. The sections individually
addressed in the January 21st proposed rule were marketing area
consolidation, the BFP, the Class I pricing structure and
classification provisions. Since these are adopted together in the
final decision, this analysis reviews the impacts of adopting all of
the provisions simultaneously on the dairy industry. The analysis also
reviews the impacts of adopting the provisions contained in the January
21st proposed rule with two alternative Class I pricing structures.
The final RIA and the final decision explain in detail the
components adopted in the Federal order regulations and analyzed by the
model. A review of the projected economic impacts of the final decision
and the projected economic impacts of the alternatives that were
considered on dairy producers, processors, consumers, and international
trade follows. The projected impacts are compared to the baseline
projections over a 6-year period from the years of 2000-2005. The
baseline assumes that the Class III price would be the BFP, the Class
II price would be the BFP plus 30 cents, each region's Class I price
would be the BFP plus the current Class I differential and the Class
III-a price would continue. The RIA details the impacts of the final
decision and the other options considered on each current order, the
Federal orders combined, the State of California, and the United
States.
The following table summarizes the impacts of adopting the newly
consolidated orders and their specific provisions, including the Class
I price structure adopted in this final decision. The table also
provides data detailing the projected impacts of the consolidated
orders and the specific provisions utilizing the two alternative Class
I price structures--Location-Specific Differentials (Option 1A) and
Relative-Value Specific Differentials (Option 1B). Since adopting new
Federal milk order provisions affect both the regulated dairy industry
and associated producers, as well as the unregulated and State
regulated dairy industries, a comparison of the impacts both Federally
and U.S.-wide are included where possible.
[[Page 16032]]
Comparisons of Certain Impacts of Consolidated Order Changes Utilizing Three Price Structures on Federal Order
(Fed) and U.S. Data: 6-year Averages (2000-2005)1
----------------------------------------------------------------------------------------------------------------
Change from baseline
-----------------------------------------
Unit Baseline Final Modified Modified
decision option 1B option 1A
----------------------------------------------------------------------------------------------------------------
Class I Diff. (Fed).............. $/cwt................ 2.56 -0.29 -0.69 0.04
Class I price (Fed).............. $/cwt................ 16.22 -0.19 -0.49 0.08
Class I price (U.S.)............. $/cwt................ 16.26 -0.14 -0.38 0.06
All-Milk Price (Fed)............. $/cwt................ 15.23 -0.02 -0.10 0.03
All-Milk Price (U.S.)............ $/cwt................ 14.73 0.00 -0.05 0.04
Milk Marketings (Fed) 2.......... mil lbs.............. 111,182.0 8.3 -130.8 149.0
Milk Marketings (U.S.)........... mil lbs.............. 165,142.2 15.2 -90.9 128.7
Class I use (Fed)................ mil lbs.............. 46,955.7 42.0 106.7 -16.6
Class I use (U.S.)............... mil lbs.............. 58,782.2 37.7 98.8 -14.9
Cash Receipts (Fed) 3............ mil $................ 16,944.5 -2.5 -128.4 104.9
Cash Receipts (U.S.) 4........... mil $................ 24,347.9 3.5 -89.9 77.0
Retail Price (Fed)............... $/gal................ ............ -0.02 -0.04 0.01
Fluid Expend. (Fed).............. mil $................ 7,617.8 -80.2 -215.4 36.4
Fluid Expend. (U.S.)............. mil $................ 9,562.0 -79.1 -209.7 31.3
Manufac. Expend. (Fed)........... mil $................ 9,326.7 77.7 87.0 68.5
Manufac. Expend. (U.S.).......... mil $................ 14,785.9 82.5 119.8 45.7
----------------------------------------------------------------------------------------------------------------
\1\ Includes the effects of the Class II, III, and IV pricing formulas.
\2\ Changes in the Final Decision and Modified Option 1A marketings do not include the additional milk from the
Upper Midwest and Chicago Regional orders that is expected to be pooled under these options.
\3\ Cash receipts do not reflect the termination of the $0.15 per hundredweight transportation credit in the New
York-New Jersey order and exclude the income from additional pooled milk in the consolidated Upper Midwest
order for the Final Decision and Modified Option 1A.
\4\ Cash receipts do not reflect the termination of the $0.15 per hundredweight transportation credit in the New
York-New Jersey order and exclude the income from additional pooled milk in the consolidated Upper Midwest
order for the Final Decision and Modified Option 1A.
As is evidenced by the summary table, the economic impacts
resulting from the adoption of the final decision are minimal when
compared to the total values included in the Federal order system and
in the U.S. This is also true with the alternative options that were
considered. Changes in the all-milk price, milk marketings, Class I
use, and cash receipts all represent less than one percent of the total
baseline projections. Although the total impacts are minimal from a
national perspective, producers, processors, and consumers may
experience a greater impact on a more localized level as is described
in the RIA.
The consolidation of Federal milk orders into 11 orders with the
adopted price structure and all other provision modifications of the
final decision best adheres to the requirements of the Farm Bill while
fulfilling the objectives of the AMAA. The changes adopted in the final
decision enhance the efficiencies of fluid milk markets while
maintaining equity among processors of fluid milk selling in marketing
order areas and among dairy farmers supplying the areas' fluid demands.
The final decision provisions achieve this while having minor overall
impacts on the Federal order system and on the U.S. dairy industry.
Although both of the alternatives considered also have minimal impacts,
the final decision best achieves economic efficiencies, equity, and
program objectives.
Final Decision
A brief review of the impacts that are projected to occur with the
implementation of the final decision are:
Producers. In general, producers in markets located in the western,
southwestern, and northeastern areas of the U.S. may not fare as well
as producers located in other parts of the country, as measured by the
all-milk price and cash receipts from milk marketings. The average all-
milk price for the combined Federal order markets is expected to
average $0.02 per hundredweight lower than the baseline. The average
all-milk price is projected to increase in 13 current markets from
$0.01 to $0.52 per hundredweight and decrease in 19 markets from $0.01
to $0.50. One market is estimated to average unchanged. The average
all-milk price throughout the entire U.S. is projected to remain
unchanged. It is important to recognize that the all-milk price can be
impacted considerably by the change in the Class I utilization due to
consolidation and the necessary alignment of Class I prices within
consolidated areas.
Over the 2000-2005 period, gross cash receipts within the Federal
order system are expected to increase an estimated $222.3 million
primarily because of changes in transportation payments and the pooling
of additional milk under the Federal order system. After adjusting for
these changes, annual cash receipts are projected to decline from the
baseline an average of $2.5 million during the 6-year period. With the
baseline cash receipts averaging $16,944.5 million this represents a
very insignificant reduction. Fifteen markets are projected to have
increases with 18 markets projected to have decreases.
Processors. Since the final decision is expected to have little
effect on where milk is produced, little impact is expected on fluid
milk processors or manufacturers of dairy products. Impacts on fluid
milk processors will likely result from changes in the minimum Class I
and Class II prices that are the handler's obligation under the Federal
order system. Fluid processors in 14 of the current Federal order
markets will experience increased differentials, while processors in 17
of the markets will see decreases. Fluid processors in two markets will
see no change. The estimated weighted average Class I differential for
all current Federal order markets would decrease $0.29 per
hundredweight. The all-market average Federal order Class I price would
decrease $0.19 per hundredweight when compared to the baseline during
the years of 2000-2005. The value of manufacturing milk would be
increased, on average, $82.5 million per year during the six-year
period.
Consumers. Since adoption of the final decision is projected to
result in a slight decrease in the average Class I
[[Page 16033]]
price for the years of 2000-2005, it is expected that average retail
prices will decrease about $0.02 per gallon. On an individual order
basis, the changes in the average retail price per gallon may range
from an increase of $0.06 to a decrease of $0.09. Although consumers
will be spending less on fluid milk products, consumption is projected
to remain relatively unchanged.
International Trade. Adopting the final decision is not expected to
have a significant impact on domestic butter and nonfat dry milk prices
and therefore, little change in international trade is expected.
International trade of raw milk and fluid milk products between the
United States, Mexico, and Canada should be unaffected. However, the
increase in the Class II price could negatively affect the Mexican
market for those products.
Other Alternatives
Although implementation of the consolidated orders with either the
Option 1B or Option 1A price surface would still result in less than a
projected one percent change in overall Federal order and U.S. prices,
cash receipts, and marketings, these two alternatives do not promote
market efficiencies, equity or program objectives as well as the
provisions adopted and would not result in the most preferable
allocation of resources over time. A brief review of the impacts that
were projected to occur with the implementation of these two
alternatives are:
Producers. In general, Option 1B would have reduced producer income
in total and would have reduced the proportion of the Class I value
represented in Federal order pools. Mainly producers located in the
Upper Midwest and Florida areas would have benefitted while producers
throughout the rest of the U.S. would have been negatively impacted.
The all-milk price for all Federal order markets combined was expected
to average $0.10 per hundredweight lower than the baseline during the
years of 2000-2005. The average all-milk price was projected to
increase in 10 current markets from $0.06 to $0.42 per hundredweight
and decrease in 23 markets from $0.01 to $0.61 during this time period.
This would have resulted in changing the gross cash receipts on an
individual order basis during this period ranging from an annual
average decrease of $48.4 million to an increase of $38.5 million.
Overall, gross cash receipts would have averaged $128.4 million less
than currently received.
Under Option 1A the all-milk price for all Federal order markets
combined was expected to average $0.03 per hundredweight higher than
the baseline during the years of 2000-2005. The average all-milk price
was projected to increase in 15 current markets from $0.01 to $0.34 per
hundredweight and decrease in 18 markets from $0.01 to $0.66. These
changes would have resulted in changing the gross cash receipts on an
individual order basis during this period ranging from an annual
average decrease of $10.3 million to an increase of $48.4 million.
Overall, gross cash receipts would have averaged $104.9 million higher
than currently received.
Processors. Since Option 1B would have lowered the Class I
differentials by a weighted average of $0.69 per hundredweight, the
all-market average Class I price charged to fluid handlers would have
declined by $0.49 per hundredweight when compared to the baseline
during the years of 2000-2005. Lower Class I prices would have been
expected to increase sales of fluid milk within the Federal order
system by an annual average of 106.7 million pounds, representing less
than a one percent increase. Similar responses would have occurred
throughout the U.S. Fluid processors would have benefitted from lower
fluid milk prices and increased fluid milk sales.
Option 1A would have increased Class I differentials by a weighted
average of $0.04 per hundredweight resulting in the all-market average
Class I price charged to fluid handlers increasing by $0.08 per
hundredweight when compared to the baseline during the years of 2000-
2005. Since the impact of the increased Class I prices would have
resulted in an insignificant decrease in fluid milk consumption within
the Federal order system, a decrease of 16.6 million pounds, and within
the U.S., a decrease of 14.9 million pounds, this option would have
little expected overall effect on processors or manufacturers of dairy
products.
Consumers. Since adoption of Option 1B was projected to result in a
decrease in the average Class I price for the period 2000-2005, it was
expected that retail prices would decrease an average of $0.04 per
gallon. On an individual order basis the changes in the average retail
price per gallon would have ranged from an increase of $0.03 to a
decrease of $0.12. As a result of the overall price decrease, consumers
would have spent less on fluid milk products while increasing
consumption. The increase in fluid consumption was estimated to be less
than one percent.
Since adoption of Option 1A was projected to result in an increase
in the average Class I price for the period of the years 2000-2005, it
was expected to minimally increase retail prices an average of $0.01
per gallon. On an individual order basis the changes in the average
retail price per gallon would have ranged from an increase of $0.05 to
a decrease of $0.01. As a result of the price increase, consumers would
have spent slightly more on fluid milk products and purchased about the
same amount of milk for fluid use.
International Trade. Options 1B or 1A were not expected to have a
significant impact on domestic butter and nonfat dry milk prices and
therefore, little change in international trade would have resulted.
International trade of raw milk and fluid milk products between the
United States, Mexico, and Canada would have been unaffected.
In response to the final decision, the Food and Nutrition Service
updated the analysis on the impacts of Federal Order reform provisions
on Food and Nutrition Service programs, participants, and administering
institutions. The updated report analyzes the potential impacts of the
milk order reform pricing provisions contained in the final decision on
the Food Stamp Program, the Women, Infants, and Children Program, and
the National School Lunch and Breakfast Programs. The report also
analyzes impacts of adopting either of the alternative Class I price
structure options. The report indicates that adoption of the final
decision provisions, as well as either of the alternatives considered,
will have minimal economic impact on these programs. This report is
included in the final RIA appendix.
The impacts of the provisions adopted in the final decision or
either of the alternatives considered are minimal when compared to the
total marketings and revenue generated in the dairy industry both on a
national and Federal order basis. However, neither of the alternative
options considered would appear to improve market efficiencies or
equity as well as adopting the provisions contained in the final
decision. Based on the analyses completed, the final decision
regulations have been tailored to impose the least burden on society
while meeting regulatory objectives. In doing so, these regulations
will replace current regulations and will not duplicate any current
regulations that may exist.
Civil Rights Impact Analysis Executive Summary
Pursuant to Departmental Regulation (DR) 4300-4, a Civil Rights
Impact Analysis (CRIA) reviews the final
[[Page 16034]]
decision regarding reforms to the Federal Milk Marketing Order program
to identify any provisions within the final decision with actual or
potential adverse effects for minorities, women, and persons with
disabilities.
The CRIA includes descriptions of (1) the purpose of performing a
CRIA; (2) the civil rights policy of the U.S. Department of Agriculture
(USDA); and (3) basics of the Federal milk marketing order program are
provided for background information. The civil rights impact analysis
of Federal Order Reform meets the requirements prescribed by DR 4300-4.
As part of the analysis, the extensive outreach efforts of USDA through
the entire reform process and after the final decision is published are
highlighted. Additionally, statistical detail is provided of the
characteristics of the dairy producer and general populations located
within the current and consolidated marketing areas.
The analysis discloses no potential for affecting dairy farmers
with specific characteristics differently than the general population
of dairy farmers. All producers, regardless of race, national origin,
or disability choosing to deliver milk to a Federal order regulated
handler will receive the minimum blend price.
Copies of the Civil Rights Impact Analysis can be obtained from
Dairy Programs at (202) 720-4392; any Market Administrator office; or
via the Internet at http://www.ams.usda.gov/dairy/.
The Regulatory Flexibility Act and the Effects on Small Businesses
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), the Agricultural Marketing
Service (AMS) has considered the economic impact of the rule on small
entities and has prepared this final regulatory flexibility analysis.
The Regulatory Flexibility Act provides, in summary, that when
preparing such analysis an agency shall address: The need for and
objectives of the rule; summary of the significant issues raised in
public comments, agency assessment of the issues raised, and changes
made to the proposed rule based on these issues; the kind and number of
small entities affected; the recordkeeping, reporting, and other
requirements; and steps taken to minimize the economic impact on small
entities.
This regulatory action is in accordance with section 143 of the
Federal Agriculture Improvement and Reform Act of 1996, 7 U.S.C. 7253,
(the Farm Bill) which required the Secretary of Agriculture (Secretary)
to consolidate the existing 31 Federal milk marketing orders, as
authorized by the Agricultural Marketing Agreement Act of 1937 (AMAA),
into between 10 and 14 orders. The Farm Bill further provided that the
Secretary may address related issues such as the use of utilization
rates and multiple basing points for the pricing of fluid milk and the
use of uniform multiple component pricing when developing one or more
basic prices for manufacturing milk. The Secretary was also directed to
designate the State of California as a Federal milk order if California
dairy producers petition for and approve such an order. Finally, the
Farm Bill specified that the Department of Agriculture use informal
rulemaking to implement these reforms.
The Farm Bill required that a proposed rule be published by April
4, 1998, and all reforms of the Federal milk order program be completed
by April 4, 1999. However, the Omnibus Consolidated and Emergency
Supplemental Appropriations Bill, passed in October 1998, extended the
time frame for implementing Federal milk order reform amendments from
April 4, 1999, to October 1, 1999. The extension specified that the
final decision, defined as the final rule for purposes of this
legislation, be issued between February 1 and April 4, 1999, with the
new amendments becoming effective on October 1, 1999. The legislation
also provides that California has from the date of issuance of the
final decision until September 30, 1999, to become a separate Federal
milk marketing order.
The final decision sets forth the consolidation of the current 31
Federal milk orders into 11 orders. Several issues related to the
consolidation of Federal milk orders are also addressed. The final
decision contains a replacement for the Class I price structure and the
basic formula price. These changes set the stage for increasing
efficiencies in supplying the milk needs of Class I markets and address
concerns that the BFP is no longer a statistically significant measure
of the value of manufacturing milk. The final decision also changes the
classification of milk by (1) establishing Class IV provisions which
would include milk used to produce nonfat dry milk, butter, and other
dry milk powders; (2) reclassifying eggnog; and (3) making other minor
classification changes. These changes recognize the position of butter
and milk powders as residual products that balance the supply of milk
with overall demand, and equalize the cost of competing products.
Finally, this final decision expands part 1000 to include provisions
that are identical within each consolidated order to assist in
simplifying the regulations. These provisions include the definitions
of route disposition, plant, distributing plant, supply plant, nonpool
plant, handler, other source milk, fluid milk product, fluid cream
product, cooperative association, and commercial food processing
establishment. In addition, the milk classification section, pricing
provisions, and some of the provisions relating to payments have been
included in the General Provisions. These changes adhere with the
efforts of the National Performance Review--Regulatory Reform
Initiative to simplify, modify, and eliminate unnecessary repetition of
regulations. Unique regional issues or marketing conditions have been
considered and included in each market's order provisions.
The purpose of the Regulatory Flexibility Act is to fit regulatory
actions to the scale of business subject to the actions in order that
small businesses are not unduly or disproportionately burdened. To
accomplish this purpose, it first is necessary to define a small
business. According to the Small Business Administration's definition
of a ``small business,'' a dairy farm is a ``small business'' if it has
an annual gross revenue of less than $500,000 and a handler is a
``small business'' if it has fewer than 500 employees. For the purposes
of determining which dairy farms are ``small businesses,'' the $500,000
per year criterion was used to establish a production guideline of
326,000 pounds per month. Although this guideline does not factor in
additional monies that may be received by dairy producers, it should be
an inclusive standard for most ``small'' dairy farmers. For purposes of
determining a handler's size, if the plant is part of a larger company
operating multiple plants that collectively exceed the 500-employee
limit, the plant will be considered a large business even if the local
plant has fewer than 500 employees.
Based on 1996 data, USDA identified approximately 80,000 of the
83,000 dairy producers (farmers) that had their milk pooled under a
Federal order as small businesses. Thus, small businesses represent
approximately 96 percent of the producers in the United States. By 1997
the total number of dairy producers that had their milk pooled under a
Federal order had declined to about 79,000. It is estimated that nearly
76,000 are small businesses.
During 1997, 78,590 dairy farmers delivered over 105.2 billion
pounds of milk to handlers regulated under the milk orders. This volume
represents 68 percent of all milk marketed in the U.S.
[[Page 16035]]
and 70 percent of the milk of bottling quality (Grade A) sold in the
country. The value of the milk delivered to Federal milk order handlers
at minimum order blend prices was nearly $14.0 billion. Producer
deliveries of milk used in Class I products (fluid milk products)
totaled 44.9 billion pounds-- 42.7 percent of total Federal order
producer deliveries. More than 200 million Americans reside in Federal
order marketing areas--77 percent of the total U.S. population.
On the processing side, there are over 1,200 individual plants
associated with Federal orders, and of these plants, approximately 700
qualify as ``small businesses'' representing about 55 percent of the
total. During October 1997, there were more than 485 fully regulated
handlers (306 distributing plants of which 111 were small businesses
and nearly 180 supply plants of which about 50 percent were small
businesses), 51 partially regulated handlers of which 28 were small
businesses and 111 producer-handlers of which all were considered small
businesses for purposes of this final RFA, submitting reports under the
Federal milk marketing order program.
The Federal milk order program is designed to set forth the terms
of trade between buyers and sellers of fluid milk. A Federal order
enforces the minimum price that processors (handlers) in a given
marketing area must pay producers for milk according to how it is
utilized. A Federal order further requires that the payments for milk
be pooled and paid to individual dairy producers or cooperative
associations on the basis of a uniform or average price. It is
important to note that a Federal milk order, including the pricing and
all other provisions, only becomes effective after approval, through a
referendum, by dairy producers associated with the order.
Development of this final decision began with the premise that no
additional burdens should be placed on the industry as a result of
Federal order consolidation and reform. As a step in accomplishing the
goal of imposing no additional regulatory burdens, a review of the
current reporting requirements was completed pursuant to the Paperwork
Reduction Act of 1995 (44 U.S.C. Chapter 35). In light of this review,
it was determined that this final decision would have little impact on
reporting, recordkeeping, or other compliance requirements because
these would remain almost identical to the current Federal order
program. No new forms are required; however, some additional reporting
will be necessary in the orders that are adopting multiple component
pricing if the current orders do not contain these provisions. Overall,
there would be slight change in the burdens placed on the dairy
industry.
There are two principal reporting forms for handlers to complete
each month that are needed to administer the Federal milk marketing
orders. The forms are used to establish the quantity of milk used and
received by handlers, the pooling status of the handler, the class-use
of the milk used by the handler, the butterfat content and amounts of
other components of the milk. This information is used to compute the
monthly uniform price paid to producers in each of the markets.
Handlers in the marketing areas adopting multiple component pricing
will be required to complete additional information regarding the
components of the milk and to assure that proper payments are made to
producers. This information is necessary to establish the values of
milk on the basis of milk components and to assure that producers are
paid correctly. Many handlers already collect and report this
information.
This rule does not involve additional information collection that
requires clearance by the Office of Management and Budget beyond the
currently approved information collection. The primary sources of data
used to complete the forms are routinely used in most business
transactions. Forms require only a minimal amount of information which
can be supplied without data processing equipment or a trained
statistical staff. Thus, the information collection and reporting
burden is relatively small. Requiring the same reports for all handlers
does not significantly disadvantage any handler that is smaller than
the industry average.
New territory, or pockets of unregulated territory within and
between current order areas has been included in the consolidated
marketing areas where such expansion will not have the effect of fully
regulating plants that are not now regulated. The addition of these
areas benefits regulated handlers by eliminating the necessity of
reporting sales outside the Federal order marketing area for the
purpose of determining pool qualification. Where such areas can be
added to a consolidated area without having the effect of causing the
regulation of any currently-unregulated handler, they are added.
Handlers not currently fully regulated under Federal orders may
become regulated for two main reasons: first, in the process of
consolidating marketing areas, some handlers who currently are
partially regulated may become fully regulated because their sales in
the combined marketing areas meet the pooling standards of a
consolidated order area. Second, a previously unregulated area in New
York, Vermont, New Hampshire and Massachusetts was added on the basis
of supporting information. As a result, previously unregulated handlers
would become fully regulated. Because of these two reasons, 11
additional plants are expected to become fully regulated under the
program. Of these 11 plants, it is estimated that 5 are small
businesses that would need to comply with the reporting, recordkeeping,
and compliance requirements. The completion of these reports will
require a person knowledgeable about the receipt and utilization of
milk and milk products handled at the plant. This most likely will be a
person already on the payroll of the business such as a bookkeeper,
controller or plant manager. The completion of the necessary reporting,
recordkeeping, and compliance requirements does not require any highly
specialized skills and should not require the addition of personnel to
complete. In fact, much of the information that handlers report to the
market administrator is readily available from normally maintained
business records, and as such, the burden on handlers to complete these
recordkeeping and reporting requirements is minimal. In addition,
assistance in completing forms is readily available from market
administrator offices. A description of the forms and a complete
Paperwork Reduction Act analysis follows this section.
No other burdens are expected to fall upon the dairy industry as a
result of overlapping Federal rules. The regulations contained in this
final decision do not duplicate, overlap or conflict with any existing
Federal rules.
Public Comments
More than 1,000 comments were received from interested parties that
specifically stated or documented they were small businesses. However,
this number may not be fully representative of the number of small
businesses that actually submitted comments because a majority of
commenters did not indicate their size. Of the comments submitted, the
majority were received from dairy producers. The comments from the
producers primarily addressed the issues of Class I pricing and
consolidation.
A few comments were received that specifically addressed the
initial regulatory flexibility analysis (IRFA).
[[Page 16036]]
These comments also addressed the issues of Class I pricing and
consolidation and further addressed the issue of producer-handler
regulation. The Small Business Administration submitted views
specifically addressing exempt plant status and requesting further
analysis of the impact of consolidation on previously unregulated
entities, if possible.
Nearly all of the 1,000 comments addressed Class I pricing and
discussed the impact of Option 1A or Option 1B on dairy producers'
income. A majority of these comments supported Option 1A because it
would maintain the revenue necessary to stay in business. Many
commenters opposing Option 1B argued that the Class I differential
decreases that would occur under this option would result in financial
losses that would force many dairy farmers out of business. Comments
filed by service providers such as feed and implement stores that
claimed to be small businesses commented on the negative impact lower
prices received by dairy producers had on surrounding community
businesses. One commenter supporting Option 1A further stated that in
order to comply with the purposes and objectives of the Regulatory
Flexibility Act, as stated in the IRFA, a Class I price structure that
avoids a burdensome financial impact on dairy farmers must be adopted.
About 200 of the comments received from declared small businesses
addressed consolidation issues. These comments focused on the impact of
including or excluding currently-unregulated areas. A majority of the
comments focused on the Northeast order and the inclusion or exclusion
of the currently-unregulated territories in New York, Pennsylvania, and
Maryland. Comments supporting the inclusion of currently-unregulated
territory discussed the need to include this territory to prevent
inequitable, unfair and disorderly marketing conditions. One supporting
commenter noted that the expansion into unregulated areas would result
in more small businesses becoming subject to Federal order regulation
but the commenter did not believe that it would unduly impact their
ability to compete. Commenters opposing the inclusion of currently-
unregulated Pennsylvania territory argued that producer returns would
decline if handlers in this area were subject to Federal order
regulations.
A few comments were received addressing the extent of regulation
applied to producer-handlers. One commenter, a small business producer-
handler, indicated that the combination of new definitions and
classification of milk provisions will result in its regulation. The
commenter argued that this effect is contrary to the IRFA that stated
``no additional regulatory burdens should be placed on the industry''
and to the intent of the proposed rule that stated the changes were not
intended to fully regulate any producer-handler that is currently
exempt from regulation. Other commenters suggested that producer-
handlers should not be exempt from regulation if their route
disposition of Class I products at wholesale exceeds 500,000 pounds per
month or if they have retail sales other than at a retail establishment
located on the premises of the producer-handler's plant. They argued
that producer-handlers with route disposition above this limit cannot
be considered small businesses and should be subject to regulation.
After reviewing the public comments filed by small businesses in
combination with updated marketing data and information and updated
analyses, changes were made to the provisions contained in the proposed
rule. Not all of the changes requested by small businesses were
feasible but when changes were beneficial to small businesses without
affecting the objectives of the rule, they were incorporated. The
changes made to the proposed rule, based in part on small business
comments, are discussed below by issue.
Consolidation
The proposed rule advanced 11 consolidated Federal milk marketing
orders. The marketing areas of these orders were expanded to include
currently-unregulated areas if this did not result in the regulation of
any currently-unregulated handlers or was not an area in which handlers
are subject to minimum Class I pricing provisions under State
regulations. After reviewing the issue in light of the public comments
and updating the initial analysis based on more recent marketing data,
11 consolidated orders are adopted in the final decision, the same
number as proposed in the January 21, 1998, rule, but with significant
modifications being made to the marketing areas of the proposed
Northeast and Western orders, and minor modifications to the marketing
areas of the proposed Southeast, Mideast, Upper Midwest and Central
orders. The final decision continues to omit currently-unregulated
areas specified in the January 21st proposed rule and also omits
currently-unregulated areas that comprise a significant distribution
area for currently-unregulated handlers, some of which were proposed to
be included in consolidated areas.
Numerous comments were received from small businesses supporting
the inclusion of currently-nonregulated areas in the Northeast order.
However, after considering the requirements of the Farm Bill, the
consolidation of the existing orders does not necessitate expansion of
the consolidated orders into unregulated areas or areas in which
handlers are subject to minimum Class I pricing under State regulation,
especially when the states' Class I prices exceed or equal those that
would be established under Federal milk order regulation. Such
regulation could have the effect of reducing returns to producers
already included under State regulation without significantly affecting
prices paid by handlers who compete with Federally-regulated handlers.
Two changes made to the prior proposed rule as a result of comments
submitted by small businesses related to the exclusion of territory in
the consolidated marketing areas. These changes occurred in the Mideast
and Central orders. The changes ensure that two currently-unregulated
handlers maintain this status.
One change occurred in the Mideast order. Based on a comment
received from Toft Dairy, Incorporated (Toft Dairy), a small business
dairy processor, and Sandusky County Milk Producers Association, a
dairy cooperative representing dairy farmers classified as small
businesses, one partial and three entire counties in north Central Ohio
are excluded from the Mideast marketing area. These areas are currently
unregulated. The proposed rule had suggested including this currently-
unregulated territory in the Mideast marketing area which would have
resulted in the regulation of Toft Dairy. Since the intent of the
consolidating marketing orders was not to cause the regulation of any
currently-unregulated handler, these areas have been removed from the
marketing area of the Mideast order. Toft Dairy will remain an
unregulated processor unless its sales area changes significantly.
Another change occurred in the Central order. Based on a comment
received from Central Dairy, Incorporated (Central Dairy), a small
business dairy processor, six currently-unregulated counties in
northeast Missouri that were proposed to be included in the Central
order are excluded from the marketing area. These areas are currently
unregulated. Central Dairy opposed inclusion of these six counties
because the handler plans to expand its distribution into this
[[Page 16037]]
area. Again, since the intent of consolidating marketing orders was not
to cause the regulation of any currently-unregulated handler these
areas have been removed from the marketing area of the Central order.
Producer-Handlers
Another change to the proposed rule resulting from public comments
involves producer-handlers. Since the intent of the proposed rule was
not to increase regulation to any currently-unregulated producer-
handlers, minor modifications have been made to the classification of
milk provisions applicable to all orders and to the producer-handler
definition in certain individual orders.
A comment submitted by Promised Land Dairy, a producer-handler
defined as a small business, stated that the change in the
classification of milk provisions combined with other order changes
would result in their regulation. Promised Land Dairy argues that the
addition of the words ``or acquired for distribution'' in
Sec. 1000.44(a)(3)(iv) would force milk delivered by a producer-handler
to any store associated with a regulated handler to be sold at no more
than the Class III price because it would be considered a receipt from
a producer-handler. Promised Land Dairy argued that this would force
producer-handlers to become fully regulated. In addition, they argued
that changes made to the Southwest order's producer-handler definition
are not warranted and would further result in the regulation of
Promised Land Dairy.
The changes in the proposed rule were not intended to fully
regulate any producer-handler that is currently exempt from regulation.
Producer-handlers have been exempt from the pricing and pooling
provisions of the orders for several reasons. First, the care and
management of the dairy farm and other resources necessary for own-farm
production and the management and operation of the processing are the
personal enterprise and risk of the owner. Second, typically producer-
handlers are small businesses that operate in a self-sufficient manner.
Finally, producer-handlers do not have an advantage as either producers
or handlers so long as they are responsible for balancing their fluid
milk needs and cannot transfer balancing costs to other market
participants.
While the provisions objected to by Promise Land Dairy would not
directly regulate this entity, they could have a very serious negative
economic impact on its continued operations as a producer-handler.
Because it is still the intent of the Department to allow currently-
unregulated producer-handlers to maintain this status, changes have
been made to Sec. 1000.44(a)(3)(iv) in the general provisions by
removing the words ``or acquired for distribution'' and re-adding these
words to Sec. 1124.44, and changes have been made to the individual
order definitions of producer-handlers. Hence, no changes are made in
the final decision to regulate a producer-handler that is currently
exempt from regulation.
Additional comments submitted by small businesses regarding
producer-handlers advocated implementing a limitation on the exemption
of producer-handlers based on size. The commenters suggested that the
producer-handler exemption should be limited to those whose Class I
route disposition is 500,000 pounds or less, or whose entire Class I
disposition of fluid milk is made as retail sales from a retail
establishment located on the premises of the producer-handler's
processing plant.
Since the intent of the final decision is not to regulate any
currently-unregulated producer-handlers, these requests have been
denied. A review of October 1997 producer-handler route disposition
data indicates that if a 500,000 pound Class I route disposition limit
were implemented, 20 producer-handlers out of 111 producer-handlers,
would become regulated. The Department's reasons for exempting
producer-handlers as discussed previously have not changed and the
intent of this rule is not to make changes to regulate currently-
unregulated producer-handlers regardless of size. Consequently, these
suggested changes have not been included in the final decision.
Class I Price Structure
Another change to the proposed rule, resulting in part from the
public comments received, involves the Class I price structure. In the
proposed rule the Department advanced two main price options--1A and
1B. The Department indicated a preference for Option 1B because it was
more market-oriented. However, the Department recognized in the
proposed rule that Option 1B would result in lower Class I prices and
lower blend prices which would have a significant economic impact on
small businesses, particularly producers. To lessen the impact, three
phase-in program options were proposed to be adopted in conjunction
with Option 1B. The objective of the phase-in programs was to provide
dairy producers and processors the opportunity to adjust marketing
practices to adapt to more market-determined Class I prices.
A majority of the public comments received from small businesses
supported Option 1A. Many of the commenters opposing Option 1B
indicated that the price levels established under this price structure
would be significantly lower than present levels, and as a result,
they--primarily dairy producers--would be forced out of business. Of
the commenters supporting Option 1B, few supported the adoption of a
phase-in program.
Option 1B was preferred by the Department because it would move the
dairy industry into a more market-determined pricing system.
Establishing a national Class I price structure based on results from
the U.S. Dairy Sector Simulator model,11 developed and
administered by Cornell University, may increase market efficiencies in
the dairy industry and lowering the differentials would allow marketing
conditions to have a greater impact on actual Class I prices paid to
producers who service the Class I market. The Department recognized
that this would impact small businesses, both producer and processors,
because less of the actual value of Class I milk would be regulated. In
the proposed rule the Department stated the following:
---------------------------------------------------------------------------
\11\ The U.S. Dairy Sector Simulator model is used to evaluate
the geographic or ``spatial'' value of milk and milk components
across the U.S. under the assumption of globally efficient markets.
A more detailed description of the model is contained in the
decision.
``Smaller, less efficient producers would likely have a greater
responsibility to bargain with processors for over-order premiums
that adequately cover their costs. With processors less likely to
face similar raw product costs, less efficient small processors may
have to negotiate and/or sustain over-order price levels necessary
to attract and maintain a sufficient supply of milk. Large
businesses, both producers and processors, may be in a better
---------------------------------------------------------------------------
competitive position to do this.'' (63 FR 4912)
After reviewing the public comments and updating marketing data and
analyses of Option 1A and Option 1B, the Department adopted a Class I
price structure that provides greater structural efficiencies in the
assembly and shipment of milk and dairy products. The adopted Class I
pricing structure establishes a price surface that utilizes USDSS model
results adjusted for all known plant locations and establishes
differential levels that will result in prices that generate sufficient
revenue to assure an adequate supply of milk. The differential levels
will better maintain equity by raising the level 40 cents per
hundredweight higher than the level proposed in Option 1B. The higher
differential level reduces the likelihood
[[Page 16038]]
of class-price inversions, where the Class I prices are below the
manufacturing milk prices for the month. Updated analysis conducted by
the Interagency Dairy Analysis Team in the final Regulatory Impact
Analysis 12 indicates that increasing the differential level
lessens the economic impact of moving toward more market-orientation on
small businesses.
---------------------------------------------------------------------------
\12\ Copies of the Regulatory Impact Analysis can be obtained
from Dairy Programs at (202) 720-4392, any Market Administrator
office, or via the Internet at http://www.ams.usda.gov/dairy.
---------------------------------------------------------------------------
Exempt Plant Limits
The Office of the Chief Counsel for Advocacy (Office of Advocacy)
of the U.S. Small Business Administration submitted views on the IRFA
pursuant to its authority under the Regulatory Flexibility Act, 5
U.S.C. 601, as amended by the Small Business Regulatory Enforcement
Fairness Act, Pub. L. 104-121, 110 Stat. 866 (1996). With regard to the
impact of the order consolidation and pricing formulae, the Office of
Advocacy stated that these issues should be left to the regulated
community and the Department. The Office of Advocacy did comment that a
system that ``best resembles the free market and imposes the least
burden on the industry would be the best alternative.''
The Office of Advocacy requested an explanation of how the 150,000
pound handler exemption was derived and a determination of whether this
exemption could be increased. They questioned whether a greater number
of small entities would benefit from an increase in the limit. The
Office of Advocacy further requested additional analysis on the impact
of the consolidation of orders on previously unregulated entities, if
possible.
The 150,000 pound handler exemption was determined after reviewing
provisions currently contained in the Federal milk marketing orders.
The 150,000 pound exemption was the highest level currently utilized,
with some orders containing no such exemption. A review of the impact
of this exemption level on distributing plants that were fully
regulated in October 1997 indicated that 15 plants, 14 of which are
small businesses, would become exempt from regulation based on this
provision. In addition, five partially-regulated plants, four of which
are small businesses, would also become exempt. No public comments were
received addressing this issue.
Federal milk order regulations must balance the interests of small
business dairy producers versus small business dairy processors.
Although only processors are regulated under Federal milk orders,
producers receive benefits from the regulations. Thus, whenever dairy
processors are exempt from Federal order regulations they are not
required to pay dairy producers minimum Federal order prices. Exempting
processors from regulation directly impacts dairy producers.
Based on October 1997 data, a review of the impacts of increasing
the exemption levels on processors was completed. As expected,
increasing the level would allow additional processors to become
exempt. In October 1997, 54 handlers had route disposition equal to or
less than 150,000 pounds. An additional 57 handlers had route
disposition between 150,000 to 1,000,000 pounds and 327 handlers had
route disposition greater than 1 million pounds.
Although it may appear that increasing the exemption level would
not result in exempting many additional plants, these plants receive
milk from a significant number of producers, a majority of whom are
small businesses. In addition, contrary to the intent of benefitting
small businesses by increasing the exemption level, more handlers that
are considered large businesses could become exempt from regulation.
Implementing the 150,000 pound level results in two large businesses
currently regulated (one fully-regulated and one partially-regulated)
becoming exempt plants. When more large businesses become exempt it not
only impacts producers, but also impacts other regulated handlers.
In an attempt to maintain a balance between the interests of both
small handlers and small dairy producers, the 150,000 pound exemption
is maintained. Based on previous experience, the exemption of plants of
this size poses no economic threat to the order's regulated handlers.
Minimization of Significant Economic Impacts on Small Businesses
The Department developed the final decision aware of the impacts of
its adoption on small businesses, both dairy producers and processors.
In the final decision, the Department has minimized the significant
economic impacts of these regulations on small entities to the fullest
extent reasonably possible while adhering to the stated objectives. The
Department reviewed the regulatory and financial burdens resulting from
these regulations and determined, to the fullest extent possible, the
impact on small businesses' abilities to compete in the market place.
The Department reviewed the regulations from both the small producer
and small processor perspectives attempting to maintain a balance
between these competing interests.
The Farm Bill mandated that the current 31 orders be consolidated
into between 10 to 14 orders. The Farm Bill also specified that other
issues could be addressed. Eleven orders are adopted in the final
decision as well as a new Class I price structure, a basic formula
price replacement, classification of milk provisions, and the
establishment of identical provisions in all orders where possible. The
objectives of the final decision are (1) to comply with the
requirements of the Farm Bill and (2) to make other changes in order
provisions consistent with the goals and requirements of the AMAA. The
focus of these changes is to enhance the efficiencies of fluid milk
markets while maintaining equity among processors of fluid milk selling
in marketing order areas and among dairy producers supplying the areas'
fluid demands.
Federal milk order regulations do not disparately apply to small
and large businesses. If a handler is regulated under a Federal milk
order, the provisions of that order apply the same to all handlers
regardless of size. Likewise, if a producer's milk is associated with a
Federal order pool, the same pricing and payment provisions will be
utilized for all producers regardless of size. This final decision
addresses several issues and adopts provisions that will continue to
apply equally to all businesses, both large and small. The provisions
adopted herein attempt to reduce the economic impact of Federal milk
order regulations on small businesses to the most reasonable extent
possible.
After reviewing submitted comments and updating marketing data and
analyses, changes were made to the provisions contained in the proposed
rule. The IRFA discussed the projected impacts of the primary
components of the proposed rule on small entities. These included
consolidation, basic formula price, Class I price structure, and
classification. Because Federal order provisions are interrelated, it
was difficult to determine the overall impact of each component on
small entities because the proposed rule contained two pricing options.
To the fullest extent possible, such estimations were set forth in the
proposed rule.
Below is a description of the primary components contained in the
final decision that were discussed in the IRFA. For comparison
purposes, impacts resulting from each component
[[Page 16039]]
are briefly discussed. Because this rule establishes the specific
provisions to be contained in Federal milk marketing orders, analysis
of the impacts of the consolidated orders on small businesses is
provided.
Consolidation
The IRFA discussed three order consolidation options: (1) The
consolidated marketing areas suggested in the December 1996 Initial
Preliminary Report on Order Consolidation; (2) the consolidated
marketing areas suggested in the May 1997 Revised Preliminary Report on
Order Consolidation; and (3) the consolidated marketing areas suggested
in the proposed rule. Determining the specific economic impacts of
marketing area consolidation on handlers, producers, and consumers is
difficult. The IRFA detailed the assumptions utilized to quantify the
economic effects of consolidation. The IRFA included an analysis of
each of the three consolidation options on the weighted average use
value to determine the potential impacts of each option on producers.
The IRFA also included projections regarding the number of handlers
that would be regulated under the consolidation options and the number
of these handlers that are small businesses.
The consolidation of orders adopted in the final decision is a
result of the examination and analysis of more recent marketing data in
combination with the comments received on the proposed rule. This
resulted in modifying significantly from the proposed rule the
marketing areas of the Northeast and Western orders, and in making
minor modifications to the marketing areas of the proposed Southeast,
Mideast, Upper Midwest and Central orders. The consolidated orders
adopted in the final decision are as follows (* denotes changes made
from the proposed rule):
*1. NORTHEAST--current marketing areas of the New England, New
York-New Jersey and Middle Atlantic Federal milk orders, with the
addition of: the contiguous unregulated areas of New Hampshire,
northern New York and Vermont; and the non-Federally regulated portions
of Massachusetts. *The Western New York State order area (ten entire
and 5 partial western New York counties) proposed to be included in the
expanded Northeast order area has been omitted.
2. APPALACHIAN--Current marketing areas of the Carolina and
Louisville-Lexington-Evansville (minus Logan County, Kentucky) Federal
milk orders plus the marketing area of the former Tennessee Valley
order, with the addition of 21 currently-unregulated counties in
Indiana and Kentucky.
3. FLORIDA--current marketing areas of the Upper Florida, Tampa
Bay, and Southeastern Florida Federal milk orders.
*4. SOUTHEAST--current marketing area of the Southeast Federal milk
order, plus 1 county from the Louisville-Lexington-Evansville Federal
milk order marketing area; plus 11 northwest Arkansas counties and 22
entire Missouri counties that currently are part of the Southwest
Plains marketing area; plus 6 Missouri counties that currently are part
of the Southern Illinois-Eastern Missouri marketing area; plus 16
currently unregulated southeast Missouri counties (including 4 that
were part of the former Paducah marketing area); plus 20 currently-
unregulated Kentucky counties (including 5 from the former Paducah
marketing area).
*A partial Missouri county that has been part of the Southwest
Plains marketing area will become completely unregulated.
*5. MIDEAST--current marketing areas of the Ohio Valley, Eastern
Ohio-Western Pennsylvania, Southern Michigan and Indiana Federal milk
orders, plus Zone 2 of the Michigan Upper Peninsula Federal milk order,
and most currently-unregulated counties in Michigan, Indiana and Ohio.
*One partial and 3 entire counties in north central Ohio are left
unregulated, as they represent the distribution area of a currently-
partially regulated distributing plant (Toft Dairy in Sandusky, Ohio).
*6. UPPER MIDWEST--current marketing areas of the Chicago Regional,
Upper Midwest, Zones I and I(a) of the Michigan Upper Peninsula Federal
milk orders, and unregulated portions of Wisconsin. *The Iowa Federal
order marketing area portion of one Illinois county is added to the
consolidated Upper Midwest marketing area and the Chicago Regional
portion of another Illinois county is removed and added to the
consolidated Central area.
*7. CENTRAL--current marketing areas of the Southern Illinois-
Eastern Missouri, Central Illinois, Greater Kansas City, Southwest
Plains, Eastern Colorado, Nebraska-Western Iowa, Eastern South Dakota,
Iowa (* less the portion of an Illinois county that will become part of
the consolidated Upper Midwest area) and *Western Colorado Federal milk
orders, * plus the portion of an Illinois county currently in the
Chicago Regional Federal order area, minus 11 northwest Arkansas
counties and 1 partial and 22 entire Missouri counties that are part of
the current Southwest Plains marketing area, minus 6 Missouri counties
that are part of the current Southern Illinois-Eastern Missouri
marketing area, plus 54 currently-unregulated counties in Kansas,
Missouri, Illinois, Iowa, Nebraska and Colorado, plus 8 counties in
central Missouri *(six fewer than in the proposed rule) that are not
considered to be part of the distribution area of an unregulated
handler in central Missouri, *plus 7 currently unregulated Colorado
counties located between the current Western and Eastern Colorado order
areas.
8. SOUTHWEST--current marketing areas of Texas and New Mexico-West
Texas Federal milk orders, with the addition of two currently-
unregulated northeast Texas counties and 47 currently-unregulated
counties in southwest Texas.
9. ARIZONA-LAS VEGAS--current marketing area of Central Arizona,
plus the Clark County, Nevada, portion of the current Great Basin
marketing area, plus eight currently-unregulated Arizona counties.
*10. WESTERN--current marketing areas of the Southwestern Idaho-
Eastern Oregon and Great Basin Federal milk orders, minus Clark County,
Nevada. *The Western Colorado order area, proposed to be included in
the Western order area, is instead included in the consolidated Central
order.
11. PACIFIC NORTHWEST--current marketing area of the Pacific
Northwest Federal milk order plus 1 currently-unregulated county in
Oregon.
The consolidated orders presented herein reflect the most
appropriate boundaries for the purpose of implementing the requirements
of the Farm Bill. These orders attempt to avoid extending regulation to
handlers whose primary sales areas are outside current Federal order
marketing areas and who are not subject to Federal order regulation.
These orders also minimize the regulatory burden placed on handlers.
Based on October 1997 data, it is projected that 306 distributing
plants will be fully regulated and 32 distributing plants will be
exempt. The number of fully-regulated small businesses will be 111. The
number of fully-regulated small businesses is down from 164, a 32
percent decline from the proposed rule. This is mainly a result from
either large business acquisitions of these small businesses or because
they have gone out of business. Two small businesses that are currently
unregulated will become regulated and, as mentioned previously, 14
fully regulated and four partially-regulated small businesses will
become exempt.
[[Page 16040]]
Basic Formula Price
The IRFA reviewed the basic formula price replacement options
considered. These options included pricing components based on their
value in manufactured products which was proposed and is adopted in the
final decision, economic formulas, futures markets, cost of production,
competitive pay pricing, and pricing differentials only.
The rule closely follows the pricing plan described in the proposed
rule by replacing the current basic formula price (BFP) with a multiple
component pricing system that derives component values from surveyed
prices of manufactured dairy products. The adopted pricing system
determines butterfat prices for milk used in Class II, Class III and
Class IV products from a butter price; protein and other solids prices
for milk used in Class III products from cheese and whey prices; and
nonfat solids prices for milk used in Class II and Class IV products
from nonfat dry milk product prices. The specific formulas used to
calculate the prices are described in complete detail in the final
decision.
All market participants, both large and small, would be affected by
the BFP replacement in the same manner. There would be no uneven impact
on market participants on the basis of size. However, the existence of
minimum order pricing serves to assure that large handlers pay no less
for their milk than smaller entities, and that small producers receive
at least the same minimum uniform price for the milk or components of
milk they produce as large producers. Consumers can be assured that the
prices generally charged for dairy products are prices that reflect, as
closely as possible, the forces of supply and demand in the market.
Impact of Multiple Component Pricing Provisions on Small Entities
As set forth in the proposed rule, seven of the 11 orders adopted
in the final decision provide for milk to be paid for on the basis of
its components--multiple component pricing (MCP).
Five of the seven MCP orders also provide for milk values to be
adjusted according to the somatic cell count of producer milk. The
equipment needed for testing milk for its component content can be very
expensive to purchase, and requires highly-skilled personnel to
maintain and operate. The cost of infra-red analyzers ranges from just
under $100,000 to $200,000. The infra-red machines that are used by
most laboratories would test for total solids and somatic cells at the
same time the butterfat and protein tests are done.
No new report forms are needed under multiple component pricing;
however, some additional reporting is necessary to enable handlers'
values of milk to be determined on the basis of components, and to
assure that producers are paid correctly. For the market administrators
to compute the producer price differential, handlers would need to
supply additional information on their currently-required monthly
reports of receipts and utilization. In addition to the product pounds
and butterfat currently reported, handlers would be required to report
pounds of protein, pounds of other solids, and, in 5 of the orders,
somatic cell information. This data would be required from each handler
for all producer receipts, including milk diverted by the handler,
receipts from cooperatives as 9(c) handlers (that is, the cooperative
acts as a handler); and, in some cases, receipts of bulk milk received
by transfer or diversion.
Since producers would be receiving payments based on the component
levels of their milk, the payroll reports that handlers supply to
producers must reflect the basis for such payment. Therefore the
handler would be required to supply the producer not only with the
information currently supplied, but also, (a) the pounds of butterfat,
the pounds of protein, and the pounds of other solids contained in the
producer's milk, as well as the producer's average somatic cell count,
and (b) the minimum rates that are required for payment for each
pricing factor and, if a different rate is paid, the effective rate
also. Many handlers already report this additional information. It
should be noted that handlers already are required to report
information relative to pounds of production, butterfat and rates of
payment for butterfat and hundredweight of milk to the appropriate
Market Administrator.
Of over 74,000 producers whose milk was pooled in December 1996
under 23 of the current orders that would be part of consolidated
orders providing for multiple component pricing, the milk of 52,500 of
these producers was pooled under 13 current orders that have MCP.
Handlers in these markets already have incurred the initial costs of
testing milk for its component content, and have made the needed
transition to reporting the component contents of milk receipts on
their handler reports to the market administrators, and on their
reports of what they have paid producers.
Of the remaining 21,750 producers who would be affected by MCP
provisions under a Federal order (including an estimated 20,650
producers qualifying as small businesses), the milk of approximately
13,000, or 60 percent, currently is received by handlers who test or
have the capability of testing for multiple components and, in many
cases, somatic cells. Many of these handlers also report component
results to the producers with their payments. Almost all of the
producers whose milk currently is not being tested or paid for on the
basis of components are located in the New England and New York-New
Jersey marketing areas, which would be consolidated with the Middle
Atlantic area into the Northeast order.
Accommodation has been made to ameliorate handlers' expenses of
testing producer milk for component content. As component pricing plans
have been adopted under a number of the present Federal milk orders
since 1988, the component testing needed to implement these pricing
plans has been performed by the market administrators responsible for
the administration of the orders involved for handlers who have not
been equipped to make all of the determinations required under the
amended orders. It has been made clear in the decisions under which
these plans have been adopted that handlers who would find it unduly
burdensome to obtain the equipment and personnel needed to accomplish
the required testing may rely on the market administrators to verify or
establish the tests under which producers are paid. As noted above,
however, many handlers not now subject to MCP provisions under Federal
orders have nevertheless already undertaken multiple component testing
and payment programs.
Class I Price Structure
The IRFA discussed two price structure options--location-specific
differentials (Option 1A) and relative-value specific differentials
(Option 1B). The IRFA set forth the projected impacts that these two
price structures would have on producers and processors.
The price structure adopted in this final decision resulted from an
examination and review of more recent marketing data in combination
with the comments received on the proposed rule. As discussed
previously, the Department adopted a Class I price structure that
provides greater structural efficiencies in the assembly and shipment
of milk and dairy products. The adopted Class I pricing structure
establishes a price surface that utilizes
[[Page 16041]]
USDSS model results adjusted for all known plant locations and
establishes differential levels that will result in prices that
generate sufficient revenue to assure an adequate supply of milk. The
differential levels will better maintain equity by raising the level 40
cents per hundredweight higher than the level proposed in Option 1B.
The higher differential level reduces the likelihood of class-price
inversions, where the Class I prices are below the manufacturing milk
prices for the month. Updated analysis conducted by the Interagency
Dairy Analysis Team in the final Regulatory Impact Analysis
13 indicates that increasing the differential level lessens
the economic impact of moving toward more market-orientation on small
businesses.
---------------------------------------------------------------------------
\13\ Copies of the Regulatory Impact Analysis can be obtained
from Dairy Programs at (202) 720-4392, any Market Administrator
office, or via the Internet at http://www.ams.usda.gov/dairy.
---------------------------------------------------------------------------
The adopted Class I price structure reduces Class I differentials
from current levels in 17 markets ranging from $0.04 per hundredweight
in the Ohio Valley order to $1.18 per hundredweight in the Eastern
Colorado order. Option 1B would have reduced differentials from current
levels in 29 markets ranging from $0.01 in Central Illinois order to
$1.58 in the Eastern Colorado order. The adopted Class I price
structure will increase Class I differentials in 14 markets ranging
from $0.08 in the Greater Kansas City order to $0.57 in the
Southeastern Florida order and leaves two orders unchanged. Option 1B
would have increased Class I differentials in only two markets--$0.15
in Chicago Regional and $0.17 in Southeastern Florida--and would have
left two orders unchanged. Option 1A would have increased differentials
in 21 markets ranging from $0.01 per hundredweight in New England, New
York-New Jersey, and Unregulated New York and New England to $0.50 in
the Upper Midwest order, lowered differentials in seven markets from
$0.04 in Ohio Valley to $0.18 in Eastern Colorado, and left four
markets unchanged.
Although the adopted Class I price structure will result in price
changes that affect both large and small entities, this option best
meets the objectives of the AMAA. The adopted Class I price structure
recognizes that there are limitations in the extent that the
marketplace can be relied upon to establish prices to producers that
are equitable and reasonable given marketing conditions. Similarly, it
recognizes that handlers will be assured a higher degree of price
equity. The adopted Class I price structure best provides the
incentives necessary for increased efficiency in the organization and
distribution of the milk supply and dairy products.
Classification Provisions
The IRFA discussed the classification of milk provisions contained
in the proposed rule. The IRFA concluded that the classification of
milk provisions would not have a significant economic impact on a
substantial number of small entities. With two primary exceptions,
these changes are adopted in the final decision. The two exceptions
are: (1) Leaving cream cheese as a Class III product as currently
classified, and (2) leaving the fluid milk product exclusion standard
for products packaged in ``all-metal, hermetically-sealed containers''
as currently classified. In addition, other minor changes have been
made including revising the shrinkage provisions to more closely
resemble current provisions, re-adding the provision for milk that is
dumped or used for animal feed, and classifying inventory of fluid milk
products and fluid cream products in bulk form in Class IV. One
additional change, as previously discussed in the comment section, was
made to ensure that producer-handlers that are not currently regulated
by the Federal order program will maintain this status. The provisions
improve reporting and accounting procedures for handlers and provide
for greater market efficiencies.
Conclusion
A review of the impacts on small entities of consolidating the
current Federal milk orders into 11 orders in conjunction with the
basic formula price replacement, classification provisions, and the
three different Class I price structure options, indicates that the
provisions set forth in the final decision adhere to the mandates of
the Farm Bill, and provides more market efficiencies while minimizing
the impact of these regulations on small entities. Since the Federal
order program serves to benefit dairy producers by regulating dairy
processors through classified pricing, provisions must be established
that maintain a balance between the interests of small dairy producers
and processors. The provisions contained in the final decision best
maintain this balance.
The adoption of the consolidated orders and the provisions
contained therein, including the adopted Class I price structure, will
affect some small entities. Producers located in the western,
southwestern, and northeastern areas may not fare as well as producers
in other parts of the country when comparing the all-milk prices and
cash receipts from milk marketings to current baseline projections.
These producers represent approximately one-third of the total
producers associated with Federal orders. Of these producers, about 30
percent are considered small businesses. When compared to the baseline,
over a 6-year period from the years of 2000-2005, the all-milk price
for all Federal orders is expected to decrease an average of $0.02 per
hundredweight. Changes in the all-market price on an individual order
basis is projected to range from a decrease of $0.50 per hundredweight
to an increase of $0.52 per hundredweight. Cash receipts are expected
to increase by an estimated $222.3 million primarily because of changes
in transportation payments and the pooling of additional milk. After
adjusting for these changes, cash receipts are projected to decline
from the baseline an average of $2.5 million during the 6-year period.
With the baseline cash receipts averaging $16,944.5 million this
represents a very small reduction.
Since the final decision is projected to have minor effects on
where milk is produced, little impact is expected on processors or
manufacturers of dairy products. A majority of the fully-regulated
processors associated with Federal orders will benefit from a decrease
in Class I prices. About 209 processors, 74 of which are small
businesses, would experience decreases ranging from $0.04 to $1.18 per
hundredweight. About 69 processors, 22 of which are small businesses,
located primarily in the Midwest and Florida areas, would experience
Class I price increases ranging from $0.08 to $0.57 per hundredweight.
About 28 processors, 14 of which are small businesses, would experience
no change in Class I prices.
Implementing the consolidated orders with the modified Option 1B
price structure would have a significant impact on many small entities,
both producers and processors. Producers located everywhere except the
Midwest and Florida regions would have been negatively impacted. When
compared to the baseline, over a 6-year period from the years of 2000-
2005, the all-milk price for all Federal orders was projected to
annually average $0.09 per hundredweight lower, with individual order
changes ranging from -$0.61 per hundredweight to $0.42 per
hundredweight. Cash receipts were expected to annually average over
$100 million less than the baseline, a .01 percent decrease.
[[Page 16042]]
Most fully-regulated fluid processors would have benefitted from
the decrease in Class I differentials. Lower differentials would have
reduced Class I prices in 29 of the current markets from between $0.01
to $1.58 per hundredweight. Two markets would have had increases of
$0.15 and $0.17 per hundredweight in Class I prices. When compared to
the baseline, the Class I price for all Federal orders was projected to
average $0.49 per hundredweight lower over a 6-year period from the
years of 2000-2005. Lower Class I prices would have been expected to
increase U.S. sales of fluid milk by 98.8 million pounds annually. Most
fluid processors would have benefitted from the lower fluid milk prices
and increased fluid milk sales.
Although most fluid processors would have benefitted from the
consolidation of orders with the modified Option 1B price surface, only
about one-third of the fully-regulated plants are small businesses and
these plants may have been negatively impacted. With less of the actual
value of fluid milk represented by the minimum prices established by
Federal orders, more emphasis would have been placed on processors' and
producers' abilities to negotiate and/or sustain over-order prices that
might be necessary to maintain an adequate supply of milk. This would
have resulted in less handler equity which could have placed small
processors at a disadvantage in competing for a supply of milk.
Adoption of this option would have resulted in large fluid
processors benefitting from the regulations at the expense of more than
50 percent of the total producers who would have experienced price
decreases. Additionally, small processors would not have been assured
equity in competing with large businesses for a milk supply. Hence, the
Department determined the impact of consolidating orders with the
modified Option 1B price structure would have had a more burdensome
financial impact on a significant number of small businesses.
Implementing the consolidated orders with the Option 1A price
structure would have minimal overall impact on small businesses. When
compared to the baseline, the all-milk price for all Federal orders was
projected to average $0.03 per hundredweight higher, with individual
order changes ranging from -$0.66 per hundredweight to $0.34 per
hundredweight over a 6-year period from the years of 2000-2005. Cash
receipts were expected to average over $482.1 million more than the
baseline, a .02 percent increase. Nearly 50 percent of the producers
would have benefitted from this modest increase.
Since this option is projected to have minor effects on where milk
is produced, little impact would have been expected on processors or
manufacturers of dairy products. Option 1A would have increased Class I
differentials by an average of $0.04 per hundredweight resulting in the
all-market average Class I price charged to fluid handlers increasing
by $0.08 per hundredweight when compared to the baseline during the
years of 2000-2005. Processors would have experienced a Class I price
increase in 21 of the current orders ranging from $0.01 to $0.50 per
hundredweight, affecting nearly 190 fully-regulated processors of which
about one-third are small businesses. Since the impact of the increased
Class I prices would have resulted in an insignificant decrease in
fluid milk consumption within the Federal order system, a decrease of
17.1 million pounds, and within the U.S., a decrease of 14.9 million
pounds, this option would have little expected effect on processors or
manufacturers of dairy products.
Implementing the consolidated orders with the Option 1A price
structure would likely have minimized the financial impact of Federal
milk orders on small entities. However, this option does not facilitate
the movement towards a more efficient system of supplying fluid milk to
meet market demands within the Federal order regulatory program.
Although this option minimizes the impact of regulations on small
businesses, it does not best meet the desired outcomes and objectives
of the final decision.
The provisions adopted in the final decision best fulfill the
requirements of the AMAA while minimizing the regulatory burdens on
small businesses. The consolidated orders, with the adopted Class I
price structure and other provisions, ensures that the Federal order
program will continue to establish and maintain market stability and
orderly marketing conditions for milk. The adopted provisions will
further provide that milk prices are established at levels high enough
to generate sufficient revenue for producers to maintain adequate
supplies of milk while providing equity to handlers. The provisions
contained in the final decision do not unduly or disproportionately
burden small businesses.
Paperwork Reduction Act of 1995
The information collection requirements contained in this decision
previously were approved by the Office of Management and Budget (OMB)
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35)
under OMB control number 0581-0032, through September 30, 2001.
The amendments set forth in the final decision do not contain
additional information collections that require clearance by the OMB
under the provisions of 44 U.S.C. Chapter 35. Following is a general
description of the reporting and recordkeeping requirements, reasons
for these requirements and an estimate of the annual burden on the
dairy industry.
Title: Report Forms Under Federal Milk Orders (From Milk Handlers
and Milk Marketing Cooperatives).
OMB Control Number: 0581-0032.
Expiration Date of Approval: September 30, 2001.
Type of Request: Extension and revision of a currently approved
information collection.
Abstract: Federal Milk Marketing Order regulations authorized under
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C.
601-674), require milk handlers to report in detail the receipt and
utilization of milk and milk products handled at each of their plants
that are regulated by a Federal Order. The data are needed to
administer the classified pricing system and related requirements of
each Federal Order.
Rulemaking amendments to the orders must be approved in referenda
conducted by the Secretary.
The terms of each of the current milk marketing orders are found at
7 CFR parts 1001-1199; the terms of each of the proposed orders in this
document are found at 7 CFR parts 1001-1135. The authority for
requiring reports is found at 8c(5) and (7) and 8d of the Act. The
current authority for requiring records to be kept is found in the
general provisions at 7 CFR part 1000.5. In the final decision, this
authority is found in the general provisions at 7 CFR part 1000.27. The
Act also provides for milk marketing agreements, but there are none in
effect.
A Federal milk marketing order is a regulation issued by the
Secretary of Agriculture that places certain requirements on the
handling of milk in the area it covers. It requires that handlers of
milk for a marketing area pay not less than certain minimum class
prices according to how the milk is used. These prices are established
under an order on the basis of evidence concerning the supply and
demand conditions for milk in the market. A milk order requires that
payments for milk be pooled and paid to individual farmers or
cooperative associations of
[[Page 16043]]
farmers on the basis of a uniform or average price. Thus, all eligible
farmers (producers) share in the market wide use-values of milk by
regulated handlers.
The Report of Receipts and Utilization and the Producer Payroll
Report are completed by regulated milk handlers and milk marketing
cooperatives and are the principal reporting forms needed to administer
Federal milk marketing orders.
The orders also provide for the public dissemination of market
statistics and other information for the benefit of producers,
handlers, and consumers. Each milk order is administered by a market
administrator who is an agent of the Secretary of Agriculture. Part of
the market administrator's duties are to prescribe reports required of
each handler, and to assure that handlers properly account for milk and
milk products, and that such handlers pay producers and associations of
producers according to the provisions of the order. The market
administrator employs a staff that verifies handlers' reports by
examining records to determine that the required payments are made to
producers. Most reports required from handlers are submitted monthly to
the market administrator. Confidentiality of information collection is
assured through section 608(d) of the Act, which imposes substantial
penalties on anyone violating these confidentiality requirements.
The forms used by the market administrators are required by the
respective milk orders that are authorized by the Act. The forms are
authorized either in the general provisions (Part 1000) or in the
sections of the respective orders. The forms are used to establish the
quantity of milk received by handlers, the pooling status of handlers,
the class-use of the milk used by the handler and the butterfat content
and amounts of other components of the milk.
The frequency of performing these recordkeeping and reporting
duties varies according to the form; the frequency ranges from ``on
occasion'' to ``annually'' but ``monthly'' is perhaps most common. In
general, most of the information that handlers report to the market
administrator is readily available from normally maintained business
records. Thus, the burden on handlers to complete these recordkeeping
and reporting requirements is expected to be minimal. In addition,
assistance in completing forms is readily available from market
administrator offices.
Regarding the use of improved information technology to reduce the
reporting and recordkeeping burden, the information requested is the
minimum necessary to carry out the program. Since the type of
information required to be collected and the certification and
reporting of that information is required, no other alternative to the
mode of information collection has been found. However, where possible,
reported information is accepted using computer tapes or diskettes as
alternatives to submitting the requested information on these report
forms. Comments were requested to help assess the number of handlers
using computers, word processors and other electronic equipment to
create and store documents, as well as the extent to which the Internet
is used to exchange information.
We are confident that the information we collect does not duplicate
information already available. Dairy Programs has an ongoing
relationship with many organizations in the dairy industry that also
respond to other governmental agencies. Thus, we are aware of the
reports dairy industry organizations are submitting to other government
agencies.
Information collection requirements have been reduced to the
minimum requirements of the orders, thus minimizing the burden on all
handlers--those considered to be small as well as large entities. Forms
require only a minimal amount of information which can be supplied
without data processing equipment or a trained statistical staff. The
primary source of data used to complete the forms are routinely used in
all business transactions. Thus, the information collection and
reporting burden is relatively small. Requiring the same reporting
requirements for all handlers does not significantly disadvantage any
handler that is smaller than industry average.
If the collection of this information were conducted less
frequently, data needed to keep the Secretary informed concerning
industry operations would not be available. Timing and frequency of the
various reports are such to meet the needs of the industry and yet
minimize the burden of the reporting public.
The collection of the required information is conducted in a manner
consistent with guidelines in 5 CFR 1320.6. The orders require that the
market administrator compute monthly minimum prices to producers based
on monthly information. Without monthly information, the market
administrator, for example, would not have the information to compute
each monthly price, nor to know if handlers were paying producers on
dates prescribed in the order, such as the partial payment for milk
received the first 15 days of the month and the final payment which is
payable after the end of the month. The Act imposes penalties for order
violations, such as the failure to pay producers not later than
prescribed dates. The orders require payments to and from the producer-
settlement fund to be made monthly. Also, class prices are based on the
monthly Basic Formula price series.
Annual Reporting and Recordkeeping Burden
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.87 hours per response.
Respondents: Milk Handlers and Milk Marketing Cooperatives.
Estimated Number of Respondents: 772.
Estimated Number of Responses per Respondent: 35.
Estimated Total Annual Burden on Respondents: 23,858 hours.
Estimated annual cost to respondents for report preparation:
$276,514 (23,858 hours at $11.59 per hour). Although hourly rates vary
among handlers in various localities, the wage paid to clerical workers
engaged in report preparation is estimated to be comparable to about a
grade GS-7, step 1.
It is important to note that the burden being reported is an
estimate of the amount of time that would be required of current
program participants.
It is expected that the final decision should have little impact on
the reporting and recordkeeping burden on handlers regulated under the
Federal milk marketing order program. In fact, as a result of the
consolidation of Federal orders from 31 to 11 as proposed, an overall
reduction in reporting and recordkeeping requirements may occur due to
greater uniformity in forms used and fewer ``special'' forms that
currently apply to one or a few orders. There should also be a
reduction in the burden on handlers that currently file reports for
individual orders that are being consolidated.
Non-substantial changes would be necessary on the required reports
and records to correctly identify the new Federal market order (e.g.
the current--and separate--reports for the Upper Florida, Tampa Bay and
Southeastern Florida marketing areas would be combined into one report
for the Florida marketing area).
[[Page 16044]]
Request for Public Input on Analyses
Comments on the Executive Order 12866 analysis, the initial
regulatory flexibility analysis, and the paperwork reduction analysis
were requested in the proposed rule, which was published in the Federal
Register on January 30, 1998. Specifically, interested parties were
invited to submit comments on the regulatory and informational impacts
of this proposed rule on small businesses. More than 1,000 comments
were received from interested parties that specifically stated or
documented they were small businesses. However, this number may not be
fully representative of the number of small businesses that actually
submitted comments because a majority of commenters did not indicate
their size. A few comments specifically addressed the initial
regulatory flexibility analysis (IRFA), the Executive Order 12866, and
the Paperwork Reduction Analysis. These comments have been considered
and addressed above.
Preliminary Statement
The material issues in this rule relate to:
1. Consolidation of marketing areas.
2. Basic formula price replacement and other class price issues.
3. Class I pricing structure.
4. Classification of milk and related issues.
5. Provisions applicable to all orders.
6. Regional issues:
a. Northeast Region.
b. Southeast Region.
c. Midwest Region.
d. Western Region.
7. Miscellaneous and administrative matters.
a. Consolidation of the marketing service, administrative expense,
and producer-settlement funds.
b. Consolidation of the transportation credit balancing funds.
c. General findings.
II. Discussion of Material Issues and Amendments to the Orders
A discussion and explanation of the material issues and
determinations contained in this rule are as follows:
1. Consolidation of Marketing Areas
Subtitle D, Chapter 1 of the 1996 Farm Bill, entitled
``Consolidation and Reform of Federal Milk Marketing Orders,''
requires, among other things, that the Federal milk marketing orders be
limited to not less than 10 and not more than 14. Nearly 1,300 public
comments received in response to the proposed rule addressed the
subject of order consolidation. Preceding the proposed rule, two
preliminary reports on order consolidation were issued by the
Agricultural Marketing Service's Dairy Division, in December 1996 and
May 1997. The proposed rule, issued in January 1998, included
consideration of public comments received in response to these
preliminary reports.
The 1996 Farm Bill specifically provides for the inclusion of
California as a separate Federal milk order, but the provision is
contingent upon petition and approval by California producers. The
Omnibus Consolidated and Emergency Supplemental Appropriations Bill,
passed in October 1998, extended the time for implementing Federal milk
order reform amendments from April 4, 1999 to October 1, 1999. The
legislation provides that California has from the date of issuance of
this final decision until September 30, 1999, to become a separate
Federal milk order. This additional time is intended to allow
California dairy interests the opportunity review this final decision
to determine whether a Federal milk order for California, consistent
with the provisions adopted for the consolidated orders, would best
meet their milk marketing regulatory needs.
Over 150 comments were received that addressed the issue of a
Federal milk order for California, with approximately 120 of them being
a form letter advocating a California Federal milk order. These
comments, and a number of additional individual comments, came
primarily from commenters outside California who expressed a need for
California and Federal order prices for milk used in manufactured
products to be in closer alignment to eliminate California
manufacturers' perceived competitive advantage in product prices.
Interest in a Federal milk order has been expressed by some
California producers, but for the most part California commenters
expressed a desire to have a chance to study and comment on this final
decision before deciding whether to pursue a proposal for a California
Federal order.
The preliminary reports, the proposed rule, and this final decision
concerning order consolidation were prepared using data gathered about
receipts and distribution of fluid milk products by all known
distributing plants located in the 47 contiguous states, not including
the State of California. Data describing the sources and disposition of
fluid milk products for the month of October 1995 were used to compile
the initial Preliminary Report. In response to comments and questions
about certain marketing area boundaries and changes in marketing
conditions in some of the markets after publication of the initial
Preliminary Report, data concerning those markets was updated to
January 1997, and more detailed information was gathered regarding the
geographic distribution of route sales by individual handlers and their
specific sources of producer milk. The updated and more detailed data
were used in re-examining the appropriate boundaries of the initially-
suggested Northeast, Appalachian, Southeast, Mideast, Central, and
Western marketing areas for the Revised Preliminary Report on Order
Consolidation. The Revised Preliminary Report, in turn, was modified on
the basis of comments received for development of the proposed rule.
Nearly 1,300 comments filed in response to the proposed rule had
some applicability to the topic of order consolidation. Approximately
750 of these comments were received as 6 form letters, one of which
(filed by approximately 120 commenters) advocated a national marketing
area map comprised of 10 order areas covering all of the contiguous 48
states. The other form letters advocated the addition of currently-
unregulated area to the Northeast area. Another 350 comments also
addressed the desirability of adding unregulated areas to the proposed
consolidated marketing areas (primarily the Northeast), with only about
55 of these being opposed to the inclusion of unregulated areas.
The comments specifically applicable to each of the consolidated
marketing areas are described in the sections dealing with the
individual consolidated areas.
In combination with consideration of the comments received, data
similar to that gathered for October 1995 were compiled for October
1997 to determine whether the consolidated marketing areas delineated
in the proposed rule continued to represent the most appropriate
boundaries for the purpose of implementing the requirements of the 1996
Farm Bill.
The October 1997 data allowed a ``snapshot'' of the marketing
patterns of fluid milk processors for that month. The regulatory status
of distributing plants for October 1997 is known, and the regulatory
status of each plant could be projected on the basis of the plant's
receipts and dispositions, and where its milk was distributed. The
information in the sections entitled ``Distributing Plants'' within the
description of each marketing area are based on the October data, as
are the lists of plants and pool plant status following the
consolidation portion of this decision. It should be
[[Page 16045]]
understood that the regulatory status of any plant can change whenever
its operations or areas of distribution change.
The result of the examination and analysis of the more recent data
in combination with the comments on the proposed rule was to modify
significantly from the proposed rule the marketing areas of the
proposed Northeast and Western orders, and to make very minor
modifications to the marketing areas of the proposed Southeast,
Mideast, Upper Midwest and Central orders.
As in the case of data referring to the operations of less than
three handlers or producers in the preliminary reports and proposed
rule, some of the data used to determine the consolidated areas is
restricted from use by the public because it refers to individual fluid
milk distributing plants and the origins of producer milk supply for
those plants. However, the basis for the marketing area boundaries is
described as specifically as possible without divulging such
proprietary information.
The same seven primary criteria as were used in the two preliminary
reports and the proposed rule were used to determine which markets
exhibit a sufficient degree of association in terms of sales,
procurement, and structural relationships to warrant consolidation. The
criteria are as follows:
1. Overlapping route disposition. The movement of packaged milk
between Federal orders indicates that plants from more than one Federal
order are in competition with each other for Class I sales. In
addition, a degree of overlap that results in the regulatory status of
plants shifting between orders creates disorderly conditions in
changing price relationships between competing handlers and neighboring
producers. This criterion is considered to be the most important.
2. Overlapping areas of milk supply. This criterion applies
principally to areas in which major proportions of the milk supply are
shared between more than one order. The competitive factors affecting
the cost of a handler's milk supply are influenced by the location of
the supply. The pooling of milk produced within the same procurement
area under the same order facilitates the uniform pricing of producer
milk. Consideration of the criterion of overlapping procurement areas
does not mean that all areas having overlapping areas of milk
procurement should be consolidated. An area that supplies a minor
proportion of an adjoining area's milk supply with a minor proportion
of its own total milk production while handlers located in the area are
engaged in minimal competition with handlers located in the adjoining
area likely does not have a strong enough association with the
adjoining area to require consolidation.
For a number of the consolidated areas it would be very difficult,
if not impossible, to find a boundary across which significant
quantities of milk are not procured for other marketing areas. In such
cases, analysis was done to determine where the minimal amount of route
disposition overlap between areas occurred, and the criterion of
overlapping route disposition generally was given greater weight than
overlapping areas of milk supply. Some analysis also was done to
determine whether milk pooled on adjacent markets reflects actual
movements of milk between markets, or whether the variations in amounts
pooled under a given order may indicate that some milk is pooled to
take advantage of price differences rather than because it is needed
for Class I use in the other market.
3. Number of handlers within a market. Formation of larger-size
markets is a stabilizing factor. Shifts of milk and/or plants between
markets becomes less of a disruptive factor in larger markets. Also,
the existence of Federal order markets with handlers too few in number
to allow meaningful statistics to be published without disclosing
proprietary information should be avoided.
4. Natural boundaries. Natural boundaries and barriers such as
mountains and deserts often inhibit the movement of milk between areas,
and generally reflect a lack of population (limiting the range of the
consumption area) and lack of milk production. Therefore, they have an
effect on the placement of marketing area boundaries. In addition, for
the purposes of market consolidation, large unregulated areas and
political boundaries also are considered a type of natural barrier.
5. Cooperative association service areas. While not one of the
first criteria used to determine marketing areas, cooperative
membership often may be an indication of market association. Therefore,
data concerning cooperative membership can provide additional support
for combining certain marketing areas.
6. Features or regulatory provisions common to existing orders.
Markets that already have similar regulatory provisions that recognize
similar marketing conditions may have a head start on the consolidation
process. With calculation of the basic formula price replacement on the
basis of components, however, this criterion becomes less important.
The consolidation of markets having different payment plans will be
more dependent on whether the basic formula component pricing plan is
appropriate for a given consolidated market, or whether it would be
more appropriate to adopt a pricing plan using hundredweight pricing
derived from component prices.
7. Milk utilization in common dairy products. Utilization of milk
in similar manufactured products (cheese vs. butter-powder) was also
considered to be an important criterion in determining how to
consolidate the existing orders.
Comments on Consolidation Criteria
Most of the comments relative to order consolidation criteria were
submitted prior to publication of the proposed rule. It was the overall
opinion of the commenters that overlapping route disposition and milk
procurement are the most important criteria to consider in the
consolidation process. In addition, Class I use percentages and
regulation on the basis of handler location were noted as important
criteria to consider. To some extent, the consolidated marketing areas
included in this final decision do combine markets with similar Class I
utilization rates rather than markets that would result in Class I use
percentages being more uniform between markets. This result occurs
because adjoining markets, where most of the sales and procurement
competition takes place between handlers regulated under different
orders, tend to have similar utilization rates rather than because the
criterion is one that should be used to determine appropriate
consolidations. Also, Class I utilization rates are a function of how
much milk is pooled on an order with a given amount of Class I use.
Differences in rates, to the extent they result in differences in blend
prices paid to producers, provide an incentive for milk to move from
markets with lower Class I utilization percentages to markets with
higher Class I use.
Regulation of processors on the basis of their location rather than
their sales areas has largely been incorporated in the consolidated
orders by a provision that would pool a handler under the order for the
area in which the handler is located unless more than 50 percent of the
handler's Class I route dispositions are distributed in another order
area. This provision should help to assure that the order under which a
distributing plant is pooled will not change from month to month, and
that a plant operator is subject to the same provisions, such as
producer pay prices, as are its primary competitors.
[[Page 16046]]
The consolidated orders also include provisions that lock plants
processing primarily ultra-high temperature (UHT) or extended shelf-
life milk into regulation under the order for the area in which the
plant is located. Such plants often have widely dispersed route sales
into a number of order areas, with sporadic deliveries to different
areas. Without some type of lock-in provision, such a plant may be
pooled in several different orders in as many months. At the same time,
the plant's milk supply generally is procured from a given group of
producers located in the same area as the UHT (or extended shelf-life)
plant. Having the plant pooled under a succession of different orders
with widely varying blend prices creates a disorderly condition for the
producers involved.
On the basis of the distributing plant pooling standards included
for all eleven orders in this final decision, there are three non UHT
pool distributing plants that would have more sales in an order area
other than the one in which they are regulated. Two of these plants are
the Superbrand Dairy Products distributing plant in Greenville, South
Carolina, and the Kroger Dairy distributing plant in Winchester,
Kentucky, both located in the Appalachian order, but which likely will
qualify for pooling under the Southeast and Mideast orders. In
addition, the Hiland Dairy plant in Fayetteville, Arkansas, in the
Southeast consolidated area, likely will qualify for pooling under the
Central order. In cases in which these plants compete almost entirely
for a producer milk supply in the area in which they are located, lock-
in provisions are incorporated to assure that the plant is pooled where
located for the purpose of competitive equity.
Some changes in regulatory status are expected to occur because of
the addition of regulated area (in the Northeast), the consolidation of
marketing areas, changes in pooling standards, and changes in the
definitions of types of plants. The expected changes are based on data
collected for October 1997 and may differ in some respects at the time
the consolidated orders go into effect.
The regulatory status of three Vermont handlers is expected to
change from partially regulated to fully regulated because a
significant percentage of their sales is in areas that will be added to
the Northeast consolidated marketing area, and a partially-regulated
New York handler is expected to meet the pooling standards because of
the consolidation of marketing areas. Two other currently partially
regulated handlers, one in New York and one in Vermont, are expected to
become fully regulated because the pooling provisions of the
consolidated order will be more like those of all the other orders than
is currently the case in the New York-New Jersey order. Two plants that
currently are fully regulated on the basis of the ``grandfather''
clause of the New York-New Jersey order will become partially regulated
when this provision ceases to exist.
In the consolidated Appalachian marketing area, two distributing
plants, one currently unregulated and one partially regulated, would
become fully regulated as a result of including the marketing area of
the Tennessee Valley order, terminated in October 1997. These plants
both were fully regulated under the Tennessee Valley order, and lost
their regulatory status as a result of the termination.
A plant currently partially regulated under the Southeast order
would become fully regulated as a result of ``locking in'' to
regulation plants that distribute primarily UHT or extended shelf-life
products. Another Southeast distributing plant, currently fully
regulated, would become partially regulated because of failure to meet
the consolidated order's pooling standards.
Two distributing plants that currently are partially regulated
under the Chicago Regional order would become fully regulated under the
consolidated Upper Midwest order because of a change in the definition
of receipts that are used in the calculation of percentage of total
receipts used in route disposition for the determination of pool
status.
Three plants, one in each of the consolidated Upper Midwest,
Central, and Pacific Northwest marketing areas, would change regulatory
status as depicted in the attached list of distributing plants and
regulatory status. These plants are distributing plants that are listed
as being fully regulated in October 1997 and becoming either partially
regulated or exempt under the consolidated orders. These plants, having
small amounts of route dispositions, actually were pooled on the basis
of their performance as supply plants or as part of supply plant units.
It is unknown whether they will continue to qualify as pool supply
plants, but will not meet the pool distributing plant standards of the
consolidated orders.
In the Pacific Northwest, the Oregon and Washington State prison
systems both operate fluid processing plants that have route
distribution in commercial channels, competing with regulated handlers.
These plants are not currently fully regulated. Under the consolidated
order, one of the plants will be partially regulated only with respect
to its commercial sales, and the other will be exempt on the basis of
size.
Several comments advocated that all of a state's territory should
be included in one Federal order to assure that all producers in a
state are paid on an equitable basis, or to make it easier to maintain
state statistical data. One of the primary reasons for Federal milk
orders is that milk marketing occurs readily across state boundaries,
making state milk marketing regulation more difficult to enforce. It is
important that Federal milk marketing areas continue to recognize the
free interstate movement of milk to and from milk plants. There are
cases where natural boundaries such as mountains or rivers may result
in part of a state having a closer marketing relationship with an
adjoining state than with other areas of the same state.
Although the Revised Preliminary Report suggested that several
currently non-Federally regulated areas be added to some consolidated
marketing areas, the proposed rule omitted areas in which handlers are
subject to minimum Class I pricing under State regulation unless the
affected handlers or States requested inclusion. This final decision
continues to omit such areas, and also omits currently-unregulated
areas that comprise a significant distribution area for currently-
unregulated handlers, some of which were proposed to be included in
consolidated areas.
Considering the requirements of the 1996 Farm Bill, consolidation
of the existing orders does not necessitate expansion of the
consolidated orders into unregulated areas or areas in which handlers
are subject to minimum Class I pricing under State regulation,
especially when the states' Class I prices exceed or equal those that
would be established under Federal milk order regulation. Such
regulation could have the effect of reducing returns to producers
already included under State regulation without significantly affecting
prices paid by handlers who compete with Federally-regulated handlers.
However, there are numerous counties and portions of counties
located within and between Federal order marketing areas that have not
been included in the defined order areas during the course of the more
than 60 years the program has developed. In some cases, these small
areas were left unregulated many years ago to maintain the unregulated
status of a small handler. In others, these areas probably formed a
``buffer'' between separate
[[Page 16047]]
smaller order areas and were not incorporated when the smaller orders
were merged. Some of these areas form ``buffer'' zones today between
current order areas that will be consolidated in the course of this
process. These areas should be included in the defined consolidated
marketing areas if their inclusion would not have the effect of
regulating any unregulated handlers who currently distribute milk in
these areas. The issue of whether to regulate currently-unregulated
areas is discussed in more detail with regard to the individual
consolidated marketing areas in the sections of this decision dealing
with those areas, especially the Northeast area.
The occurrence of partial counties in marketing area definitions
should be minimized for the purpose of simplifying handlers' reporting
burden. The continued existence of these unregulated areas, partially
regulated counties, and counties split between marketing areas serves
only to complicate the reporting of route dispositions outside the
marketing area by regulated distributing plant handlers for the purpose
of determining pool qualifications and increase the costs of
administering the orders.
In order to avoid extending Federal regulation to handlers whose
primary sales areas are outside current Federal order marketing areas
and who currently are not subject to Federal order regulation, it has
been determined that the appropriate in-area Class I disposition
percentage portion of the pool distributing plant definition is 25
percent for all orders. Discussion of this provision is included in the
section of this decision dealing with identical provisions. The 25-
percent level of in-area sales will assure that currently-regulated
handlers retain their pool status. At the same time, increasing from
current levels the percentage of in-area sales required for pool status
under the consolidated orders will allow State-regulated and most other
non-Federally regulated handlers to operate at their current level of
sales within Federal order areas without being subject to full Federal
order regulation.
Cornell University Study
In addition to AMS' analysis of the receipt and distribution data
in the development of this decision, researchers at Cornell University
also provided input on potential consolidated marketing areas early in
the Federal order reform process. This input was part of Cornell's
partnership agreement with AMS to provide alternative analyses on
Federal order reform issues. These researchers used an economic model
(the Cornell U.S. Dairy Sector Simulator, or USDSS), to determine 10-14
optimal marketing areas. Cornell's first options for 10-14 marketing
areas were presented at an October 1996 invitational workshop for dairy
economists and policy analysts held in Atlanta, Georgia. Based on USDSS
model results, these options would result in minimum cost flows of milk
using the known concentrations of milk production and population,
without considering the location of milk plants. The marketing area
maps that were circulated using these first results were those
referenced by interested persons who cited the Cornell results in their
comments on the Preliminary Reports on Order Consolidation and on the
proposed rule.
A second set of options was presented by Cornell researchers in
spring 1997. These options were generated with a further-developed
USDSS model. In updating the model, the researchers enhanced the inputs
to its model as a means of better reflecting the actual structure of
the national market for fluid milk products. These model updates
allowed for determination of the minimum cost flows of: milk,
intermediate and final products from producers to plants; from plants
to plants; and from plants to consumers on the basis of the locations
of milk supplies, dairy product processing plants, and consumers. The
enhanced model is intended to provide for geographic market definition
on the basis of a resulting set of optimal, efficient simulated flows
of milk and dairy products between locations.
Although the USDSS model considers important factors such as milk
supply and demand locations and transportation constraints in
determining the optimal consolidated marketing areas, it aggregates
processing locations, sometimes at locations that are not
representative of where substantial volumes of milk are processed. In
addition, the model does not consider several important factors such as
large areas that are not Federally regulated and certain economic
factors which influence the movement of milk.
AMS is unaware of any other analyses performed to determine or
suggest consolidated marketing areas.
As noted before, AMS' analysis focused initially on distributing
plant receipts and distribution information for October 1995, updated
as needed for further analysis during development of the proposed rule.
Equivalent data was gathered for October 1997 to assure that the
consolidated marketing areas continue to represent actual marketing
relationships between the current order areas, with more current
information used as needed for further analysis. The data gathered by
the Dairy Division from Federal Milk Market Administrators reflects
actual movements of milk, both from production areas to processing
plants, and from processing plants to consumption areas. This final
decision considers this data, the seven criteria described fully above,
and information provided by the USDSS model analysis.
The consolidated marketing area options presented by Cornell are
not adopted because the USDSS model does not adequately reflect issues
or factors that strongly affect which current marketing areas are most
closely related. For this reason, this decision is based on data
reflecting actual distribution and procurement by fluid milk processing
plants.
Marketing Areas
Following are maps of the current marketing areas and the 11
consolidated marketing areas, followed by brief descriptions of the
marketing areas (with those modified from the Proposed Rule, and the
modifications, marked by*) and the major reasons for consolidation. A
more detailed description of each consolidated order follows this
summary.
At the end of the Order Consolidation portion of this decision is
appended a list of distributing plants associated with each
consolidated marketing area, with each plant's expected regulatory
status, determined on the basis of data describing the plants'
operations during October 1997.
BILLING CODE 3410-02-P
[[Page 16048]]
[GRAPHIC] [TIFF OMITTED] TP02AP99.000
[[Page 16049]]
[GRAPHIC] [TIFF OMITTED] TP02AP99.001
BILLING CODE 3410-02-C
[[Page 16050]]
Eleven Consolidated Marketing Areas
*1. NORTHEAST--current marketing areas of the New England, New
York-New Jersey and Middle Atlantic Federal milk orders, with the
addition of: the contiguous unregulated areas of New Hampshire,
northern New York and Vermont; and the non-Federally regulated portions
of Massachusetts. *The Western New York State order area (ten entire
and 5 partial western New York counties) proposed to be included in the
expanded Northeast order area has been omitted. The handlers who would
be added to those currently fully regulated under the three separate
orders either have a sufficient percentage of their route disposition
within the consolidated marketing area to meet the pooling requirements
or are located in the area to be added.
Reasons for consolidation include the existence of overlapping
sales and procurement areas between New England and New York-New Jersey
and between New York-New Jersey and Middle Atlantic. An important
measure of association is evidenced by industry efforts to study and
pursue consolidation of the three Federal orders prior to the 1996 Farm
Bill.
2. APPALACHIAN--Current marketing areas of the Carolina and
Louisville-Lexington-Evansville (minus Logan County, Kentucky) Federal
milk orders plus the marketing area of the former Tennessee Valley
order, with the addition of 21 currently-unregulated counties in
Indiana and Kentucky.
Overlapping sales and procurement areas between these marketing
areas are major factors for this consolidation.
3. FLORIDA--current marketing areas of the Upper Florida, Tampa
Bay, and Southeastern Florida Federal milk orders.
Natural boundary limitations and overlapping sales and procurement
areas among the three orders are major reasons for consolidation, as
well as a measure of association evidenced by cooperative association
proposals to consolidate these three marketing areas. Further, the
cooperative associations in this area have worked together for a number
of years to accommodate needed movements of milk between the three
Florida Federal orders.
*4. SOUTHEAST--current marketing area of the Southeast Federal milk
order, plus 1 county from the Louisville-Lexington-Evansville Federal
milk order marketing area; plus 11 northwest Arkansas counties and 22
entire Missouri counties that currently are part of the Southwest
Plains marketing area; plus 6 Missouri counties that currently are part
of the Southern Illinois-Eastern Missouri marketing area; plus 16
currently unregulated southeast Missouri counties (including 4 that
were part of the former Paducah marketing area); plus 20 currently-
unregulated Kentucky counties (including 5 from the former Paducah
marketing area).
*A partial Missouri county that has been part of the Southwest
Plains marketing area will become completely unregulated to minimize
the reporting complications caused by partially regulated counties.
Major reasons for this consolidation include sales and procurement
area overlaps between the Southeast order and these counties.
*5. MIDEAST--current marketing areas of the Ohio Valley, Eastern
Ohio-Western Pennsylvania, Southern Michigan and Indiana Federal milk
orders, plus Zone 2 of the Michigan Upper Peninsula Federal milk order,
and most currently-unregulated counties in Michigan, Indiana and Ohio.
*One partial and 3 entire counties in north central Ohio are left
unregulated, since they represent the distribution area of a currently-
partially regulated distributing plant (Toft Dairy in Sandusky, Ohio).
Major criteria for this consolidation include the overlap of fluid
sales in the Ohio Valley marketing area by handlers from the other
areas to be consolidated. With the consolidation, most route
disposition by handlers located within the Mideast order would be
within the marketing area. Also, nearly all milk produced within the
area would be pooled under the consolidated order. The portion of the
Michigan Upper Peninsula marketing area included in the Mideast
consolidated area has sales and milk procurement areas in common with
the Southern Michigan area and has minimal association with the western
end of the current Michigan Upper Peninsula marketing area.
*6. UPPER MIDWEST--current marketing areas of the Chicago Regional,
Upper Midwest, Zones I and I(a) of the Michigan Upper Peninsula Federal
milk orders, and unregulated portions of Wisconsin. *The Iowa Federal
order marketing area portion of one Illinois county, in which Chicago
Regional handlers have the preponderance of sales, is added to the
consolidated Upper Midwest marketing area, and the Chicago Regional
portion of another Illinois county, in which Iowa order handlers have
the preponderance of sales, is removed and added to the consolidated
Central area. These changes will reduce overlapping route disposition
between the two consolidated orders and reduce the incidence of partial
counties in marketing areas.
Major consolidation criteria include an overlapping procurement
area between the Chicago Regional and Upper Midwest orders and
overlapping procurement and route disposition area between the western
end of the Michigan Upper Peninsula order and the Chicago Regional
order. A number of the same cooperative associations market member milk
throughout the consolidated area.
*7. CENTRAL--current marketing areas of the Southern Illinois-
Eastern Missouri, Central Illinois, Greater Kansas City, Southwest
Plains, Eastern Colorado, Nebraska-Western Iowa, Eastern South Dakota,
Iowa (* less the portion of an Illinois county that will become part of
the consolidated Upper Midwest area) and *Western Colorado Federal milk
orders, * plus the portion of an Illinois county currently in the
Chicago Regional Federal order area, minus 11 northwest Arkansas
counties and 1 partial and 22 entire Missouri counties that are part of
the current Southwest Plains marketing area, minus 6 Missouri counties
that are part of the current Southern Illinois-Eastern Missouri
marketing area, plus 54 currently-unregulated counties in Kansas,
Missouri, Illinois, Iowa, Nebraska and Colorado, plus 8 counties in
central Missouri *(six fewer than in the proposed rule) that are not
considered to be part of the distribution area of an unregulated
handler in central Missouri, *plus 7 currently unregulated Colorado
counties located between the current Western and Eastern Colorado order
areas.
This configuration would leave 31 unregulated counties in central
Missouri that are intended to delineate the distribution area of
Central Dairy at Jefferson City, Missouri, which has limited
distribution in Federal order territory.
Major criteria on which this consolidation is based include
overlapping route disposition and procurement between the current
orders. The consolidation would result in a concentration of both the
sales and supplies of milk within the consolidated marketing area. The
consolidation would combine several relatively small orders and provide
for the release of market data without revealing proprietary
information. In addition, many of the producers in these areas share
membership in several common cooperatives. The Western Colorado area
has become more closely associated with the Eastern Colorado area than
with the Great Basin area since issuance of the proposed rule.
[[Page 16051]]
8. SOUTHWEST--current marketing areas of Texas and New Mexico-West
Texas Federal milk orders, with the addition of two currently-
unregulated northeast Texas counties and 47 currently-unregulated
counties in southwest Texas.
Major criteria supporting this consolidation include sales and
procurement area overlaps and common cooperative association membership
between the Texas and New Mexico-West Texas marketing areas, and
similar marketing concerns with respect to trade with Mexico for both
orders. Addition of the currently-unregulated Texas counties will
result in the regulation of no additional handlers, and will reduce
handlers' recordkeeping and reporting burden and the market
administrator's administrative costs.
9. ARIZONA-LAS VEGAS--current marketing area of Central Arizona,
plus the Clark County, Nevada, portion of the current Great Basin
marketing area, plus eight currently-unregulated Arizona counties.
The major criterion on which the consolidation is based is sales
overlap between the sole Las Vegas, Nevada, handler and handlers
regulated under the Central Arizona order in both Clark County, Nevada,
and unregulated portions of northern Arizona. The Grand Canyon and
sparsely populated areas in the northwest part of Arizona, and the
sparsely populated desert region of eastern Arizona constitute natural
barriers between this and adjacent marketing areas. In addition, the
most significant relationship between this area and any other is
represented by the substantial volumes of bulk and packaged milk
exchanged between the Arizona-Las Vegas area and Southern California.
*10. WESTERN--current marketing areas of the Southwestern Idaho-
Eastern Oregon and Great Basin Federal milk orders, minus Clark County,
Nevada. *The Western Colorado order area, proposed to be included in
the Western order area, is instead included in the consolidated Central
order. The major criteria on which the consolidation is based include
overlapping sales between Southwestern Idaho-Eastern Oregon and Great
Basin, as well as a significant overlap in procurement for the two
orders in five Idaho counties. The two orders also have similar
multiple component pricing plans and most of the milk used in nonfluid
products under both orders is used in cheese.
Collection of detailed data for individual handlers indicates that
the strength of earlier relationships between the former Great Basin
and Lake Mead orders that justified their 1988 merger have dwindled
significantly, with the Las Vegas area now more closely related to a
combination of southern California and Central Arizona handlers.
11. PACIFIC NORTHWEST--current marketing area of the Pacific
Northwest Federal milk order plus 1 currently-unregulated county in
Oregon. The degree of association with other marketing areas is
insufficient to warrant consolidation.
=======================================================================
Table 1.--Market Information: Population, Utilization, Producer Milk and Weighted Average Utilization Value
(WAUV) in Consolidated Marketing Areas
----------------------------------------------------------------------------------------------------------------
Class I
Market Population 1 utilization 2 Producer milk WAUV 2 3 (per
(millions) (percent) 2 (1000 lbs.) cwt)
----------------------------------------------------------------------------------------------------------------
Northeast....................................... 49.0 48.6 1,962,335 $13.97
Appalachian..................................... 17.3 85.0 410,372 13.35
Florida......................................... 14.1 90.6 217,952 15.69
Southeast....................................... 26.9 85.6 482,499 13.60
Mideast......................................... 31.0 58.9 1,040,112 13.42
Upper Midwest................................... 18.5 24.1 1,597,232 12.94
Central......................................... 21.5 50.1 868,443 13.29
Southwest....................................... 21.3 53.4 649,872 13.97
Arizona-Las Vegas............................... 5.7 46.3 195,943 13.84
Western......................................... 3.2 32.5 304,129 13.14
Pacific Northwest............................... 9.0 35.6 539,987 13.33
---------------------------------------------------------------
Total....................................... 217.5 N/A 7,756,390 N/A
----------------------------------------------------------------------------------------------------------------
1 Based on July 1, 1997 estimates.
2 Based on October 1997 information, for plants which would be fully regulated under assumptions used in this
decision.
3 Not a blend price--shown solely for the purpose of showing impact of consolidation on utilization.
Table 2.--Market Information: Number of Plants in Consolidated Marketing Areas
----------------------------------------------------------------------------------------------------------------
Distributing plants 1
------------------------------------------------ Manufacturing
Market Fully FR small and supply
regulated (FR) Exempt2 businesses plants 3
----------------------------------------------------------------------------------------------------------------
Northeast....................................... 64 9 31 95
Appalachian..................................... 25 3 4 13
Florida......................................... 12 1 2 4
Southeast....................................... 36 1 3 37
Mideast......................................... 51 4 27 59
Upper Midwest................................... 27 3 13 301
Central......................................... 35 3 7 84
Southwest....................................... 21 2 5 17
Arizona-Las Vegas............................... 5 1 2 3
Western......................................... 11 1 5 18
Pacific Northwest............................... 19 4 12 27
---------------------------------------------------------------
[[Page 16052]]
Total....................................... 306 32 111 669
----------------------------------------------------------------------------------------------------------------
1 Based on October 1997 information. Excludes: (1) out-of-business plants through December 1998; and (2) new
plants since October 1997.
2 Exempt based on size (less than 150,000 lbs. route distribution per month).
3 Based on May 1997 information.
Descriptions of Consolidated Marketing Areas
Each of the consolidated order areas is described in the text
following this introduction. The criteria which were used to determine
which areas should be consolidated are explained. For each consolidated
area, the following information is included:
Geography. The political units (states, counties, and portions of
counties) included in each area, the topography, and the climatic
conditions are described for the purpose of delineating the territory
to be incorporated in each consolidated marketing area and describing
its characteristics pertaining to milk production and consumption. This
information was derived principally from Microsoft
Encarta 96 Encyclopedia, and augmented by several U.S.
atlases.
Population. The total population of each area and its distribution
within the area is included for the purpose of identifying where milk
is consumed. July 1, 1997, population estimates were obtained from
``CO-97-1 Estimates of the Population of Counties,'' Population
Estimates Program, Population Division of the U.S. Bureau of the
Census.
Metropolitan Statistical Area (MSA) information is provided by the
United States Office of Management and Budget (OMB), which defines
metropolitan areas according to published standards that are applied to
Census Bureau data. To be described as an MSA, an area (one or more
counties) must include at least one city with 50,000 or more
inhabitants, or a Census Bureau-defined urbanized area (of at least
50,000 inhabitants) and a total metropolitan population of at least
100,000 (75,000 in New England). Areas with more than 1 million
population may be described as ``consolidated metropolitan statistical
areas'' (CMSAs) made up of component parts designated as primary
metropolitan statistical areas (PMSAs). For purposes of the marketing
area descriptions in this decision, the term ``MSA'' also includes
CMSAs and PMSAs.
Per capita consumption. Available data pertaining to per capita
consumption is discussed to help describe how much milk is needed to
supply the fluid needs of the population of each marketing area. Per
capita consumption numbers were estimated by state using data from a
report on ``Per Capita Sales of Fluid Milk Products in Federal Order
Markets,'' published in the December 1992 issue of Federal Milk Order
Market Statistics, 391, issued May 1993. This data
was the most recent available.
Production. A description of the amount and sources of milk
production for the market is included for the purpose of identifying
the supply area for each consolidated marketing area. Production data
by state and county for each Federal milk order was compiled from
information collected by the offices administering the current Federal
milk orders (market administrators' offices). For most of the
consolidated marketing areas, production data has been updated to
October 1997. For several of the consolidated areas, however, October
1997 data is difficult to compile and, when compared with previously
published statistics, may yield confidential information. For these
areas, the data cited in the proposed rule has been used to describe
the sources of milk for the consolidated market.
Distributing plants. For each marketing area the number and types
of distributing plants expected to be associated with each marketing
area are included, with the locations of plants by population centers,
to identify where milk must be delivered. This information was
collected by market administrators' offices. The expected regulatory
status was determined on the basis of each plant's receipts and route
distribution of fluid milk during October 1997. Changes in plant
operations or distribution patterns could change the expected status.
Utilization. The utilization percentages of the current individual
orders and the effect of consolidation on the consolidated orders are
described for each marketing area, with an estimate of the effect of
consolidation on each current individual order's blend price. The
current utilization data is published each month for each Federal milk
order market. Pool data was used to calculate the effects of
consolidation on utilization.
Other plants. The presence of manufacturing and supply plants in
and near the consolidated order areas, and the products processed at
these plants, are described for each consolidated area. This
information was collected by market administrators' offices for May
1997, and has been changed from the proposed rule only where changes
from the proposed marketing areas have occurred.
Cooperative Associations. The number of cooperative associations
pooling member milk under each of the current individual orders
included in each consolidated area, and the number that pool milk in
more than one of the areas is identified. This information was obtained
from market administrators' offices, updated to December 1997 from the
proposed rule. For purposes of the consolidation discussion, the four
cooperative associations that combined to create Dairy Farmers of
America (DFA) are considered to be a single organization.
Criteria for Consolidation. The extent to which the criteria used
in identifying markets to be consolidated are supported by the
marketing conditions present in each of the consolidated areas is
discussed.
Discussion of comments and alternatives. Comments filed in response
to the consolidation section of the proposed rule and alternatives
considered are summarized and discussed for each consolidated area.
Northeast
The consolidated Northeast marketing area is comprised of the
current New England, New York-New Jersey, and Middle Atlantic Federal
milk order marketing areas (Orders 1, 2, and 4), with currently-
unregulated areas in northern New York, Vermont and New Hampshire
added. The entire areas of the States of Connecticut (8 counties),
Delaware (3 counties), Massachusetts (14 counties), New Hampshire (10
counties), New Jersey (21 counties),
[[Page 16053]]
Rhode Island (5 counties), and Vermont (14 counties) are contained
within the consolidated Northeast order area. In addition, the District
of Columbia, 21 counties and the City of Baltimore in Maryland, 41
complete and 3 partial counties and the 5 boroughs of New York City in
New York, the 15 Pennsylvania counties currently included in the Middle
Atlantic marketing area, and 4 counties and 5 cities in Virginia are
included in the consolidated order. There are 156 complete and 3
partial counties and 8 cities, including the District of Columbia, in
the consolidated Northeast marketing area.
The Western New York State order area, proposed to be included in
the consolidated Northeast area, is not included at the request of the
business entity that would be most affected by its inclusion because
the currently-unregulated portions of Pennsylvania are not included.
Geography
The Northeast marketing area extends from the Canadian border on
the north, south to northern Virginia, eastern Maryland and Delaware,
with its eastern edge along the western border of Maine at the northern
end of the marketing area, and along the Atlantic Ocean for the
remainder. The total northeast-southwest extent of the marketing area
is approximately 600 miles. The marketing area extends westward to Lake
Ontario in New York State (about 350 miles east to west), goes only as
far west as the northern part of New Jersey (about 60 miles), and
expands westward again across the eastern half of southern
Pennsylvania, taking in a small part of northeast Virginia, eastern
Maryland, and Delaware (about 230 miles east to west). There is a large
State-regulated area in Pennsylvania just to the west of the Northeast
marketing area; and most of the State of Virginia to the south of the
marketing area also is regulated under a State order. The consolidated
Northeast marketing area is contiguous to no other consolidated
marketing areas, but parts of it, in south central New York State and
south central Pennsylvania, are very close to the consolidated Mideast
area.
The northern and northwestern parts of the Northeast area are large
areas of coniferous forests that are somewhat mountainous. To the south
and southeast of the forested areas are areas where dairy farming
predominates as the primary type of agriculture. In fact, for 4 of the
10 states that are located in the Northeast marketing area (New
Hampshire, New York, Pennsylvania and Vermont) dairy products were the
number 1 agricultural commodity in terms of cash receipts during 1996.
Principally along the Atlantic coastline is a flatter area where other
agricultural activities, including greenhouse and nursery, fruit, truck
and mixed farming, take place. A near-continuous strip along the east
coast of the area, from northeast Massachusetts southwest to the
Baltimore area, is a major industrial area and is heavily populated.
Population
According to July 1, 1997, population estimates, the total
population in the consolidated Northeast marketing area is 49 million.
The area is very densely populated, especially along a coastal strip
extending from Boston, Massachusetts, in the northeast to Washington,
D.C., in the southwest. In this consolidated marketing area of
approximately 160 counties, 106 are included within Metropolitan
Statistical Areas (MSAs). The 20 Metropolitan Statistical Areas in the
consolidated Northeast marketing area account for 93.7 percent of the
total market area population.
Almost sixty percent of the marketing area population is located in
6 interconnected MSAs in 48 counties, extending from central New Jersey
to southern New Hampshire. The six MSAs are: Springfield,
Massachusetts; Boston-Worcester-Lawrence, Massachusetts/New Hampshire/
Maine/Connecticut; Providence-Fall River-Warwick, Rhode Island/
Massachusetts; New London-Norwich, Connecticut/Rhode Island; Hartford,
Connecticut; and New York-Northern New Jersey-Long Island, New York/New
Jersey/Connecticut/Pennsylvania. The population in this northeastern
portion of the marketing area is concentrated most heavily at its
northern and southern ends--the New York City area has a population of
approximately 20 million, and the Boston area's population is
approximately 5.5 million. Two of the other MSAs, Hartford and
Providence, each have over 1 million population. Although each of these
six MSAs is described as a separate area in the population data, many
of the counties involved are divided between separate MSAs.
Just southwest of the New York City MSA is the Philadelphia-
Wilmington-Atlantic City, Pennsylvania/New Jersey/Delaware/Maryland
MSA, with a population of 6 million. Some counties of these two MSAs
are adjacent. Southwest of the Philadelphia MSA and separated from it
by only one county is the Washington, DC/Baltimore, Maryland/northern
Virginia MSA, with a population in the consolidated marketing area of
6.8 million.
Of the 12 other MSAs in the consolidated marketing area, 6 are
located in New York State, with an average population of nearly 400,000
each. Two are located in Pennsylvania, with populations of .6 and .45
million. One MSA in Vermont, 1 in Delaware, and 2 in Massachusetts have
average populations of 163,000.
Fluid Per Capita Consumption
Fluid per capita consumption estimates vary within the Northeast
from 16.7 pounds per month in the more southern parts of the region to
20 pounds per month in New England. These rates would result in a
weighted average of 18 pounds per month, and an estimated total fluid
milk consumption rate of 882 million pounds per month for the Northeast
marketing area. Approximately 752 million pounds of this fluid milk
consumption would be required along the heavily-populated coastal area
extending from northeast Massachusetts southwest through Washington,
D.C. and northern Virginia. Handlers who would have been fully
regulated under the consolidated Northeast order during October 1997
distributed 828.1 million pounds within the consolidated marketing
area. October 1997 sales within the marketing area by handlers that
would be regulated by other orders totaled 6.2 million pounds, and
sales by handlers who would have been partially regulated were 18.9
million pounds. Sales in the marketing area by exempt and government
plants, and by producer-handlers totaled 6.6 million pounds.
Milk Production
In October 1997, nearly 19,000 producers from 13 states pooled 1.9
billion pounds of milk on the three orders comprising the consolidated
Northeast order. With the addition of several currently-unregulated
handlers, it is probable that approximately 2 billion pounds of milk
per month will be pooled under the Northeast order.
Eleven of the 13 states supplying milk to the three Federal order
pools are at least partly in the marketing area, and 84 percent of the
producer milk pooled under the three orders in October 1997 came from
just 3 states--New York (41.5 percent), Pennsylvania (32.2 percent),
and Vermont (10.3 percent). Over 10 million pounds of milk was produced
in each of fifty-one counties: 1 county in northeast Connecticut, 3 in
the most northwestern of the Maryland portion of the marketing area, 30
spread over most of New York, 1 on the western edge of
[[Page 16054]]
northern Virginia, and 16 in southeast to south central Pennsylvania
and in the eastern part of the northern tier of Pennsylvania counties,
with an additional Pennsylvania county, Lancaster, accounting for over
150 million pounds of milk. Over seventy percent of the markets' total
producer milk was produced within the consolidated marketing area.
Less than one-third of the milk production for the consolidated
market was produced within 100 miles of the heavily populated coastal
corridor. Although the Northeast area contains two out of the top five
milk-producing states in the U.S. (New York and Pennsylvania), the
population of the marketing area is nearly 20 million more than the
next most-populated consolidated area (the Mideast area, with 31
million people). The Northeast, therefore, is a very significant milk
production area with a very high demand for fluid milk and dairy
products.
Distributing Plants
Using distributing plant lists included in the proposed rule, with
the pooling standards at 25 percent of route dispositions as in-area
sales, and updated for known plant closures through December 1998, 141
distributing plants would be expected to be associated with the
Northeast marketing area. On the basis of data collected for October
1997, the plants associated would include 64 fully regulated
distributing plants (58 currently fully regulated, 5 currently
partially regulated, and 1 currently unregulated), 15 partially
regulated (2 currently fully regulated and 13 currently partially
regulated). Nine exempt plants having less than 150,000 pounds of total
route disposition per month (3 currently fully regulated, 2 currently
partially regulated, 2 currently exempt based on size, and 2 currently
unregulated) and 47 producer-handlers (45 currently producer-handlers,
1 currently partially regulated, and 1 currently unregulated) would
have been associated with the market during October 1997. Three
handlers who currently are exempt based on institutional status would
continue to be exempt on the same basis, and 3 handlers located in the
Western New York order area who would have been fully regulated under
the proposed rule would continue to be unregulated under any Federal
order.
Since October 1997, 14 distributing plants (3 in New York, 2 in
each of the States of Massachusetts, Maryland, New Jersey, Pennsylvania
and Vermont, and 1 in Connecticut), have gone out of business.
Less than half (60) of the Northeast distributing plants which were
identified as being in business as of December 1998 were located in the
6 Northeast MSAs that have over a million people each. This number
includes 31 of the pool distributing plants. Under the consolidated
order, it is anticipated that there would be 5 pool distributing plants
in the Boston-Worcester-Lawrence area, 6 in the Philadelphia-
Wilmington-Atlantic City area, and 11 in the New York-Northern New
Jersey-Long Island area. The Hartford, Connecticut, area would have 2
pool distributing plants, Providence-Fall River-Warwick would have 3,
and the Washington-Baltimore area would have 4 pool distributing
plants.
Of the remaining 81 distributing plants, 14 pool distributing
plants were located in other MSAs as follows: 8 in New York; 4 in
Pennsylvania; and 2 in Massachusetts. Sixty-seven distributing plants,
including 19 pool distributing plants, were not located in MSAs.
Utilization
According to October 1997 pool statistics for handlers who would be
fully regulated under this Northeast order, the Class I utilization
percentages for the New England, New York-New Jersey, and Middle
Atlantic markets were 52, 45, and 53 percent, respectively. Based on
calculated weighted average use values for (1) the current order with
current use of milk, and (2) the current order with projected use of
milk in the consolidated Northeast order, the potential impact of this
decision on producers who supply the current market areas is estimated
to be: New England, a 9-cent per cwt decrease (from $14.09 to $14.00);
New York-New Jersey, a 8-cent per cwt increase (from $13.91 to $13.99);
and Middle Atlantic, a 10-cent per cwt decrease (from $14.00 to
$13.90). The weighted average use value for the consolidated Northeast
order market is estimated to be $13.97 per cwt. For October 1997,
combined Class I utilization for Orders 1, 2 and 4 was 47.7 percent
based on 917.3 million pounds of producer milk used in Class I out of
1.922 billion total producer milk pounds.
The Northeast area is one of two consolidated marketing areas that
would have a significantly higher-than-average percentage of its milk
used in Class II. Currently, all three of the orders have Class II
utilization between 15 and 25 percent. When the markets are combined
the average for the consolidated market will be approximately 18
percent.
Other Plants
Located within the consolidated Northeast marketing area during May
1997 were 95 supply or manufacturing plants: 13 in Vermont (4 in the
Burlington area), 1 in New Hampshire and 10 in Massachusetts (all in
the Boston-Worcester-Lawrence area), 1 in Rhode Island (in the
Providence-Fall River-Warwick area), 7 in Connecticut (3 in the
Hartford area and 4 in the New York-Northern New Jersey-Long Island
area), 12 in New Jersey (all in the New York-Northern New Jersey-Long
Island area), 2 in Delaware (one in the Philadelphia-Wilmington-
Atlantic City area), 7 in Maryland (four in the Washington-Baltimore
area), 13 in Pennsylvania (5 in the Philadelphia-Wilmington-Atlantic
City area), and 29 in New York (9 in the New York-Northern New Jersey-
Long Island area).
Fifteen of the 95 plants are pool plants. Of these pool plants, 7
are manufacturing plants--5 manufacture primarily powder, 1
manufactures primarily cheese and 1 manufactures primarily other
products. There are 8 pool supply plants--1 has no primary product, but
ships only to distributing plants; 5 are supply plants that manufacture
primarily Class II products, and 2 supply plants manufacture primarily
cheese. Of the remaining 80 nonpool plants in the Northeast marketing
area, 73 are manufacturing plants--37 manufacture primarily Class II
products, 1 manufactures primarily butter, 33 manufacture primarily
cheese and 2 manufacture primarily other products. Seven of the
remaining nonpool plants are supply plants--2 are supply plants that
manufacture primarily Class II products and 5 are supply plants that
manufacture primarily cheese.
There are also six supply or manufacturing plants in the
unregulated area of New York--one in the unregulated county of
Chautauqua, one in the unregulated portion of Cattaraugus County, two
in the unregulated portion of Allegany County, and two in the
unregulated portion of Steuben County. Two are pool supply plants--one
manufactures primarily Class II products and the other manufactures
primarily cheese. The remaining four are nonpool manufacturing plants--
three manufacture primarily cheese and one manufactures primarily Class
II products.
[[Page 16055]]
Cooperative Associations
During December 1997, 76 cooperative associations pooled their
members' milk on the three Northeast orders. Three of the cooperatives
pooled milk on all three orders, 3 pooled milk on both the New England
and New York-New Jersey orders, and 3 others pooled milk on both the
New York-New Jersey and Middle Atlantic orders. The 9 cooperative
associations that pooled milk on more than one of the Northeast orders
represented 72.6 percent of cooperative milk pooled under the 3 orders
and 55 percent of the total milk. Seventy-six percent of the milk
pooled in the Northeast is cooperative association milk, with 80
percent of Federal Order 1 milk, 68.4 percent of Federal Order 2 milk,
and 87 percent of Federal Order 4 milk pooled by cooperatives.
The 5 cooperatives that market milk only under Order 1 account for
26.7 percent of the milk marketed under that order by cooperative
associations, and 21.3 percent of total milk marketed under Order 1. In
Order 2, only 40.4 percent of cooperative association milk is marketed
by the 59 co-ops that market milk only under Order 2. Milk marketed by
these cooperatives represents 27.6 percent of the total milk pooled for
December 1997. Three cooperative associations that marketed milk only
on the Order 4 portion of the Northeast order marketed 8.2 percent of
the milk marketed by cooperatives under this order. This amount of milk
represented 7.2 percent of total milk pooled under Order 4 in December
1997.
Criteria for Consolidation
The current New England, New York-New Jersey, and Middle Atlantic
Federal milk order marketing areas (Orders 1, 2, and 4) should be
consolidated because of the interrelationship between Orders 1 and 2
and between Orders 2 and 4 regarding route disposition and milk supply.
Eighty percent of fluid milk disposition by handlers who would be fully
regulated under the consolidated order is distributed within the
consolidated marketing area. Fully regulated handlers account for 96
percent of the fluid milk products distributed within the consolidated
marketing area. The utilization of the three markets is similar, and
several cooperative associations market their members' milk in all
three markets. The three markets are surrounded by State-regulated and
unregulated areas to the west and south, the Atlantic ocean to the
east, and Canada to the north. The adjoining Maine State milk order
also serves as somewhat of a barrier to milk marketing in the northeast
by limiting the association of non-Maine milk with the Maine pool.
The merger of these markets has been previously proposed by
interested parties. A committee comprised chiefly of Northeast region
cooperatives was formed over three years ago to study a merger of the
three Federal orders. In support of a Northeast consolidation, the
committee and other interested parties, including handlers and
regulatory agencies, have noted: overlapping sales and procurement
areas; a trend toward consolidation of cooperative processors and
handlers in the region (leaving the remaining handlers with larger
distributing areas and volumes); and regulation of plants by an order
in which they are not located. The proponents of consolidation have
indicated that consolidation would tend to solve some of the presently
existing inequities and would lead to greater efficiency for handlers
and order administration.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives to the
consolidation of the order areas included in the Northeast marketing
area that were considered included the addition of all currently
unregulated and State-regulated area adjoining the Order 1, 2 and 4
marketing areas. These considerations included Pennsylvania Milk
Marketing Board (PMMB) Areas 2, 3, and 6, some or all of the non-
Federally regulated part of the State of Virginia, the unregulated
areas of West Virginia and Maryland, the Western New York State order
area and northern New York, northern Vermont and New Hampshire, pockets
of unregulated area in Massachusetts, and the State of Maine. The
proposed rule would have included in the consolidated Northeast
marketing area the unregulated areas of Vermont, New Hampshire,
Massachusetts, northern New York, and the Western New York State order
area.
Nearly 1,150 comments that dealt to some extent with the
consolidation of the Northeast order area were received in response to
the proposed rule. Approximately 125 of these comments favored adoption
of a national marketing area map that would include all U.S. territory
in the 48 contiguous states in one of ten Federal order areas. Over 950
comments favored the expansion of the Northeast area into all of
Pennsylvania, with more than 600 of these comments also favoring
expansion into some combination of the unregulated areas of New York,
Maryland, West Virginia, Vermont, Massachusetts, New Hampshire, and
Maine. More than 50 commenters urged the continued omission of
Pennsylvania Milk Marketing Board Areas 2, 3, and 6 from any of the
consolidated Federal order areas.
Most of the comments supporting expansion of the Northeast
consolidated marketing area into non-federally regulated areas,
especially Pennsylvania, argued that handlers in the non-federally
regulated areas compete for milk supplies in the same milksheds and for
fluid milk sales in the same markets as Federally-regulated handlers,
with the surrounding federal order pool(s) carrying the necessary
reserve milk supplies for the Class I sales distributed by non-
regulated handlers. In addition, the comments argued that dairy farmers
whose milk is priced in individual handler pools at primarily-fluid
handlers under PMMB regulation have a competitive advantage over
neighboring producers whose milk is included in marketwide pools that
blend the cost of balancing milk supplies for fluid use with returns
from the fluid market.
Nearly 60 comments, many from Pennsylvania dairy farmers, opposed
expansion of the consolidated Northeast order area into Pennsylvania.
Comments stated that the PMMB individual handler pools result in
greater returns to producers, and producer returns would decline if
handlers are required to pay the additional fluid value into the
marketwide pool to subsidize cheese/powder plants.
As stated in the introduction to the consolidation discussion,
consolidation of the existing orders does not necessitate expansion of
the consolidated orders into currently-unregulated areas, especially if
such expansion would result in the regulation of currently-unregulated
handlers. Handlers located in PMMB areas 2, 3, and 6 are regulated
under the State of Pennsylvania if they do not have enough sales in any
Federal order area to meet an order's pooling standards. These PMMB
handlers are subject to minimum Class I pricing, sometimes at price
levels that exceed those that would be established under Federal milk
order regulation. When such plants do meet Federal order pooling
standards, the State of Pennsylvania continues to enforce some of its
regulations in addition to Federal order regulations. Inclusion of the
Pennsylvania-regulated handlers in the consolidated marketing area
would have little effect on handlers' costs of Class I milk (or might
reduce them), and would reduce returns to a few producers. In
[[Page 16056]]
view of these considerations, it appears that stable and orderly
marketing conditions can be maintained without extending full Federal
regulation to State-regulated handlers.
There are significant differences between PMMB regulation and
Federal order regulation that make it difficult to determine whether
PMMB regulation gives State-regulated handlers a cost advantage over
Federally-regulated plants distributing milk in the same areas. Some of
the differences between PMMB and Federal order regulation are: (1) The
number of classes of use (two versus four); (2) the location at which
milk is priced (where it is distributed for sale to consumers versus
where it is received from producers for processing); (3) individual
handler pooling versus marketwide pooling; and (4) State regulatory
treatment of milk sold in interstate commerce, including milk
distributed outside the State and received from outside the State. In
addition to creating different costs among similarly-located State- and
Federally-regulated handlers, PMMB regulation may result in different
costs between similarly-located PMMB-regulated handlers. However, since
the main focus of this rulemaking process has been to consolidate
existing Federal marketing areas, it would be more appropriate to
consider this issue of marketing area expansion in Pennsylvania at a
future time.
Maine has been and continues to be excluded from Federal order
regulation. Three comments, two from New York State Dairy Foods and one
from Crowley Foods, Inc., a fluid milk processor with distributing
plants regulated under the New York-New Jersey and New England orders,
suggested including Maine in the consolidated Northeast order on the
basis that Maine regulation depends on balancing seasonal reserves on
the New England order, and that the inclusion of Maine would allow
similarly situated handlers equal opportunities. Five comments
supported Maine's exclusion from Federal orders because of its
geographic separation from other areas, its long history of successful
milk marketing regulation, and the limited impact of its pricing system
on other regulated areas.
There appears to be little reason to add the State of Maine to the
consolidated Northeast order area. Maine handlers with significant
distribution in the Federal order areas can be and are pooled under
Federal orders, limiting the extent of any competitive advantage.
Inclusion of Maine-regulated handlers in the consolidated marketing
area would have little effect on handlers' costs of Class I milk (or
might reduce them), and would reduce returns to a few producers. When
not pooled under Federal orders, Maine handlers are subject to minimum
prices paid for milk, and producers are assured minimum prices in
payment for milk. There is no compelling reason to extend Federal order
regulation to encompass this State-regulated marketing area.
The Western New York State order area, proposed to be added to the
consolidated Northeast area because the persons regulated under that
order had so requested, is not included. Upstate Milk Producers
Cooperative (Upstate), the entity that would be most affected by the
inclusion of this area, had supported its addition prior to issuance of
the proposed rule. Because the proposed rule failed to include the
State-regulated Pennsylvania areas in the consolidated Northeast area,
however, Upstate determined that it would be faced with unfair
competition from PMMB-regulated handlers and requested that the Western
New York order area be left out of the consolidated Northeast order
area.
All of the comments received that dealt with the inclusion of
unregulated area in the States of Massachusetts, New Hampshire, and
Vermont and the currently-unregulated northern area of New York State
in the consolidated Northeast order area supported the addition of this
area. According to the comments, inclusion of the currently unregulated
areas will assure that distributing plant operators that currently are
fully regulated would be placed on an equal competitive footing with
handlers currently unregulated, while having no negative effect on the
producers who would be affected. Inclusion of these currently
unregulated areas would lighten handlers' reporting burden and the
market administrator's administrative burden in keeping separate data
on sales in this small unregulated area. The number of handlers who
would be affected by these additions is minimal, and the additions
would enhance the efficiency of Federal order administration while
easing the reporting burden of regulated handlers.
In addition to the northern portions of New Hampshire, Vermont, and
New York, and the small area of Massachusetts, the offshore
Massachusetts counties of Dukes and Nantucket are added to the
marketing area. The only entity currently operating in those counties
(a producer-handler on Martha's Vineyard) would be exempt from the
pooling and pricing provisions of the order by virtue of its status as
a producer-handler and by having fewer than 150,000 pounds of route
disposition per month. Mainland handlers distributing milk in these two
counties would find their reporting burden eased if these counties
become part of the marketing area.
Appalachian
The consolidated Appalachian marketing area is comprised of the
current Carolina (Order 5) and Louisville-Lexington-Evansville (Order
46) marketing areas (less one Kentucky county that is included in the
consolidated Southeast marketing area) as well as 64 counties and 2
cities formerly comprising the marketing area of the Tennessee Valley
Federal Order (Order 11), terminated in October 1997, and currently-
unregulated counties in Indiana and Kentucky. There are 297 counties
and 2 cities in this consolidated marketing area. This area remains
unchanged from the proposed rule.
Geography
The Appalachian market is described geographically as follows: 7
unregulated Georgia counties (formerly part of Order 11), 20 Indiana
counties (17 currently in Order 46 and 3 currently unregulated), 81
Kentucky counties (47 currently in Order 46, 16 formerly part of Order
11, and 18 currently unregulated), all North Carolina and South
Carolina counties (100 and 46, respectively, and all currently in Order
5), 33 Tennessee counties (formerly part of Order 11), 8 counties and 2
cities in Virginia (formerly part of Order 11), and 2 West Virginia
counties (formerly part of Order 11).
The consolidated Appalachian market reaches from the Atlantic
coastline westward to southern Indiana and western Kentucky's border
with Illinois. It is surrounded by Illinois on the west, Indiana,
northeastern Kentucky, West Virginia and Virginia to the north, the
Atlantic Ocean on the east, and Georgia, Alabama, western Tennessee and
southwestern Kentucky to the south. Measuring the extreme dimensions,
this market extends about 625 miles from its northwest corner in
Indiana to its southeastern corner on the South Carolina-Georgia
border, about 300 miles south-to-north from the South Carolina-Georgia
border to the North Carolina-Virginia border, about 500 miles west-to-
east from the Appalachian-Southeast markets' border in Tennessee to
eastern North Carolina, and about 375 miles west-to-east from the
Illinois-Indiana border to West Virginia and Virginia.
The Appalachian market is contiguous to 3 other consolidated
[[Page 16057]]
marketing areas: the Southeast area to the southwest and south, the
Central area to the west and the Mideast area to the north. Unregulated
counties in West Virginia and State-regulated area in Virginia also
border this market to the north. North and South Carolina have almost
500 miles of coastline on the Atlantic Ocean.
In terms of physical geography, similarities exist across the
states or areas included in this market. Southern Indiana and central
Kentucky are in the Interior Low Plateau region where valleys and steep
hillsides are typical. In this market, the Appalachian or Cumberland
and Alleghany Plateaus are found in West Virginia, Virginia, Kentucky,
Tennessee and northwestern Georgia on the western edge of the
Appalachian Mountains. Eastern Tennessee and both western North and
South Carolina are in the Blue Ridge region, which is part of the
Appalachian Mountain range. Moving eastward toward the Atlantic Ocean,
the central part of the Carolinas are in the Piedmont Plateau, with the
Atlantic Coastal Plain covering approximately the remaining eastern
half of both these states.
Climatic types in this region vary somewhat. Humid subtropical
climates are typical in most of North and South Carolina, as well as
Virginia (which is affected by elevation differences) and southern
Indiana. Humid continental climates are typical for northwestern
Georgia, western North and South Carolina and southern West Virginia.
Temperate climates are common in eastern Tennessee and central
Kentucky.
Much of the consolidated Appalachian area does not provide a
hospitable climate or topography for dairy farming. As an agricultural
pursuit, dairy farming is far down the list in the area, accounting for
an average of less than five percent of all receipts from farm
commodities for the states involved. Crops such as tobacco, corn and
soybeans, and other livestock commodities such as cattle/calves,
turkeys and broiler chickens are more prevalent in this region.
Population
According to July 1, 1997, population estimates, the total
population in the Appalachian marketing area is 17.3 million. There are
24 Metropolitan Statistical Areas (MSAs) within the consolidated
marketing area, containing 62.3 percent of the area's population. The
largest 17 contain 57 percent of the population of the market.
Charlotte, North Carolina, is the largest MSA in the marketing area
with a population of 1.35 million. Charlotte is located near the South
Carolina border about at the mid point of the North and South Carolina
border, and about 250 miles west of the Atlantic coast. Less than 100
miles to the north lies the second-largest MSA of Greensboro-Winston-
Salem-High Point, North Carolina, with a population of 1.15 million.
About 50 miles east of Greensboro is the third-largest MSA, Raleigh-
Durham-Chapel Hill, with 1.05 million people. The Raleigh MSA abuts the
Greensboro MSA. An additional four North Carolina MSAs are among the
largest of the 17 MSAs containing 57 percent of the population of the
consolidated marketing area, for a combined population of one million.
North Carolina is the most populous state in the consolidated marketing
area with 7.4 million; over sixty percent of the population of North
Carolina is located in these seven MSAs.
South Carolina is the second-most populous state in the
consolidated area, with 3.8 million people. The Carolinas contain
nearly two-thirds of the consolidated market's population. Greenville
is the largest MSA in the state with a population of 905,000.
Greenville is located in the northwest corner of the state. Charleston,
the second-largest MSA in South Carolina, with over half a million
people, is approximately at the midpoint of South Carolina's coast.
The Tennessee portion of the consolidated Appalachian market has a
population of 2 million, with three MSA's that are included in the
largest 17 in the market. These three areas contain 1.6 million, or
just under 80 percent of the population in that part of Tennessee that
is included in the Appalachian marketing area. The largest Tennessee
MSA is Knoxville, which is in the eastern end of Tennessee near North
Carolina. Six counties make up the Knoxville MSA with a combined
population of 650,000. The Johnson City-Kingsport-Bristol area, the
second-largest Tennessee MSA, is located in the northeastern tip of
Tennessee along the Virginia and North Carolina border, and contains
460,000 people. Chattanooga, the third-largest MSA in Tennessee, is
located on the Tennessee-Georgia border, and has a population of
447,000. The three MSAs run northeast to southwest just west of the
North Carolina border.
The Kentucky portion of the consolidated Appalachian market
contains 2.7 million people. There are two MSAs within the state that
are included in the largest 17 in the market. The largest is
Louisville, which lies on the border with Indiana and has a population
of one million. Lexington, the second-largest Kentucky MSA, is located
in the center of the state and has just under half a million people.
Generally, the Kentucky counties in the Appalachian marketing area are
not heavily populated. Only two have populations over 100,000. They are
Jefferson county, where Louisville is located, and Fayette county, home
to Lexington.
Indiana counties in the Appalachian market have a population of .8
million. Only Vanderburgh county has a population over 100,000.
Evansville, the only MSA in the portion of Indiana included in the
Appalachian market, is in Vanderburgh county. Evansville's MSA contains
289,000 and is located on the Indiana-Kentucky border, near the
Illinois state line.
There are seven Georgia counties within the consolidated
Appalachian marketing area, with a total population of .3 million.
Three of them, Catoosa, Dade, and Walker, are part of the Chattanooga
MSA. These three counties have a combined population of 124,000. The 10
Virginia counties in the Appalachian market have a population of .3
million. Three of the counties, Scott, Washington and Bristol City, are
part of the Johnson City-Kingsport-Bristol MSA. The two West Virginia
counties within the Appalachian market have a total population of .1
million.
Fluid Per Capita Consumption
Estimates of fluid per capita consumption within the consolidated
Appalachian marketing area vary from 15.8 per month for South Carolina
to 20.4 pounds per month for Indiana. Use of 17 pounds per month as a
weighted average results in an estimated 294 million pounds of fluid
milk consumption for the Appalachian marketing area. Appalachian
handlers' route disposition within the area during October 1997 totaled
283 million pounds, with another 21 million distributed by other order
plants, partially regulated plants, and plants exempt both for reasons
of both size and institutional status.
Milk Production
Milk production data for the Appalachian consolidated order area
has not been updated from December 1996 to October 1997 as have the
data for most of the other consolidated order areas. The Tennessee
Valley order was terminated October 1997. As a result, on the basis of
10 percent of receipts distributed within the Southeast order area,
three of the Tennessee Valley-regulated handlers became pool plants
under the Southeast order. Consequently, milk production data for
[[Page 16058]]
the consolidated Appalachian and Southeast orders based on October 1997
pool data would not be representative of the milk that would be pooled
on those consolidated orders. Available information indicates that the
sources of milk for the consolidated Appalachian market have not
changed in any significant way from the December 1996 data.
In December 1996, over 4,000 producers from 359 counties in 15
states pooled 443.3 million pounds of producer milk on Orders 5, 11 and
46. Approximately 71 percent of the milk pooled on the three orders was
produced within the proposed consolidated marketing area.
North and South Carolina are the only States that are located
entirely within the consolidated marketing area, and provided nearly
all of their producers' milk to Order 5 (encompassing the entire States
of North and South Carolina), with 103.7 and 34 million pounds,
respectively. Neither of these states produces enough milk to meet even
the fluid milk requirements of its population. Kentucky producers
pooled 101.1 million pounds on the three orders, with 89 percent
produced within the consolidated marketing area. Tennessee producers
pooled 69.9 million pounds on the three orders, principally on Order
11, with 84 percent produced within the consolidated marketing area.
Although Virginia is primarily outside the marketing area, producers
from 40 Virginia counties supplied 68.5 million pounds of milk for the
Tennessee Valley and Carolina order markets in December 1996. Georgia
producers pooled 27.6 million pounds and Indiana producers pooled 21
million pounds in December, with the balance of the milk pooled on the
three orders originating in Alabama, Connecticut, Illinois, Maryland,
Massachusetts, New Mexico, Pennsylvania, and West Virginia.
Thirty-four counties each supplied over 3 million pounds of milk to
the three markets consolidated in this area. One such county was
located in New Mexico, and another in Pennsylvania. Eight were located
in Kentucky, south and southwest of Lexington, and southeast of
Louisville. Eleven were located in North Carolina west of the Raleigh-
Durham area, with all but one located near Greensboro, Winston-Salem,
Asheville, Charlotte or Durham. Of the two South Carolina counties that
supplied over 3 million pounds each, one was located northwest of
Columbia, and the other northwest of Charleston. The five Tennessee
counties that pooled over 3 million pounds of milk on the three orders
are located in northeast and southeast Tennessee; two in the Johnson
City-Kingsport-Bristol area and three southwest of Knoxville. Only one
of the six counties in Virginia that supplied over 3 million pounds to
Orders 5 and 11 is located within the marketing area. Five of the six
are located in southwest Virginia, with the other in the northwest part
of the State.
Distributing Plants
Using distributing plant lists included in the proposed rule, with
the pooling standards adjusted to 25 percent of route dispositions as
in-area sales and updated for known plant closures through December
1998, 31 distributing plants would be expected to be associated with
the Appalachian marketing area, including 25 fully regulated
distributing plants (23 currently fully regulated, 1 currently
partially regulated, and 1 currently unregulated), 2 partially
regulated (both currently partially regulated), 3 exempt plants, on the
basis of having less than 150,000 pounds of total route disposition per
month (2 currently fully regulated and 1 currently unregulated), and 1
government agency plant (currently a government agency plant).
Four of the 31 distributing plants expected to be associated with
the consolidated area are located in Virginia, with only one located
within the marketing area. The plant in the marketing area currently is
fully regulated and is expected to remain so, and one of the other
Virginia plants, currently partially regulated, also is expected to be
fully regulated. The other two Virginia plants, both currently
partially regulated, are expected to remain in that status. Since
October 1997, 2 distributing plants in the marketing area have gone out
of business.
Under the consolidated Appalachian order, there would be 18
distributing plants in the largest Appalachian MSAs having distributing
plants. There would be 3 pool distributing plants in the Greensboro-
Winston-Salem-High Point area. The Charleston area would have 2 pool
distributing plants. The Johnson City-Kingsport-Bristol, Tennessee,
area would have 2 pool distributing plants. The Greenville-Spartanburg-
Anderson, South Carolina, area would have 2 pool distributing plants.
The Knoxville area would have 1 pool distributing plant and 1 exempt
plant, with less than 150,000 pounds of total route disposition per
month. The Charlotte, Chattanooga, Lexington, Louisville, and
Evansville areas would each have 1 pool distributing plant. The
Raleigh-Durham area would have one government agency plant and one
plant exempt on the basis of size.
Of the remaining 13 distributing plants associated with the market,
one pool plant would be located in a North Carolina MSA and one pool
plant would be located in a South Carolina MSA. The eleven remaining
distributing plants, eight of which are expected to be pool plants,
would not be located in MSAs. Three (2 pool, 1 exempt) would be in
North Carolina, and 3 would be in Virginia (1 pool and 2 partially
regulated). Three plants in Kentucky, 1 in Indiana, and 1 in Tennessee
are expected to be pool plants.
The 25 plants expected to be fully regulated under the Appalachian
order had distribution totaling 365 million pounds in October 1997,
with 78 percent within the consolidated marketing area.
A South Carolina plant included above in the description of fully
regulated distributing plants--Superbrand Dairy Products, Inc., in
Greenville (about 140 miles northeast of Atlanta)-- has a greater
proportion of its sales in the Southeast market than in the Appalachian
market. This plant currently is locked into regulation under the
Carolina order based on its need to procure a milk supply in the
Carolina order, although it has greater route disposition in the
Southeast. This lock-in is included in the Appalachian order
provisions.
Utilization
As in the case of milk production data, October 1997 data for the
three markets consolidated in the Appalachian order are not available
because of the termination that month of the Tennessee Valley order.
Instead of using October 1995 data from the proposed rule, however,
September 1997 data is used as representative for this section.
According to September 1997 pool statistics for handlers who would
be fully regulated under this Appalachian order, the Class I
utilization percentages for the Carolina and Louisville-Lexington-
Evansville markets and the former Tennessee Valley market were 86, 80,
and 87 percent, respectively. Based on calculated weighted average use
values for (1) the current order with current use of milk, and (2) the
current order with projected use of milk in the consolidated
Appalachian order, the potential impact of this decision on producers
who supply the current market areas is estimated to be: Carolina,
unchanged (from $13.59); Louisville-Lexington-Evansville, a 3-cent per
cwt increase (from $12.73 to $12.76); and Tennessee Valley, a 6-cent
[[Page 16059]]
per cwt decrease (from $13.38 to $13.32). The weighted average use
value for the consolidated Appalachian order market is estimated to be
$13.35 per cwt. For September 1997, combined Class I utilization for
Orders 5, 11 and 46 was 85.0 percent based on 349.0 million pounds of
producer milk used in Class I out of 410.4 million total producer milk
pounds pooled.
Other Plants
Also located within the consolidated Appalachian marketing area
during May 1997 were 13 supply or manufacturing plants: 4 in Kentucky
(1 in the Louisville area), 5 in North Carolina (1 in the Charlotte-
Gastonia-Rock Hill area and one in the Greensboro-Winston-Salem-High
Point area), 1 in Tennessee, and 3 nonpool cheese plants in Indiana (1
in the Lexington area and one in the Louisville area). Three of the 13
plants are pool plants, or have a ``pool side.'' Two of the three pool
plants (one in Kentucky and the one in Tennessee) are ``split plants,''
that is, one side of a plant is a manufacturing facility, and the other
side receives and ships Grade A milk, and accounting is done
separately. Of these pool plants, the pool sides of the 2 split plants
have no primary product, shipping only to distributing plants. The
nonpool side of one of these plants manufactures cheese, while the
nonpool side of the other manufactures powder. The other pool plant is
a supply plant that manufactures primarily Class II products. Of the
other nonpool plants in the Appalachian marketing area, 5 manufacture
primarily cheese and 5 manufacture primarily Class II products.
Cooperative Associations
Using September 1997 cooperative association information for the
former Tennessee Valley order area and December 1997 information for
the Carolina and Louisville-Lexington-Evansville (Order 46) orders, it
can be estimated that approximately 75 percent of the milk in the
consolidated Appalachian area was supplied by 12 cooperatives.
Dairymen's Marketing Cooperative, Inc., and cooperative associations
that merged to form Dairy Farmers of America supplied nearly half of
the milk pooled on all three markets during these months. Carolina-
Virginia Milk Producers Association, Inc., supplied approximately 20
percent of the milk pooled on both the Carolina and Tennessee Valley
markets.
Five cooperative associations supplied 16 percent of the milk
pooled under the Carolina order in December 1997, but supplied no milk
to the other two markets. Three of these cooperatives pooled no milk on
any other Federal order market, while one also pooled milk on the two
Ohio orders, the New York-New Jersey order, and the Middle Atlantic
order. In addition to the Carolina order, the fifth cooperative pooled
the milk of Texas producers on the Texas, Southern Illinois-Eastern
Missouri, Chicago, and Southeast orders.
In addition to the 55 percent of the September 1997 Tennessee
Valley milk supply from cooperative associations pooling milk on the
other two Appalachian markets, one cooperative that also pooled milk on
the Southeast order in December 1997 supplied approximately 15 percent
of the milk pooled on the Tennessee Valley order.
Three cooperative associations that supplied less than 2 percent of
the milk pooled under Order 46 did not supply milk to either the
Carolina or Tennessee Valley markets.
Criteria for Consolidation
Overlapping route disposition and procurement are the primary
criteria on which this consolidation is based. There is a stronger
relationship between the three marketing areas involved than between
any one of them and any other marketing area on the basis of both
criteria. Route dispositions within the Appalachian area by handlers
who would be regulated under this order account for 93 percent of the
total fluid milk products distributed in the area. The primary sources
of the remaining 7 percent are four other consolidated order areas,
with no more than 3 percent distributed by any of the four. Handlers to
be regulated under the Appalachian order distributed nearly 80 percent
of their route dispositions within the marketing area.
Over two-thirds of the milk supply for the Appalachian market is
produced within the marketing area, with a large part of the rest of
the milk supply coming from unregulated areas to the north (Virginia
and Pennsylvania). The Appalachian order area supplies a significant
minority of the milk supply for the Southeast market, but in October
1997 this amount was less than the amount supplied to the Southeast
area from the Southwest area. In addition, a large proportion of the
milk produced in the Appalachian order area that was pooled on the
Southeast order in October 1997 was received at plants that formerly
were pooled under the terminated Tennessee Valley order, and will be
pooled under the consolidated Appalachian order. There is also common
cooperative association affiliation between the markets.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives that were
considered included combining all of the current Florida, Carolina,
Tennessee Valley and Southeast order areas, consolidating the Southeast
and proposed Appalachian areas, and including all of the State of
Kentucky in one order, specifically the Southeast. These alternative
consolidations were examined at length and were found to have less
overlap in sales and procurement than the Appalachian marketing area.
Thirteen comments that pertained specifically to the proposed
Appalachian area were filed by 12 commenters in response to the
proposed rule. Six of these comments supported the consolidation of the
Appalachian marketing area as described in the proposed rule, including
comments filed by several affected dairy farmers, the North Carolina
Department of Agriculture, the North Carolina Dairy Producers
Association, and a comment filed on behalf of Piedmont Milk Sales,
Inc., Hunter Farms, Land O'Sun Dairies and Milkco, Inc. This last
comment stated that the Appalachian and Southeast areas should not be
combined because a separate milk order area should exist between the
consolidated Northeast and Southeast order areas. The comment argued
that existence of the Appalachian area would be expected to result in
blend price differences between and among the Northeast, Mideast,
Appalachian, Southeast and Florida orders such that milk supplies will
move South and East as needed.
Seven comments supported the combination of the Appalachian and
Southeast areas, or at least the inclusion of more territory in the
Appalachian area. The Kentucky Farm Bureau Federation urged that all
Kentucky counties and the proposed Appalachian area be combined with
the Southeast. The comment stated that this further consolidation would
make milk utilization rates more similar across the order, would
facilitate and encourage milk flow to deficit areas and minimize any
negative price impacts on producers. According to the Carolina-Virginia
Milk Producers Association, the existence of separate Southeast and
Appalachian order areas could result in disorderly marketing conditions
on the eastern side of the proposed Southeast order area. Comments
filed by Trauth Dairy urged the inclusion of the northern areas of
Kentucky, including the Newport, Kentucky, area containing Louis Trauth
Dairy, Inc., in the
[[Page 16060]]
proposed Appalachian area rather then in the proposed Mideast area.
A comment filed by DFA supported the inclusion of Charleston, West
Virginia, and areas of West Virginia south of Charleston, as well as
the Ohio counties surrounding Cincinnati and the northern counties of
Kentucky, in the Appalachian market rather than the Mideast market to
promote orderly marketing of milk. The DFA comment stated that adequate
milk supplies do not exist in close proximity to processors in the
greater Cincinnati, Ohio, and Charleston, West Virginia, markets, and
that an economic incentive must be provided to assure a milk supply to
those processors. A second DFA comment recommended that the Southeast
and Appalachian order areas be combined because the primary
supplemental milk supply for both areas is in more western states
(Texas, New Mexico and Missouri). The comment stated that it is likely
that these supplemental supplies would be likely to be associated with
the Southeast order because of its greater proximity, and eastern
Southeast milk would be ``stair-stepped'' across to the Appalachian
order to reduce hauling costs. According to DFA, during the market's
flush production month, the Appalachian order would not bear the burden
of surplus milk since the distant surplus milk would be associated with
the Southeast order in addition to the eastern Southeast milk supplies
that also would be associated with the Southeast order to avoid
inefficient milk movements, resulting in a disproportionate burden of
surplus milk pooled on the Southeast order.
For the month of October 1997, a month when some supplemental
supplies usually are required for short markets, nearly one-quarter of
the producer milk pooled on the current Southeast order originated in
the States of Missouri, New Mexico, and Texas. For the same month, just
over 1 percent of the producer milk pooled on the Louisville-Lexington-
Evansville and Carolina orders was produced in those more western
States. It is clear that the western milk is a much more important
source of supply for the Southeast area than for the Appalachian area,
and that the magnitude of this difference is an indication of how much
these two consolidated markets differ. The ability to pool surplus milk
on the Southeast order is directly related to the addition of the
southern Missouri/northwest Arkansas area to the Southeast marketing
area, an addition that was strongly urged by DFA. Concerns about the
ability of handlers in the eastern part of the Southeast area to
attract a supply of milk could be addressed more appropriately by the
inclusion of transportation credits in the Southeast order than by
consolidation with the Appalachian area.
A dairy farmer in West Virginia urged that the State of West
Virginia be added to the Appalachian order area because milk usage for
Class I milk and cost of production would then become similar to the
other states in the Appalachian area. Another dairy farmer referred to
a comment filed earlier to include Maryland in the Appalachian area
instead of the Northeast.
As discussed in the proposed rule, consolidating the Carolina and
Tennessee Valley markets with the Southeast does not represent the most
appropriate consolidation option because of the minor degree of
overlapping route disposition and producer milk between these areas.
That conclusion continued to be supported by data gathered for
distributing plants for October 1997.
The northern Kentucky/southern Ohio and West Virginia area was
examined in painstaking detail with updated data to determine whether
or where this area could be divided to reflect handlers' sales areas
and supply procurement areas better than in the proposed rule. No
support for such a modification to the proposed rule could be found.
Only one Appalachian handler has significant route disposition within
the Ohio Valley order area, while a very small volume of Class I sales
moves from the Ohio Valley area into the Order 46 area. There is even
less overlap between either West Virginia or Maryland and the
Appalachian area, and no justification for changing the marketing area
of either of these States.
Florida
The consolidated Florida marketing area is comprised of the three
current Federal order marketing areas contained wholly in the state of
Florida: Upper Florida (Order 6), Tampa Bay (Order 12) and Southeastern
Florida (Order 13). There are 63 counties in this consolidated area (40
in Order 6, 13 in Order 12, and 10 in Order 13). This area remains
unchanged from the proposed rule.
Geography
The consolidated Florida marketing area is described geographically
as all counties in the State of Florida, with the exception of the four
westernmost counties in the Florida Panhandle. This marketing area is a
large peninsula, ranging from about 140 miles in width in the north to
about 50 miles in width in the south, that extends south from the
southeast U.S. about 400 miles between the Atlantic Ocean and the Gulf
of Mexico. Also included in the Florida market is approximately 150
miles of the Panhandle, a narrow strip of land extending west along the
Gulf of Mexico from the northern part of the peninsula. The water
surrounding most of Florida's peninsula constitutes a natural boundary,
as east-to-west travel is limited.
Almost all of Florida has a humid subtropical climate. The southern
end of the state and the islands south of the peninsula have a tropical
wet and dry climate. In general, the state's climate can and does
affect levels of milk production negatively. Seasonal variation in
production for this market typically is greater than for most other
U.S. regions. The importance of dairy farming as an agricultural
pursuit in Florida is relatively minor (7 percent of total receipts
from agricultural commodities), with several crops contributing more
total receipts to the State's income. However, no livestock commodity
is as important in Florida as dairy farming.
Population
According to July 1, 1997, population estimates, the total
population in the consolidated Florida marketing area is 14.1 million.
Ninety-three percent of the population of the marketing area is located
in Metropolitan Statistical Areas (MSAs). The two largest MSAs are
Miami-Fort Lauderdale (Miami) on the eastern side of the southern end
of the peninsula, and Tampa-St. Petersburg-Clearwater (Tampa) midway on
the western side of the peninsula. Broward and Dade Counties comprise
the Miami population center (currently in Order 13) with a population
of 3.5 million. The Tampa population center (currently in Order 12) is
comprised of Hernando, Hillsborough, Pasco and Pinellas counties with a
population of 2.2 million. The six counties in these two population
centers represent about 41 percent of the total marketing area
population.
Fluid Per Capita Consumption
Florida customarily is considered a deficit milk production state.
For much of the year, milk needs to be imported from other states in
order to meet the demand for fluid consumption. Based on the population
figure of 14.1 million and an estimated per capita fluid milk
consumption rate of 17 pounds of fluid milk per month, total fluid milk
consumption in the Florida marketing area is estimated at 239.7 million
pounds per month.
[[Page 16061]]
During October 1997, 216 million pounds of milk were disposed of in
the consolidated marketing area by all Florida distributing plants
expected to be fully regulated under the Florida order. Other order
plants had route disposition within Florida of 14.2 million pounds.
Another 1.3 million pounds of milk was distributed within the
consolidated area by partially regulated handlers, producer-handlers,
and exempt plants. The discrepancy between the actual total route
disposition of 231.5 million pounds and the estimated consumption level
of 239.7 million pounds may be explained by the older than average
population in Florida.
Milk Production
In October 1997, 175.8 million pounds of milk produced in Florida
were pooled in four Federal orders; 98.5 percent of this milk was
pooled on the three current Florida orders. About 340 producers located
in Florida (96 percent of all Florida producers having association with
Federal orders) had producer milk pooled on at least one of the three
Florida markets. A small number of Florida producers had producer milk
associated with Order 7, while more than 100 Georgia producers had
producer milk associated with the Florida markets. Additionally, 44.7
million pounds of Georgia milk was pooled on the three Florida markets;
89 percent of this milk went to Order 12.
There are 40 counties in Florida that pooled milk in at least one
of the three current Florida orders. Eight of these counties produced
66.5 percent of the milk pooled.
Three counties (Gilchrist, Lafayette and Suwannee, about 75 miles
west of Jacksonville) had 42.3 million pounds of producer milk. For
these three counties, 72.6 percent of the October 1997 producer milk
was pooled on the Tampa Bay order, which is located approximately 150
miles southeast of the counties.
Nearly 90 percent of Clay County's producer milk was pooled in
Order 6. This county is in the Jacksonville MSA, which is the largest
population center in Order 6.
Twenty-two and one-half million pounds of producer milk came from
Hillsborough, Highlands, and Manatee Counties, all part of the Order 12
market. However, 64 percent of this milk was pooled on Order 13, with
the rest pooled on Order 12.
Okeechobee County, located in the Order 13 marketing area about 125
miles northwest of the Miami area, is by far the largest milk producing
county in Florida. The county had 43.8 million pounds of producer milk
in October 1997, almost all of which was pooled on Order 13.
Distributing Plants
Using plant lists included in the proposed rule, with pooling
standards adjusted to 25 percent of route dispositions as in-area
sales, updated for known plant closures through December 1998, 12
plants would be expected to be fully regulated under the consolidated
Florida market. Four of these plants are located in the Miami MSA and
three in the Tampa MSA. Three plants are located in mid-Florida, one in
the Orlando area and two in the Lakeland-Winter Haven area. Two more
are located in northeast Florida: one in the Jacksonville area, and one
in Daytona Beach. One plant in the Tampa MSA, currently fully
regulated, would be exempt on the basis of size. One partially
regulated plant in the Jacksonville area would be expected to continue
its partially regulated status, and one producer-handler is not located
within an MSA.
Slightly less than two-thirds of the consolidated market's
population is contained in the MSAs where fully regulated plants are
located.
Utilization
According to October 1997 pool statistics for handlers who would be
fully regulated under this Florida order, the Class I utilization
percentages for the Upper Florida, Tampa Bay, and Southeastern Florida
markets were 91, 88, and 94 percent, respectively. Based on calculated
weighted average use values for (1) the current order with current use
of milk, and (2) the current order with projected use of milk in the
consolidated Florida order, the potential impact of this rule on
producers who supply the current market areas is estimated to be: Upper
Florida, a 4-cent per cwt decrease (from $15.39 to $15.35); Tampa Bay,
a 8-cent per cwt increase (from $15.54 to $15.62); and Southeastern
Florida, a 13-cent per cwt decrease (from $16.03 to $15.90). The
weighted average use value for the consolidated Florida order market is
estimated to be $15.69 per cwt. For October 1997, combined Class I
utilization for the three Florida markets was 90.6 percent based on
197.5 million pounds of producer milk used in Class I out of 218.0
million total producer milk pounds.
Other Plants
Also located within the Florida marketing area during May 1997 were
four supply or manufacturing plants, three of which are not associated
with the current markets' pools. Three ice cream plants are located in
the Tampa area and one pool supply plant is in the Jacksonville area.
Cooperative Associations
In December 1997, three cooperatives marketed milk in the Florida
markets, representing nearly 100 percent of the milk marketed.
Effective October 1, 1998, Florida Dairy Farmers Association, which
marketed milk under all three Florida orders, and Tampa Independent
Dairy Farmers' Association, Inc., which marketed milk only under the
Tampa Bay order, merged to create Southeast Milk, Inc. The December
1997 production marketed by these two cooperatives in all three Florida
orders comprised 93 percent of the producer milk associated with the
three markets. Dairy Farmers of America, Inc. (DFA), members marketed
nearly 7 percent of producer milk associated with the three Florida
orders on the Tampa Bay and Southeastern Florida pools.
Criteria for Consolidation
The consolidated Florida market should encompass the current
marketing areas of the Upper Florida, Tampa Bay and Southeastern
Florida Federal milk orders. Natural boundary limitations and
overlapping sales and procurement areas among the three orders are
major reasons for consolidation, as well as a measure of association
evidenced by cooperative association proposals to consolidate these
three marketing areas. Further, the cooperative associations in this
area have worked together for a number of years to accommodate needed
movements of milk between the three Florida Federal orders, and into
and out of the area.
Discussion of Comments and Alternatives
Prior to the issuance of the proposed rule, the inclusion of other
Federal order marketing areas with the consolidated Florida area was
considered because of the existence of some overlap of sales,
procurement of producer milk, and dispositions of surplus milk.
However, because of the closeness of the relationship between the
current Florida markets and the lack of significant overlap of sales or
production with other order areas no basis was seen for expanding the
consolidation any further.
Only three comments were received that pertained specifically to
the consolidated Florida area. These comments, filed by the three
cooperative associations with
[[Page 16062]]
membership in the consolidated Florida marketing area, supported the
consolidation of the current three Florida order areas without any
additional territory.
Southeast
The consolidated Southeast marketing area is comprised of the
current Southeast (Order 7) marketing area, portions of the current
Southwest Plains (Order 106) marketing area in northwest Arkansas and
southern Missouri, and six southeastern Missouri counties from the
current Southern Illinois-Eastern Missouri (Order 32) marketing area.
Also included are 16 currently unregulated Missouri counties, 21
currently unregulated Kentucky counties, and 1 Kentucky county that
currently is part of the Louisville-Lexington-Evansville (Order 46)
marketing area. There are 572 counties in this consolidated area. A
partial county in Missouri that was proposed to be included in the
Southeast area has been omitted.
Geography
The Southeast market is described geographically as follows: all
counties or parishes in Alabama, Arkansas, Louisiana, and Mississippi
(67, 75, 64, and 82 counties, respectively), 4 in Florida, 152 in
Georgia, 44 in Missouri, 62 in Tennessee and 22 in Kentucky (one--Logan
County--currently is in Order 46, and 21 currently are unregulated). Of
these 21 counties, 14 were part of the former Paducah, Kentucky (Order
99) marketing area. Eleven Arkansas and 22 Missouri counties are part
of the current Order 106 marketing area. Six Missouri counties are part
of the current Order 32 marketing area. Sixteen southeastern Missouri
counties currently are unregulated (4 of these were part of the former
Paducah Federal milk order). A partial Missouri county that was
proposed to be part of the Southeast area is omitted for the purpose
reducing the incidence of partially regulated counties.
The Southeast market spans the southeastern area of the United
States from the Gulf of Mexico and the Alabama/Georgia-Florida border
north to central Missouri, Kentucky, Tennessee, and South Carolina, and
from the Atlantic Ocean west to Texas, Oklahoma, and Kansas. Measuring
the extreme dimensions, this market extends about 575 miles north to
south from central Missouri to southern Louisiana and 750 miles west to
east from Louisiana's border with Texas to the Atlantic Ocean coast in
southern Georgia.
The Southeast marketing area is contiguous to 4 other consolidated
marketing areas: Florida to the southeast, the Southwest to the west,
the Central to the northwest and the Appalachian to the northeast and
east. Georgia's coastline on the Atlantic Ocean is about 100 miles in
length, while western Florida, Alabama, Mississippi, and Louisiana
extend about 600 miles along the Gulf of Mexico coastline. Also
contiguous to the current Southeast market are currently unregulated
counties in Texas, Missouri, Kentucky (and as of October 1, 1997, the
Tennessee Valley [Order 11] marketing area). The consolidated marketing
areas would encompass all of these counties in the Southwest, Central,
Appalachian or Southeast marketing areas, with some currently-
unregulated counties in central Missouri remaining unregulated under
this proposal.
In terms of physical geography, the Southeast region is generally
flat or gently rolling low-lying land. Relatively higher elevations
which might potentially form natural barriers or obstruct easy
transportation exist in northwest Arkansas and northeast Georgia.
Moving from the south to the north of the Southeast market,
climates range from humid subtropical in coastal areas to warm and
humid or humid continental to temperate in Tennessee and Kentucky.
Warm, humid summers and mild winters are typical in the Southeast.
These types of climates can severely limit the production level of
dairy herds in the summer.
Population
According to July 1, 1997, population estimates, the total
population in the consolidated Southeast marketing area is 26.9
million. The 42 Metropolitan Statistical Areas (MSAs) in the market
account for 62.3 percent of the total marketing area population. Almost
half of the Southeast population is located in the 17 most populous
MSAs. Eight MSAs have populations greater than 500,000 each; their
total population is about 36 percent of the Southeast population.
Because of the large number of MSAs in the Southeast market and also
because no large (i.e., greater than 500,000) population centers are
added to this market, only those areas with populations greater than
500,000 are described in greater detail.
Over 25 percent of the Southeast market's population is located in
Georgia, the most populous of the Southeast market states, with 7.2
million people. Almost half of Georgia's population is concentrated in
the Atlanta MSA, located about 60 miles south of the Southeast-
Appalachian marketing area boundary in the northwest portion of the
state. Atlanta is the largest city in the Southeast market with a
population of 3.6 million.
With 4.3 million people, Alabama is the Southeast market area's
third most populous state. Birmingham and Mobile, the state's two
largest MSA regions, are among the top eight in population in the
Southeast. The Birmingham area has a population of about 900,000 and
ranks 5th in size among all Southeast area MSAs. Birmingham is located
about 150 miles west of Atlanta in north central Alabama. The Mobile
area is a Gulf of Mexico port city in southwestern Alabama. With a
population of 527,000, Mobile is the 8th largest population center in
the Southeast market area.
Louisiana is the second most populated state in the Southeast
market area with 4.4 million people. Two of the Southeast's 8 largest
MSAs are located in Louisiana--New Orleans, the second largest MSA with
1.3 million people and Baton Rouge, the 6th largest MSA with almost .6
million people. New Orleans is located in the state's ``toe'' in
southeastern Louisiana. Baton Rouge also is located in Louisiana's
``toe,'' about 80 miles west of New Orleans.
Arkansas has a total population of 2.5 million--2 million from the
current Southeast marketing area and an additional 500,000 from the
Arkansas portion of the Southwest Plains marketing area. The Little
Rock-North Little Rock, Arkansas (Little Rock) MSA, in the center of
Arkansas, has the 7th largest population concentration in the Southeast
market area with 552,000.
The portion of Tennessee in the Southeast marketing area is the
fourth most populated with 3.4 million people and is home to the third
and fourth largest MSAs in the Southeast. The Nashville area, with a
population of 1.1 million, is located in central Tennessee. The
Memphis, Tennessee/Arkansas/Mississippi MSA, also with a population of
1.1 million, is located near these three states' borders.
Other states or portions of states in the Southeast marketing area
do not have MSAs with greater than 500,000 population. Mississippi, the
Southeast's 5th most populous state, has a total population of 2.7
million. The Missouri, Florida, and Kentucky counties in the Southeast
market have populations of 1.3 million, 602,000 and 529,000,
respectively.
Fluid Per Capita Consumption
Fluid per capita consumption estimates vary throughout the
Southeast
[[Page 16063]]
market from a low of 16 pounds of fluid milk per month in Mississippi
to a high of 19 pounds in Arkansas and Kentucky. Multiplying the
individual states' consumption rates by their population results in an
estimated fluid milk consumption rate of 468 million pounds of fluid
milk per month for the Southeast marketing area.
Route distribution in the consolidated Southeast area by handlers
expected to be regulated under the consolidated Southeast order
(including the 3 Arkansas and Missouri plants) equaled 380 million
pounds within the Southeast marketing area in October 1997. Other fluid
milk dispositions in the consolidated Southeast marketing area came
from plants expected to be regulated under other orders (66.7 million
pounds) and from partially regulated, exempt and producer-handler
plants (2 million pounds).
Milk Production
Milk production data for the Southeast consolidated order area have
not been updated from January 1997 to October 1997 as have the data for
most of the other consolidated order areas. As a result of terminating
the Tennessee Valley order as of October 1997, three of the Tennessee
Valley-regulated handlers became pool plants under the Southeast order,
on the basis of having at least 10% of their sales in the Southeast
order marketing area. These handlers will become regulated under the
consolidated Appalachian order when the consolidated orders become
effective. Consequently, milk production data for the consolidated
Southeast order area based on October 1997 pool data would not be
representative of the consolidated Southeast market. Available
information indicates that the sources of milk for the consolidated
Southeast market have not changed significantly from the January 1997
data.
In January 1997, 4,180 producers from 388 counties pooled 477.4
million pounds of producer milk on the current Southeast market. Over
85 percent of the Southeast's producer milk came from Southeast market
area counties. Of the 388 counties, 19 pooled over 5 million pounds
each, accounting for 39 percent of Order 7's producer milk. Of these 19
counties, 2 Texas counties are located outside the Southeast marketing
area. Because of the large number of counties, only the locations for
those top 19 production counties are described in greater detail.
However, the volume of producer milk, number of producers (farms) and
number of counties is provided for each state within the market area.
Almost 73 million pounds of milk were pooled on the Southeast
market from 581 producers in 28 Louisiana parishes in January 1997. Top
production parishes are Tangipahoa, Washington and St. Helena, all
located in the state's ``toe,'' north of New Orleans and northeast of
Baton Rouge, each bordering Mississippi. Another high production area
is centered on De Soto Parish in northwestern Louisiana. These four
parishes account for over 62 million pounds of producer milk, with 76
percent coming from Tangipahoa and Washington parishes.
Almost 67 million pounds of milk were pooled on the Southeast
market from 331 producers in 68 Georgia counties in January 1997. Of
this volume, 64 million came from 312 producers in 64 Georgia counties
in the Order 7 marketing area. The balance is associated with Georgia
producers located in the marketing area of the former Order 11
(Tennessee Valley). Top production counties are Putnam, Morgan and
Macon, which pooled 27 million pounds of producer milk on Order 7.
About 65 million pounds of milk were pooled on the Southeast market
from 580 producers in 46 Tennessee counties in January 1997. Of this
volume, 62 million came from 562 producers in 42 Tennessee counties in
the Order 7 marketing area. The balance is associated with Tennessee
producers located in the marketing area of the former Federal Order 11.
Two high production counties in the state are Marshall and Lincoln,
located in south central Tennessee. These counties contributed over 12
million pounds of producer milk to the Order 7 pool in January 1997.
About 61 million pounds of milk were pooled on the Southeast market
from 443 producers in 48 Mississippi counties in January 1997. Top
production counties are Walthall and Pike, in southern Mississippi on
the state's border with Louisiana. These two counties adjoin the heavy
milk production area in Louisiana. The counties contributed 15 million
pounds of producer milk to the Order 7 pool in January 1997.
About 32 million pounds of milk were pooled on the Southeast market
from 408 producers in 19 Kentucky counties in January 1997.
Additionally, 116 producers in 15 of these counties pooled almost 9
million pounds of producer milk on Orders 11 and 46 (Louisville-
Lexington-Evansville). Two counties, Barren and Monroe, contributed
over 13 million pounds of producer milk. These contiguous counties are
in south central Kentucky about 80 miles northeast of Nashville,
Tennessee.
Four Missouri counties--Wright, Texas, Laclede and Howell--pooled
33 million pounds of producer milk on Order 7. All of these counties
currently are located in the Order 106 (Southwest Plains) marketing
area in southern Missouri.
Other Southeast marketing area states or areas contribute producer
milk to the Southeast marketwide pool. About 37 million pounds of milk
were pooled on the Southeast market from 205 producers in 51 Alabama
counties, and 25 million pounds were pooled from 343 producers in 39
Arkansas counties. Sixteen Florida producers from 6 counties (2 in the
Southeast market area) pooled 3.5 million pounds on Order 7 in January
1997.
In January 1997, Order 7 producer milk also originated in Missouri
counties not included in the Southeast marketing area, Texas, New
Mexico, Indiana and Oklahoma. Large amounts of milk from Missouri (21
million pounds in addition to the 33 million described previously) and
Texas (46 million pounds--20 million from Hopkins and Erath Counties)
were associated with the Order 7 pool.
Distributing Plants
Using distributing plant lists included in the proposed rule, with
the pooling standards adjusted to 25 percent of route disposition as
in-area sales, updated for known plant closures through December 1998,
48 distributing plants located in the consolidated Southeast marketing
area would be expected to be associated with the Southeast market
(including the added territory in northwestern Arkansas and southern
Missouri). These plants include 36 fully regulated distributing plants,
3 of which are currently regulated under the Southwest Plains order and
one of which is currently partially regulated. In addition, it is
expected that 3 plants would be partially regulated (one of which
currently is fully regulated and two of which are partially regulated),
and 7 plants that are, and are expected to be, exempt--1 on the basis
of size and 6 on the basis of institutional status. An additional
currently regulated plant is expected to be exempt on the basis of
institutional status. Of the 36 fully regulated plants, 16 are located
in the largest eight MSA regions. One distributing plant located in the
consolidated Appalachian marketing area that has more than half of its
route disposition within the Southeast marketing area would be locked
into regulation under the Appalachian order.
[[Page 16064]]
Since October 1997, it is known that 2 pool distributing plants
have gone out of business. One of these plants was located in Louisiana
and the other in Missouri.
Of the 48 distributing plants, Georgia has 9; Louisiana, 10;
Mississippi, 6; Alabama, 8; Arkansas, 6; Tennessee, 5; Missouri, 2; and
Kentucky, 2. No distributing plants are located in the Florida counties
included in the Southeast market area.
In Georgia, three pool distributing plants and one producer-handler
are located in the Atlanta area, with 3 others elsewhere in the State.
Georgia also has 1 partially regulated handler and 1 government agency
(state prison) plant.
Eight of Louisiana's 10 distributing plants currently are and would
continue to be fully regulated (pool plants) in this consolidated
marketing area. Four of these 8 are located in either the New Orleans
or Baton Rouge areas (2 in each). Four other pool distributing plants
are located in Louisiana. The remaining two plants are affiliated with
educational institutions.
Four of Mississippi's 6 currently operational distributing plants
would be fully regulated pool plants in the Southeast market. Two
educational institutions also have plants.
Seven of Alabama's distributing plants are fully regulated. One is
located in the Birmingham area and 2 are located in the Mobile area. Of
the remaining four, 2 are in northern Alabama, one is in central
Alabama, and one is in the state's southeastern corner.
Four of Arkansas' 6 currently operational distributing plants are
fully regulated; two are in the Little Rock area, and the other 2 are
located in northwest Arkansas. Also located within Arkansas are 2
exempt distributing plants--one on the basis of size and one that is a
state prison plant. Four of Tennessee's 5 distributing plants are, and
are expected to be, fully regulated. Three of the 4 are located in the
Nashville area and one fully regulated plant and one partially
regulated plant are located in the Memphis area.
Two distributing plants that would be fully regulated under the
Southeast market are located in the currently unregulated Kentucky
counties that are added to this marketing area. One is located in
Fulton in the southwest corner of Kentucky on the Tennessee border, and
the other about 30 miles east of Fulton.
Two Missouri distributing plants are located in the consolidated
Southeast area. One is a pool plant located in Springfield, and the
other a plant exempt on the basis of institutional status located just
south of the Springfield MSA.
Utilization
As in the case of milk production data, October 1997 data for the
consolidated Southeast order are not used because of the termination
that month of the Tennessee Valley order. Instead of using October 1995
data from the proposed rule, however, September 1997 data is used as
representative for this section.
According to September 1997 pool statistics for handlers who are
expected to be fully regulated under the Southeast order, the Class I
utilization for the Southeast market was 84 percent. Based on
calculated weighted average use values for (1) the current order with
current use of milk, and (2) the current order with projected use of
milk in the consolidated Southeast order, the potential impact of this
rule on producers who supply the current market area is estimated to be
a 3-cent per hundredweight increase (from $13.60 to $13.63).
For September 1997, Class I utilization for the Southeast market
was 83.9 percent based on 357.2 million pounds of producer milk used in
Class I out of 426 million total producer milk pounds.
Other Plants
Also located within the Southeast marketing area during May 1997
were 37 supply or manufacturing plants: 1 in Kentucky, 5 in Alabama
(including 1 in the Birmingham area), 5 in Arkansas (including 1 in the
Little Rock area), 7 in Georgia (including 4 in the Atlanta area), 3 in
Louisiana (including 1 in the Baton Rouge area), 11 in Missouri, 2 in
Mississippi, and 3 in Tennessee (including 1 each in the Memphis and
Nashville areas). Eight of the 37 plants are pool plants. Of these pool
plants, 2 primarily ship to distributing plants, 3 manufacture cheese,
1 manufactures Class II products, 1 manufactures powder and 1 primarily
manufactures other products. Of the Southeast marketing area's 28
nonpool plants, 13 manufacture primarily Class II products, 3
manufacture cheese, 10 manufacture primarily other products, and 1 each
manufacture primarily butter and cheese. One plant is a ``split
plant,'' with one side serving as a manufacturing facility primarily
for Class II products, while the other side receives and ships Grade A
milk.
Cooperative Associations
In December 1997, thirteen cooperative associations, including 3 of
those that merged to become Dairy Farmers of America (DFA), represented
members marketing 73 percent of the milk pooled on the Southeast
market.
This number of cooperative associations is more than twice the
number (six) that pooled milk on the Southeast order in December 1995.
Of those six, National Farmers Organization (NFO) ceased marketing milk
in the Southeast. Milk Marketing, Inc., headquartered in Strongsville,
Ohio, and one of the cooperatives that formed DFA, marketed a small
amount of milk in the Southeast in December 1997, and two cooperatives
began marketing milk after December 1995. In addition, 5 cooperative
associations representing Texas and New Mexico producers pooled milk on
the Southeast order in December 1997.
The DFA cooperatives represented 71 percent of co-op milk and 52
percent of the total milk supply pooled under the Southeast order
during December 1997. For the same month, Carolina-Virginia Milk
Producers Association, Inc., represented 9 percent of the milk pooled
by cooperative associations; the two new cooperatives pooled 8 percent
of co-op milk; and the five Texas/New Mexico cooperatives pooled 7
percent.
Criteria for Consolidation
Retention of the Southeast marketing area as a single area is based
on overlapping route dispositions within the marketing area to a
greater extent than with other marketing areas. Procurement of producer
milk also overlaps between states within the market. There is also a
seasonal need for milk from outside the marketing area. However, the
amount of supplemental seasonal supplies is not as great as the amount
of milk that is actually pooled under the order from distant areas.
There is common cooperative association membership within the marketing
area.
As noted in the proposed rule, the addition of northwest Arkansas
and southern Missouri to the marketing area is primarily in response to
comments received during the public comment period.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives that were
considered included incorporating all of the State of Kentucky in the
Southeast area, dividing the Southeast area on the state line between
Mississippi and Alabama, combining the Florida, Carolina, Tennessee
Valley and Southeast order areas, and adding the eastern part of the
Texas order area to the Southeast. These
[[Page 16065]]
alternatives were analyzed in detail for the proposed rule and
determined not to result in a configuration of marketing areas as
appropriate as those proposed for reasons discussed in the proposed
rule.
Seven comments filed in response to the proposed rule specifically
addressed the consolidated Southeast marketing area. A comment filed on
behalf of Piedmont Milk Sales, Inc., Hunter Farms, Land O'Sun, and
Milkco, Inc., supported and endorsed the portion of the proposed rule
that would maintain separate order areas for the Southeast and
Appalachian areas. Comments filed by DFA and by Carolina-Virginia Milk
Producers Association favored combining the proposed Southeast and
Appalachian order areas. In addition, the Kentucky Farm Bureau
Federation urged that all Kentucky counties and the proposed
Appalachian order be combined with the Southeast. The comment stated
that such a configuration would make milk utilization rates more
similar across the order, would facilitate and encourage milk to flow
to deficit areas and minimize any negative price impacts on producers.
These comments were considered in the discussion of comments and
alternatives under the Appalachian area.
Comments from Carolina-Virginia Milk Producers Association and
Missouri Farm Bureau Federation support the inclusion, as proposed, of
southern Missouri/northwest Arkansas in the Southeast marketing area.
The Carolina-Virginia Milk Producers' comment noted that this area is a
crucial part of the supply area for the southeast region, and that the
exclusion of the area from the consolidated Southeast order area could
have a detrimental impact on the over-order premium structure of that
area. The comment stated that the correction of producer blend prices
and creation of a unified marketing area in that part of the southeast
region is justified. With regard to southern Missouri, a representative
of the Subcommittee on Livestock of the U.S. House of Representatives
Committee on Agriculture supported adding southeastern Missouri to the
Southeast order area, as proposed. A comment filed by Barber Pure Milk
Company opposed adding northwest Arkansas/southern Missouri to the
Southeast marketing area on the basis of the minimal overlapping route
disposition and potential of diluting the Southeast pool.
A substantial share of the milk production from the portions of
Missouri and Arkansas that are added to the Southeast marketing area is
pooled under the Southeast order, and this milk represents a
substantial share of the total milk production that is pooled under the
Southeast market.
Route disposition by distributing plants located within this area
would become in-area dispositions from Southeast pool distributing
plants. More than half of the dispositions from the three plants that
would become Southeast pool distributing plants would be within the
consolidated Southeast marketing area.
Mideast
The consolidated Mideast marketing area is comprised of the current
Ohio Valley (Order 33), Eastern Ohio-Western Pennsylvania (Order 36),
Southern Michigan (Order 40), part of the Michigan Upper Peninsula
(Order 44), and Indiana (Order 49) marketing areas plus 6 currently
unregulated Indiana counties, 2 whole and 3 partial currently
unregulated Michigan counties, and 3 whole and 2 partial currently
unregulated Ohio counties. There would be 301 whole and 1 partial
county in this consolidated area. Three whole and one partial
currently-unregulated Ohio counties that were proposed to be part of
the Mideast area are not included.
Geography
The Mideast market is described geographically as follows:
Indiana--72 counties (64 currently in Order 49, 2 currently in
Order 33, and 6 currently unregulated on the western edge of the State,
just south of the northwest corner) Kentucky--18 counties (all
currently in Order 33).
Michigan--77 counties. Two whole and 3 partial counties currently
are unregulated. The rest of the area currently is included in Orders
40, 44, 49, and 33. Of the total 83 Michigan counties, only 6 in the
western end of the Upper Peninsula are not included in the consolidated
Mideast marketing area.
Ohio--84 whole and 1 partial county. Three whole and 2 partial
counties to be included currently are unregulated. All of the State
currently is included in Orders 33 and 36, except for 3 partial and 6
whole counties.
Pennsylvania--12 whole and 2 partial counties, currently in the
Order 36 area.
West Virginia--37 counties; 20 currently in Order 33, 17 currently
in Order 36.
The consolidated Mideast marketing area lies directly south of the
Great Lakes, with the State of Michigan enclosed on the east and west
sides by Lakes Huron and Michigan. On the eastern border of the
marketing area, between the Mideast and Northeast marketing areas, is
Pennsylvania State-regulated territory and the Allegheny and
Appalachian Mountains. On the northeast border is the Western New York
State order area.
The east-to-west distance across the consolidated marketing area is
approximately 450 miles, from locations on the eastern edge of the area
in western Pennsylvania to the border of Indiana and Illinois.
Northwest to southeast, from Marquette, Michigan, in the Upper
Peninsula to the northeast area of Kentucky in the marketing area is
just over 800 miles. From the northern tip of lower Michigan to
southern Indiana the more direct north-south distance is 530 miles.
The consolidated Mideast marketing area is contiguous to 3 other
consolidated marketing areas. The consolidated Central marketing area
would provide the western border of the Mideast marketing area along
the Indiana-Illinois border, and the consolidated Appalachian area
would provide the southern boundary. The western end of Michigan's
Upper Peninsula, part of the consolidated Upper Midwest area, would
adjoin the Mideast portion of the Upper Peninsula.
In terms of physical geography, most of the consolidated Mideast
marketing area is at low elevations, and relatively flat. The climate
and topography are favorable to milk production, with dairy being the
number one agricultural commodity in terms of financial receipts in the
State of Michigan in 1996. Dairy also ranks high in terms of financial
receipts in the rest of the area; 3rd in Ohio and West Virginia, and
5th in Indiana.
Population
According to July 1, 1997, population estimates, the total
population in the consolidated marketing area is 31 million. The 34
MSAs in the consolidated Mideast marketing area include 79.8 percent of
the area's population. Over 55 percent of the area's population is
contained in the 8 most populous MSAs, which each have over 950,000
people. Two-thirds of the population is located in the states of
Michigan and Ohio.
The Mideast area's largest and 7th largest of the 34 MSAs are
located in Michigan. Detroit-Ann Arbor-Flint, with 5.4 million
population, is the largest MSA, and is located in the southeast portion
of the state between Lakes Huron and Erie. Grand Rapids-Muskegon-
Holland is the 7th largest Mideast MSA, is located approximately 150
miles west-northwest of Detroit, and has a population of 1 million.
These two
[[Page 16066]]
MSAs contain two-thirds of the population of Michigan. There are 5
other MSAs in Michigan. Two have approximately 450,000 population each,
one has approximately 400,000 population, and the other two average
approximately 160,000 apiece. Eighty-four percent of the population of
Michigan is located in these 7 MSAs, all in the lower half of southern
Michigan.
Four of the 8 largest Mideast MSAs are located in the State of
Ohio. These are: (1) Cleveland-Akron, the second-largest, with a
population of 2.9 million, located on Lake Erie in northwestern Ohio;
(2) Cincinnati-Hamilton, OH-KY-IN, the 4th largest, with a population
of 1.9 million, located in the southwest corner of Ohio; (3) Columbus,
the 6th largest, with a population of 1.5 million, located
approximately midway between Cincinnati and Cleveland; and (4) Dayton,
the 8th largest, with a population of .95 million.
There are 6 additional MSAs in Ohio, 2 with populations of
approximately .6 million each, 1 with a population of .4 million, and 3
that average just over 150,000 each. Eighty-two percent of the
population of Ohio is located in MSAs, most in the northern part of the
State.
The third-largest MSA in the Mideast area is Pittsburgh,
Pennsylvania, with a population of 2.4 million. Pittsburgh is 127 miles
southeast of Cleveland. There are two smaller MSAs in the Pennsylvania
portion of the consolidated Mideast marketing area, having an average
population of about 200,000 each. Eighty-seven percent of the
population of the Pennsylvania portion of the Mideast area is located
in MSAs.
Indianapolis, Indiana, is the 5th largest MSA in the consolidated
Mideast marketing area, with a population of 1.5 million. Indiana
contains 9 additional MSAs, 2 with populations of .5 and .6 million,
and 7 others that average 155,000 population. All but 2 of the 9
smaller MSAs are located north of Indianapolis. Seventy-four percent of
the population of the portion of Indiana that is in the consolidated
Mideast area is located in MSAs.
The portion of West Virginia that is within the consolidated
Mideast area contains 4 MSAs, 3 of which are located on the West
Virginia-Ohio border, along the Ohio River. The population of these
MSAs averages just over 200,000. Forty-five percent of the population
of the West Virginia portion of the consolidated Mideast area is
located in MSAs.
Fluid Per Capita Consumption.
Estimates of fluid per capita consumption within the consolidated
Mideast area vary from 18.75 pounds per month for Michigan to 20.4
pounds per month for Indiana. Use of 19 pounds per month as a weighted
average results in an estimated 589 million pounds of fluid milk
consumption for the Mideast marketing area. Mideast handlers' route
disposition within the area during October 1997 totaled 544 million
pounds, with another 36 million distributed by 23 handlers fully
regulated under other orders. An additional 4.5 million pounds was
distributed by partially regulated handlers, producer-handlers, and
handlers that would be exempt under this rule on the basis of each
having less than 150,000 pounds of route disposition per month.
Milk Production
In October 1997, nearly 11,000 producers from 335 counties in 12
states pooled 1 billion pounds of milk on Federal Orders 33, 36, 40, 44
and 49. Over 90 percent of this producer milk came from Mideast
marketing area counties. The States of Indiana, Michigan, Ohio and
Pennsylvania supplied 95 percent of the milk (13%, 39.6%, 30.6% and
11.9%, respectively), with 90 percent coming from counties that would
be in the consolidated Mideast area. Just over two-thirds of the milk
pooled under these orders was produced in Michigan and Ohio counties
located within the consolidated marketing area.
Other states pooling milk on the orders consolidated in the Mideast
area were Illinois (0.5%), Iowa (0.1%), Kentucky (0.1%), Maryland
(0.4%), New York (2.7%), Virginia (0.1%), West Virginia (1.0%), and
Wisconsin (0.1%). These states contributed a total of 4.9 percent of
the milk pooled on the 5 orders.
Sixty-two of the counties that had production pooled under the five
current orders supplied more than 5 million pounds of milk each during
October 1997. Six of the counties were in northern and northeast
Indiana, over 100 miles from Indianapolis; 11 were in western
Pennsylvania--7 of them within 100 miles of Pittsburgh, and the others,
including those with the most production (10-22 million pounds), in the
northwest corner of the state, within 100 miles of Cleveland, Ohio.
Twenty-eight Michigan counties pooled more than 5 million pounds each
under the 5 orders, including 14 counties with more than 10 million
pounds and 4 counties with more than 20 million pounds. All of these
counties are located within 110 miles of Detroit or Grand Rapids, the
two largest MSAs in Michigan. The heaviest milk production area of Ohio
is the northeast quadrant of the State and within 50 miles of the
Akron-Cleveland MSA, including 5 counties supplying over 10 million
pounds each during October 1997, and 1 county pooling over 40 million
pounds. A smaller production area in Ohio is located in the central
portion of the western edge of the State within 80 miles of the Dayton
MSA, and includes two counties with over 10 million pounds production
and 1 county with over 20 million. The only population centers of the
marketing area that do not appear to have adequate supplies of nearby
milk are Indianapolis and Cincinnati, in the southern portion of the
area.
Distributing Plants
Using distributing plant lists included in the proposed rule, with
the pooling standards adjusted to 25 percent of route disposition as
in-area sales, updated for known plant closures through January 1998,
72 distributing plants would be expected to be associated with the
Mideast marketing area, including 51 fully regulated distributing
plants (all currently fully regulated), 4 partially regulated (all
currently partially regulated), 4 exempt plants that would have less
than 150,000 pounds of total route disposition per month (all currently
fully regulated), and 13 producer-handlers (all currently producer-
handlers). Since October 1997, 5 distributing plants (1 fully regulated
plant in Indiana and 1 in Michigan; 2 partially regulated plants in
Pennsylvania; and a producer-handler in Pennsylvania), have gone out of
business.
There would be 40 distributing plants in the 8 Mideast MSA's that
each have over a million people (including Dayton-Springfield which has
.95 million). Twenty-seven of these plants would be pool plants--5 in
the Pittsburgh area, 6 in the Detroit area, 4 in the Cleveland area, 3
each in the Grand Rapids, Indianapolis and Cincinnati areas, 2 in
Columbus and 1 in Dayton. Nine of the plants in the large MSA areas
would be producer-handlers, 3 would be exempt on the basis of having
less than 150,000 pounds of milk per month in Class I route
dispositions, and 1 would be partially regulated.
Of the remaining 29 distributing plants located in the marketing
area, 18 would be located in other MSA's as follows: 5 pool plants and
1 producer-handler in Ohio; 4 pool plants in Indiana; 4 pool plants in
Michigan; 2 pool plants in Pennsylvania; 1 pool plant in Kentucky; and
1 pool plant in
[[Page 16067]]
West Virginia. The ten remaining distributing plants located in the
marketing area would not be located in MSA's. Three of these pool
plants and 2 producer-handlers would be located in Michigan; 2 pool
plants and 1 plant exempt on the basis of size would be located in
Ohio; 2 pool plants would be located in Indiana; and 1 producer-handler
would be located in West Virginia.
There are 3 distributing plants that would be outside the marketing
area. These would be 1 partially regulated plant in Pennsylvania, and 1
in Virginia. In addition, a small pocket of unregulated area within
Ohio would contain one partially regulated plant.
The in-area route disposition standard, proposed to be 30 percent
of route dispositions, will instead be 25 percent--the same percentage
as in other consolidated orders. This percentage should not result in
the full regulation of any handler not currently fully regulated unless
they increase sales in the marketing area.
Utilization
According to October 1997 pool statistics for handlers who would be
fully regulated under this Mideast order, the Class I utilization
percentages for the Ohio Valley, Eastern Ohio-Western Pennsylvania,
Southern Michigan, Michigan Upper Peninsula, and Indiana markets were
58, 58, 55, 89, and 70 percent, respectively. Based on calculated
weighted average use values for (1) the current order with current use
of milk, and (2) the current order with projected use of milk in the
consolidated Mideast order, the potential impact of this consolidation
on producers who supply the current market areas is estimated to be:
Ohio Valley, a 4-cent per cwt increase (from $13.46 to $13.50); Eastern
Ohio-Western Pennsylvania, a 4-cent per cwt decrease (from $13.51 to
$13.47); Southern Michigan, a 6-cent per cwt increase (from $13.27 to
$13.33); Michigan Upper Peninsula, a 25-cent per cwt decrease (from
$13.34 to $13.09); and Indiana, a 11-cent per cwt decrease (from $13.52
to $13.41). The large decrease for Michigan Upper Peninsula is a result
of changing from its current individual handler pool provisions to a
marketwide pool (very little reserve milk is pooled under Order 44--
instead, it is pooled on the Southern Michigan order). For October
1997, combined Class I utilization for Orders 33, 36, 40, 44 and 49 was
58.7 percent based on 601.6 million pounds of producer milk used in
Class I out of 1.025 billion total producer milk pounds pooled. The
weighted average use value for the consolidated Mideast market is
estimated to be $13.42 per hundredweight.
The Mideast is one of two consolidated marketing areas that has a
significantly higher-than-average percentage of its milk used in Class
II. Currently, the Southern Michigan, Ohio Valley and Indiana markets
have Class II utilization over 20 percent. When the markets are
combined the average for the consolidated market will be just under 20
percent.
Other Plants
Also located within the Mideast marketing area during May 1997 were
59 supply or manufacturing plants: 1 in Charleston, West Virginia, 4 in
Pennsylvania, 18 in Michigan, 9 in Indiana and 27 in Ohio. Nine of the
59 plants are pool plants. Of these pool plants, 6 are supply plants--1
manufactures primarily Class II products, 3 manufacture primarily
powder, and 2 have no primary product, only shipping to distributing
plants. Three pool plants are manufacturing plants, manufacturing
primarily cheese. Of the 50 nonpool plants in the Mideast marketing
area, one is a supply plant that manufactures primarily cheese. The
other 49 nonpool plants are manufacturing plants. In this area of high
Class II use, 28 of the nonpool plants manufacture primarily Class II
products. In addition, 1 manufactures primarily butter, 1 manufactures
primarily powder, 27 manufacture primarily cheese, and 2 manufacture
primarily other products.
There are also two manufacturing plants in the currently-
unregulated area of Ohio--a nonpool plant that manufactures primarily
Class II products in the unregulated county of Erie, Ohio and a nonpool
plant that manufactures primarily cheese in the unregulated area of
Sandusky, Ohio.
Cooperative Associations
In December 1997, 20 cooperative associations pooled member milk
under the 5 orders to be consolidated (considering Milk Marketing,
Inc., and Mid-America Dairymen, Inc., as one entity--DFA). Two of the
cooperatives pooled milk on the four principal orders, 3 cooperatives
had member milk pooled on 3 of the principal orders, 3 cooperatives
pooled milk on 2 of the principal orders, and 12 of the cooperatives
pooled milk on only one of the orders. The percentage of cooperative
member milk pooled on each of the orders varied from 44 percent under
Order 36 to 86.5 percent under Order 40. Of the total milk pooled on
the 5 orders in December 1997, 68 percent was marketed by cooperative
associations.
Criteria for Consolidation
Overlapping route disposition, overlapping production areas,
natural boundaries, and multiple component pricing are all criteria
that support the consolidation of these current order areas into a
consolidated Mideast marketing area. Handlers who would be fully
regulated under the consolidated order distribute approximately 90
percent of their route dispositions within the consolidated marketing
area, and 93 percent of the milk distributed within the marketing area
is from handlers who would be regulated under the order.
Many of the counties from which milk was pooled on the individual
orders supplied milk to three or four of those orders. For instance,
milk from a number of the same Michigan counties was pooled on the Ohio
Valley, Indiana and Southern Michigan orders; milk from several of the
same Indiana counties was pooled on the Ohio Valley, Southern Michigan
and Indiana counties; and milk from some of the same Ohio counties was
pooled on the Ohio Valley, Indiana, and Southern Michigan orders.
The Great Lakes serve as natural boundaries on the northern edge of
the area and on the eastern and western sides of Michigan, as do the
mountains in central Pennsylvania. All of the orders involved in the
consolidated Mideast area contain multiple component pricing
provisions. Instead of the Southern Michigan component pricing plan,
proposed for the consolidated Mideast order in the proposed rule, the
same component pricing provisions adopted for the other consolidated
orders have been incorporated in the Mideast order.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives to the
consolidation of the Ohio Valley, Eastern Ohio-Western Pennsylvania,
Southern Michigan, Indiana, and partial Michigan Upper Peninsula
marketing areas that were considered included the addition of
Pennsylvania Milk Marketing Board (PMMB) Area 6 to the consolidated
Mideast area, with some consideration being given to the addition of
currently-unregulated areas of Maryland and West Virginia, and moving
the southern part of Ohio and part of West Virginia to the Appalachian
order area.
Ten comments that pertained specifically to the consolidated
Mideast marketing area were filed by 8
[[Page 16068]]
commenters in response to the proposed rule. Three of the comments,
from Michigan Milk Producers Association, United Dairy, Inc., and DFA,
plus a very large number of comments that did not specifically mention
the Mideast area, addressed the inclusion of unregulated areas in
consolidated Federal order areas. The DFA comment included the
signatures of 600 producers to a ``Petition to Eliminate all
Unregulated Market Areas in Pennsylvania.'' Although the large number
of comments that did not specifically mention the Mideast area were
unclear about exactly what additional area should be added to the
marketing area, they appeared to favor the addition of PMMB Area 6,
with perhaps some western Maryland and West Virginia territory, to the
eastern edge of the Mideast area.
As stated in the introduction to the consolidation discussion,
consolidation of the existing orders does not necessitate expansion of
the consolidated orders into currently-unregulated areas, especially if
such expansion would result in the regulation of currently-unregulated
handlers. Therefore, PMMB Area 6 and the unregulated portions of
Maryland and West Virginia should not be added to the consolidated
Mideast order area.
Two comments from DFA recommended including Charleston, West
Virginia, and areas of West Virginia south of Charleston, as well as
the Ohio counties surrounding Cincinnati and the northern counties of
Kentucky, in the Appalachian market to help provide an economic
incentive through the expected higher blend prices to producers to
supply milk to the plants in that area. A comment by Trauth Dairy in
Newport, Kentucky, also urged the inclusion of the northern areas of
Kentucky in the Appalachian area instead of the Mideast area. These
comments are addressed in the description of comments and alternatives
considered for the Appalachian order area.
Schneider's Dairy suggested that a pass-through provision similar
to that of the current New York-New Jersey order be incorporated in the
Mideast order to assure that regulated handlers distributing fluid milk
products in unregulated areas where they compete with unregulated
handlers are not disadvantaged. As discussed in the section of this
decision dealing with Northeast regional issues, Class I prices are
determined by the need to attract milk supplies to the location of the
processing plant, and not by where the fluid products are distributed.
Therefore, a pass-through provision is not incorporated in either the
Northeast order or this order.
Independent Cooperative Milk Producers Association and Schneider's
Dairy supported the consolidation of order areas to form the Mideast
area as proposed.
Upper Midwest
The consolidated Upper Midwest marketing area is comprised of the
current Upper Midwest (Order 68) and Chicago Regional (Order 30)
marketing areas, with the addition of the western portion of the
Michigan Upper Peninsula (Order 44) marketing area. There are 204
counties in this consolidated area. One partial Illinois county
proposed to be part of the Central order area has been added to this
area, and another partial Illinois county proposed to be part of this
area has been changed to the Central order area.
Geography
The consolidated Upper Midwest marketing area is described
geographically as follows: 15 counties in Illinois (all currently in
Order 30), 6 counties in Iowa (all currently in Order 68), 6 counties
in Michigan (all currently in Zones I and IA of Order 44), 83 counties
in Minnesota (all currently in Order 68), 16 counties in North Dakota
(all currently in Order 68), 8 counties in South Dakota (all currently
in Order 68), and 70 counties in Wisconsin (43 currently in Order 30,
20 currently in Order 68, and 7 currently unregulated). This market is
about 600 miles east to west and about the same distance north to
south.
The area described above is contiguous to the consolidated Central
market to the south, a small corner of the consolidated Mideast market
to the southeast, and the eastern portion of Michigan's Upper
Peninsula, also part of the consolidated Mideast market, to the
northeast. North of the Upper Midwest market is Lake Superior and the
Canadian border, and west of the market is a large sparsely-populated
and unregulated area. Most of the eastern border of the marketing area
is Lake Michigan.
The consolidated Upper Midwest marketing area is generally low-
lying, with some local differences in elevation in Wisconsin and the
upper peninsula of Michigan. Natural vegetation in the western part of
the area is tall-grass prairie, with the eastern two-thirds of the
northern portion being broadleaf forest, coniferous forest, and mixed
broadleaf and coniferous forest. Annual precipitation averages 30-35
inches per year. Most of the area experiences summer temperatures that
average about 75 degrees; the northern and western portions average
winter temperatures are in the low 'teens, while the southern and more
eastern portions experience average winter temperatures in the 20's.
The far western part of the market predominantly grows mixed field
crops, with cattle and soybeans more to the southwest. Both Minnesota
and Wisconsin are included in the top five milk-producing states, and
dairy is the number 1 agricultural enterprise in Wisconsin, generating
over half of the State's income derived from agricultural commodities.
Population
According to July 1, 1997, population estimates, the total
population of the consolidated Upper Midwest marketing area is
approximately 18.5 million. Using Metropolitan Statistical Areas
(MSAs), there are 3 population centers over 1 million. The Chicago-
Gary-Kenosha area, primarily in northeastern Illinois, is the largest,
with a 7.9 million population in the marketing area. The Minneapolis-
St. Paul area, located mostly in Minnesota, is next with 2.8 million;
and the third-largest MSA is Milwaukee-Racine, Wisconsin, with a
population of 1.6 million. The Chicago area is located in the southeast
corner of the marketing area, on the west side of the southern end of
Lake Michigan, with Milwaukee approximately 85 miles north, also along
Lake Michigan. Minneapolis is located 400 miles northwest of Chicago,
along the Minnesota-Wisconsin border.
Approximately two-thirds of the population of the consolidated
marketing area is within the three largest MSAs, with 81 percent of the
population contained within the area's 17 MSA's (with the 14 smaller
MSAs averaging 196,000 population).
Sixty percent of the population of the market is concentrated in
the Illinois and southeast Wisconsin portion of the marketing area. In
Wisconsin, nearly 90 percent of the population is located in the
southern two-thirds of the state, and in Minnesota 85 percent of the
population is in the southern half of the state.
Fluid Per Capita Consumption
Based on the population figure of 18.5 million and an estimated per
capita fluid milk consumption rate of 20 pounds of fluid milk per
month, total fluid milk consumption in the consolidated Upper Midwest
marketing area is estimated at 370 million pounds per month. Plants
that would be fully regulated distributing plants under the Upper
Midwest order had route
[[Page 16069]]
disposition within the market of 343 million pounds in October 1997.
Handlers fully regulated under other Federal orders distributed 43
million pounds in the consolidated marketing area during October 1997,
while partially regulated plants distributed 1.7 million pounds.
Producer-handlers and exempt plants operating in the combined marketing
areas during this month had a combined route disposition of less than
.5 million pounds.
Milk Production
In October 1997, 2.4 billion pounds of milk were associated with
the Chicago Regional and Upper Midwest markets, but only 1.6 billion
pounds of milk were pooled because of class price relationships. The
2.4 billion pounds were produced by 27,250 producers located in 13
states from Tennessee to Minnesota, and from New Mexico to Michigan.
However, over 93 percent of the producer milk was produced within the
consolidated marketing area, and 91.4 percent was produced within the
states of Wisconsin and Minnesota. As with population density and milk
plant density, most milk production in Minnesota and Wisconsin occurs
in the southern parts of these states. Over 85 percent of Wisconsin
milk associated with the combined Chicago Regional-Upper Midwest orders
in October 1997 was produced in the southern two-thirds of the State,
while 84 percent of the Minnesota milk associated with the two orders
was produced in the southern half of Minnesota.
Fifty-two counties, 10 in Iowa, 15 in Minnesota, and 27 in
Wisconsin supplied milk to both the current Chicago Regional and Upper
Midwest orders during October 1997. The largest part of the common
production area is in Wisconsin, where 27 counties supply 25 percent of
the milk associated with Order 30, and 30 percent of the milk
associated with Order 68. When data for the 52 counties is combined, 26
percent of the Chicago Regional market and 42 percent of the Upper
Midwest market is supplied by this common production area.
Distributing Plants
Using distributing plant lists included in the proposed rule, with
the pooling standards adjusted to 25 percent of route disposition as
in-area sales, updated for known plant closures through December 1998,
35 distributing plants would be expected to be associated with the
Upper Midwest marketing area, including 27 fully regulated distributing
plants (2 currently partially regulated and 25 currently pool plants),
4 partially regulated (3 currently partially regulated and 1 currently
fully regulated), 1 producer-handler, and 3 exempt plants, based on
distributing less than 150,000 pounds of total route disposition per
month (1 new, 1 currently partially regulated, and 1 currently
unregulated). Since October 1997, one pool distributing plant and one
partially regulated plant have gone out of business.
There would be 6 distributing plants in the Chicago area (5 pool
plants and 1 exempt plant). The Milwaukee-Racine area would have 2 pool
distributing plants. There would be 7 distributing plants in the
Minneapolis-St. Paul area (6 pool plants and 1 partially regulated
plant). Of the remaining 20 distributing plants, 16 are located in
other MSAs as follows: 4 pool plants in Minnesota, 2 pool plants and 2
partially regulated plants in North Dakota, 1 pool plant in Illinois,
and 5 pool plants, 1 partially regulated plant, and 1 exempt plant in
Wisconsin. Four of the remaining distributing plants are not located in
MSAs: 1 pool plant and 1 exempt plant in Minnesota, 1 producer-handler
in Wisconsin and 1 pool plant in Michigan.
Utilization
According to October 1997 pool statistics for handlers who would be
fully regulated under this Upper Midwest order, the Class I utilization
percentages for the Chicago Regional and Upper Midwest were 29 and 19
percent, respectively. Based on calculated weighted average use values
for (1) the current order with current use of milk, and (2) the current
order with projected use of milk in the consolidated Upper Midwest
order, the potential impact of this consolidation on producers who
supply the current market areas is estimated to be: Chicago Regional, a
3-cent per cwt decrease (from $12.98 to $12.95), and Upper Midwest, a
2-cent per cwt increase (from $12.89 to $12.91). The weighted average
use value for the consolidated Upper Midwest market, based on October
1997 data, is estimated to be $12.94 per hundredweight. However, a
substantial amount of milk was omitted from both pools for October 1997
because of unusual class price relationships. Annual Class I
utilization percentages may be considered more representative for these
markets. For the year 1997, the annual Class I utilization percentage
for the Chicago Regional market was 21.5, with 18.7 for the Upper
Midwest. The Class I use percentage for the entire Michigan Upper
Peninsula market, which has a individual handler pool and represents a
very small portion of the producer milk that would be expected to be
pooled under the consolidated Upper Midwest order, was 89 percent. It
is estimated that the Class I use percentage for the consolidated order
would be in the neighborhood of 20 percent.
Other Plants
Located within the consolidated Upper Midwest marketing area during
May 1997 were 301 supply or manufacturing plants: 1 in South Dakota, 3
in Iowa, 28 in Illinois (12 in the Chicago area), 39 in Minnesota (over
three-quarters of which are located in the southeastern quarter of the
State), and 230 in Wisconsin (over 90 percent of which are scattered
throughout the southern three-quarters of the state). One hundred five
of the plants are pool plants, or have a ``pool side.'' Eighty-five of
the 105 pool plants (1 in Iowa, 4 in Illinois, 16 in Minnesota and 64
in Wisconsin) are ``split plants;'' that is, one side of a plant is a
manufacturing facility and the other side receives and ships Grade A
milk, and accounting is done separately. In most cases, the nonpool
portion of such a plant is a manufacturing operation, primarily cheese-
making. Most of the other pool plants are pool supply plants, located
primarily in Wisconsin, that ship milk to pool distributing plants.
The 196 nonpool plants in the consolidated Upper Midwest marketing
area are manufacturing plants--103 manufacture primarily cheese, 16
manufacture primarily Class II products, 15 manufacture primarily
butter, 23 manufacture primarily milk powders, and 39 manufacture
primarily other products.
Also associated with the Upper Midwest order, but not within the
marketing area, are 2 pool supply plants and 6 manufacturing plants (3
manufacturing primarily cheese, 2 making Class II products, and 1
butter plant) in North Dakota.
Cooperative Associations
In December 1997, 67 cooperative associations pooled member milk on
the Chicago Regional and Upper Midwest orders, providing 99 percent of
the milk pooled under each of the two orders. Nine of the cooperatives
marketed milk in both orders, accounting for nearly half of the milk
pooled in the Upper Midwest (and 42.9 percent of the cooperative member
milk), and 66.8 percent of the milk pooled in the Chicago Regional
market (67.5 percent of total cooperative member milk). In the two
markets, 16 cooperatives pooled milk only under Order 30, and 42
[[Page 16070]]
cooperatives pooled milk only under Order 68.
Criteria for Consolidation
As in the proposed rule, the Chicago Regional, Upper Midwest, and
the western end of the Michigan Upper Peninsula marketing areas should
be combined into a consolidated Upper Midwest Federal order marketing
area. Although these areas do not have a considerable degree of
overlapping fluid milk disposition, they do have an extensive
overlapping procurement area. Handlers regulated under the Chicago
Regional and Upper Midwest markets (the predominant markets in this
consolidation) distribute milk into markets further south, and
approximately 10 percent of the fluid milk distributed within the
consolidated area is distributed by handlers regulated under other
orders. However, these other orders are more closely related to markets
to the south than to the consolidated Upper Midwest order area. On that
basis, it is more appropriate to include them in other consolidated
marketing areas.
Other aspects of the consolidation also fit the criteria set forth.
The consolidated Upper Midwest area is bounded on three sides by Lakes
Michigan and Superior, the international border with Canada, and a
large unregulated area. A significant portion of both the Chicago
Regional and Upper Midwest markets' milk is supplied by the same
cooperative associations. The two predominant markets have identical
multiple component pricing plans, and both have large reserves of milk
that normally is used in manufactured products, primarily cheese.
Approximately 90 percent of the milk used in manufacturing in these
markets is used to make cheese. The amount of cheese manufactured from
milk pooled under these milk orders is enough to supply a population 3
times greater than that of the consolidated marketing area. Fluid milk
handlers in both markets must compete with cheese manufacturers for a
milk supply, and marketing order provisions for both markets must
provide for attracting an adequate supply of milk for fluid use.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives to the
consolidation of the order areas included in the Upper Midwest
marketing area that were considered included combining the Iowa,
Nebraska-Western Iowa, and Eastern South Dakota order areas with those
of the Chicago Regional and Upper Midwest areas in a consolidated Upper
Midwest order. Also considered was a consolidation of even more
marketing areas (up to 10; including Indiana, Illinois, parts of
Kentucky, Missouri, and Kansas) that would increase the population and
Class I use of the consolidated Upper Midwest area.
Over 160 comments received in response to the proposed rule
concerned the proposed consolidated Upper Midwest marketing area.
Nearly 140 of these comments (including approximately 120 form letters)
supported a consolidation of 10 marketing areas for the purpose of
increasing the Class I utilization of the consolidated Upper Midwest
order area to a level closer to the U.S. national average or, at the
very least, including the Iowa, Eastern South Dakota, and Nebraska-
Western Iowa marketing areas in the consolidated Upper Midwest area.
No justification on the basis of the criteria of overlapping sales
and procurement areas could be found for any increase in a consolidated
marketing area that would be comprised of the Chicago Regional and
Upper Midwest order areas beyond the addition of the Iowa, Eastern
South Dakota, and Nebraska-Western Iowa marketing areas. The collection
of more detailed data concerning the overlap in route disposition and
milk procurement showed clearly that those three areas are more closely
related to markets to the south than to the north, with approximately
85 percent of the total fluid milk distributed by handlers regulated
under the three orders disposed of in the consolidated Central market.
The numerous markets recommended by upper midwest producer groups
to be consolidated with the Chicago Regional and Upper Midwest order
areas have very little distribution or procurement overlap with those
areas, aside from occasional need for reserve milk supplies. When
reserve supplies are needed by the other markets, upper midwest milk
can be, and is, pooled on the more southern markets and shares in their
pools. The potential gain of adding areas recommended by upper midwest
producer groups would be much less than the loss to producers whose
milk is pooled under orders to be consolidated in the Central, Mideast
and Appalachian marketing areas.
Approximately 10 comments, including some from cooperative
associations representing large numbers of producers, advocated the
addition of the northeast portion of the Iowa marketing area to the
consolidated Upper Midwest area based on the extensive overlap of
producers, Class I sales, and geographic similarities between that area
and the adjoining consolidated Upper Midwest area. An equivalent number
of comments, most from Iowa interests, argued that the consolidated
Upper Midwest order should remain as proposed. This issue is more fully
discussed in the ``Comments and Alternatives'' section of the
description of the Central order area, as is the assignment to
consolidated areas of 3 counties, each in its entirety, that currently
are split between orders.
One comment advocated the addition of the Gary, Indiana, area to
the consolidated Upper Midwest area instead of the Mideast area on the
basis that Gary, Indiana, is part of the greater Chicago market. This
portion of the current Indiana order area historically has been part of
the Indiana marketing area, and there is no data supporting its
separation from that area. The single pool distributing plant located
in Gary has ceased to process milk. Any distribution in the Gary area
acquired by Chicago handlers as a result will be pooled as Class I use
under the consolidated Upper Midwest order.
Based on the considerations of the most recent data available,
comments received, and the stated consolidation criteria, limiting the
extent of the consolidated Upper Midwest marketing area to the areas of
the current Chicago Regional and Upper Midwest marketing areas, with
the addition of the western part of the Michigan Upper Peninsula
marketing area, represents the most appropriate marketing area
configuration for the north central area of the U.S.
Central
The consolidated Central order marketing area merges the current 9
Federal order marketing areas of Central Illinois, most of Southern
Illinois-Eastern Missouri, most of Southwest Plains, Greater Kansas
City, Iowa, Eastern South Dakota, Nebraska-Western Iowa, Western
Colorado, and Eastern Colorado (Federal orders 50, 32, 106, 64, 79, 76,
65, 134, and 137, respectively). Moving to the consolidated Southeast
marketing area are 6 Missouri counties currently in Federal order 32
and, from Order 106, 11 northwest Arkansas counties and 22 southern
Missouri counties. Order 106 counties in Kansas and Oklahoma remain in
the Central market. In addition, some counties in Colorado, Illinois,
Iowa, Kansas, Missouri and Nebraska that currently are not part of any
order area are included in the consolidated Central market. There are
543 counties and the City of St. Louis,
[[Page 16071]]
Missouri, in this consolidated area. The marketing area has changed
from the proposed rule by the addition of the Western Colorado
marketing area and seven currently-unregulated Colorado counties, the
elimination of 6 currently-unregulated Missouri counties, the addition
of two partial counties and the deletion of one partial county for the
purpose of eliminating the inclusion of partial counties.
Geography
The consolidated Central marketing area would include the following
territory:
Colorado--44 counties, including the 30 Colorado counties currently
in the Eastern Colorado marketing area and the 4 Colorado counties in
the Western Colorado marketing area. Ten currently-unregulated
counties, 3 in the southeast corner of the state between the Eastern
Colorado and Southwest Plains marketing areas, and 7 in the central
part of the State between the Eastern Colorado and Western Colorado
marketing areas, are added.
Illinois--87 counties, including the 5 of the 6 counties currently
in the Iowa marketing area (of the 2 partial Illinois counties in the
Iowa marketing area, all of Whiteside and none of Jo Daviess are
included in the Central area), the 19 counties currently in the Central
Illinois marketing area, the 49 counties currently in the Southern
Illinois-Eastern Missouri marketing area and 8 currently-unregulated
adjacent counties in southern Illinois, and 6 currently-unregulated
counties in western Illinois located between the current Central
Illinois and Southern Illinois-Eastern Missouri order areas and the
Mississippi River.
Iowa--93 counties, including the 68 counties currently in the Iowa
marketing area, the 17 counties currently in the Nebraska-Western Iowa
marketing area, the 1 county currently in the Eastern South Dakota
marketing area, 6 currently unregulated counties in the northwestern
part of Iowa, and 1 currently unregulated county in the southeastern
corner of Iowa.
Kansas--the entire State (105 counties).
Minnesota--the 4 southwestern Minnesota counties that currently are
in the Eastern South Dakota marketing area.
Missouri--39 counties and 1 city, including 6 of the counties and 1
city that currently are in the Southern Illinois-Eastern Missouri
marketing area, the 20 counties that currently are in the Greater
Kansas City marketing area, the 5 counties that currently are in the
Iowa marketing area; and 8 currently-unregulated counties distributed
around the center area proposed to remain unregulated.
Nebraska--66 counties in the southern and eastern parts of
Nebraska; omitting the 11 counties in the panhandle that currently are
part of the Nebraska-Western Iowa marketing area, and adding 5
currently-unregulated counties in the southwest corner of the State
between the Nebraska-Western Iowa and Eastern Colorado marketing areas
and 3 currently-unregulated counties in the southeast corner of the
State between the Nebraska-Western Iowa and Greater Kansas City
marketing areas.
Oklahoma--the entire State (77 counties).
South Dakota--the 26 eastern South Dakota counties (including the
portion of Union County that currently is in the Nebraska-Western Iowa
marketing area) that currently are in the Eastern South Dakota
marketing area.
Wisconsin--the 2 southwest Wisconsin counties that currently are in
the Iowa marketing area.
The consolidated Central marketing area is adjacent to the
consolidated Upper Midwest order area on the north and northeast, the
consolidated Mideast and Appalachian areas on the east, and the
northwest corner of the Southeast order area and the consolidated
Southwest area on the south and the consolidated Western order area on
the west. The area north of approximately the western half of the
consolidated Central area also is unregulated. The north-south distance
covered by the area is approximately 800 miles, from Watertown, South
Dakota, to Ardmore, Oklahoma. The east-west extent of the area, from
the Indiana-Illinois border to the Colorado/Utah border, is
approximately 1,200 miles.
Geographically, the Central marketing area includes a wide range of
topography and climate types, ranging from the Colorado Plateau and the
Rocky Mountains in the west to the central section of the Mississippi
River Valley toward the eastern part of the area. Precipitation ranges
from less than 15 inches per year in Denver, Colorado, to more than 30
inches at St. Louis, Missouri. Most of the area experiences fairly hot
summer temperatures, while winter temperatures vary somewhat more than
summer, with colder winter temperatures occurring in the northern and
western parts of the Central area. The natural vegetation ranges from
desert and desert scrub in western Colorado through coniferous forest
in the Rocky Mountains to short grass prairie in eastern Colorado
through tall grass prairie in eastern South Dakota, Nebraska, Kansas
and Oklahoma, and much of Illinois; to broadleaf forest on both sides
of the Mississippi River.
Population
According to July 1, 1997, population estimates, the total
population in the consolidated Central marketing area is approximately
21.5 million. Using Metropolitan Statistical Areas (MSAs), there are
four population centers over 1 million. The St. Louis, Missouri/
Illinois, area is the largest, with over 2.6 million population, and
the Denver-Boulder-Greeley, Colorado, area is next with approximately
2.3 million. Kansas City, Missouri/Kansas, has a population of 1.7
million, and Oklahoma City, Oklahoma, is just over 1 million.
Approximately thirty-five percent of the population of the consolidated
marketing area is within these four largest MSAs, with nearly two-
thirds of the population contained within the area's 32 MSA's (with the
28 smaller MSAs averaging 228,559 population). The Colorado portion of
the marketing area has 91.3 percent of its population concentrated in 5
MSA's. The Missouri portion has 94.4 percent concentrated in 3 MSA's.
Fluid Per Capita Consumption
Based on the population figure of 21.5 million and a per capita
fluid milk consumption rate of 19 pounds of fluid milk per month (a
weighted average based on state populations in the marketing area and
fluid per capita consumption estimates for each state), total fluid
milk consumption in the consolidated Central marketing area would be
approximately 408.5 million pounds per month. Plants that would be
fully regulated distributing plants in the Central order had route
disposition within the nine marketing areas included in the
consolidated Central area of 366 million in October 1997. It is likely
that most of the milk distributed within formerly unregulated areas by
Central order handlers would be distributed within the consolidated
Central marketing area. The 11 producer-handlers and 3 exempt plants
operating in the Central market during October 1997 had a combined in-
area route disposition of 3 million pounds, partially regulated plants
distributed 2 million pounds in the marketing area, and plants that are
expected to be fully regulated under other consolidated orders
distributed 59 million pounds in the Central marketing area during
October 1997.
Milk Production
In October 1997, 996.7 million pounds of milk were associated with
the
[[Page 16072]]
orders consolidated in the Central market (including all of the milk
pooled under Orders 32 and 106). However, because of class price
relationships in the Iowa and Nebraska-Western Iowa markets, only 893.2
million pounds of the milk was pooled. The 996.7 million pounds were
produced by 9,900 producers located in 17 states from Idaho to
Kentucky, and from Texas to Minnesota. Three-quarters of the milk
associated with the Central market was produced within the consolidated
marketing area. The states contributing the most producer milk were, in
descending order of volume, Iowa, Colorado, Missouri, Kansas, Illinois
and Oklahoma. However, 68 percent of the Missouri producer milk came
from farms in counties which are included in the consolidated Southeast
marketing area. These 6 States accounted for 71 percent of the producer
milk associated with the nine current orders to be consolidated. All of
the states having substantial portions of their areas in the
consolidated Central market contribute producer milk to at least two of
the current nine individual orders, with five of the states (Iowa,
Kansas, Minnesota, Missouri, and Nebraska) supplying milk to five of
the order areas each.
Distributing Plants
Using distributing plant lists included in the proposed rule and
the pooling standards adjusted to 25 percent of route dispositions as
in-area sales, updated for known plant closures through December 1998,
57 distributing plants would be expected to be associated with the
Central marketing area, including 35 fully regulated distributing
plants (all currently pool plants), 1 partially regulated (currently
partially regulated), 3 plants exempt on the basis of size (currently
pool plants but have less than 150,000 pounds of total route
disposition per month), 13 producer-handlers (all currently producer-
handlers), 1 unregulated plant (located in the unregulated central
portion of Missouri), and 4 government agency plants (all currently
government agency plants). Since October 1997, it is known that 1 pool
distributing plant (in Illinois) and 1 partially regulated plant (in
Wyoming) have gone out of business.
There would be 10 distributing plants in the Denver area (7 pool
plants and 3 producer-handlers). The Kansas City area would have 1 pool
distributing plant. The St. Louis area would have 6 distributing plants
(4 pool plants, 1 exempt plant, and one producer-handler). There would
be 1 pool distributing plant and 2 producer-handlers in the Oklahoma
City area. Of the remaining 37 distributing plants, 19 are located in
other MSAs as follows: 1 pool plant, 1 exempt plant (on the basis of
size) and 1 producer-handler in Colorado; 1 pool plant in Illinois; 4
pool plants, 1 producer-handler and 1 exempt plant in Iowa; 1 pool
plant in Kansas; 3 pool plants in Nebraska; 1 pool plant and 1
producer-handler in Oklahoma; 1 pool plant and 1 partially regulated
plant in South Dakota, and 1 pool plant in Wyoming.
Eighteen of the remaining distributing plants are not located in
MSAs. They are: 1 pool plant and 1 government agency plant in Colorado;
4 pool plants and 1 government agency plant in Illinois; 1 pool plant
and 1 producer-handler in Iowa; 1 pool plant and 1 government agency
plant in Kansas; 1 unregulated and 2 producer-handlers in Missouri; 1
producer-handler in Nebraska; 2 pool plants in Oklahoma; and 1
government agency plant in South Dakota.
Utilization
According to October 1997 pool statistics for handlers who would be
fully regulated under this Central order, the Class I utilization
percentages for the individual markets ranged from 38 percent for the
Southwest Plains market to 87 percent for the Central Illinois market.
Class I (and Class II) receipts and utilization data for Iowa and the
combination of Greater Kansas City and Eastern South Dakota markets are
restricted to protect the confidentiality of individual handler
information. Data for Eastern Colorado and Western Colorado markets are
combined in order to mask restricted data. Combined utilization for the
nine markets would result in a Class I percentage of 50 percent.
Based on calculated weighted average use values for (1) the current
order with current use of milk, and (2) the current order with
projected use of milk in the consolidated Central order, the potential
impact of this consolidation on producers who supply the current market
areas is estimated to be: Southern Illinois-Eastern Missouri, a 27-cent
per cwt decrease (from $13.49 to $13.22); Central Illinois, a 50-cent
per cwt decrease (from $13.56 to $13.06); Greater Kansas City, a 69-
cent per cwt decrease (from $13.91 to $13.22); Nebraska-Western Iowa, a
10-cent decrease (from $13.23 to $13.13); Eastern South Dakota, a 32-
cent decrease (from $13.33 to $13.01); Iowa, a 5-cent decrease (from
$13.08 to $13.03); Southwest Plains, a 70-cent increase (from $12.94 to
$13.64); Western Colorado, a 65-cent decrease (from $13.88 to $13.23);
and Eastern Colorado, an 11-cent decrease (from $13.70 to $13.59). The
weighted average use value for the consolidated Central order market is
estimated to be $13.29 per cwt.
Other Plants
Located within the Central marketing area during May 1997 were 84
supply or manufacturing plants: 8 in Colorado (4 in the Denver area),
15 in Illinois (2 in the Decatur area), 23 in Iowa (2 in the Des Moines
area and 1 in the Dubuque area), 6 in Kansas, 7 in Missouri (5 in the
St. Louis area), 7 in Nebraska, 7 in South Dakota (1 in the Sioux Falls
area), 4 in Oklahoma (1 in the Tulsa area), and 7 in Wisconsin. Twenty-
two of the 84 plants are pool plants, or have a ``pool side.'' Twelve
of the 22 pool plants (6 in Iowa, 1 in Nebraska, 2 in South Dakota, and
3 in Wisconsin) are ``split plants;'' that is, one side of a plant is a
manufacturing facility, and the other side receives and ships Grade A
milk, and accounting is done separately. In most cases, the nonpool
portion of such a plant is a manufacturing peration, primarily cheese-
making. Of the pool plants, 8 have no primary product, but are only
shipping to distributing plants, and 6 are pooled manufacturing plants.
Of the 62 nonpool plants in the consolidated Central marketing
area, 59 are manufacturing plants--24 are plants that manufacture
primarily Class II products, 3 manufacture primarily butter, 6
manufacture primarily powder, 25 manufacture primarily cheese, and 1
manufactures primarily other products.
Also associated with the consolidated Central order, but not within
the marketing area, are 2 nonpool cheese plants and a nonpool supply
plant located in South Dakota.
Cooperative Associations
Twenty-five cooperative associations pooled milk in December 1997
under the nine orders consolidated in the Central market. Of these
cooperatives, 1 pooled milk under 7 of the orders, 5 cooperatives
associated producer milk with 3 orders each, and 2 others pooled milk
under 2 orders each. Seventeen of the 25 cooperatives pooled milk under
only one order, and for 10 of these organizations that was the Iowa
order.
The percentage of cooperative milk pooled under the eight orders
was 95, with a range of 80.7 percent cooperative milk under the
Southwest Plains order to 100 percent cooperative member milk under the
Central Illinois, Greater Kansas City and Eastern South Dakota orders.
Criteria for Consolidation
Most of the criteria used in determining the optimum consolidation
[[Page 16073]]
of order areas apply to the Central marketing area. The Federal order
markets consolidated in the Central area are strongly related to each
other through overlapping route disposition. The great majority of
sales by handlers who would be regulated under the consolidated Central
order are distributed within the marketing area, and the consolidated
markets have a greater relationship in terms of overlapping sales areas
than with any other markets. In addition, sales within the currently-
unregulated areas included in the consolidated Central area are
overwhelmingly from handlers that would be pooled under the Central
order. Inclusion of these areas would reduce handlers' burden of
reporting out-of-area sales and take in pockets of currently-
unregulated counties that occur between the current order areas. As
discussed above, the milk procurement areas for the consolidated
markets also have a significant degree of overlap.
The Western Colorado order is included because the more recent data
collected for this final decision indicates that since the proposed
rule the Western Colorado marketing area has developed a closer
relationship with the Eastern Colorado market than with any other
market, even across the Continental Divide. A benefit of combining
Western Colorado with other markets is that it is a small market where
data cannot be released without revealing confidential information
unless combined with data pertaining to another marketing area.
Consolidation of the area will allow publication of meaningful
statistics without disclosing proprietary information. In addition,
several comments supported the combination of the Western Colorado area
with the consolidated Central market in view of the large negative
effect of lower producer pay prices on the small number of producers
involved if the Western Colorado area were consolidated with the
Southwestern Idaho-Eastern Oregon and Great Basin marketing areas.
Some of the currently-unregulated counties in western Illinois and
central Missouri have been added to the Central marketing area. The
omission from the marketing area of the counties in central Missouri
that are not included in the consolidated Central marketing area are
based on an estimation of the marketing area of Central Dairy, located
in Jefferson City, Missouri. This handler has not been previously
regulated. As discussed earlier, it is not the intent of this decision
to include currently-unregulated area in the consolidated order areas
where such inclusion would have the effect of regulating previously-
unregulated handlers.
An additional benefit of the consolidation of these nine order
areas is that data will be able to be made public without disclosing
proprietary information. Four of the current Federal order markets
(Central Illinois, Greater Kansas City, Eastern South Dakota, and
Western Colorado) included in this consolidated area have too few pool
plants to be able to publish market data without revealing confidential
information. In addition to these three markets, the number of handlers
regulated under each of the Nebraska-Western Iowa, Iowa and Eastern
Colorado orders is in the single digits.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives to the
consolidation of the order areas included in the Central marketing area
that were considered included combining the Iowa, Nebraska-Western
Iowa, and Eastern South Dakota order areas with those of the Chicago
Regional and Upper Midwest areas in a consolidated Upper Midwest order.
The collection of more detailed data concerning the overlap in route
disposition and milk procurement showed clearly that these marketing
areas are more closely related to markets to the south than to the
north.
Approximately 85 percent of the total fluid milk dispositions
distributed by handlers regulated under the three order areas that were
suggested to be included in the Central area in the initial Preliminary
Report, and in the Upper Midwest area in the Revised Preliminary
Report, are disposed of in the consolidated Central market. The
disposition by other Central marketing area handlers within the
consolidated Central area is somewhat greater than the proportion for
the three more northern order areas.
Also considered was the exclusion of 14 Nebraska counties, in
addition to the 11 already excluded, from the Central marketing area to
expand the unregulated area in which Gillette Dairy could distribute
milk without becoming regulated. There was no data indicating that
Gillette distributes milk in those counties. In the early stages of the
study of appropriate order consolidation, it was assumed that the
southern Missouri and northwest Arkansas portions of the Southwest
Plains order area would remain with the rest of that area. This area
was included with the consolidated Southeast order area in the proposed
rule, and remains there.
Eighteen comments that pertained specifically to the proposed
Central marketing area were filed by 17 commenters in response to the
proposed rule. Four of these comments advocated moving the Western
Colorado order area from the consolidated Western order to the
consolidated Central order. These comments expressed concern about the
expected reduction in the blend price to Western Colorado producers
under the Western order. An examination of updated data on route
dispositions and bulk milk movements resulted in making this change
which is explained in greater detail in the description of comments and
alternatives under the section of this decision dealing with the
Western area.
A comment filed by the American Farm Bureau Federation recommended
that the central area of Missouri that was proposed to be unregulated
be included in the Central order area. A comment filed on behalf of
Central Dairy, the handler who is located and distributes milk in the
unregulated Missouri area opposed the addition of any presently
unregulated territory to Federal order marketing areas, and
specifically opposed the addition of six currently-unregulated
northeast Missouri counties into which the handler expects to expand
its distribution.
There is no intention of causing the regulation of this handler. As
discussed earlier with regard to the Northeast and Mideast marketing
areas, consolidation of the existing orders does not necessitate
expansion of the consolidated orders into currently-unregulated areas,
especially if such expansion would result in the regulation of
currently-unregulated handlers. At the same time, minimizing the extent
of the unregulated counties in the middle of the consolidated marketing
area would help to reduce the reporting burden on handlers in
determining which route dispositions are inside, and which are outside
the marketing area. The administrative burden of verifying such
reporting also would be eliminated. Six currently-unregulated northeast
Missouri counties that were proposed to be added to the Central order
area have been removed on the basis of comments received from the
Jefferson City handler, who indicated that regulation of the six
counties may result in a change in the handler's regulatory status. No
urgency on the part of regulated handlers having sales in the
unregulated area to include that area in the consolidated order area
was apparent from comments. In fact, none of the comments received from
affected handlers advocated that the unregulated area be included in
the consolidated area.
[[Page 16074]]
A comment by Gillette Dairy, a handler located in Rapid City, South
Dakota, in the former Black Hills Federal order area, supported
excluding the 11 counties of the Nebraska panhandle, currently part of
the Nebraska-Western Iowa order area, from the consolidated Central
area. Gillette has some sales in this area and competes there with
regulated handlers, but requested that the panhandle area be excluded
to lessen Gillette's likelihood of becoming fully regulated under the
Central order. This area was excluded in the proposed rule, and its
exclusion was unopposed by any interested persons who filed comments
before the deadline for doing so. Although Gillette's sales in the
panhandle area do not represent an overwhelming majority of the total
sales there, the volume of sales in this sparsely-populated area should
not affect the competitive status of any regulated handlers. Therefore,
the area will be excluded from the consolidated area as proposed.
Several comments, from the Iowa Department of Agriculture, Wells'
Dairy, and Anderson-Erickson Dairy, as well as Swiss Valley Farms,
supported the inclusion of the Iowa order area in the consolidated
Central area, stating that the attraction of a supply of milk for fluid
needs requires such a consolidation.
Comments were received on dividing the current Iowa marketing area
by adding the eastern edge of the Iowa marketing area to the proposed
consolidated Upper Midwest order. Such a division would result in the
Swiss Valley Farms distributing plant in Dubuque, Iowa, qualifying as a
pool plant under the consolidated Upper Midwest order (as it now does
during some months under the current Chicago Regional order). The Swiss
Valley plant comprises a large majority of the Iowa market sales in the
Chicago Regional and Upper Midwest order areas, and the movement of a
half-dozen counties would assure its pool status in the consolidated
Upper Midwest order and its location in that order area.
Comments by Lakeshore Federated Dairy Cooperative argued that the
extensive overlap of producers, Class I sales, and geographic
similarities between the northeast portion of the Iowa marketing area
and the adjoining consolidated Upper Midwest area should be considered
compelling reasons for making such a change. Lakeshore's comments were
supported by Prairie Farms, Foremost Farms, and DFA. In addition,
Grande Cheese Company, a Wisconsin cheesemaker, filed comments
supporting Lakeshore's position.
In its comments, Swiss Valley argued that the 2 southwest Wisconsin
counties proposed to be included in the consolidated Central marketing
area were removed from the Chicago Regional area and added to the Iowa
area on the basis of a formal rulemaking proceeding in the late 1980's,
at which time it was determined that the principal competition for
fluid sales and milk supply in this area occurred between Iowa handlers
rather than with Chicago Regional handlers. It is therefore Swiss
Valley's position that the two counties should remain with the rest of
the Iowa area, in the consolidated Central marketing area.
On the basis of data gathered for this decision, the primary source
of route disposition in Grant and Crawford Counties, Wisconsin, and
Dubuque County, Iowa, is the Swiss Valley plant in Dubuque, and most of
the rest of the milk distributed in these counties is from handlers
regulated under the Chicago Regional order. The data also shows that
the Dubuque plant procures most of its milk supply from counties that
also supply milk to the Chicago Regional and Upper Midwest orders, as
well as to other plants pooled under the Iowa order.
One of the problems in this marketing area has been the ability of
the Swiss Valley plant to choose the order under which it is regulated.
As a result of differences between the current pool plant definitions
of the two orders, Swiss Valley has been able to switch regulation
between the Iowa and Chicago Regional orders as its price advantage
shifted, and has done so frequently during 1997 and 1998. The pool
plant definitions of the consolidated Upper Midwest and Central orders,
which are very similar, will require that the Swiss Valley plant be
regulated under the order for the area in which it has the greater
volume of route disposition.
If, under the consolidated orders, the Dubuque plant distributes a
greater share of its sales in the consolidated Upper Midwest area than
in the consolidated Central area, the plant will be pooled under the
Upper Midwest order. The only appropriate change to be made to the
current Iowa marketing area is to eliminate the partial counties from
the marketing area definitions of the consolidated Central and Upper
Midwest orders.
The Illinois Counties of Jo Daviess and Whiteside currently are
split between the Iowa and Chicago Regional order areas. More than half
of the sales in Whiteside County are supplied by Iowa handlers
(including Swiss Valley), so Whiteside County will be located entirely
within the consolidated Central area. More than half of the sales in Jo
Daviess County are supplied by Chicago Regional handlers (not including
Swiss Valley), and that county will be located entirely within the
consolidated Upper Midwest area. The Iowa County of Mitchell currently
is located in the Upper Midwest area except for the City of Osage,
which is defined as part of the current Iowa marketing area. All of
Mitchell County will be included in the consolidated Upper Midwest
area.
After considering all comments and other relevant information, it
is determined that the territory encompassed in the Central marketing
area best meets the criteria used.
Southwest
The consolidated Southwest marketing area is comprised of the
current Texas (Order 126) and New Mexico-West Texas (Order 138)
marketing areas as well as 49 currently unregulated Texas counties.
There are 290 counties in this area. This area remains unchanged from
the proposed rule.
Geography
The consolidated Southwest market is described geographically as
follows: three counties in Colorado (currently in Order 138), all New
Mexico counties (33, currently in Order 138) and all 254 Texas counties
(162 currently in Order 126, 43 currently in Order 138, and 49
currently unregulated). Two currently unregulated counties are located
in northeast Texas, while the remaining 47 are in southwest Texas.
The Southwest market spans the south central area of the United
States. It is surrounded by Arizona on the west, Colorado and Oklahoma
on the north, Arkansas, Louisiana and the Gulf of Mexico in the
northeast, east, and southeast, and Mexico to the south. Measuring the
extreme dimensions, this market extends about 800 miles north to south
from southern to northern Texas and about 875 miles east to west from
Texas' border with Louisiana and Arkansas to New Mexico's border with
Arizona.
The Southwest market is contiguous to 3 consolidated marketing
areas: Arizona-Las Vegas to the west, Central to the north and
Southeast to the east. Unregulated counties in Colorado also form a
relatively small border in the northwest corner of the market. Texas
has over 350 miles of coastline on the Gulf of Mexico, while Texas and
New Mexico share about 970 miles of boundary with northern Mexico.
In terms of physical geography, diverse topographic relief exists
in the
[[Page 16075]]
Southwest market area, particularly in New Mexico (ranging from deserts
to high mountain ranges). Northwest New Mexico is part of the Colorado
Plateau, an area of broad valleys and plains as well as deep canyons
and mesas. The Rocky Mountains extend into the north central area of
the state. The Basin and Range region, generally characterized by
ranges or isolated mountains interspersed with valleys, desert basins
or high plains, is located in central and southwestern New Mexico, as
well as western Texas. The Great Plains cover the eastern third of New
Mexico and extend through the Texas Panhandle in north Texas and much
of central Texas. This area is characteristically dry and treeless and
also encompasses Texas hill country and the Edwards Plateau. The Osage
Plains covers the area in Texas from the Oklahoma-Texas border into the
south central part of the state and the low and flat West Gulf Coastal
Plain covers the eastern two-fifths of the state.
Climates in this region also vary. The western part of the region,
including New Mexico, southwest Texas and the Texas Panhandle, is semi-
arid to arid with wide ranges in both daily and annual temperatures.
The southern tip of Texas and the Gulf coast are more humid and
subtropical. For some of the area there are few agricultural uses other
than dairy farming. Dairy products were the 2nd and 3rd highest
revenue-producing agricultural commodities in New Mexico and Texas,
respectively, in 1996, accounting for nearly one-third of agricultural
receipts in New Mexico, but less than 10 percent in Texas.
Population
According to July 1, 1997, population estimates, the total
population in the consolidated marketing area is 21.3 million. The 26
Metropolitan Statistical Areas (MSA) in the consolidated Southwest
market account for 81.3 percent of the total market area population.
About 55 percent of the Southwest population is located in the 4 most
populous MSAs. Seven MSAs have populations greater than 500,000; their
total population is 63.4 percent of the Southwest population. Because
of the large number of MSAs in the Southwest market, only those areas
with populations greater than 500,000 are described in detail.
Almost 92 percent of the Southwest market's population is located
in Texas, which has 19.5 million people. Twenty-three of the 26
Southwest market MSAs are in Texas. About 66 percent of Texas'
population is concentrated in 6 areas, which include the Southwest
area's top 5 population centers: the Dallas-Fort Worth (Dallas) MSA in
northeastern Texas, with a population of 4.7 million; the Houston-
Galveston-Brazoria (Houston) MSA in southeastern Texas near the Gulf of
Mexico, with a population of 4.3 million; the San Antonio MSA in south
central Texas, with a population of 1.5 million; the Austin-San Marcos
(Austin) MSA in central Texas, with a population of 1 million; the El
Paso MSA located in the far western corner of Texas on the Texas-New
Mexico-Mexico border, with a population of 702,000; and the McAllen-
Pharr-Edinburg MSA located at the southern tip of Texas, with a
population of 511,000.
New Mexico's population is about 1.7 million. The remaining 3 of
the 26 Southwest market MSAs are located in New Mexico. About 40
percent of the state's population is located in the Albuquerque area,
just northwest of central New Mexico.
In the remainder of the Southwest marketing area, the 3 Colorado
counties have a population of about 71,000.
Fluid Per Capita Consumption
Estimates of fluid per capita consumption vary from 17.1 pounds of
fluid milk per month per person in Texas to 17.5 in New Mexico to 18.8
in Colorado. Multiplying the individual states' consumption rate by its
population in the consolidated marketing area results in a fluid milk
consumption rate of 364.5 million pounds of fluid milk per month for
the consolidated Southwest marketing area.
In October 1997, the fully regulated plants in Orders 126 and 138
had route distribution totaling 342.5 million pounds. Ninety-eight
percent, or 328 million pounds, was distributed within the consolidated
Southwest marketing area. Handlers fully regulated under other Federal
orders had about 21 million pounds of route distribution into the
Southwest market area. Producer-handlers in the Southwest area
distributed about 5 million pounds of route distribution in the
Southwest marketing area in October 1997, while partially-regulated
plants and plants that would be exempt on the basis of size distributed
approximately .5 million pounds.
Production
In October 1997, 1,570 producers from 144 counties in 5 states
pooled 650 million pounds of producer milk on Orders 126 and 138. Over
99 percent of this producer milk came from counties included in the
consolidated Southwest marketing area. About 55 percent of the combined
market's producer milk was provided by producers in six counties.
About 455 million pounds of milk were pooled on either Order 126 or
138 from 1,345 producers in 118 Texas counties in October 1997. Three
Texas counties were among the top 6 in volume pooled: Erath (1st),
Hopkins (4th) and Comanche (6th). Erath County--located about 75 miles
west of Dallas--pooled 104.5 million pounds on Order 126 (and an
additional 9 million pounds on 3 other Federal orders). Hopkins
County--located about 50 miles east of Dallas--pooled 34 million pounds
on Order 126 and another 15 million pounds on 4 other Federal orders.
Contiguous to and lying southwest of Erath County, Comanche County
pooled 33 million pounds on Order 126 and about .5 million pounds on 3
other Federal orders.
Of the 271 million pounds of milk pooled on either Order 126 or 138
from 185 producers in 12 New Mexico counties, 69 percent was produced
in the following three counties, all among the top 6 in volume pooled:
Chaves (2nd), Dona Ana (3rd) and Roosevelt (5th). Chaves County--
located about 200 miles southeast of Albuquerque--pooled 92 million
pounds on Orders 126 and 138 in October 1997 and an additional 28
million pounds on 3 other Federal orders. Dona Ana County, located over
200 miles south of Albuquerque, contiguous to El Paso County, TX, and
the U.S.-Mexico border, pooled 61 million pounds of producer milk on
Order 138. Contiguous to and lying northeast of Chaves County,
Roosevelt County pooled 33 million pounds on Orders 126 and 138 and
another 6.6 million on 4 other Federal orders.
In October 1997, producer milk for Orders 126 and 138 also
originated in one of the Colorado counties in the Southwest marketing
area, and in counties in Arkansas and Oklahoma. However, the combined
amount of producer milk pooled from these areas is less than 1 percent
of the total producer milk pooled in these Orders.
Distributing Plants
Using distributing plant lists included in the proposed rule, with
the pooling standards adjusted to 25 percent of route disposition as
in-area sales, updated for known plant closures through December 1998,
31 distributing plants located in the consolidated Southwest marketing
area would be expected to be associated with the Southwest market,
including 21 fully regulated distributing plants, 2 partially
regulated, 2 exempt and 6 producer-handlers. None of these plants'
regulatory status is expected to change as a result of the
consolidation process.
[[Page 16076]]
Of the 21 fully regulated plants, 17 are located in the top six MSA
regions.
Since October 1997, it is known that 3 plants (2 fully regulated
and 1 producer-handler) have gone out of business. The fully regulated
plants were located in El Paso, Texas, and in Albuquerque, New Mexico.
The producer-handler was located in Hobbs, New Mexico.
Of the 31 distributing plants that would be located in the
consolidated Southwest marketing area, 24 are in Texas, and 7 are in
New Mexico. Twenty of the Texas plants would be fully regulated. They
are as follows: 6 in the Dallas area, 3 in the Houston area, 2 in the
San Antonio area, 1 in the Austin area, and 2 in the El Paso area, and
6 located throughout the state. One of the Texas distributing plants
was associated with Order 30 (Chicago Regional) in October 1997, and is
expected to be partially regulated in the Southwest market. Two
producer-handlers are located in Texas, one in the El Paso area and the
other in the central part of the state.
Just over half of New Mexico's 7 distributing plants are located in
the Albuquerque area. One fully regulated handler and 3 producer-
handlers are located in this population center. Of the remaining 3
plants located in New Mexico, there are 2 plants that would be exempt
on the basis of size (both located in central New Mexico) and 1
producer-handler (located southeast of Albuquerque).
Utilization
According to October 1997 pool statistics, the Class I utilization
percentages for the Texas and New Mexico-West Texas markets were 56 and
44 percent, respectively. Based on calculated weighted average use
values for (1) the current order with current use of milk, and (2) the
current order with projected use of milk in the consolidated Southwest
order, the potential impact of this consolidation on producers who
supply the current market areas is estimated to be: Texas, a 5-cent per
cwt decrease (from $14.09 to $14.04), and New Mexico-West Texas, a 10-
cent per cwt increase (from $13.51 to $13.61). The weighted average use
value for the consolidated Southwest order market is estimated to be
$13.97 per cwt. For October 1997, combined Class I utilization for
Orders 126 and 138 was 53.4 percent based on 347.0 million pounds of
producer milk used in Class I out of 649.9 million total producer milk
pounds.
Other Plants
Located within the Southwest marketing area during May 1997 were 17
manufacturing plants: 11 in Texas (2 in the Dallas MSA and 1 in the El
Paso MSA) and six in New Mexico. Six of the 17 plants were pool plants.
All of these pool plants were manufacturing plants--one manufactured
primarily Class II products, two manufactured primarily powder, two
manufactured primarily cheese and one manufactured primarily other
products. Of the 11 nonpool plants in the Southwest marketing area, all
were manufacturing plants--one manufactured primarily powder, four
manufactured primarily cheese, one manufactured primarily other
products and five manufactured primarily Class II products.
Cooperative Associations
In December 1997, three cooperative associations marketed about 95
percent of the milk pooled under both of the orders consolidated in the
Southwest area: Dairy Farmers of America (DFA); and Select Milk
Producers, Inc. (Select); and Elite Milk Producers, Inc. (Elite).
Criteria for Consolidation
Nearly all of the route disposition by Order 126 and 138 handlers
is distributed within the consolidated marketing area. In addition,
nearly all of the milk that would be pooled under the consolidated
order, based on October 1997 data, originates within the marketing
area. Two cooperatives market the vast majority of milk within the
consolidated area.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives to the
consolidation of the Texas and New Mexico-West Texas order areas that
were considered included the consolidation of east Texas with the
Southeast area. This alternative consolidation was examined at length
and found to have little overlap of either fluid milk product
disposition or producer milk movements.
Only one comment pertained specifically to the consolidated
Southwest marketing area. This was a comment from DFA that discussed
general support for the marketing areas proposed by USDA, with no
objection to the Southwest marketing area, as proposed.
Arizona-Las Vegas
The consolidated Arizona-Las Vegas marketing area is comprised of
the current Central Arizona (Order 131) marketing area, one county in
Nevada which currently is in the Great Basin (Order 139) marketing
area, and currently unregulated counties in Arizona. There are 16
counties in this consolidated marketing area. This area remains
unchanged from the proposed rule.
Geography
The Arizona-Las Vegas market is described geographically as
follows: All counties (15) in Arizona (6 whole and 1 partial currently
are part of Order 131, and 8 whole and 1 partial currently are
unregulated) and Clark County, Nevada, which currently is part of the
Great Basin marketing area. The market extends about 400 miles north to
south from Arizona's border with Utah (and Nevada's southernmost
county) to the U.S.-Mexico border. The market ranges from 300 to 375
miles east to west from the Arizona-New Mexico border to the Arizona/
southern Nevada-California border.
The Arizona-Las Vegas marketing area is contiguous to two other
consolidated marketing areas, the Great Basin portion of the Western
area to the north and the New Mexico-West Texas portion of the
Southwest area to the east. California, which is not part of the
Federal order system, lies to the west and Mexico is south of this
marketing area.
Arizona can be divided into three geographic regions--the Sonoran
Desert, in the southwest; the Colorado Plateau, in the north; and the
Mexican Highland, mainly in the central and southeastern parts of the
state. With each of these regions, three distinct climatic zones exist:
The Sonoran Desert is hot in the summer but can experience frost in the
winter; the Colorado Plateau is hot and dry in the summer and cold and
windy in the winter; and the Mexican Highland receives significant
precipitation in both summer and winter. This region is cooler in both
summer and winter than the Sonoran Desert region.
These topographical and climatic conditions apparently are
conducive to milk production. Dairy products represent one of the
principal agricultural commodities (2nd and 3rd) in the States of
Arizona and Nevada, respectively, representing 16.6 and 21.7 percent of
total agricultural receipts of the two States in 1996.
Population
Arizona is one the fastest-growing states in the United States.
According to July 1, 1997, population estimates, the total population
in the consolidated marketing area is 5.7 million. Using Metropolitan
Statistical Areas (MSAs), the largest population center is the Phoenix-
Mesa (Phoenix) area, located in
[[Page 16077]]
central Arizona approximately 125 miles north of the U.S.-Mexico border
in the Sonoran Desert region. About 250 miles to the northwest of
Phoenix is the Las Vegas, Nevada, area, the second-largest population
center in this marketing area. The Las Vegas MSA is comprised of three
counties: Clark and Nye counties in Nevada and Mohave County in
Arizona. Almost half of this market's population is in the Phoenix
area, and over 70 percent is accounted for when Las Vegas is added.
Fluid Per Capita Consumption
Based on the population figure of 5.7 million and an estimated per
capita fluid milk consumption rate of 20 pounds of fluid milk per
month, total fluid milk consumption in the Arizona-Las Vegas marketing
area is estimated at 114 million pounds per month. In October 1997,
plants that would have been fully regulated distributing plants in the
Arizona-Las Vegas order had route disposition within the market of
approximately 95 million pounds, representing 94 percent of their route
disposition. Another 6.5 million pounds of milk was distributed in the
consolidated marketing area by 2 handlers expected to be fully
regulated under the consolidated Western Federal order and by 10
California plants that are partially regulated under the Central
Arizona and Great Basin orders.
Milk Production
In October 1997, almost 196 million pounds of milk was pooled in
the Central Arizona market, supplied by over 100 producers located in
fewer than 10 counties in Arizona and California. Over 95 percent of
the Central Arizona milk was produced within the marketing area.
Further, over 90 percent of the producer milk produced within the Order
131 area was produced in Maricopa County, Arizona, where Phoenix, this
market's largest city, also is located. With 177 million pounds of
producer milk for October 1997, Maricopa County produces almost twice
the amount of milk required to meet the fluid milk needs of the entire
marketing area. Arizona producers did not supply milk to any other
Federal order; however, it is known that producer milk moves from both
Arizona and Clark County, Nevada, to southern California. These figures
do not reflect the producer milk associated with Anderson Dairy, the
Las Vegas handler who has been pooled on Order 139. There is only one
producer located in Clark County, Nevada. Anderson's milk supply comes
from a cooperative association in southern California.
Distributing Plants
Using distributing plant lists included in the proposed rule, with
the pooling standards adjusted to 25 percent of route disposition as
in-area sales, updated for known plant closures through December 1998,
8 distributing plants would be expected to be associated with the
consolidated Arizona-Las Vegas marketing area, including 5 fully
regulated distributing plants (all currently pool plants), 1 exempt
plant and 2 producer-handlers. There are 4 distributing plants in the
Phoenix area (all pool plants). Located in the Las Vegas MSA are one
pool plant and a producer-handler. Another producer-handler is located
in the Yuma area and the exempt plant is located in a currently-
unregulated Arizona county, and has total route disposition of less
than 150,000 pounds. All of the plants that are expected to be fully
regulated under this consolidated order are located in areas that
contain over 70 percent of the market's population.
Utilization
According to October 1997 pool statistics, the Class I utilization
for the Central Arizona market was 46 percent. Due to restricted
information, this calculation excludes receipts for the Las Vegas
handler who currently is regulated under Order 139, but would be
regulated under this order. Because the degree of consolidation for
this market is very minor, little change in the Class I utilization
percentage, and thus little change in producer returns, is expected in
the Arizona-Las Vegas area as a result of the consolidation. For
October 1997, Class I utilization for the Central Arizona market was
46.3 percent based on the use of 90.8 pounds of producer milk in Class
I out of 195.9 total pounds of producer milk. The weighted average use
value for the Arizona-Las Vegas market is estimated to be $13.84 per
hundredweight.
Other Plants
For May 1997, 3 supply or manufacturing plants were located within
the Arizona-Las Vegas marketing area: 2 in Arizona (both in the Phoenix
area) and 1 in Nevada (in the Las Vegas area). One Arizona plant was a
pool plant operated by the cooperative, manufacturing primarily cheese,
while the other plants were nonpool plants manufacturing primarily
Class II products.
Cooperative Associations
For December 1997, the only cooperative pooling milk under the
Central Arizona order was United Dairymen of Arizona, which represented
over 90 percent of the milk pooled under the Central Arizona order.
Security Milk Producers Association, a cooperative based in California,
supplies milk to the Las Vegas handler.
Criteria for Consolidation
Market data indicate that there are sales into the Las Vegas area
by Central Arizona pool plants, and sales by both Phoenix and Las Vegas
handlers into the unregulated areas along the southern part of the
Nevada-Arizona border. Rapid population growth in the area between the
two areas has greatly increased competition between the handlers in
Phoenix and Las Vegas. In addition, both areas exchange significant
volumes of bulk and packaged milk with Southern California. At the same
time, the strength of the earlier relationship between the Las Vegas
area and Utah clearly has declined since the merger of the Lake Mead
and Great Basin order areas in 1988, which was based on data compiled
up to 1986.
The Grand Canyon serves as a natural barrier in northwestern
Arizona between this area and Great Basin. Although the actual
consolidated order area extends to the Utah border, the portion of
Arizona between the Grand Canyon and Utah is very sparsely populated,
and is included in the consolidated marketing area primarily for the
purpose of simplifying the marketing area description and easing
handlers' burden of reporting out-of-area sales. The Colorado River
forms much of the western boundary with California and Nevada. A north-
south strip along the eastern edge of Arizona constituting
approximately 30 percent of the State's territory is very sparsely
populated, containing just over 5 percent of the population of the
consolidated marketing area. This lightly populated desert area can be
seen as another form of natural barrier to the movement of bulk and
packaged milk.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives to the
consolidation of the Central Arizona marketing area and the southern
Nevada portion of the Great Basin order area included retaining the Las
Vegas area with the rest of the current Great Basin order area in the
consolidated Western marketing area.
Twelve comments that pertained specifically to the proposed
Arizona-Las Vegas area were filed by 10 commenters in response to the
proposed rule. Anderson Dairy in Las Vegas advocated that Clark County,
Nevada, in which Las
[[Page 16078]]
Vegas is located, be left out of any consolidated marketing area to
better enable Anderson to compete with milk distributed from California
and from the Salt Lake City area. Two comments from the Nevada Dairy
Commission, suggesting that prices could be set within the State, and
from a U.S. Senator from Nevada, requested that Clark County be
excluded from any Federal order marketing area. Security Milk Producers
Association, a cooperative that supplies milk to Anderson, first filed
a comment supporting the proposed Arizona-Las Vegas area, and then
filed a later comment urging that if Clark County cannot be deregulated
and California does not become a Federal order, Clark County should be
reunited with the rest of the consolidated Western order area. A
commenter in the southern Nevada dairy industry supported the
cooperative's view.
A comment from DFA suggested that the Great Basin marketing area be
consolidated with the proposed Arizona-Las Vegas area rather than the
proposed Western area, arguing that the price/utilization relationships
of the Great Basin area are more similar to the Arizona-Las Vegas area
than to the rest of the Western area. Darigold, Inc., urged that Las
Vegas be reunited with Utah due to its proximity to the major
production areas in Utah. Darigold suggested that if there is a linkage
between the Phoenix and Las Vegas markets, those areas both should be
included in the Western area.
A comment filed by the American Farm Bureau Federation recommended
that the consolidation of the Central Arizona and Clark County areas be
reconsidered in favor of a return to the consolidation of the Central
Arizona area with the Southwest area, suggested in the Initial
Preliminary Report on Order Consolidation.
A comment filed by the Dairy Institute of California supported the
consolidation of the Las Vegas area with Arizona because such a
combination would eliminate competitive distortions between these areas
and California caused by the Las Vegas raw milk price levels. The Utah
Farm Bureau stated that it does not oppose removing the Clark County,
Nevada, area from the Great Basin order area and combining it with
Arizona.
An increase in sales by Central Arizona pool plants into the Las
Vegas area, and increased sales by both Phoenix and Las Vegas handlers
into the unregulated area of rapidly-increasing population along the
southern part of the Nevada-Arizona border, are factors that have
greatly increased overlapping route distribution in these two areas.
Mohave County, Arizona (currently-unregulated), and Clark County,
Nevada, are two of the fastest-growing areas in the United States in
terms of population. These two counties adjoin each other in southern
Nevada and northwestern Arizona, and both are increasing in population
significantly faster than the growth rates for their states. From 1990
to 1997, a period during which the population of the United States
increased by 7.6 percent, the population of Arizona increased by 24.3
percent, while Mohave County's population increased by 37.8 percent.
Over the same period, Clark County, Nevada, experienced a population
increase of 49.2 percent, while the Nevada population increased by 39.5
percent. The rapidly-growing area between Phoenix and Las Vegas
represents a growing market which can be expected to be served by both
of the major population centers.
Ninety-five percent of the route dispositions of handlers who would
be regulated under this order were distributed within the consolidated
marketing area in October 1997, and approximately the same percentage
of route disposition within the marketing area was by handlers who
would be regulated under this consolidated order. Similarly, over 95
percent of the milk pooled under the current Central Arizona order is
produced within the marketing area, and there is no indication of
movements of producer milk between Utah and Nevada, as was the case
when the Great Basin and Lake Mead orders were merged.
In addition, both areas exchange significant volumes of bulk and
packaged milk with Southern California, a relationship that does not
pertain to any of the other areas in the region. The Las Vegas area's
earlier relationship with southern Utah was based primarily on Utah as
an important milk supply area for Las Vegas at the time of the merger
of the Lake Mead and Great Basin order areas in 1988. That relationship
clearly has ceased to exist. Therefore, the assertion by commenters
that the Las Vegas, Nevada, area should continue to be included in the
same marketing area with Utah or be unregulated does not reflect
current marketing conditions.
Western
The consolidated Western marketing area is comprised of the current
Southwestern Idaho-Eastern Oregon (Order 135) and Great Basin (Order
139) marketing areas, less one Nevada county (Clark) in Order 139 that
is added to the Arizona-Las Vegas marketing area. There are 67 counties
in this consolidated area. The Western Colorado (Order 134) marketing
area, proposed to be part of the Western consolidated area, was changed
to become part of the Central consolidated area.
Geography
The Western market is described geographically as follows: 28
counties in Idaho (18 currently in Order 135 and 10 in Order 139), 3 in
eastern Nevada (all currently in Order 139), 5 in eastern Oregon (all
currently in Order 135), all counties (29) in Utah (currently in Order
139) and 2 in the southwest corner of Wyoming (currently in Order 139).
Measuring the extreme dimensions, this market extends about 625 miles
north to south from Oregon and Idaho to Utah's boundary with Arizona.
This market's east-to-west dimension is approximately 550 miles from
the westernmost edge in central/eastern Oregon to the easternmost edge
of the Utah/Colorado border.
The consolidated Western marketing area is contiguous to four of
the consolidated marketing areas, the Pacific Northwest to the west and
north of the Oregon portion of this market, Arizona-Las Vegas to the
south, the Central market on the east, and the Southwest to the extreme
southeast corner. Non-Federally regulated territory borders the Western
market on the west-southwest (Nevada) and the north-northeast (Idaho
and Wyoming).
In terms of physical geography, the Western marketing area has
several regions: The Columbia Plateau in southern Idaho and
northeastern Nevada, characterized by fertile soils; the Great Basin in
southeast Idaho, nearly all of Nevada and the western third of Utah,
described by ranges and parallel valleys; and the Colorado Plateau in
the eastern half of Utah, characterized by gorges. In general, the
Western market is quite dry, with temperatures tending to be extreme
and affected by elevation.
Population
According to July 1, 1997, population estimates, the total
population in the consolidated marketing area is 3.2 million. Using
Metropolitan Statistical Areas (MSAs), the largest population center is
the Salt Lake City-Ogden, Utah area (Salt Lake City). Salt Lake City is
located in north central Utah. The Boise City, Idaho, area (Boise), the
second largest population center in this marketing area, is located
about 300 miles to the northwest of Salt Lake City. Provo-Orem, Utah,
(Provo) the third largest population center, lies 40 miles
[[Page 16079]]
south of Salt Lake City. Forty percent of the market's population is in
the Salt Lake City area, and over 60 percent is accounted for when
Boise and Provo are added.
Fluid Per Capita Consumption
Based on the population figure of 3.2 million and an estimated per
capita fluid milk consumption rate of 23 pounds of fluid milk per
month, total fluid milk consumption in the Western marketing area is
estimated at 73.6 million pounds per month. Plants that would have been
fully regulated distributing plants in the Western order had route
disposition within the market of 74 million pounds in October 1997;
approximately 80 percent of this total is from Order 139 pool plants.
The 7 producer handlers operating during this month had a combined
route disposition of 1.6 million pounds. Additionally, 1.1 million
pounds of route disposition came from other order plants, with about .5
million from partially regulated handlers and exempt plants.
Milk Production
In October 1997, over 457 million pounds of milk was associated
with the Great Basin and Southwestern Idaho-Eastern Oregon markets, but
only 304 million pounds of this milk was pooled because of class price
relationships. The 457 million pounds of milk were produced by 952
dairy farmers located in 51 counties in California, Idaho, Nevada,
Oregon, Utah and Wyoming. Over 95 percent of the milk associated with
the market was produced within the marketing area. Four counties
produced more than 50 percent of the milk available to be pooled. The
three top producing counties in Idaho, Jerome, Gooding and Twin Falls
counties, are all located in southwestern Idaho, about 130 miles
southeast of Boise and 230 miles northwest of Salt Lake City. Jerome
and Gooding counties each provided approximately twice as much milk as
Twin Falls County, the third-largest county in terms of milk production
in the Western market. The fourth-largest production county was Cache
County in northeastern Utah, located about 80 miles north of Salt Lake
City.
The three Idaho counties, part of the marketing area of the current
Southwestern Idaho-Eastern Oregon order, are the top three milk-
producing counties for Order 135 and among the top seven milk-producing
counties for Order 139 in October 1997. Five counties in the current
Southwestern Idaho-Eastern Oregon marketing area supplied one-quarter
of the milk associated with the Great Basin order in October 1997.
Distributing Plants
Using the distributing plant list included in the proposed rule,
with the pooling standards adjusted to 25 percent of route disposition
as in-area sales, updated for known plant closures through December
1998, 25 distributing plants would be expected to be associated with
the Western marketing area, including 11 fully regulated distributing
plants (all currently pool plants), 2 partially regulated (currently
partially regulated), 1 exempt plant based on size (currently a pool
plant), 7 producer-handlers, and 4 exempt plants based on institutional
status (all were exempt as defined under current federal orders). Since
October 1997, it is known that 2 distributing plants (1 fully regulated
and 1 exempt plant) in Utah and 1 producer-handler in Arizona have gone
out of business.
There would be 9 distributing plants in the Salt Lake City area (5
pool plants, 2 producer-handlers and 2 exempt plants). The Boise area
would have 2 pool distributing plants, the Provo area would have 1
exempt plant and the Pocatello area would have 1 pool plant. The
remaining 12 distributing plants are located in Idaho (4 plants: 2
pool, 1 exempt, and 1 producer-handler), Nevada (1 partially regulated
plant), and Utah (7 plants: 1 pool, 1 partial, 1 exempt, 4 producer-
handlers).
Fully regulated distributing plants are located in MSAs containing
about half of the consolidated market's population, including the
Pocatello, Idaho, MSA, with 2.2 percent of this market's population.
Utilization
According to October 1997 pool statistics, the Class I utilization
percentages for the Southwestern Idaho-Eastern Oregon and Great Basin
markets were 16 and 41 percent, respectively. Based on calculated
weighted average use values for (1) the current order with current use
of milk, and (2) the current order with projected use of milk in the
consolidated Western order, the potential impact of this market
consolidation on producers who supply the current market areas is
estimated to be an 11-cent per cwt increase (from $12.92 to $13.03) for
Southwestern Idaho-Eastern Oregon, and a 9-cent per cwt decrease (from
$13.25 to $13.16) for Great Basin. The weighted average use value for
the consolidated Western order market is estimated to be $13.14 per
cwt. For October 1997, combined Class I utilization for Orders 135 and
139 was 32.5 percent based on 98.8 million pounds of producer milk used
in Class I out of 304.1 million total producer milk pounds.
A substantial amount of milk was omitted from the Southwestern
Idaho-Eastern Oregon pool for October because of unusual price
relationships. The annual Class I utilization percentage may be
considered more representative for this market. For the year 1997, the
annual Class I utilization for Southwestern Idaho-Eastern Oregon was
8.3 percent. It is estimated that the Class I use percentage for the
consolidated market would be about 23 percent.
Other Plants
Eighteen supply or manufacturing plants were located within the
consolidated Western marketing area during May 1997: 8 in Idaho (3 in
the Boise area), 9 in Utah (2 in the Salt Lake City area) and 1 in
Wyoming. Two of the 18 plants were pool plants; both manufacture
primarily cheese. Of the 16 nonpool plants, 12 manufacture primarily
cheese and 5 manufacture primarily soft or Class II products (including
ice cream). Of the 8 Idaho plants, all but one manufacture cheese,
while of the 9 Utah plants, 6 manufacture cheese and 3 manufacture soft
products.
Cooperative Associations
For December 1997, four cooperatives representing 77 percent of the
milk pooled under the two orders had membership in the consolidated
Western marketing area. Western Dairymen Cooperative, Inc., a
cooperative association that became part of Dairy Farmers of America,
Inc., had membership in both the Southwestern Idaho-Eastern Oregon and
Great Basin marketing areas. Magic Valley Quality Milk Producers, Inc.,
also had membership in Orders 135 and 139; Darigold Farms had
membership in Order 135, and Security Milk Producers' Association had
membership in Order 139.
Criteria for Consolidation
The consolidated Western market is composed of the current
marketing areas of the Southwestern Idaho-Eastern Oregon and Great
Basin markets, minus the Clark County, Nevada, portion of the Great
Basin area. Sales overlap exists between Southwestern Idaho-Eastern
Oregon and Great Basin, as well as a significant overlap in procurement
for the two orders in Idaho. The two orders also share similar multiple
component pricing plans. The Western Colorado order, proposed for
inclusion in the Western area, was shown on the basis of October 1997
data to have developed a
[[Page 16080]]
closer relationship with the Eastern Colorado area than with the Great
Basin order, and has been included in the consolidated Central area
instead of the Western area.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives to the
consolidation of the Southwestern Idaho-Eastern Oregon, Great Basin
(minus Clark County, Nevada) and Western Colorado marketing areas that
were considered included leaving the Southwestern Idaho-Eastern Oregon
area as a separate order and consolidating the Great Basin market with
the Central Arizona, Western Colorado, and Eastern Colorado marketing
areas, leaving both the Southwestern Idaho-Eastern Oregon and Great
Basin areas as separate order areas, and combining the Western Colorado
area with the Eastern Colorado area and other areas to the east. These
alternative consolidations were examined at length and found to be less
appropriate than the marketing areas delineated in the proposed rule in
terms of overlap of either fluid milk product disposition or producer
milk movements.
Fifteen comments that pertained specifically to the proposed
Western marketing area were filed by 12 commenters in response to the
proposed rule. Several of these comments objected to the separation of
the Las Vegas area from the Great Basin portion of the Western area.
These comments are addressed in the discussion of comments and
alternatives considered for the consolidated Arizona-Las Vegas area.
Comments filed by Dairy Farmers of America, Southern Foods Group,
and a western Colorado dairy farmer advocated consolidating the Western
Colorado order area with the consolidated Central area instead of the
Western area. DFA's comment stated that the Western Colorado milkshed
is more similar to the Central area than to the Western area. The
comments filed by Southern Foods Group and the dairy farmer expressed
concern about an expected reduction in the blend price paid to
producers supplying the Western Colorado area.
October 1997 data show an increased relationship between Western
Colorado and Eastern Colorado, and reduced milk movements between
Western Colorado and Great Basin. On the basis of the change in the
relationships between Western Colorado and its two nearest neighbor
order areas, the Western Colorado area should become part of the
consolidated Central area instead of the Western area.
Five Farm Bureau organizations (Michigan, Utah, Iowa, Ohio and
American), a Pennsylvania producer and Dairy Farmers of America filed
eight comments opposing the consolidation of the Southwestern Idaho-
Eastern Oregon order area with the Great Basin marketing area. One DFA
comment suggested combining Utah with the Arizona-Las Vegas area
instead of with Idaho. A primary basis for opposition to the
consolidation is the disparity in the two regions' utilization of Class
I fluid milk: The Southwestern Idaho-Eastern Oregon order has a very
low percentage of Class I use, which varies from less than 10 percent
to over 20 percent, while the Great Basin order's Class I use
percentage is higher at about 35 percent. Commenters fear that the
consolidation of these orders would result in lower returns to
producers who currently are pooled under the Great Basin order. Most of
the comments suggest that the Southwestern Idaho-Eastern Oregon
marketing area should remain under a separate order.
A major source of milk production for both the Southwestern Idaho-
Eastern Oregon and Great Basin orders is a 5-county area located within
the Federal order 135 marketing area, supplying one-quarter of the milk
pooled on the Great Basin order in October 1997. The Southwestern
Idaho-Eastern Oregon area should be consolidated with some other order
area because of the small number of handlers pooled under the order,
and this close relationship with Great Basin makes that consolidation
the only viable possibility.
Pacific Northwest
The Pacific Northwest marketing area is comprised of the current
Pacific Northwest (Order 124) marketing area and one currently-
unregulated county in southwest Oregon. There are 75 counties in this
marketing area. This area remains unchanged from the proposed rule.
Geography
The Pacific Northwest market is described geographically as
follows: All counties (39) in Washington, 30 counties in Oregon (29
currently are part of Order 124 and one, Curry County, is unregulated)
and six counties in northwestern Idaho. The market extends about 490
miles north-to-south from Washington's northern border with the
Canadian province of British Columbia to Oregon's southern border with
California and Nevada. East-to-west, the market ranges from about 450
miles in the northern half of the market (covering territory from
Washington's western boundary with the Pacific Ocean to the eastern
border of Idaho with Montana) to about 250 miles in the southern half
of the market (covering approximately two-thirds of Oregon from the
state's western border with the Pacific Ocean to central Oregon).
The Pacific Northwest marketing area is contiguous with the
consolidated Western Federal order marketing area in eastern Oregon.
The remainder of the marketing area is surrounded by currently non-
Federally regulated areas (California and northwestern Nevada to the
south and Montana, Idaho, and one northeastern Oregon county to the
east), political boundaries (Canada to the north), and the Pacific
Ocean to the west.
Along the Oregon and Washington coasts lies the Coast Range. The
Cascade Range is located further inland in both states. Both ranges are
north-south in direction, and the Cascade Range effectively divides
both states into two distinct climates: a year-round mild, humid
climate with abundant precipitation predominates in the western part of
the states, and a dry climate with little precipitation but greater
temperature extremes prevails east of the Cascade Range. The mild
climate of the western portion results in longer growing seasons. The
Columbia River flows south through eastern Washington, turns west, and
becomes the western two-thirds of the border between Oregon and
Washington. The portion of Idaho included in the Pacific Northwest
marketing area is within the Rocky Mountains. This area has a generally
continental climate with the higher elevations having long and severe
winters.
Much of the area is conducive to the production of milk and many
other agricultural commodities. Although dairy products ranked 2nd
among receipts of agricultural commodities in the State of Washington
in 1996, and 4th in Oregon, they accounted for only 13.8 percent and
7.9 percent, respectively, of such receipts. Apples (in Washington) and
greenhouse/nursery, wheat, and cattle and calves (in Oregon) ranked
ahead of dairy, accounting for 19.8 percent and 33.8 percent,
respectively, of agricultural commodity receipts.
Population
According to July 1, 1997, population estimates, the total
population in the marketing area is 9 million. Seventy-seven percent of
the marketing area population is located in Metropolitan Statistical
Areas (MSAs). The two
[[Page 16081]]
largest MSAs are located on the western side of the Cascade Range. The
Seattle-Tacoma-Bremerton (Seattle) area, with a population of 3.4
million (37.6% of the marketing area population), is in northwestern
Washington. Over seventy percent of the population of the State of
Washington is located west of the Cascade Mountains, in the western
third of the State. Another 14.5% of the State's population is
contained in 3 MSA's east of the Cascades.
The Portland-Salem (Portland) area in northwestern Oregon is
located on the Oregon-Washington border, with Portland just south of
the Columbia River. The population of this MSA is 2.1 million, or 23.6%
of the marketing area population. Ninety percent of the population of
Oregon is concentrated in the western one-third of the State, or in the
western half of the Oregon portion of the marketing area.
Fluid Per Capita Consumption
Based on the population figure of 9 million and an estimated per
capita fluid milk consumption rate of 22 pounds of fluid milk per
month, total fluid milk consumption in the Pacific Northwest marketing
area is estimated at 198 million pounds per month. For October 1997,
plants that would be fully regulated distributing plants under the
Pacific Northwest order had route disposition within the market of 170
million pounds. In addition, the 18 producer-handlers operating during
this month had a combined route disposition of 18 million pounds.
Additionally, slightly over 1 million pounds of route disposition (less
than one percent of total route disposition in the marketing area) came
from handlers outside the market. Because the handlers associated with
this market are able to fulfill the market's Class I or fluid needs,
and because of the somewhat geographic isolation of the market,
maintaining the current Pacific Northwest order as a separate market is
appropriate.
Milk Production
In October 1997, the 540 million pounds of milk pooled in the
Pacific Northwest market were produced by 1,211 producers located in 57
counties in California, Idaho, Oregon, and Washington. Five counties
produced 57 percent of the milk pooled. Four of these counties are in
Washington State. They are Whatcom, Skagit, and Snohomish counties,
which are less than 100 miles north of Seattle; and Yakima County,
which is located in central Washington about 100 miles southeast of
Seattle on the eastern side of the Cascade Range. The fifth county is
in Oregon. It is Tillamook County, which borders the Pacific Ocean,
about 60 miles west of the Portland area on the western side of the
Coast Range.
Less than two percent of the milk pooled in the Pacific Northwest
was produced outside of the marketing area, in Idaho and California.
The largest portion is from producers in two northern California
counties who pooled nearly 6 million pounds of milk or 89.8 percent of
the pooled milk produced outside the Pacific Northwest marketing area.
Distributing Plants
Using distributing plant lists included in the proposed rule, with
the pooling standards adjusted to 25 percent of route disposition as
in-area sales, updated for known plant closures through December 1998,
35 distributing plants would be expected to be associated with the
Pacific Northwest market, including 19 fully regulated distributing
plants (all currently fully regulated), 2 partially regulated plants, 4
exempt plants (below 150,000 pounds in total route disposition), and 10
producer-handlers. It is known that 3 distributing plants (all
producer-handlers) have gone out of business since October 1997.
There are 11 distributing plants within the Portland area,
including 7 pool plants, 2 exempt plants and 2 producer-handlers. The
Seattle/Tacoma MSAs have 4 pool plants, 1 partially regulated plant,
and 4 producer-handlers. In addition to these two main population
centers, the Spokane, Washington, MSA, located in the eastern area of
the state near the Idaho border with a population of 405,000, has 2
pool plants.
Two smaller MSA's in western Oregon contain 2 pool plants, 1
producer-handler, and 1 plant exempt on the basis of size. Of the 5
distributing plants that would be operating in Oregon outside of MSAs,
3 would be fully regulated, 1 partially regulated, and 1 exempt of the
basis of size. All but one, in central Oregon, are located in western
Oregon.
One producer-handler is located in a northwest Washington MSA, and
1 pool plant, 2 producer-handlers and 1 partially regulated plant are
located in the southeast quadrant of the State of Washington outside
any MSA.
Since October 1997, three producer-handlers are known to have gone
out of business, two in the State of Washington, and one in Oregon.
Distributing plants fully regulated under the Pacific Northwest
order are located in MSAs where 71 percent of the market's population
is concentrated.
Utilization
According to October 1997 pool statistics, the Class I utilization
percentage for the Pacific Northwest market was 36 percent. Because
this market is to remain separate, expected utilization changes due to
the reform process result only from potential changes in plants'
regulatory status; thus very little change in producer returns under
the Pacific Northwest order is expected as a result of consolidation.
For October 1997, Class I utilization for the Pacific Northwest market
was 35.6 percent based on 192 million pounds of producer milk used in
Class I out of 540 million total producer milk pounds. The weighted
average use value for the Pacific Northwest market is estimated to be
$13.33 per hundredweight.
Other Plants
Located within the Pacific Northwest marketing area in May 1997
were 27 supply or manufacturing plants; 12 in Oregon (5 in the Portland
area), 15 in Washington (7 in the Seattle area) and none in Idaho. Two
of the 27 plants (both in Oregon) were Order 124 pool supply plants,
one of which manufactured primarily cheese, and the other nonfat dry
milk. Of the 10 nonpool manufacturing plants located in Oregon, 8
manufactured primarily Class II products (including ice cream), 1
manufactured butter, and the other made cheese.
The 15 manufacturing/supply plants located in the State of
Washington were all nonpool plants. Three manufactured primarily Class
II products, 3 manufactured primarily butter, 2 manufactured primarily
powder, and 7 manufactured primarily cheese.
Cooperative Associations
Five cooperative associations had members in the Pacific Northwest
market in December 1997. Darigold Farms is the largest, and the only
cooperative that had membership affiliated with another order (Order
135) in December 1997. Other cooperatives in this market are Farmers
Cooperative Creamery, Tillamook County Creamery Association, Northwest
Independent Milk Producers Association, and Portland Independent Milk
Producers Association. These five cooperatives pooled 85 percent of the
total producer milk pooled under the Pacific Northwest order in
December 1997.
Criteria for Consolidation
The consolidated Pacific Northwest market adds one currently
unregulated Oregon county to the Pacific Northwest milk order. The
degree of association of
[[Page 16082]]
this market with other Federal order marketing areas is insufficient
under any criteria to warrant consolidation with any other order areas.
Discussion of Comments and Alternatives
Prior to issuance of the proposed rule, alternatives to the leaving
the Pacific Northwest area as a separate order area that were
considered included the consolidation of the current Pacific Northwest,
Southwestern Idaho-Eastern Oregon and Great Basin order areas. Because
there is virtually no relationship with regard to either overlapping
route dispositions or overlapping milk procurement between the Pacific
Northwest and Southwestern Idaho-Eastern Oregon milk marketing areas,
and none at all with Great Basin, these alternatives were not pursued.
Only two comments pertained specifically to the ``consolidated''
Pacific Northwest marketing area. Darigold Farms, Inc., commented that
the Pacific Northwest marketing area should remain unchanged except for
the addition of the one southwestern Oregon county proposed to be
added. Darigold stated that the addition of this county would not cause
the regulation of any plant. A comment filed by an individual from Utah
stated that Idaho should be included in the Pacific Northwest area or
be a separate order. As noted before, there is almost no relationship
between the Pacific Northwest and Southwestern Idaho-Eastern Oregon
marketing areas, and no basis for such a consolidation.
BILLING CODE 3410-02-P
List of Plants and Regulatory Status
----------------------------------------------------------------------------------------------------------------
Order/ Expected
Plant name City State October 1997 status \1\ status \1\
----------------------------------------------------------------------------------------------------------------
Northeast
----------------------------------------------------------------------------------------------------------------
ARMSTRONG, DAVID F. (SUNSET WHITESBORO....... NY NY-NJ........... 1 1
DAIRY).
ARRUDA, GEORGIANNA (ESTATE OF) TIVERTON......... RI New England..... 4 4
BANGMA, LEONARD & DONALD...... UXBRIDGE......... MA New England..... 4 4
BECHTEL DAIRIES, INC.......... ROYERSFORD....... PA Mid Atlantic.... 1 OOB 4/98
BOICE BROS. DAIRY (RICHARD P. KINGSTON......... NY NY-NJ........... 1 1
BOICE).
BRIGGS, ROBERT A.............. WEST MEDWAY...... MA New England..... 4 4
BROOKSIDE DAIRY............... FITCHBURG........ MA New England..... 4 4
BYRNE DAIRY, INC.............. SYRACUSE......... NY NY-NJ........... 1 1
CAMPHILL VILLAGE.............. KIMBERTON........ PA Mid Atlantic.... 4 4
CHRISTIANSEN DAIRY CO., INC... NO. PROVIDENCE... RI New England..... 1 1
CHROME DAIRY FARMS............ OXFORD........... PA Mid Atlantic.... 1 1
CIENIEWICZ, JOSEPH............ BERLIN........... CT New England..... 4 4
CLINTON MILK CO............... NEWARK........... NJ NY-NJ........... 1 OOB 10/98
CLOVER FARMS DAIRY COMPANY.... READING.......... PA NY-NJ........... 1 1
CLOVERLAND/GREEN SPRING DAIRY. BALTIMORE........ MD Mid Atlantic.... 1 1
CLOVERLAND/GREEN SPRING DAIRY. BALTIMORE........ MD Mid Atlantic.... 1 OOB 2/98
COOPER'S HILLTOP DAIRY FARM... ROCHDALE......... MA New England..... 4 4
CORNELL UNIVERSITY............ ITHACA........... NY ................ 6A 6B
CRESCENT RIDGE DAIRY, INC..... SHARON........... MA New England..... 4 4
CROWLEY FOODS, INC............ ALBANY........... NY NY-NJ........... 1 1
CROWLEY FOODS, INC............ BINGHAMTON....... NY NY-NJ........... 1 1
CROWLEY FOODS, INC............ CONCORD.......... NH New England..... 1 1
CUMBERLAND DAIRY, INC......... BRIDGETON........ NJ Mid Atlantic.... 2 2
CUMBERLAND FARMS, INC......... CANTON........... MA New England..... 1 OOB 8/98
DAIRY MAID DAIRY, INC......... FREDERICK........ MD Mid Atlantic.... 1 1
DUNAJSKI DAIRY, INC........... PEABODY.......... MA New England..... 4 4
DUTCH VALLEY FOOD CO., INC.... SUNBURY.......... PA Mid Atlantic.... 1 1
DUTCH WAY FARM MARKET......... MYERSTOWN........ PA Mid Atlantic.... 4 4
EDWARDS, CHARLES & KURT & GLOVERSVILLE..... NY NY-NJ........... 4 4
KEITH (MODEL DAIRY FARM).
ELMHURST DAIRY, INC........... JAMAICA.......... NY NY-NJ........... 1 1
EMBASSY DAIRY, INC............ WALDORF.......... MD Mid Atlantic.... 1 OOB 3/98
EMMONS WILLOW BROOK FARM, INC. PEMBERTON........ NJ Mid Atlantic.... 4 4
FAIRDALE FARMS, INC........... BENNINGTON....... VT New England..... 2 1
FARMLAND DAIRIES, INC. &/OR WALLINGTON....... NJ NY-NJ........... 1 1
FAIRDALE MILK COMPANY, INC.
FISH FAMILY FARM, INC......... BOLTON........... CT New England..... 4 4
FLINT, PETER.................. CHELSEA.......... VT New England..... 1 1
FREDDY HILL FARM DAIRY........ LANSDALE......... PA Mid Atlantic.... 4 4
FRIENDSHIP DAIRIES, INC....... FRIENDSHIP....... NY NY-NJ........... 1 2
GARELICK FARMS, INC. WAS: EAST GREENBUSH... NY NY-NJ........... 1 1
CUMBERLAND FARMS, INC.
GARELICK FARMS, INC. WAS: FLORENCE......... NJ NY-NJ........... 1 1
CUMBERLAND FARMS, INC.
GARELICK FARMS, INC........... FRANKLIN......... MA New England..... 1 1
GIANT FOOD, INC............... LANDOVER......... MD Mid Atlantic.... 1 1
GRANT'S DAIRY, INC............ BANGOR........... ME New England..... 2 2
GRATERFORD STATE.............. GRATERFORD....... PA Mid Atlantic.... 6A 6B
GUERS DY., INC................ POTTSVILLE....... PA Mid Atlantic.... 2 2
GUIDA-SEIBERT DAIRY CO........ NEW BRITAIN...... CT New England..... 1 1
HALO FARM, INC................ TRENTON.......... NJ Mid Atlantic.... 1 1
HARRISBURG DAIRIES............ HARRISBURG....... PA Mid Atlantic.... 1 1
[[Page 16083]]
HATCH, HOWARD................. N. HAVERHILL..... NH New England..... 1 1
HATCHLAND DAIRY............... N. HAVERHILL..... NH New England..... 4 4
HERITAGE'S DAIRY, INC......... THOROFARE........ NJ Mid Atlantic.... 1 OOB 5/98
HERMANY FARMS, INC............ BRONX............ NY NY-NJ........... 1 1
HIGHLAWN FARM................. LEE.............. MA ................ 5 3B
HILL FARM OF VERMONT.......... PLAINFIELD....... VT ................ 5 3B
HILLCREST DAIRY, INC. (MICHAEL MORAVIA.......... NY NY-NJ........... 4 4
J. JANAS).
HINE, FREDRICK DBA: FIELD VIEW ORANGE........... CT New England..... 4 4
DAIRY FARM.
HOGAN, FRANCIS J. & ANDREW J. HUDSON FALLS..... NY NY-NJ........... 4 OOB 5/97
& SEAN P.--HOGAN'S DAIRY.
HOMESTEAD DAIRIES, INC........ MASSENA.......... NY ................ 5 OOB 6/98
HOOVER DAIRY.................. SANBORN.......... NY ................ 5 5
HY POINT DAIRY FARMS, INC..... WILMINGTON....... DE Mid Atlantic.... 1 1
H.E.A., INC................... CRANSTON......... RI New England..... 1 1
H.P. HOOD, INC................ AGAWAM........... MA New England..... 1 1
H.P. HOOD, INC. WAS: BOOTH BARRE............ VT New England..... 2 1
BROTHERS DAIRY, INC.
H.P. HOOD, INC................ BURLINGTON....... VT New England..... 2 OOB 10/97
H.P. HOOD, INC................ NEWINGTON........ CT New England..... 2 2
H.P. HOOD, INC................ ONEIDA........... NY NY-NJ........... 2 1
H.P. HOOD, INC................ PORTLAND......... ME New England..... 1 1
KEMPS FOODS, INC.............. LANCASTER........ PA Mid Atlantic.... 1 1
KOLB'S FARM STORE............. SPRING CITY...... PA Mid Atlantic.... 4 4
KREIDER DAIRY FARMS, INC...... MANHEIM.......... PA NY-NJ........... 2 4
KRISCO FARMS, INC............. CAMPBELL HALL.... NY NY-NJ........... 4 OOB 5/98
LAPP VALLEY FARM.............. NEW HOLLAND...... PA Mid Atlantic.... 4 4
LEESBURG STATE PRISON FARM.... LEESBURG......... NJ Mid Atlantic.... 6A 6B
LEONARD, STEWART J............ NORWALK.......... CT New England..... 1 1
LEWES DAIRY, INC.............. LEWES............ DE Mid Atlantic.... 1 1
LEWIS COUNTY DAIRY CORP....... LOWVILLE......... NY NY-NJ........... 1 1
LONGACRE'S MODERN DAIRY, INC.. BARTO............ PA NY-NJ........... 1 1
MANINO, ROSE (DARI-DELL)...... FRANKFORT........ NY NY-NJ........... 2 3B
MAPLE HILL FARMS, INC......... BLOOMFIELD....... CT New England..... 1 OOB 9/97
MAPLEHOFE DAIRY, INC.......... QUARRYVILLE...... PA Mid Atlantic.... 4 4
MARCUS DAIRY, INC............. DANBURY.......... CT NY-NJ........... 1 1
MCNAMARA, PATRICK............. WEST LEBANON..... NH New England..... 4 4
MEADOW BROOK FARMS, INC....... POTTSTOWN........ PA Mid Atlantic.... 1 1
MERCERS DAIRY, INC............ BOONVILLE........ NY NY-NJ........... 2 3B
BMERRYMEAD FARM............... LANSDALE......... PA Mid Atlantic.... 4 4
MOHAWK DAIRY (Z & R CORP.).... AMSTERDAM........ NY NY-NJ........... 1 1
MONUMENT FARMS, INC........... MIDDLEBURY....... VT ................ 5 1
MOUNT WACHUSETT DAIRY, INC.... W. BOYLSTON...... MA New England..... 1 OOB 12/98
MOUNTAINSIDE FARMS, INC....... ROXBURY.......... NY NY-NJ........... 1 1
MUNROE, A B DAIRY, INC........ EAST PROVIDENCE.. RI New England..... 1 1
NEW ENGLAND DAIRIES, INC...... HARTFORD......... CT New England..... 1 1
NICASTRO FARMS, INC. DBA: FRANKFORT........ NY NY-NJ........... 4 4
RIVERSIDE FARMS.
NICHOLS, DAVID................ CHESTERFIELD..... MA New England..... 4 4
NIP N TUCK FARMS.............. VINEYARD HAVEN... MA ................ 5 4
OAK TREE FARM DAIRY, INC...... EAST NORTHPORT... NY NY-NJ........... 1 1
OAKHURST DAIRY................ PORTLAND......... ME New England..... 2 2
OREGON DAIRY FARM MKT......... LITITZ........... PA Mid Atlantic.... 4 4
PARMALAT WELSH FARMS, INC. LONG VALLEY...... NJ NY-NJ........... 1 1
WAS: WELSH FARMS, INC.
PARMALAT WEST DAIRIES, INC.... SPRING CITY...... PA Mid Atlantic.... 2 OOB 5/97
PEACEFUL MEADOWS ICE CREAM, WHITMAN.......... MA New England..... 4 4
INC.
PEARSON, ROBERT L............. WEST MILLBURY.... MA New England..... 4 4
PEDRO, JOSEPH................. FALL RIVER....... MA New England..... 4 4
PENNVIEW FARMS................ PERKASIE......... PA Mid Atlantic.... 4 4
PERRYDELL FARMS............... YORK............. PA Mid Atlantic.... 4 4
PINE VIEW ACRES, INC.......... LANCASTER........ PA Mid Atlantic.... 4 4
PIONEER DAIRY, INC............ SOUTHWICK........ MA New England..... 1 1
POTOMAC FARMS DAIRY, INC...... CUMBERLAND....... MD Mid Atlantic.... 2 2
PULEO'S DAIRY................. SALEM............ MA New England..... 1 3B
QUALITY MILK, INC............. WARE............. MA New England..... 1 3B
QUEENSBORO FARM PRODUCTS,INC.. CANASTOTA........ NY NY-NJ........... 1 2
READINGTON FARMS, INC......... WHITEHOUSE....... NJ NY-NJ........... 1 1
READY FOODS, INC.............. PHILADELPHIA..... PA Mid Atlantic.... 2 3B
RICHARDSON FARMS, INC......... MIDDLETON........ MA New England..... 4 4
RICHARDSONS G. H. DAIRY....... DRACUT........... MA New England..... 3A 3B
[[Page 16084]]
RICHFOOD DAIRY................ RICHMOND......... VA Mid Atlantic.... 1 1
RIDGE VIEW FARMS.............. ELIZABETHTOWN.... PA Mid Atlantic.... 4 4
RITCHEY'S DAIRY............... MARTINSBURG...... PA Mid Atlantic.... 2 2
RONNYBROOK FARM DAIRY, INC.... ANCRAMDALE....... NY NY-NJ........... 4 4
ROSENBERGER'S DAIRY, INC...... HATFIELD......... PA Mid Atlantic.... 1 1
RUDOLPH STEINER EDUCATION & GHENT............ NY NY-NJ........... 4 4
FARMING ASSOC., INC.
RUTTER BROS. DAIRY, INC....... YORK............. PA Mid Atlantic.... 1 1
SALEM VALLEY FARMS, INC....... SALEM............ CT New England..... 4 4
SARATOGA DAIRY, INC. SARATOGA SPRINGS. NY NY-NJ........... 1 1
(STEWART'S PROCESSING CORP.).
SCHNEIDER/VALLEY FARMS, INC... WILLIAMSPORT..... PA NY-NJ........... 2 2
SEWARD DAIRY, INC............. RUTLAND.......... VT New England..... 2 OOB 8/98
SHAW FARM DAIRY, INC.......... DRACUT........... MA New England..... 4 4
STEARNS, WILLARD J. & SONS, STORRS........... CT New England..... 4 4
INC.
STOP & SHOP COMPANIES, INC.... READVILLE........ MA New England..... 1 1
SULOMAN'S MILK................ GILBERTSVILLE.... PA Mid Atlantic.... 4 4
SUNNYDALE FARMS, INC.......... BROOKLYN NY...... .............. NY-NJ........... 1 1
SYNAKOWSKI WALTER J (VALLEY REMSEN........... NY NY-NJ........... 4 4
SIDE FARM).
TANNER BROS. DAIRY............ WARMINSTER....... PA Mid Atlantic.... 4 4
THOMAS, ORIN & SONS, INC...... RUTLAND.......... VT New England..... 2 1
TRINITY FARM.................. ENFIELD.......... CT New England..... 4 4
TURKEY HILL DAIRY, INC........ CONESTOGA........ PA Mid Atlantic.... 1 1
TURNER'S DAIRY, INC........... SALEM............ NH New England..... 1 1
TUSCAN DAIRY FARMS, INC....... FRASER........... NY NY-NJ........... 2 2
TUSCAN DAIRY FARMS, INC....... UNION............ NJ NY-NJ........... 1 1
TUSCAN/LEHIGH DAIRIES, LP WAS: LANSDALE......... PA Mid Atlantic.... 1 1
LEHIGH VALLEY DAIRIES, INC.
TUSCAN/LEHIGH DAIRIES, LP WAS: SCHUYLKILL HAVEN. PA NY-NJ........... 2 2
LEHIGH VALLEY DAIRIES, INC.
UPSTATE MILK COOPERATIVES, INC BUFFALO.......... NY NY-NJ........... 2 1
UPSTATE MILK COOPERATIVES, INC JAMESTOWN........ NY ................ 5 5
UPSTATE MILK COOPERATIVES, INC ROCHESTER........ NY NY-NJ........... 2 2
VALLEY OF VIRGINIA COOP. DBA MT. CRAWFORD..... VA Mid Atlantic.... 2 2
SHENANDOAH'S PRIDE.
VALLEY OF VIRGINIA COOP. DBA SPRINGFIELD...... VA Mid Atlantic.... 1 1
SHENANDOAH'S PRIDE.
VAN WIE, CHARLES F. CLARKSVILLE...... NY NY-NJ........... 4 4
(MEADOWBROOK FARMS DAIRY).
WALSH, WILLIAM................ SIMSBURY......... CT New England..... 4 4
WAWA DAIRY FARMS.............. WAWA............. PA Mid Atlantic.... 1 1
WAY-HAR FARMS................. BERNVILLE........ PA NY-NJ........... 3A 3B
WENDTS DAIRY DIV NIAGARA CO... NIAGARA FALLS.... NY ................ 5 5
WENGERTS DAIRY, INC........... LEBANON.......... PA Mid Atlantic.... 1 1
WEST LYNN CREAMERY, INC....... LYNN............. MA New England..... 1 1
WHITTIER CREAMERY COMPANY, INC SHREWSBURY....... MA New England..... 1 1
WINSOR, S. B. DAIRY, INC...... JOHNSTON......... RI New England..... 1 3B
WRIGHT'S DAIRY FARM, INC...... NORTH SMITHFIELD. RI New England..... 4 4
----------------------------------------------------------------------------------------------------------------
Appalachian
----------------------------------------------------------------------------------------------------------------
BROADACRE DAIRIES............. POWELL........... TN ................ 5 1
CAROLINA DAIRIES.............. KINSTON.......... NC Carolina........ 1 OOB 5/98
COBURG DAIRY, INC............. N. CHARLESTON.... SC Carolina........ 1 1
DAIRY FRESH, LP............... WINSTON-SALEM.... NC Carolina........ 1 1
DEAN MILK CO.................. LOUISVILLE....... KY Louis-Lex-Evans. 1 1
FLAV-O-RICH, INC.............. BRISTOL.......... VA Carolina........ 2 1
FLAV-O-RICH, INC.............. FLORENCE......... SC Carolina........ 1 1
FLAV-O-RICH, INC.............. LONDON........... KY Louis-Lex-Evans. 1 1
FLAV-O-RICH, INC.............. WILKESBORO....... NC Carolina........ 1 1
GOLDEN GALLON, INC............ CHATTANOOGA...... TN Southeast....... 1 1
HOOSIER DAIRY, INC. WAS: HOLLAND.......... IN Louis-Lex-Evans. 1 1
HOLLAND DAIRIES, INC.
HUNTER FARMS.................. CHARLOTTE........ NC Carolina........ 1 1
HUNTER FARMS.................. HIGHPOINT........ NC Carolina........ 1 1
IDEAL AMERICAN DAIRY.......... EVANSVILLE....... IN Louis-Lex-Evans. 1 1
JACKSON DAIRY................. DUNN............. NC Carolina........ 1 3B
JERSEY RIDGE DAIRY, INC....... KNOXVILLE........ TN ................ 5 3B
LAND-O-SUN DAIRIES, INC....... KINGSPORT........ TN Carolina........ 1 1
LAND-O-SUN DAIRIES, INC....... PORTSMOUTH....... VA Carolina........ 2 2
LAND-O-SUN DAIRIES, INC....... SPARTANBURG...... SC Carolina........ 1 1
[[Page 16085]]
MAOLA MILK & ICE CREAM CO..... NEW BERN......... NC Carolina........ 1 1
MAPLEVIEW FARMS............... HILLSBORO........ NC Carolina........ 1 3B
MARVA MAID DAIRY.............. NEWPORT NEWS..... VA Carolina........ 2 2
MAYFIELD DAIRY FARMS, INC..... ATHENS........... TN Southeast....... 1 1
MILKCO, INC................... ASHEVILLE........ NC Carolina........ 1 1
NORTH CAROLINA ST. UNIV....... RALEIGH.......... NC Carolina........ 6A 6B
PEELER JERSEY FARMS, INC...... GAFFNEY.......... SC Carolina........ 1 OOB 10/98
REGIS MILK CO................. CHARLESTON....... SC Carolina........ 1 1
SOUTHERN BELLE DAIRY, INC..... SOMERSET......... KY Southeast....... 1 1
SUPERBRAND DY. PRODS., INC.... GREENVILLE....... SC Carolina........ 1 1
SUPERBRAND DAIRY, INC......... HIGHPOINT........ NC Carolina........ 1 1
U C MILK CO................... MADISONVILLE..... KY Louis-Lex-Evans. 1 1
WESTOVER DAIRIES.............. LYNCHBURG........ VA Carolina........ 1 1
WINCHESTER FARMS DAIRY........ WINCHESTER....... KY Louis-Lex-Evans. 1 1
----------------------------------------------------------------------------------------------------------------
Florida
----------------------------------------------------------------------------------------------------------------
BORDEN, INC. (TRI-STATE DAIRY) MIAMI............ FL Southeast 1 OOB 4/97
Florida.
FARM STORES, INC. (REW JB MIAMI............ FL Southeast 1 OOB 10/98
DAIRY PLANT ASSOCIATES dba Florida.
FARM STORES).
GOLDEN FLEECE DAIRY........... LECANTO.......... FL Tampa Bay....... 4 4
GUSTAFSON'S DAIRY, INC........ GREEN COVE....... FL Upper Florida... 1 1
M&B DAIRY PRODUCTS, INC....... TAMPA............ FL Tampa Bay....... 1 3B
MCARTHUR DAIRY, INC........... MIAMI............ FL Southeast 1 1
Florida.
PUBLIX SUPER MKTS., INC....... DEERFIELD BEACH.. FL Southeast 1 1
Florida.
PUBLIX SUPER MKTS., INC....... LAKELAND......... FL Tampa Bay....... 1 1
RYAN FOODS COMPANY, WAS: JACKSONVILLE..... FL Southeast....... 2 2
LONGLIFE DAIRY PRODUCTS, INC.
SUPERBRAND DAIRY PRODUCTS, INC MIAMI............ FL Southeast 1 1
Florida.
SUPERBRAND DAIRY PRODUCTS, INC PLANT CITY....... FL Tampa Bay....... 1 1
T.G. LEE FOODS, INC., WAS: ORANGE CITY...... FL Upper Florida... 1 1
LIFE STYLE/DIV TG LEE FOODS.
T.G. LEE FOODS, INC........... ORLANDO.......... FL Tampa Bay....... 1 1
VELDA FARMS, INC.............. MIAMI............ FL Southeastern 1 1
Florida.
VELDA FARMS, INC.............. ST. PETERSBURG... FL Tampa Bay....... 1 1
VELDA FARMS, INC.............. WINTER HAVEN..... FL Tampa Bay....... 1 1
WIGGINS DAIRY PRODUCTS, INC... PLANT CITY....... FL Tampa Bay....... 1 1
----------------------------------------------------------------------------------------------------------------
Southeast
----------------------------------------------------------------------------------------------------------------
ALCORN STATE UNIVERSITY....... LORMAN........... MS Southeast....... 6A 6B
ARKANSAS DEPT. OF CORREC...... GRADY............ AR Southeast....... 6A 6B
AVENT'S DAIRY NC.............. OXFORD........... MS Southeast....... 1 1
BARBER PURE MILK CO........... BIRMINGHAM....... AL Southeast....... 1 1
BARBER PURE MILK CO........... MOBILE........... AL Southeast....... 1 1
BARBER PURE MILK CO........... MONTGOMERY....... AL Southeast....... 1 1
BARBE'S DAIRY, INC............ WESTWEGO......... LA Southeast....... 1 1
BORDEN, INC................... BATON ROUGE...... LA Southeast....... 1 OOB 10/98
BORDEN MILK PRODUCTS, LLC..... LAFAYETTE........ LA Southeast....... 1 1
BORDEN MILK PRODUCTS, LLC..... MONROE........... LA Southeast....... 1 1
BROWNS VELVET DAIRY PRODUCTS NEW ORLEANS...... LA Southeast....... 1 1
(SOUTHERN FOODS GROUP, LP).
CENTENNIAL FARMS DAIRY, INC... ATLANTA.......... GA Southeast....... 1 1
COLLEGE OF THE OZARKS......... POINT LOOKOUT.... MO Southwest Plains 1 6B
COUNTRY DELITE FARMS, INC..... NASHVILLE........ TN Southeast....... 1 1
DAIRY FRESH CORP.............. BAKER............ LA Southeast....... 1 1
DAIRY FRESH CORP.............. COWARTS.......... AL Southeast....... 1 1
DAIRY FRESH CORP.............. HATTIESBURG...... MS Southeast....... 1 1
DAIRY FRESH CORP.............. PRICHARD......... AL Southeast....... 1 1
DASI PRODUCTS, INC............ DECATUR.......... AL Southeast....... 2 2
ETOWAH MAID DAIRIES, INC...... CANTON........... GA Southeast....... 4 4
FLAV-O-RICH, INC.............. CANTON........... MS Southeast....... 1 1
FOREMOST DAIRY, INC........... SHREVEPORT....... LA Southeast....... 1 1
GEORGIA STATE PRISON.......... REIDSVILLE....... GA Southeast....... 6A 6B
GOLD STAR DAIRY............... LITTLE ROCK...... AR Southeast....... 1 1
HERITAGE FARMS DAIRY.......... MURFREESBORO..... TN Southeast....... 1 1
HILAND DAIRY CO............... FAYETTEVILLE..... AR Southwest Plains 1 1
HILAND DAIRY CO............... FORT SMITH....... AR Southwest Plains 1 1
HILAND DAIRY CO............... SPRINGFIELD...... MO Southwest Plains 1 1
HUMPHREY DAIRY................ HOT SPRINGS...... AR Southeast....... 3A 3B
KINNETT DAIRIES, INC.......... COLUMBUS......... GA Southeast....... 1 1
[[Page 16086]]
KLEINPETER DAIRY, INC......... BATON ROUGE...... LA Southeast....... 1 1
LOUISIANA STATE PENITENTIARY.. ANGOLA........... LA Southeast....... ........... OOB 12/95
LOUISIANA TECH................ RUSTON........... LA Southeast....... 6A 6B
LUVEL DAIRY PRODUCTS, INC..... KOSCIUSKO........ MS Southeast....... 1 1
MAYFIELD DAIRY................ BRASELTON........ GA Southeast....... 1 1
MEADOW GOLD DAIRIES, INC. HUNTSVILLE....... AL Southeast....... 1 1
(SOUTHERN FOODS GROUP, LP).
MID-AMERICA DAIRYMEN, INC..... LEBANON.......... MO Southwest Plains 1 OOB 8/98
MISSISSIPPI STATE UNIVERSITY.. MISS. STATE...... MS Southeast....... 6A 6B
NEW ATLANTA DAIRIES, INC...... ATLANTA.......... GA Southeast....... 1 1
PEELER JERSEY FARMS, INC...... ATHENS........... GA Southeast....... 1 1
PUBLIX SUPERMARKETS, INC...... LAWRENCEVILLE.... GA Southeast....... 1 1
PURITY DAIRIES, INC........... NASHVILLE........ TN Southeast....... 1 1
RYAN FOODS COMPANY............ MURRAY........... KY Southeast....... 2 1
SAVANNAH MANUFACTURING SAVANNAH......... GA Southeast....... 2 2
COMPANY--A HERSHEY FOODS
COMPANY.
SOUTHERN UNIVERSITY........... BATON ROUGE...... LA Southeast....... 6A 6B
SUPERBRAND DY. PRODS., INC.... HAMMOND.......... LA Southeast....... 1 1
SUPERBRAND DY. PRODUCTS, INC.. MONTGOMERY....... AL Southeast....... 1 1
TURNER HOLDINGS, LLC.......... COVINGTON........ TN Southeast....... 1 2
TURNER HOLDINGS, LLC.......... FULTON........... KY Southeast....... 1 1
TURNER HOLDINGS, LLC WAS: LITTLE ROCK...... AR Southeast....... 1 1
COLEMAN DAIRY, INC.
TURNER HOLDINGS, LLC WAS: MEMPHIS.......... TN Southeast....... 1 1
FOREST HILL DAIRY.
----------------------------------------------------------------------------------------------------------------
Mideast
----------------------------------------------------------------------------------------------------------------
ARPS DAIRY, INC............... DEFIANCE......... OH Ohio Valley..... 1 1
BAREMAN DAIRY, INC............ HOLLAND.......... MI Southern 1 1
Michigan.
BARKER'S FARM DAIRY, INC...... PECKS MILL....... WV Ohio Valley..... 4 4
BROUGHTON FOODS CO............ MARIETTA......... OH Ohio Valley..... 1 1
BRUNTON DAIRY................. ALIQUIPPA........ PA E Ohio-W Penn... 4 4
BURGER DAIRY CO............... NEW PARIS........ IN Indiana......... 1 1
BURGER, C.F., CREAMERY, INC... DETROIT.......... MI Southern 2 2
Michigan.
CALDER BROTHERS DAIRY......... LINCOLN PARK..... MI Southern 1 1
Michigan.
COLTERYAHN DAIRY, INC......... PITTSBURGH....... PA E Ohio-W Penn... 1 1
CON-SUN FOOD INDUSTRIES, INC.. ELYRIA........... OH E Ohio-W Penn... 1 1
COOK'S FARM DAIRY, INC........ ORTONVILLE....... MI Southern 4 4
Michigan.
COUNTRY DAIRY................. NEW ERA.......... MI Southern 4 4
Michigan.
COUNTY FRESH, INC............. GRAND RAPIDS..... MI Southern 1 1
Michigan.
CROOKED CREEK FARM DAIRY...... ROMEO............ MI Southern 4 4
Michigan.
DEAN DAIRY PRODUCTS CO........ SHARPSVILLE...... PA E Ohio-W Penn... 1 1
DEAN FOODS COMPANY............ ROCHESTER........ IN Indiana......... 1 1
DIXIE DAIRY CO................ GARY............. IN Indiana......... 1 OOB 4/98
EASTSIDE JERSEY DAIRY, INC.... ANDERSON......... IN Indiana......... 1 1
ELMVIEW DAIRY................. COLUMBUS......... PA E Ohio-W Penn... 4 OOB 1/97
EMBEST, INC................... LIVONIA.......... MI Southern 1 1
Michigan.
FIKE, R BRUCE & SONS DAIRY.... UNIONTOWN........ PA E Ohio-W Penn... 1 1
FISHER'S DAIRY, R.V. FISHER... PORTERSVILLE..... PA E Ohio-W Penn... 4 4
FLEMINGS DAIRY................ UTICA............ OH Ohio Valley..... 1 1
GALLIKER DAIRY CO............. JOHNSTOWN........ PA E Ohio-W Penn... 2 2
GLEN EDEN FARM-DIANNE TEETS... ROCHESTER........ PA E Ohio-W Penn... 4 OOB 11/98
GOSHEN DAIRY COMPANY.......... NEW PHILADELPHIA. OH E Ohio-W Penn... 1 1
GREEN VALE FARM............... COOPERSVILLE..... MI Southern 4 4
Michigan.
GREEN VALLEY DAIRY............ GEORGETOWN....... PA E Ohio-W Penn... 1 3B
GUERNSEY FARMS DAIRY.......... NORTHVILLE....... MI Southern 1 1
Michigan.
HARTZLER FAMILY DAIRY......... WOOSTER.......... OH E Ohio-W Penn... 1 3B
HILLSIDE DAIRY CO............. CLEVELAND HGHTS.. OH E Ohio-W Penn... 1 1
HUTTER FARM DAIRY............. MT. PLEASANT..... PA E Ohio-W Penn... 4 4
INVERNESS DAIRY, INC.......... CHEBOYGAN........ MI Michigan U P.... 1 1
JACKSON FARMS................. NEW SALEM........ PA E Ohio-W Penn... 4 4
JILBERT DAIRY, INC............ MARQUETTE........ MI Michigan U P.... 1 1
JOHNSON'S DAIRY, INC.......... ASHLAND.......... KY Ohio Valley..... 1 OOB 5/97
KERBER'S DAIRY................ N. HUNTINGDON.... PA E Ohio-W Penn... 1 3B
KROGER COMPANY, THE........... INDIANAPOLIS..... IN Indiana......... 1 1
LANSING DAIRY, INC (MELODY LANSING.......... MI Southern 1 1
FARMS, INC.). Michigan.
LIBERTY DAIRY CO.............. EVART............ MI Southern 1 1
Michigan.
LONDON'S FARM DAIRY, INC...... PORT HURON....... MI Southern 1 1
Michigan.
MAPLEHURST FARMS, INC......... INDIANAPOLIS..... IN Indiana......... 1 1
MARBURGER FARM DAIRY, INC..... EVANS CITY....... PA E Ohio-W Penn... 1 1
[[Page 16087]]
MCDONALD DAIRY COMPANY........ FLINT............ MI Southern 1 1
Michigan.
MCMAHONS DAIRY, INC........... ALTOONA.......... PA ................ 5 OOB
MEADOW BROOK DAIRY............ ERIE............. PA E Ohio-W Penn... 1 1
MEYER H & SONS DAIRY.......... CINCINNATI....... OH Ohio Valley..... 1 1
MICHIGAN DAIRY................ LIVONIA.......... MI Southern 1 1
Michigan.
ALBERT MIHALY & SON DAIRY..... LOWELLVILLE...... OH E Ohio-W Penn... 4 4
OBERLIN FARMS DAIRY, INC...... CLEVELAND........ OH E Ohio-W Penn... 1 1
OSBORN DAIRY.................. SAULT STE MARIE.. MI Michigan U P.... 4 4
PLEASANT VIEW DAIRY CORP...... HIGHLAND......... IN Indiana......... 1 1
PRAIRIE FARMS DAIRY, INC...... FT. WAYNE........ IN Indiana......... 1 1
PRAIRIE FARMS DAIRY, INC WAS: GALESBURG........ MI Southern 1 1
ROELOF DAIRY. Michigan.
QUALITY CREAMERY, INC......... COMSTOCK PARK.... MI Southern 1 OOB 7/98
Michigan.
QUALITY DAIRY CO B.T.U........ LANSING.......... MI Southern 1 1
Michigan.
REITER DAIRY CO............... SPRINGFIELD...... OH Ohio Valley..... 1 1
REITER DAIRY, INC............. AKRON............ OH E Ohio-W Penn... 1 1
SANI DAIRY.................... JOHNSTOWN........ PA E Ohio-W Penn... 2 OOB 1/99
SCHENKEL'S ALL-STAR DAIRY, INC HUNTINGTON....... IN Indiana......... 1 1
SCHIEVER FARM DAIRY........... HARMONY.......... PA E Ohio-W Penn... 1 3B
SCHNEIDERS DAIRY, INC......... PITTSBURGH....... PA E Ohio-W Penn... 1 1
SMITH DAIRY PRODUCTS CO....... ORRVILLE......... OH Ohio Valley..... 1 1
SMITH DAIRY PRODUCTS CO....... RICHMOND......... IN Ohio Valley..... 1 1
STERLING MILK CO.............. WAUSEON.......... OH Ohio Valley..... 1 1
SUPERIOR DAIRIES, INC......... SAGINAW.......... MI Southern 1 1
Michigan.
SUPERIOR DAIRY, INC........... CANTON........... OH E Ohio-W Penn... 1 1
TAMARACK FARMS................ NEWARK........... OH Ohio Valley..... 1 1
TAYLOR MILK CO., INC.......... AMBRIDGE......... PA E Ohio-W Penn... 2 OOB 11/98
THE SPRINGHOUSE............... EIGHTY FOUR...... PA E Ohio-W Penn... 4 4
TOFT DAIRY INC................ SANDUSKY......... OH Ohio Valley..... 2 2
TOLEDO MILK PROCESSING, INC. MAUMEE........... OH Ohio Valley..... 1 1
(COUNTRY FRESH OF OHIO).
TRAUTH, LOUIS DAIRY........... NEWPORT.......... KY Ohio Valley..... 1 1
TURNER DAIRY FARMS, INC....... PITTSBURGH....... PA E Ohio-W Penn... 1 1
UNITED DAIRY FARMERS.......... CINCINNATI....... OH Ohio Valley..... 1 1
UNITED DAIRY, INC............. CHARLESTON....... WV Ohio Valley..... 1 1
UNITED DAIRY, INC............. MARTINS FERRY.... OH E Ohio-W Penn... 1 1
VALLEY RICH DAIRY............. ROANOKE.......... VA Ohio Valley..... 2 2
WHITE KNIGHT PACKAGING CORP. WYOMING.......... MI Southern 1 1
(PARMA- LAT WHITE KNIGHT Michigan.
PKG. CORP.).
YOUNG'S JERSEY DAIRY, INC..... YELLOW SPRINGS... OH Ohio Valley..... 4 4
----------------------------------------------------------------------------------------------------------------
Upper Midwest
----------------------------------------------------------------------------------------------------------------
AYSTA DAIRY, INC.............. VIRGINIA......... MN Upper Midwest... 1 1
CASS-CLAY CREAMERY, INC....... FARGO............ ND Upper Midwest... 1 1
CASS-CLAY CREAMERY, INC....... GRAND FORKS...... ND Upper Midwest... 1 1
CASS-CLAY CREAMERY, INC....... MANDAN........... ND Upper Midwest... 2 2
CENTRAL MINNESOTA............. SAUK CENTRE...... MN Upper Midwest... 1 1
COUNTRY LAKE FOODS, INC. (LAND BISMARCK......... ND Upper Midwest... 2 2
O'LAKES, INC.).
COUNTRY LAKE FOODS, INC. (LAND THIEF RIVER FALLS MN Upper Midwest... 1 1
O'LAKES, INC.).
COUNTRY LAKE FOODS, INC. (LAND WOODBURY......... MN Upper Midwest... 1 1
O'LAKES, INC.).
DEAN FOODS CO................. HARVARD.......... IL Chicago Regional 1 1
DEAN FOODS CO................. HUNTLEY.......... IL Chicago Regional 1 1
FOREMOST FARMS USA............ DEPERE........... WI Chicago Regional 1 1
FOREMOST FARMS USA............ WAUKESHA......... WI Chicago Regional 1 1
FOREMOST FARMS USA............ WAUSAU........... WI Chicago Regional 1 1
FRANKLIN FOODS................ DULUTH........... MN Upper Midwest... 1 1
HANSENS DAIRY, INC............ GREEN BAY........ WI Chicago Regional 2 OOB 1/99
HASTINGS COOPERATIVE.......... HASTINGS......... MN Upper Midwest... 1 1
KOHLER MIX SPECIALTIES, INC... WHITE BEAR LAKE.. MN Upper Midwest... 2 2
KWIK TRIP DAIRY............... LA CROSSE........ WI Chicago Regional 1 1
LAMERS DAIRY, INC............. KIMBERLY......... WI Chicago Regional 2 1
LIFEWAY FOODS, INC............ SKOKIE........... IL Chicago Regional 2 1
MARIGOLD FOODS, INC........... CEDARBURG........ WI Chicago Regional 1 1
MARIGOLD FOODS, INC........... MINNEAPOLIS...... MN Upper Midwest... 1 1
MARIGOLD FOODS, INC........... ROCHESTER........ MN Upper Midwest... 1 1
MEYER BROTHERS DAIRY.......... WAYZATA.......... MN Upper Midwest... 1 1
MOM'S DAIRY................... GIBBON........... MN Upper Midwest... 2 3B
[[Page 16088]]
MULLER-PINEHURST, INC......... ROCKFORD......... IL Chicago Regional 1 1
NORTH BRANCH DAIRY, INC....... NORTH BRANCH..... MN Upper Midwest... 1 OOB 7/98
OAK GROVE DAIRY............... NORWOOD.......... MN Upper Midwest... 1 1
OBERWEIS DAIRY, INC........... AURORA........... IL Chicago Regional 1 1
POLLARD DAIRY, INC............ NORWAY........... MI Michigan U P.... 1 1
SCHROEDER MILK CO., INC....... ST PAUL.......... MN Upper Midwest... 1 1
STAR SPECIALTY FOODS, INC. MADISON.......... WI Chicago Regional 1 2
(MORNING- STAR FOODS, INC.).
SWISS VALLEY FARMS CO......... CHICAGO.......... IL Chicago Regional 1 1
TETZNER DAIRY................. WASHBURN......... WI Upper Midwest... 4 4
UNITED WORLD IMPORTS.......... CHICAGO.......... IL Chicago Regional 2 3B
VERIFINE DAIRY PRODUCTS CO.... SHEBOYGAN........ WI Chicago Regional 1 1
WEBERS, INC................... MARSHFIELD....... WI ................ 5 3B
----------------------------------------------------------------------------------------------------------------
Central
----------------------------------------------------------------------------------------------------------------
ALBERS DAIRY.................. BARTELSO......... IL S Ill-E Missouri 2 4
ANDERSON-ERICKSON DAIRY CO.... DES MOINES....... IA Iowa............ 1 1
W.H. BRAUM, INC............... TUTTLE........... OK Southwest Plains 1 1
CENTRAL DAIRY & ICE CREAM..... JEFFERSON CITY... MO ................ 5 5
CHESTER DAIRY CO.............. CHESTER.......... IL S Ill-E Missouri 1 1
DAIRY GOLD FOODS CO........... CHEYENNE......... WY Eastern Colorado 1 1
DEPT. OF CORRECTIONS.......... CANON CITY....... CO Eastern Colorado 4 6B
DILLON DAIRY CO............... DENVER........... CO Eastern Colorado 1 1
ELDON MOSS.................... IOWA CITY........ IA Iowa............ 4 4
FARM FRESH DAIRY, INC......... CHANDLER......... OK Southwest Plains 1 1
GALESBURG CORR. CENTER........ GALESBURG........ IL Central Illinois 6A 6B
GILLETTE DAIRY OF BLACK HILLS. RAPID CITY....... SD ................ 2 2
GRAFF DAIRY, LLC.............. GRAND JUNCTION... CO Western Colorado 1 3B
GRAVES DAIRY.................. BELLVUE.......... CO Eastern Colorado 4 4
HILAND DAIRY CO............... NORMAN........... OK Southwest Plains 1 1
HILAND DAIRY CO............... WICHITA.......... KS Southwest Plains 1 1
JACKSON ICE CREAM CO.......... HUTCHINSON....... KS Southwest Plains 1 1
KANSAS STATE UNIV............. MANHATTAN........ KS Greater Kansas 6A 6B
City.
KARL'S FARM DAIRY, INC........ NORTH GLENN...... CO Eastern Colorado 4 4
LAESCH DAIRY CO............... BLOOMINGTON...... IL S Ill-E Missouri 1 OOB 6/98
LAND O'LAKES, INC. FLUID DAIRY SIOUX FALLS...... SD E South Dakota.. 1 1
DIVISION.
LAND-O-SUN DAIRIES, INC....... O'FALLON......... IL S Ill-E Missouri 1 1
LENZ DAIRY.................... PRAIRIE HOME..... MO Greater Kansas 4 4
City.
LONGMONT DAIRY FARM........... LONGMONT......... CO Eastern Colorado 4 4
LOWELL-PAUL DAIRY, INC........ GREELEY.......... CO Eastern Colorado 4 4
MARTIN DAIRY, INC............. HUMANSVILLE...... MO S Ill-E Missouri 2 4
MEADOW GOLD DAIRIES, INC...... DELTA............ CO Western Colorado 1 1
MEADOW GOLD DAIRIES, INC...... ENGLEWOOD........ CO Eastern Colorado 1 1
MEADOW GOLD DAIRIES, INC...... GREELEY.......... CO Eastern Colorado 1 1
MEADOW GOLD DAIRIES, INC...... LINCOLN.......... NE Nebraska-W Iowa. 1 1
MEADOW GOLD DAIRIES, INC...... TULSA............ OK Southwest Plains 1 1
MID-STATES DAIRY COMPANY...... HAZELWOOD........ MO S Ill-E Missouri 1 1
PATKE FARM DAIRY.............. WASHINGTON....... MO S Ill-E Missouri 1 3B
PEVELY DAIRY CO............... ST LOUIS......... MO S Ill-E Missouri 1 1
PRAIRIE FARM DAIRIES, INC..... CARLINVILLE...... IL S Ill-E Missouri 1 1
PRAIRIE FARMS DAIRY, INC...... GRANITE CITY..... IL S Ill-E Missouri 1 1
PRAIRIE FARMS DAIRY, INC...... OLNEY............ IL S Ill-E Missouri 1 1
PRAIRIE FARMS DAIRY, INC...... PEORIA........... IL Central Illinois 1 1
PRAIRIE FARMS DAIRY, INC...... QUINCY........... IL S Ill-E Missouri 1 1
RADIANCE DAIRY................ FAIRFIELD........ IA Iowa............ 4 4
ROBERTS DAIRY CO.............. DES MOINES....... IA Iowa............ 1 1
ROBERTS DAIRY CO.............. IOWA CITY........ IA Iowa............ 1 1
ROBERTS DAIRY CO.............. KANSAS CITY...... MO Greater Kansas 1 1
City.
ROBERTS DAIRY CO.............. OMAHA............ NE Nebraska-W Iowa. 1 1
ROBINSON DAIRY, INC........... DENVER........... CO Eastern Colorado 1 1
ROYAL CREST DAIRY, INC........ DENVER........... CO Eastern Colorado 1 1
SAFEWAY STORES, INC........... DENVER........... CO Eastern Colorado 1 1
SCHRANT ROADSIDE DAIRY WINSIDE.......... NE Nebraska-W Iowa. 4 4
(ROADSIDE DAIRY).
SHOENBERG FARMS, INC. DBA FARM ARVADA........... CO Eastern Colorado 1 1
FRESH, INC.
SINTON DAIRY FOODS CO., LLC... COLORADO SPRINGS. CO Eastern Colorado 1 1
SOUTH DAKOTA STATE UNIV....... BROOKINGS........ SD E South Dakota.. 6A 6B
STAR DAIRY, INC............... MULHALL.......... OK Southwest Plains (\2\) 4
SWAN BROS. DAIRY, INC......... CLAREMORE........ OK Southwest Plains 4 4
[[Page 16089]]
SWISS VALLEY FARMS CO......... CEDAR RAPIDS..... IA Chicago Regional 1 3B
SWISS VALLEY FARMS CO......... DUBUQUE.......... IA Chicago Regional 1 1
WELLS DAIRY, INC.............. LE MARS.......... IA Nebraska-W Iowa. 1 1
WELLS DAIRY, INC.............. OMAHA............ NE Nebraska-W Iowa. 1 1
WESTERN DAIRYMEN COOP, INC.... RIVERTON......... WY Eastern Colorado 2 OOB 11/97
WILD'S BROTHER'S DAIRY........ EL RENO.......... OK Southwest Plains 4 4
----------------------------------------------------------------------------------------------------------------
Southwest
----------------------------------------------------------------------------------------------------------------
BELL DAIRY PRODUCTS, INC...... LUBBOCK.......... TX New Mex-W Texas. 1 1
CREAMLAND DAIRIES............. ALBUQUERQUE...... NM New Mex-W Texas. 1 1
DAVID'S SUPERMARKETS, INC..... GRANDVIEW........ TX Texas........... 1 1
FARMERS DAIRIES............... EL PASO.......... TX New Mex-W Texas. 1 1
HOBBS DRIVE IN DAIRY.......... HOBBS............ NM New Mex-W Texas. 4 OOB 8/98
HYGEIA DAIRY.................. CORPUS CHRISTI... TX Texas........... 1 1
H. E. BUTTS GROCERY CO........ HOUSTON.......... TX Texas........... 1 1
H. E. BUTTS GROCERY CO........ SAN ANTONIO...... TX Texas........... 1 1
LAND O' PINES................. LUFKIN........... TX Texas........... 1 OOB 3/97
LANE'S DAIRY.................. EL PASO.......... TX New Mex-W Texas. 4 4
LILLY DAIRY PRODUCTS, INC..... BYRAN............ TX Texas........... 1 1
LOS LUNAS DAIRY............... ALBUQUERQUE...... NM New Mex-W Texas. 4 4
MICKEY'S DRIVE IN DAIRY....... ALBUQUERQUE...... NM New Mex-W Texas. 4 4
MIDWEST MIX CO................ SULPHUR SPRINGS.. TX Texas........... 2 2
MILK PRODUCTS, LLC WAS: ALBUQUERQUE...... NM New Mex-W Texas. 1 OOB 6/98
BORDEN, INC.
MILK PRODUCTS, LLC WAS: AUSTIN........... TX Texas........... 1 1
BORDEN, INC.
MILK PRODUCTS, LLC WAS: CONROE........... TX Texas........... 1 1
BORDEN, INC.
MILK PRODUCTS, LLC WAS: DALLAS........... TX Texas........... 1 1
BORDEN, INC.
MILK PRODUCTS, LLC WAS: EL PASO.......... TX New Mex-W Texas. 1 OOB 7/87
BORDEN, INC.
MORNINGSTAR SPECIALTY......... SULPHUR SPRINGS.. TX Texas........... 2 2
MOUNTAIN GOLD DAIRY........... CARRIZOZO........ NM New Mex-W Texas. 3A 3B
NATURE'S DAIRY, INC........... ROSWELL.......... NM New Mex-W Texas. 4 4
OAK FARMS DAIRIES............. DALLAS........... TX Texas........... 1 1
OAK FARMS DAIRIES............. HOUSTON.......... TX Texas........... 1 1
OAK FARMS DAIRIES............. SAN ANTONIO...... TX Texas........... 1 1
OAK FARMS DAIRIES WAS: PURE WACO............. TX Texas........... 1 1
MILK COMPANY.
PLAINS CREAMERY............... AMARILLO......... TX New Mex-W Texas. 1 1
PRICES CREAMERY, INC.......... EL PASO.......... TX New Mex-W Texas. 1 1
PROMISED LAND DAIRY........... FLORESVILLE...... TX Texas........... 4 4
RANCHO LAS LAGUNAS............ SANTA FE......... NM New Mex-W Texas. 3A 3B
RASBAND DAIRY................. ALBUQUERQUE...... NM New Mex-W Texas. 4 4
SCHEPPS DAIRY, INC............ DALLAS........... TX Texas........... 1 1
SOUTHWEST DAIRY............... TYLER............ TX Texas........... 1 1
SUPERBRAND DAIRY PRODS, INC... FT WORTH......... TX Texas........... 1 1
VANDERVOORTS DAIRY............ FT WORTH......... TX Texas........... 1 1
----------------------------------------------------------------------------------------------------------------
Arizona-Las Vegas
----------------------------------------------------------------------------------------------------------------
ANDERSON DAIRY, INC........... LAS VEGAS........ NV Great Basin..... 1 1
GOLDEN WEST DAIRIES........... WELLTON.......... AZ Central Arizona. 4 OOB 9/98
HETTINGA, HEIN & ELLEN........ YUMA............. AZ Central Arizona. 4 4
JACKSON & COMPANY............. PHOENIX.......... AZ Central Arizona. 1 1
MEADOWWAYNE DAIRY............. COLORADO CITY.... AZ Central Arizona. 5 4
SAFEWAY STORES, INC........... TEMPE............ AZ Central Arizona. 1 1
SHAMROCK FOODS COMPANY........ PHOENIX.......... AZ Central Arizona. 1 1
SMITH'S FOOD & DRUG CENTERS, TOLLESON......... AZ Central Arizona. 1 1
INC.
SUNRISE DAIRY................. TAYLOR........... AZ ................ 5 3B
----------------------------------------------------------------------------------------------------------------
Western
----------------------------------------------------------------------------------------------------------------
BRIGHAM YOUNG UNIVERSITY...... PROVO............ UT Great Basin..... 6A 6B
BROWN DAIRY, INC.............. HOYTSVILLE....... UT Great Basin..... 4 4
CHURCH OF JESUS CHRIST OF SALT LAKE CITY... UT Great Basin..... 6A 6B
LATTER-DAY SAINTS.
COUNTRY BOY DAIRY............. OGDEN............ UT Great Basin..... 4 4
CREAM O'WEBER DAIRY, INC...... SALT LAKE CITY... UT Great Basin..... 1 1
DARIGOLD, INC................. BOISE............ ID SW Idaho-E 1 1
Oregon.
FALCONHURST DAIRY, INC........ BUHL............. ID Great Basin..... 1 1
FARM FRESH.................... SALEM............ UT Great Basin..... 1 OOB 8/98
GOSSNER FOODS, INC............ LOGAN............ UT Great Basin..... 1 1
IDEAL DAIRY, INC.............. RICHFIELD........ UT Great Basin..... 4 4
[[Page 16090]]
JOHNNY'S DAIRY................ SOUTH WEBER...... UT Great Basin..... 4 4
JONES DAIRY & HEALTH FOODS.... TAYLORSVILLE..... UT Great Basin..... 3A OOB 12/98
KDK, INC...................... DRAPER........... UT Great Basin..... 1 1
MEADOW GOLD DAIRIES, INC...... BOISE............ ID SW Idaho-E 1 1
Oregon.
MEADOW GOLD DAIRIES, INC...... POCATELLO........ ID Great Basin..... 1 1
MEADOW GOLD DAIRIES, INC...... SALT LAKE CITY... UT Great Basin..... 1 1
MODEL DAIRY................... RENO............. NV Great Basin..... 2 2
REED'S DAIRY, INC............. IDAHO FALLS...... ID Great Basin..... 4 4
ROSEHILL DAIRY................ MORGAN........... UT Great Basin..... 4 4
SLADES DAIRY WAS: DALE BARKER. MOUNT PLEASANT... UT Great Basin..... 4 4
SMITH FOOD & DRUG CENTERS, INC LAYTON........... UT Great Basin..... 1 1
SMITH'S DAIRY................. BUHL............. ID SW Idaho-E 1 3B
Oregon.
STOKER WHOLESALE, INC......... BURLEY........... ID SW Idaho-E 1 1
Oregon.
UTAH STATE PRISON............. DRAPER........... UT Great Basin..... 6A 6B
UTAH STATE UNIVERSITY......... LOGAN............ UT Great Basin..... 3A 6B
WESTERN QUALITY FOOD PRODUCTS. CEDAR CITY....... UT Great Basin..... 2 2
WINDER DAIRY.................. SALT LAKE CITY... UT Great Basin..... 1 1
Pacific Northwest
----------------------------------------------------------------------------------------------------------------
ALLISON HARDY................. ELMA............. WA Pacific 4 OOB 5/98
Northwest.
ALPENROSE DAIRY............... PORTLAND......... OR Pacific 1 1
Northwest.
ANDERSEN DAIRY, INC........... BATTLE GROUND.... WA Pacific 1 1
Northwest.
BRANDSMA, EDWARD & AILEEN..... LYNDEN........... WA Pacific 4 4
Northwest.
CURLY'S DAIRY, INC............ SALEM............ OR Pacific 1 1
Northwest.
DARIGOLD, INC................. MEDFORD.......... OR Pacific 1 1
Northwest.
DARIGOLD, INC................. PORTLAND......... OR Pacific 1 1
Northwest.
DARIGOLD, INC................. SEATTLE.......... WA Pacific 1 1
Northwest.
DE JONG, WALTER............... MONROE........... WA Pacific 4 OOB 8/98
Northwest.
EBERHARD CREAMERY, INC........ REDMOND.......... OR Pacific 1 1
Northwest.
ECHO SPRING DAIRY, INC........ EUGENE........... OR Pacific 1 1
Northwest.
EVERGREEN DAIRY, INC. (WEIKS). OLYMPIA.......... WA Pacific 4 OOB 5/96
Northwest.
FAITH DAIRY, INC.............. TACOMA........... WA Pacific 4 4
Northwest.
FRED MEYER, INC............... PORTLAND......... OR Pacific 1 1
Northwest.
GILBERT, GERALD, ET AL........ OTHELLO.......... WA Pacific 4 4
Northwest.
GRAAFSTRA DAIRY, INC.......... ARLINGTON........ WA Pacific 4 4
Northwest.
HARVEY, MIKE.................. VANCOUVER........ WA Pacific 4 4
Northwest.
INLAND NORTHWEST DAIRIES, LLC. SPOKANE.......... WA Pacific 1 1
Northwest.
KROPF, ROY.................... HALSEY........... OR Pacific 4 OOB 9/98
Northwest.
LOCHMEAD FARMS, INC........... JUNCTION CITY.... OR Pacific 4 4
Northwest.
MALLORIE'S DAIRY, INC......... SILVERTON........ OR Pacific 4 4
Northwest.
PACIFIC FOODS OF OREGON, INC.. CLACKAMAS........ OR Pacific 1 3B
Northwest.
SAFEWAY 85, INC............... MOSES LAKE....... WA Pacific 1 1
Northwest.
SAFEWAY STORES, INC........... BELLEVUE......... WA Pacific 1 1
Northwest.
SAFEWAY STORES, INC........... CLACKAMAS........ OR Pacific 1 1
Northwest.
SMITH BROTHERS FARMS, INC..... KENT............. WA Pacific 4 4
Northwest.
SPRINGFIELD CREAMERY.......... EUGENE........... OR ................ 3A 3B
STATE OF OREGON DEPARTMENT OF SALEM............ OR Pacific 2 3B
CORRECTIONS. Northwest.
STATE OF WASHINGTON DEPARTMENT MONROE........... WA Pacific 4 2
OF CORRECTIONS. Northwest.
STRATTON, WARD................ PULLMAN.......... WA Pacific 4 4
Northwest.
SUNSHINE DAIRY, INC........... PORTLAND......... OR Pacific 1 1
Northwest.
TILLAMOOK COUNTY CREAMERY ASSN TILLAMOOK........ OR Pacific 1 2
Northwest.
UMPQUA DAIRY PRODUCTS CO., INC ROSEBURG......... OR Pacific 1 1
Northwest.
VENN, WILLIAM (TIMOTHY & SUSAN NORTH BEND....... WA Pacific 4 4
BERNDT). Northwest.
VITAMILK DAIRY, INC........... SEATTLE.......... WA Pacific 1 1
Northwest.
WAGNER, PAUL B. & SHARON...... PORT ORFORD...... OR ................ 5 3B
WILCOX DAIRY FARMS, LLC....... CHENEY........... WA Pacific 1 1
Northwest.
WILCOX DAIRY FARMS, LLC....... ROY.............. WA Pacific 1 1
Northwest.
WINEGAR, GARY & MARGO......... ELLENSBURG....... WA Pacific 1 OOB 7/97
Northwest.
PALMER ZOTTOLA DBA VALLEY OF GRANTS PASS...... OR Pacific 1 1
THE ROGUE DAIRY. Northwest.
----------------------------------------------------------------------------------------------------------------
\1\ Distributing plant status (as determined from October 1997 Data):
1: Pool.
2: Partially Regulated.
3: Exempt based on size:
A. As defined under current federal orders.
B. As defined under proposed rule; with route disposition less than 150,000 lbs. per month.
4: Producer-Handler.
5: UNREGULATED.
6: Exempt based on institutional status:
[[Page 16091]]
A. As defined under current Federal orders.
B. As defined under proposed orders (Government, university, and charitable).
\2\ New--No data for October 1997: Information not included in analysis.
2. Basic Formula Price Replacement and Other Class Price Issues
This rule closely follows the pricing plan described in the
proposed rule by replacing the current basic formula price (BFP) with a
multiple component pricing system that derives component values from
surveyed prices of manufactured dairy products. The adopted pricing
system determines butterfat prices for milk used in Class II, Class III
and Class IV products from a butter price; protein and other solids
prices for milk used in Class III products from cheese and whey prices;
and nonfat solids prices for milk used in Class II and Class IV
products from nonfat dry milk product prices.
The calculation of the Class I skim milk and butterfat prices for
each order, determined in the proposed rule by computing a six month
declining average of the higher of the Class III or Class IV skim milk
prices for the second preceding month and adding a fixed Class I
differential to the result, has been changed to reflect more closely
the value of milk used in manufacturing. The Class I skim price for a
month will be determined by adding the fixed Class I differential for
each order to the higher of a Class III or IV skim value, calculated
from product prices reported by NASS for the most recent two-week
period for which prices are available on the 23rd day of the previous
month. Similarly, the Class I butterfat price will be calculated by
adding the fixed Class I differential divided by 100 to a butterfat
value computed by using product prices for the same two-week period.
The price of Class II skim milk for a month will be computed by the
sum of a Class IV skim price per hundredweight, calculated from product
prices reported by NASS for the most recent two-week period for which
prices are available on the 23rd day of the previous month, and the 70-
cent Class II differential. The Class II butterfat price will be
determined from the NASS-reported butter price, as in Classes III and
IV, plus .7 cents per pound to incorporate the Class II differential.
This price will be announced on the 5th day of the month and apply to
butterfat in Class II during the previous month.
A table showing current and re-calculated prices for the period
1994 through 1997 appears at the end of this discussion of the BFP
replacement. The basis for re-calculating the prices is described later
in this discussion.
Provisions for Federal milk orders regulating the handling of milk
in areas for which a multiple component pricing system has not been
adopted will maintain a hundredweight skim/butterfat pricing system
instead of the component pricing plan. The hundredweight prices will be
determined by using the component price formulas contained in this
decision to compute corresponding hundredweight prices using standard
component levels.
Background
The proposed rule described in some detail the development in the
early 1960's of the Minnesota-Wisconsin manufacturing grade milk price
series (M-W) as a means of identifying a price determined by supply and
demand for milk used in manufactured dairy products. Also described
were the developments that have made the M-W less representative of the
value of milk used in manufactured products. The two primary trends
making the M-W less representative over the last four decades are the
declining volume of Grade B (manufacturing grade) milk and the
declining numbers of plants from which payments could be reported to
update the base month price.
The problem of the declining number of plants from which payments
could be reported to update the base month M-W survey of two months
previous was addressed in 1995 by using an updating formula that uses
changes from the base month to the next month in prices paid for
butter, nonfat dry milk, and cheese. However, the problem of using a
declining volume of Grade B milk to accurately represent the value of
milk used for manufacturing was not solved with the implementation of
the current BFP. The decision based on the basic formula price hearing
recognized that ``the adoption of the base month M-W price, or any
Grade B milk series, is only a short term solution, since the amount of
Grade B milk production is expected to continue declining.''
Process
The Basic Formula Price Replacement Committee was one of several
committees formed to deal with specific issues involved in
restructuring the Federal milk order system pursuant to the 1996 Farm
Bill. The Committee established goals and criteria for a new BFP,
hosted a July 1996 public forum on dairy price discovery techniques in
Madison, Wisconsin, and considered over 1,600 comments submitted by
interested persons relative to the basic formula price in response to
the May 1996 invitation to comment on Federal Order restructuring. The
Committee conducted extensive study and analysis, worked with a
University Study Committee (USC) commissioned to conduct objective
analysis of the performance of numerous alternatives to the current
basic formula price, and issued a preliminary report on BFP replacement
in April 1997. The Committee studied the comments responding to the
preliminary report, as well as those received earlier, in the
development of the BFP replacement portion of the proposed rule, which
was published in January 1998.
The goals and criteria to be met by a replacement for the basic
formula price were discussed in detail in the proposed rule. Briefly,
the goals are: (a) Meet the supply and demand criteria set forth in the
Agricultural Marketing Agreement Act of 1937 (the Act), (b) not deviate
greatly from the general level of the current BFP, and (c) demonstrate
the ability to change in reaction to changes in supply and demand.
The criteria established to evaluate the various alternatives were:
(a) Stability and predictability; (b) simplicity, uniformity, and
transparency; (c) sound economics-- e.g., consistency with market
conditions; and (d) reduced regulation.
Comments
Of the more than 1,600 comments received relative to the basic
formula price in response to the May 1996 invitation to comment on
Federal Order restructuring, most favored one or more of five
categories of alternatives to the current BFP. These five alternatives
were: Economic formulas, futures markets, cost of production,
competitive pay price, and product price and component formulas. In
addition, numerous comments were received relative to the use of
National Cheese Exchange prices in particular and exchange prices in
general in the determination of a basic formula price.
After publication of the proposed rule in January 1998, nearly 600
comments were received relating to some aspect of the basic formula
price replacement. Approximately 450 of these comments were form
letters or very general in nature. For the most part, comments that
related specifically to the proposal
[[Page 16092]]
supported the use of product price formulas and the use of surveyed
product prices to calculate component prices in determining the value
of milk. Many of the comments, however, suggested modifications to the
proposed rule. These comments are addressed in the discussion of each
of the individual topics involved in these pricing issues.
The only alternative previously considered that retained
considerable support from producer organizations was a competitive pay
price. In addition, many individual producer comments continued to
advocate cost of production or a floor for the BFP ranging from $14.50
to $18.00. Some producers also suggested letting the market determine
prices, and a few suggested supply management to ensure that farmers
receive fair milk prices. One processor opposed product price formulas,
suggesting that futures are the preferred tool used by markets to
manage risk. Several producers supported basing producer prices on
retail prices, while a state senator from Wisconsin suggested paying
producers on the quality and quantity of their milk.
As noted in the proposed rule, the reason the USC dropped cost of
production from consideration was that cost of production represents
only the supply side of the market, ignoring factors underlying demand
or changes in demand for milk and milk products.
Competitive Pay Price
Although some producer groups submitted comments on the proposed
rule that continued to support use of a competitive pay price for
determining the BFP replacement, a number of these comments stated that
the pricing proposal contained in the proposed rule was one they could
support. Other commenters continued to express the view that a
competitive pay price is the best indicator of the national supply and
demand for milk and that continuing to use such a price would provide a
simple, economically defensible method of calculating the true value of
milk used in manufactured dairy products.
Several proponents suggested including a competitive pay price for
Grade A milk, with some adjustments, as a way to improve the size and
representativeness of the competitive pay price.
As described in the proposed rule, a competitive pay price to be
used as a BFP must represent the result of open market negotiation
between dairy farmers (or their cooperatives) and milk processors.
Competition requires sufficient numbers of buyers and sellers so that
no one participant or group of participants can unduly influence the
price. In addition, the price cannot be a Federal- or State-regulated
price, such as the price for Grade A milk currently priced under
Federal milk orders.
Identification of a competitive pay price in today's dairy
industry, where 70 percent of the milk is currently covered under
Federal milk marketing orders, appears to be an unsurmountable
challenge. After accounting for state regulations, only about two
percent of Grade A milk is unregulated, and it is unlikely that even
this small amount of milk is not affected by regulated prices. Only
about five percent of the total milk marketed in the U.S. is Grade B or
unregulated, and 42 percent of that milk is located in Minnesota and
Wisconsin. The remainder is scattered among 23 states in amounts too
small and delivered to too few processing plants to generate a
competitive pay price. In areas where alternative markets exist, the
price for unregulated milk likely is not below the price paid for
regulated milk, since producers would prefer to sell their milk to
regulated handlers to receive the higher regulated price. Thus,
unregulated handlers are compelled to meet the regulated price in order
to attract sufficient supplies of milk. The circular result is that the
regulated price ultimately becomes the competitive price. This process
does not lead to a representative competitive pay price for milk.
The concept of a competitive pay price has appeal from the
standpoint of sound economics. However, serious concerns must be raised
about the degree of competition reflected in a price based on the
declining volume of Grade B milk produced and purchased, or the
introduction of Grade A milk that, even if unregulated, is
significantly influenced by minimum order prices and therefore suspect
as a ``competitive'' price.
The proposed rule contained a description of a BFP Replacement
Committee attempt to determine a competitive pay price series that
included nine states' pay prices for Grade A milk used in
manufacturing, with the prices adjusted for protein content,
performance premiums, over-order premiums, and hauling subsidies. The
nine states accounted for approximately 75% of the Grade A milk used
for manufacturing in the U.S.
The reduced price level that resulted from the study was explained
in terms of currently effective pay prices in the states included in
the survey and the heavier weighting of milk used in butter/powder
production than in the current BFP. In addition to the negative aspects
of the reduced price level and the uncertainty of being able to
identify prices paid to producers that are not influenced by regulated
prices, the USC analysis found that two competitive pay price series
that passed the USC's level one criteria were questionable in their
ability to reflect the manufactured milk market. Neither performed well
when tested using the level two criteria and therefore were dropped
from further consideration.
Product Price Formulas and Component Pricing
Most comments filed in response to the proposed rule supported
adoption of the use of product price formulas to derive multiple
component prices for most markets as a viable market-oriented
alternative to the current basic formula price. Favorable comments
expressed the opinion that a price determined from the national
finished product markets more accurately reflects the value of milk for
manufacturing than other methods of determining a milk price. The price
handlers can afford to pay for milk is determined by the price for
which the finished product can be sold. Therefore, a pricing system
that translates finished product prices to a price for raw milk results
in a representative raw milk price for both producers and handlers.
Component pricing, with prices determined for butterfat, protein,
nonfat solids, and ``other solids'' (solids other than protein), can
best be accomplished through product price formulas, to reflect the
value of each component in finished product prices. The product price
formulas adopted in this rule are relatively easy to use and
understand, and the value of milk may be computed on an on-going basis
by everyone in the dairy industry by following commodity markets.
Because milk used in manufactured products obtains its value from
the components of milk, it is the components that should be priced;
particularly butterfat and protein, and to a lesser extent the other
solids contained in the milk.
Opposition to product price formulas was directed primarily at the
need for establishing product yields and make allowances in determining
a milk price or component prices. Opponents expressed the view that
yields and make allowances would not reflect actual processing yields
and costs in manufacturing plants, and therefore would not yield an
accurate price for milk. Opponents further explained that when yields
and make allowances are determined, they would be difficult to adjust
and would not react to changes
[[Page 16093]]
in manufacturing conditions. Opponents also argued that when an
incorrect make allowance is established, plants are guaranteed a
return, or profit, to the detriment of dairy farmers. Some comments
even described the make allowance as an unfair charge paid by dairy
farmers to processors to have their milk made into products. Other
opponents explained that an incorrect yield or make allowance may force
payment for milk at a level that would not allow a return to the
manufacturing plant.
The USC tested several product price formulas, including a one-
class multiple component pricing formula and a set of formulas similar
to the formulas recommended in this decision. Based on the results of
the USC analysis measured against several criteria, the multiple
component pricing formulas had the best overall performance of any of
the alternatives considered.
Commodity Prices
As recommended in the proposed rule and contained in this final
decision, commodity prices determined by surveys conducted by the
USDA's National Agricultural Statistics Service (NASS) will be used in
the formulas that replace the BFP. A considerable number of comments
were received concerning the use of commodity prices in determining
prices for milk used in manufactured dairy products. Most of those
commenting supported use of a price survey, but many commenters urged
that participation be mandatory and reported prices audited, with the
survey enlarged to include plants representing the entire nation so
that the prices are truly representative.
Proponents of the NASS surveys explained that the NASS data is
unbiased and would yield accurate representative prices of the products
that are being marketed. Several comments contained specific
recommendations for product categories to be surveyed to obtain the
most accurate representative result.
NASS data traditionally have been collected via a survey with
voluntary participation. The price information in the current cheese
price survey, like most NASS data, is not audited. NASS applies various
statistical techniques and cross-checking with other sources to provide
the most reliable information available.
At the present time there appears to be no need for the suggested
changes to the proposed surveys. The scope of the surveys that have
been undertaken by NASS, and their geographic representation, appears
to be comprehensive. Unless there is some indication that the prices
gathered by the survey process are not representative, the very
significant increase in regulation required to audit those prices and
the steps that would need to be taken to make participation mandatory
would be excessive and are not anticipated to be undertaken at this
time.
Several alternatives to a NASS price survey were considered. There
is a weekly cash butter contract trading on the Chicago Mercantile
Exchange (CME). This contract is currently used to establish the
butterfat differential and butterfat price in all federal milk orders.
This price series has been criticized due to the ``thinness'' of
trading. Dairy Market News (DMN) publishes regional wholesale butter
prices. However, since DMN price series cover cash or short-term
contract transactions, they may not be representative of the
predominant long-term contracts. Criticism of cheese exchange trading,
including inaccurate representation of cheese prices and accusations of
market manipulation, reached the point that the National Cheese
Exchange (NCE) discontinued trading, and cash trading of cheese moved
to the CME. The CME also has received some criticism for thinness of
trading.
There is very limited exchange trading of nonfat dry milk. Other
alternatives to a NASS survey for nonfat dry milk and dry whey are
limited to prices published by Dairy Market News (DMN). The prices
reported by DMN are generally considered to be representative of the
dry product markets. However, the prices are reported as a range. A
simple average of the prices is used to compute a monthly price and may
not reflect the weighted average price at which the product moved. The
DMN prices are not intended to establish prices but are provided for
market information.
The NASS ``Dairy Products Prices'' reports wholesale cheese prices
which are used to compute the current BFP. The NASS survey requests
prices for cheddar cheese. The instructions for the survey specify what
should and should not be included in the reported prices. The
instructions state that a sale occurs when a transaction is completed,
cheese is ``shipped out'', or title transfer occurs. Prices for cheddar
cheese only are to be reported f.o.b. the processing plant/storage
center. Prices should be for ``bare'' or ``naked'' cheese with only the
minimum packaging required for 40-pound blocks. Processors are asked to
include all sales transactions of 40-pound blocks and barrel cheese 4-
30 days old, the total volume sold, the total dollars received, or
price per pound, and the moisture content of barrel cheese when it is
sold. Intra-company sales, forward pricing sales, resales,
transportation charges, clearing charges, and block cheese that will be
aged should not be included.
At the time the proposed rule was published the NASS survey
included prices for cheddar cheese only. Since publication of the
proposed rule, NASS has begun surveys of Grade AA butter prices, dry
whey prices, and nonfat dry milk prices. These surveys incorporate
input from the dairy industry on appropriate types of products,
packaging, and package sizes to be included for the purpose of
obtaining unbiased representative prices. A sale is considered to occur
when a transaction is completed, the product is shipped out or title
transfer occurs. In addition, all prices are f.o.b. the processing
plant/storage center, with the processor reporting total volume sold
and total dollars received or price per pound.
Butter prices are for USDA Grade AA butter with 80 percent
butterfat, salted, fresh or ``storage,'' in 25-kilogram and 68-pound
boxes. Processors are instructed not to include transportation charges,
unsalted butter, Grade A butter, intra-company sales, forward pricing
sales, and resales.
Nonfat dry milk prices are for USDA Extra Grade or USPH Grade A
non-fortified dry milk in 25-kilogram bags, 50-pound bags, or
``totes,'' and tanker sales. Several commenters suggested excluding
nonfat dry milk processed with high heat treatment since such product
is a higher-cost specialty product, making its price unrepresentative
of the nonfat dry milk market. As a result of the comments, it was
determined that only low and medium heat process nonfat dry milk should
be included in the price survey. The instructions inform processors to
exclude transportation charges, sales of product more than 180 days
old, instant nonfat dry milk, dry buttermilk, intra-company sales,
forward pricing sales, and resales.
Dry whey prices are for USDA Extra Grade edible nonhygroscopic dry
whey in 25-kilogram bags, 50-pound bags, ``totes,'' and tanker sales.
As is the case with the other commodities, transportation charges,
intra-company sales, forward pricing sales, and resales are to be
excluded as well as sales of product more than 180 days old.
Several comments expressed concern about the ``circularity'' of
survey pricing that could be caused by including sales whose price is
based on previous survey information. According to this view, NASS-
reported prices would cease to reflect market supply and demand, with
[[Page 16094]]
market prices reflecting NASS-reported prices instead. These comments
stated that the current pricing system relies on the market (in the
form of the base month M-W survey) to correct survey results.
Under any method of discovering prices, whether those paid to
producers or those paid for manufactured dairy products, prices
currently known will be used as one of the determinants of prices for
the following period. Under the current pricing system, it is
inconceivable that handlers paying Grade B producers for their milk
used in manufactured products do not consider the most recently
announced prices as a starting point for determining what prices to pay
their producers. When butter and cheese prices are determined at an
exchange, both buyers and sellers use the exchange prices in arriving
at the prices at which products will move. Ultimately, prices move in
response to supply and demand conditions in the marketplace.
Basic Formula Price Replacement
Application of the BFP and USC Committees' criteria for BFP
replacement to the various BFP alternatives and consideration of
comments received in response to the proposed rule resulted in the
determination that the component pricing product price formulas
contained in this final rule best meet the stated goals and criteria
for the replacement of the BFP.
A BFP based on commodity prices is subject to the same problems of
stability as the underlying commodity prices. For the most part product
price formulas do not reduce the volatility in producer milk prices.
Product price formulas are relatively simple to compute and
understand, and may be applied uniformly, or on a regional basis,
accommodating differences in yields or make allowances. Product prices
established in a relatively free and open interaction between supply
and demand directly translate the value of the finished products to the
value of milk and its components. Therefore, they have a sound economic
underpinning.
Product price formulas can require increased data collection,
particularly if industry insists that data used in the formulas be
audited.
The predictability of prices computed from product price formulas
should be reasonably good, or at least no worse than predictability of
the underlying commodity prices. Short run predictability may improve
since all information needed to compute prices is reported on an
ongoing basis. This contrasts with the present BFP computation in which
the base month Minnesota-Wisconsin price is not reported until the
actual basic formula price is announced.
Product price formulas are transparent, since the information to
compute the price is available, and the effect of a change in commodity
prices or one of the other factors may be observed and quantified.
This final rule replaces the current BFP with a multiple component
pricing (MCP) system which will determine butterfat, protein, and other
solids prices for milk used in Class III products and butterfat and
nonfat solids prices for milk used in Class IV products.
Numerous comments were received, primarily before issuance of the
proposed rule, concerning whether the revised orders should keep Class
III-A (i.e. a four class market) or whether all hard manufactured
products should be priced in Class III. The opposition to Class III-A
centered around two issues: (1) The integrity of the classified pricing
system, and (2) the perception that a butter/nonfat dry milk class
would reduce producer pay prices. The supply/demand for butter and
nonfat dry milk is sufficiently different from the supply/demand for
cheese to justify separate classification and pricing. In addition, the
decision to use the higher of the Class III or Class IV price for
determining the Class I price, and base the Class II price on the Class
IV price, should more accurately reflect the value of these different
categories of use.
Changes in the cheese market have a major impact on the dairy
industry. The cheese industry has evolved from cheese production being
a means of surplus milk storage and removal to a competitive consumer
demand-driven industry. More milk is used in cheese production
nationally than is used in Class I. The nonfat dry milk industry is now
one which balances surplus milk storage and removals. This category is
also evolving, with increasing commercial uses for nonfat dry milk, and
dry milk products formulated for specific needs. Increasing quantities
of nonfat dry milk are being produced for use in other dairy products
and the food and pharmaceutical industries.
The separation of manufacturing milk into two classes will assure
that shifts in demand for any one manufactured product will not lower
the prices for milk used in all other classifications, including Class
I prices. Recent milk price increases have been attributed to increased
cheese values. Many people expect that per capita cheese consumption
will continue to grow. However, some warn of impending market
saturation as more cheese plant capacity materializes and consumer
tastes and preferences change. Cheese consumption patterns are based on
many factors outside the dairy industry's control. Health concerns
relating to changing demographics, changes in pizza consumption and
income growth, as well as retail and wholesale inventory decisions,
etc., will impact consumption and prices. A recent report by the Food
and Agricultural Policy Research Institute noted that ``anything that
results in demand weakness for cheese will likely result in a markedly
different outlook for the entire dairy sector.'' The adopted pricing
system will allow other manufactured products (i.e. Class IV) to move
Class I prices, helping to reduce the volatility in milk prices.
Over the last six years cheese prices, and to a lesser extent
butter prices, have shown considerable fluctuation while the nonfat dry
milk price remained relatively stable. Price changes for these finished
products are indicative of varying supply/demand situations over time.
The stable nonfat dry milk prices and the butter prices prior to the
fall of 1995 were a reflection of large stocks being carried in storage
and flat demand. Prices for nonfat dry milk and butter became more
volatile once government inventories were depleted and were no longer a
factor in stabilizing prices. Butter prices increased during May and
June of 1997 in response to demand for cream, while both cheese and
nonfat dry milk prices remained relatively flat. These differences in
price movements indicate separate supply and demand balances for
different manufactured dairy products.
Research cited in the proposed rule supports the conclusion that
the different supply and demand characteristics for the cheese and
butter/nonfat dry milk market segments warrant separate classification
and prices. This pricing plan will allow the market-clearing price
level of each of these manufactured products to be achieved independent
of the other products. As a result, dairy farmers will be paid a price
which is more representative of the level at which the market values
their milk in its different uses.
The importance of using minimum prices that are market-clearing for
milk used to make cheese and butter/nonfat dry milk cannot be
overstated. The prices for milk used in these products must reflect
supply and demand, and must not exceed a level that would require
handlers to pay more for milk
[[Page 16095]]
than needed to clear the market and make a profit.
The current BFP serves two functions: (1) A fixed differential is
added to the current BFP to establish the Class I and Class II prices
for the second succeeding month; and (2) the current BFP serves as the
Class III price. In some Federal milk orders, a seasonal adjuster is
added to the BFP to determine the Class III price. The BFP replacement
will function in a similar fashion, using component prices. Class IV
(butter and dry milk products) will be priced on a butterfat and nonfat
solids basis. Class III (hard cheese) will be priced on a butterfat,
protein, and other solids basis. The price of butterfat will be the
same in Class III and Class IV. Class II will use the same butterfat
price as Class III and Class IV with an adjustment to reflect the
addition of the Class II differential. Payments to producers under MCP
will be based on butterfat, protein, and other solids contained in the
producers' milk, in addition to the producer price differential. Most
Federal milk orders with MCP will also contain an adjustment to
producer pay prices for the somatic cell counts of producers' milk.
The producer price differential reflects the collective value of
participation in the marketwide pool. Primarily, it represents the
producer's pro rata share of the additional value of Class I and Class
II use in the market. The butterfat, protein, and other solids prices
are component prices based on the value of the use of milk in
manufacturing.
The Class I price will consist of a Class I butterfat price and a
Class I skim milk price. As modified from the proposed rule, the Class
I butterfat price will be determined by adding a fixed Class I
differential divided by 100 to an advanced butterfat price computed
using product prices for the most recent two-week period for which
prices are available on the 23rd day of the month and will apply to the
following month. The Class I skim milk price will be determined by
adding the fixed Class I differential for each order to the higher of
an advanced Class III or IV skim milk price, calculated by using
product prices for the same two-week period. The calculation of Class I
prices will be the same for both MCP and non-MCP markets.
Announcement of Class I butterfat and skim milk prices in advance
eliminates current problems caused by calculating the butterfat
differential after the month for which it is effective. Handlers will
have true advance Class I pricing. There will be three different
butterfat prices each month (Class I, Class II, and other classes) but
no butterfat differential. The separate Class I butterfat price should
present no administrative or verification problems since Class I
butterfat testing and reporting currently exists.
The prices for butterfat, protein, and other solids used in Class
III will be computed as follows:
Butterfat price = ((NASS AA Butter survey price--0.114)/0.82)
Protein price = ((NASS cheese survey price--0.1702) x 1.405) +
((((NASS cheese survey price--0.1702) x 1.582)--butterfat price) x
1.28)
Other solids price = ((NASS dry whey survey price--.137)/0.968).
For milk used in Class IV products the butterfat price is the same
as the Class III butterfat price, while the nonfat solids price will be
computed as follows:
Nonfat solids price = ((NASS nonfat dry milk survey price--0.137)/
1.02).
This system of pricing best fits the three established goals and
criteria, discussed previously, for a replacement to the BFP.
The first goal, that a replacement for the basic formula price meet
the supply/demand criteria set forth in the Act, may be the most
difficult to evaluate definitively since the Act specifically mentions
minimum prices to producers. The BFP, as part of a classified pricing
system, does contribute to minimum prices to producers. However, the
basic formula price does not need to be set at a level to ``assure an
adequate supply of wholesome milk'' since the BFP makes up only a
portion of the minimum price paid to farmers. The minimum price to
farmers is a weighted average of the value of all of the milk in the
market place, of which the BFP is a part. The BFP replacement meets the
supply and demand criteria for milk used in butter/nonfat dry milk and
cheese even though the component prices are established from finished
product commodity prices. The commodity prices are based on a
competitive marketplace and reflect the supply and demand for those
products (Class III and Class IV) that utilize approximately 50% of the
Grade A milk supply.
The supply and demand for Grade A milk is not limited to one
category of products. The same milk may be used for fluid or soft
manufactured products as well as the Class III and Class IV products
used to determine the BFP. As a result, the minimum prices established
for Class III and Class IV reflect supply and demand for the milk used
in all products.
In several comments received in response to the proposed rule,
commenters expressed the view that the proposed product price formulas
did not meet the requirements of the Act, and that an updated
competitive pay price resembling the current BFP would be the
appropriate replacement for the current BFP. For a price to be
competitively established there must be a large number of willing
buyers and sellers. The current base month price is established from a
survey of pay prices for Grade B or manufacturing grade milk in
Minnesota and Wisconsin. Whether prices paid for Grade B milk are
representative of the value of Grade A milk is debatable. In addition,
the volume of Grade B milk involved represents a declining production
base from which to gather pay prices, and the number of plants buying
manufacturing grade milk is continuing to decline, with many plants
refusing to buy manufacturing grade milk even when they need milk and
Grade A milk is more expensive. In other situations the manufacturing
grade milk is procured because the seller of the milk is a member of
the cooperative purchasing the milk and the cooperative will not deny
market access to its member. Such a situation clearly is not
competitive.
The Act stipulates that the price of feeds and the availability of
feeds be taken into account in the determination of milk prices. This
requirement currently is fulfilled by the BFP. If the price of feed
increases the quantity of milk produced would be reduced due to lower
profit margins. As the milk supply declines, plants buying
manufacturing milk would pay a higher price to maintain an adequate
supply of milk to meet their needs. As the resulting farm profit
margins increase, so should the supply of milk. Likewise, the reverse
would occur if the price of feed declines. The price of feed is not
directly included in the determination of the price for milk, but
rather causes a situation in which the price of milk may increase or
decrease. A change in feed prices may not necessarily result in a
change in milk prices. For instance, if the price of feed increases but
the demand for cheese declines, the milk price may not increase since
milk plants would need less milk and therefore would not bid the price
up in response to lower milk supplies.
The pricing system contained in this decision will function in the
same manner as the current pricing system by accounting for changes in
feed costs and feed supplies indirectly. The product price formulas
adopted in this rule should reflect accurately the market values of the
products made from producer milk used in manufacturing. As feed costs
increase with a resulting
[[Page 16096]]
decline in production, commodity prices would increase as a result of
manufacturers attempting to secure enough milk to meet their needs.
Such increases in commodity prices would mean higher prices for milk.
The opposite would be true if feed costs were declining. Additionally,
since Federal order prices are minimum prices, handlers may increase
their pay prices in response to changing supply/demand conditions even
when Federal order prices do not increase.
The second goal for a BFP replacement is that it should not deviate
greatly from the price level of the current BFP. In effect, prices
established by the current BFP formula in the past were used as a
benchmark to compare how well the product price formulas adopted in
this decision tracked the supply and demand conditions exhibited by the
BFP. Several comparisons of the basic formula price replacement were
made to the current BFP to determine whether the price computation
formulas result in a price level for milk used in manufactured products
that is reasonably close to the current BFP. It must be recognized that
after the initial implementation of the revised prices, supply and
demand factors will interact to adjust the actual price level to
reflect the market for milk used in manufactured dairy products.
Protein, butterfat, and other solids values were combined to
compute a Class III hundredweight price using standard factors of 3.1
for protein and 5.9 for other solids contained in skim milk, and 3.5
for butterfat. The resulting price averaged $0.47 or 3.7 percent below
the current BFP for the 60-month period of January 1994 through
December 1998. The Class IV hundredweight price, computed from the
butterfat price times 3.5 and the nonfat solids price using a standard
factor of 9 for nonfat solids contained in skim milk, averaged $0.50 or
3.9 percent below the current BFP during the same period. The
replacement Class III and Class IV prices were both highly correlated
with the current basic formula price. The Class III price had a .981
correlation coefficient while the Class IV price had a .744 correlation
coefficient.
The above comparisons are based on applying the component pricing
formulas to commodity prices that were in effect during the period
examined. Therefore, price level comparisons can only provide an
indication of how the BFP replacement prices may have behaved. The
current BFP has been responding to changing market conditions, while
the replacement formulas are applied to historic data which has
exhibited changes over time in response to existing price levels,
rather than marketing conditions that would have occurred under the BFP
replacement. Additionally, the current BFP may have a greater tendency
to reflect supply and demand conditions in Minnesota and Wisconsin
rather than national supply/demand conditions. The formulas in this
decision use national commodity price series, thereby reflecting the
national supply and demand for dairy products and the national demand
for milk.
The basic formula price replacement also meets the third primary
goal. The formulas have the ability to respond to supply/demand
changes. The Class III and Class IV prices should respond appropriately
since the formulas use NASS-surveyed commodity prices that reflect
national supply and demand for these commodities.
Overall, the BFP replacement formulas (for Class III and Class IV)
meet the established criteria necessary for a BFP replacement. The
formulas are relatively simple to use and can be applied uniformly. The
formulas are transparent and the Class III and Class IV formulas meet
the sound economics criterion.
In the near term, the use of NASS survey prices may reduce the
ability to predict Federal order class prices since there is a limited
history of using NASS survey prices. Predictability should improve over
time as the relationship between the survey prices and easily-tracked
exchange prices becomes apparent to industry observers.
The formulas used in the basic formula price replacement likely
will result in prices that are less stable than the current BFP. Unlike
the current BFP, in which commodity updates are used to adjust the
producer pay price survey, changes in product prices will be the sole
determinants of changes in component prices. Past observation of
competitive pay prices and commodity prices indicates that generally
competitive pay prices do not move as quickly as commodity prices.
Since the current BFP is based primarily on the base month survey
price, the commodity-driven price series adopted in this rule will
react more quickly to changes in the commodity markets than the current
BFP reacts.
Make Allowances
Use of an economic engineering approach to determine appropriate
make allowances was investigated. Neither the time nor the resources
are available to construct models for determining appropriate make
allowances at this time. As an alternative, various sources were used
to determine appropriate make allowances for the basic formula price
replacement. Research by Stephenson and Novakovic of Cornell University
indicates that results obtained by using an economic engineering
approach can be comparable to a survey of plants. Resources may need to
be devoted to developing an economic engineering model, a survey, or a
combination of the two.
The make allowances contained in the proposed rule were developed
primarily from make allowance studies conducted at and published by
Cornell University and an analysis of manufacturing plant size in
relationship to the data contained in the Cornell studies. Audited cost
of production data published by the California Department of Food and
Agriculture was also used in determining a reasonable level of make
allowances.
The proposed rule make allowances used in computing the component
prices for Class III and Class IV resulted in per hundredweight prices
which did not deviate greatly on average from the current BFP over the
period analyzed, one of the criteria for a basic formula price
replacement. During the September 1991 through May 1997 period on which
the analysis in the proposed rule was based, the proposed Class III
price level would have averaged $0.26 per hundredweight above the
current BFP, with Class IV prices averaging $0.22 per hundredweight
below.
Nearly all comments received relating to make allowances asserted
that the proposed rule allowances were understated. Both handler and
producer interests argued that failure to cover processors' costs of
converting milk to finished products results in a disincentive to
produce finished dairy products. They expressed concern that the
disincentive would discourage investment in the manufacturing sector,
leading to reduced manufacturing capacity and reduced outlets for
producers' milk. A few commenters stated that make allowances should
cover the costs of only the most efficient processors, and others
objected to the inclusion of any make allowances, which they
characterized as a charge against producers to pay processors for
processing milk.
Producers objected to the inclusion of manufacturing allowances for
milk processors while no allowance is made for producers to recognize
any fixed recovery of the cost of producing milk. The current pricing
system, using the BFP, also does not assure producers a fixed rate of
return. However, because
[[Page 16097]]
the BFP is based on a competitive pay price of what manufacturers pay
dairy farmers for milk, the manufacturers' make allowance has, in
effect, been deducted from prices received from the sale of
manufactured products before the pay prices are reported. Therefore the
differences between the current pricing system using the BFP and the
pricing system contained in this decision with respect to make
allowances deals with the level and stability of make allowances rather
than their existence.
National Milk Producers Federation (NMPF) supported use of a survey
of dairy product manufacturing costs that has been conducted by the
Rural Cooperative Business Service (RCBS), with some modifications, to
establish Federal order make allowances. Many other comments supported
the NMPF position. NMPF suggested adding a marketing cost allowance of
$0.015 per pound of product to the manufacturing costs. NMPF explained
that the addition of the marketing allowance was necessary since the
NASS price data that will be used in the formulas includes the
marketing costs covered by the $0.015.
The RCBS survey contains data for six cheese plants, six nonfat dry
milk plants and five butter plants. In addition, the survey results
include manufacturing data from three dry whey plants. The plants
included in the survey represent a wide geographic representation of
the United States. Given the limited number of plants involved in the
study, however, regional information is unavailable. The survey results
also represent a range of packaging types which can affect the final
make allowance.
International Dairy Foods Association (IDFA) suggested that make
allowances be determined by computing weighted averages of the results
of the RCBS survey and the California audited make allowances. IDFA
also included a $0.015 marketing cost adjustment as well as adjusting
the RCBS make allowance to incorporate the same return on investment
that is included in the California make allowance. IDFA and numerous
other commenters explained that a return on investment is necessary for
manufacturers to continue to invest in plants and equipment.
A number of comments were filed urging that make allowances be
determined by auditing manufacturing plants in the same manner
practiced by the State of California. Proponents explained that
California has had long and successful experience with auditing make
allowances and that a similar procedure could and should be implemented
in Federal orders.
At this time the use of the RCBS study and the California data are
deemed to be adequate for determining the initial make allowances
contained in this decision. Several problems exist with auditing make
allowances. First, the Federal milk order system currently is not
equipped to handle the type of audits necessary for determining
appropriate make allowances. An increase in market administrator
administrative fees would be required to acquire and train auditors to
conduct the make allowance audits, since these audits would have to be
done in addition to the current audit program. Since most Class III and
Class IV manufacturing is done in plants that currently are
unregulated, authority to audit these plants to obtain make allowance
data would need to be obtained. In addition, the industry may request a
hearing on an expedited basis and present relevant data to justify
changing make allowances. Therefore, there is no current plan to begin
auditing manufacturing plants for the purpose of obtaining make
allowance data.
The level of the make allowances included in this decision is based
on input by all sectors of the dairy industry. If the make allowances
are established at too low a level, manufacturers will fail to invest
in plants and equipment, and reduced production capacity will result.
If the make allowances are established at too high a level there will
be unwarranted incentive to increase capacity above the needs of the
industry, leading to overcapacity and resulting losses to
manufacturers. Either scenario would not be in the best interest of the
dairy industry. Manufacturing plant operators who find the level of
make allowances inadequate compared to their actual costs also have the
alternative to not participate in a Federal order marketwide pool.
Most commenters agreed with NMPF and IDFA that the make allowances
proposed to be used for the butterfat and nonfat solids prices were too
low, and the resulting prices too high. NMPF suggested that a make
allowance of $.1327 per pound of butter (plus the $.0015 marketing
cost, or $.1342) would be appropriate for use in the butterfat price
calculation, and IDFA favored a make allowance of $.114, compared to
the proposed make allowance of $.079. Several commenters suggested use
of California make allowances.
The formula for determining the butterfat price for butterfat used
in Class III and Class IV products will be computed using the following
formula:
Butterfat price = ((NASS AA Butter survey price-0.114)/82).
The make allowance of $0.114 per pound of butter is determined by
adding to the RCBS survey make allowance a marketing cost of $0.015 and
a return on investment of $.0068, which is the same return on
investment included with the California butter processing cost. The
RCBS make allowance included packaging costs for print butter;
therefore, $0.0175 was deducted from the make allowance to adjust for
the difference between print and bulk butter packaging. The California
butter processing cost was also adjusted by the $0.015 marketing cost.
A weighted average make allowance was then computed using the adjusted
RCBS make allowance and pounds of butter contained in the RCBS survey
and the adjusted California butter processing cost and the pounds of
butter represented by the California butter plant audit. The resulting
make allowance of $0.114 is $0.035 greater than the $0.079 make
allowance contained in the proposed rule. An increase in the butter
price formula make allowance will allow plants to recover a larger
percentage of the costs of producing butter than under the proposed
rule.
Comments on the computation of a nonfat solids price included
suggestions by NMPF that the nonfat dry milk make allowance level
should be $.1245 plus the $.0015 marketing cost, or $.126, and by IDFA
that $.137 would be an appropriate level, compared to the $.125 used in
the proposed rule. Several other commenters favored the California make
allowance, suggesting something in the $.135-$.14 per pound range for
nonfat dry milk.
The formula for computing the nonfat solids prices for milk used in
Class IV will be as follows:
Nonfat solids price = ((NASS nonfat dry milk survey price-0.137)/1.02).
As in the case of computing the butterfat make allowance, the
nonfat solids make allowance is a weighted average of the RCBS survey
and the California processing costs. A marketing cost of $0.015 and a
return on investment of $0.0159 was added to the RCBS survey while the
$0.015 marketing cost was added to the California price. The resulting
make allowance of $0.137 per pound of nonfat dry milk is $0.012 more
than the proposed rule make allowance of $0.125. The resulting increase
in the make allowance will allow plants to recover a larger percentage
of the cost of
[[Page 16098]]
producing nonfat dry milk than they would have using the make allowance
included in the proposed rule.
In addition to revising the make allowance for computing the nonfat
solids price, the yield factor is also adjusted. In the proposed rule a
yield factor of .96 was used in the nonfat solids formula. The .96 was
intended to represent the 96 pounds of solids in 100 pounds of nonfat
dry milk. Most parties, including IDFA and NMPF, commented that the .96
was inappropriate and that a factor of 1.02 was more appropriate. Since
buttermilk powder is also a product of manufacturing butter and nonfat
dry milk, its value needs to be addressed. Because the proposed rule
did not account for the yield of buttermilk, the .96 factor was
appropriate. However, failing to account for buttermilk powder resulted
in overstating the nonfat solids price since the pounds of nonfat
solids were understated. Use of the 1.02 factor allows the nonfat
solids contained in nonfat dry milk and buttermilk powder to be
accounted for, and the value of all nonfat solids to be accurately
reflected in the nonfat solids price.
The results of the revisions made to the butterfat and nonfat
solids formulas yield a Class IV hundredweight price that would have
averaged four cents below the current Class III-A price and fourteen
cents above the California 4a price over the period of January 1994
through December 1998. These results address the major concern of many
of the comments that the Class IV prices in the proposed rule were too
far out of alignment with California 4a prices for Federal order plants
to be competitive. The more important criteria of reflecting supply and
demand is also met by the revised formulas. Research by Knutson,
Anderson, Awokuse, and Siebert showed that the formulas contained in
the proposed rule outperformed the current basic formula price in
reflecting supply and demand. Under the revised formulas the level of
prices will be changed, but not their relationship to supply and
demand.
Nearly all comments on the cheese make allowance proposed for use
in computation of the protein price described the proposed $ .127 make
allowance as too low, resulting in a too-high protein price. NMPF
supported use of the RCBS survey results ($ .1421), which were somewhat
higher than the proposal. IDFA supported using an average of the RCBS
survey and California make allowances, which generally are higher still
($ .152). A number of other commenters argued that the proposed cheese
make allowance would cover the cost of making none of the cheese made
in California. The Dairy Institute of California advocated make
allowances of at least $.17 for blocks and $.14 for barrels.
Many commenters insisted that barrel cheddar cheese prices should
be included in a weighted average with block cheddar prices since much
more barrel cheese is produced than block cheese. NMPF urged that the
barrel price not be included because barrels don't have uniform
composition, and because the use of such prices would have the effect
of unnecessarily reducing prices to producers. Other commenters
suggested that if barrel prices are included, they should be increased
by 3 cents per pound to make up for the difference in packaging costs.
Still other commenters argued that all varieties of cheese should be
included in the NASS price survey to assure that all cheese value is
captured.
The formula for computing the protein price for milk used in Class
III is as follows:
Protein price = ((NASS cheese survey price - 0.1702) x 1.405) +
((((NASS cheese survey price - 0.1702) x 1.582) - butterfat price)
x 1.28)
The NASS cheese survey price will be determined by adding three
cents to the moisture-adjusted barrel price and then computing a
weighted average price using the block cheese price and the adjusted
barrel price times the pounds of each cheese type in the NASS survey
and dividing by the total pounds of block and barrel cheese in the NASS
survey. Including both block and barrel cheese in the price computation
increases the sample size by about 150 percent, giving a better
representation of the cheese market. Since the make allowance of
$0.1702 is for block cheese, the barrel cheese price must be adjusted
to account for the difference in cost for making block versus barrel
cheese. The three cents that is added to the barrel cheese price is
generally considered to be the industry standard cost difference
between processing barrel cheese and processing block cheese.
The make allowance used in computing the protein price, $0.1702,
was established by computing a weighted average make allowance using
the RCBS survey and the California processing costs. The RCBS survey
was adjusted by adding a marketing cost of $0.015 and a return on
investment of $0.0104 for a total of $0.1540 while the California
processing costs were increased by a marketing cost of $0.015 for a
total of $0.1855. The weighted average was then computed by multiplying
the pounds of cheese represented in each study by the respective
prices. The resulting total was divided by the total pounds of cheese
represented by the studies.
The factors used in the formulas for computing component prices are
determined by the quantity of the component in the commodity, except
for protein, for which the Van Slyke yield formula is used. In the
protein formula, the 1.405 and 1.582 are yield factors derived from the
Van Slyke cheese yield formula. Both the 1.405 and 1.582 factors are
determined by calculating the change in cheese yield if an additional
tenth of a pound of protein or butterfat is contained in the milk,
holding everything else constant.
The proposed rule used a 1.32 factor times the cheese price for use
in computing the protein price. The change to a factor of 1.405
reflects the use of true protein as the basis for payments for protein
rather than using a measurement of ``total nitrogen'' for the protein
content of milk. The resulting protein price will be for a pound of
``true protein.''
Total nitrogen protein content and true protein content both result
from chemical (Kjeldahl) testing methods approved for determining the
protein content of dairy products by the Association of Official
Analytical Chemists. When expressing protein based on total nitrogen,
the protein percentage is over-stated by the amount of non-protein
nitrogen (which has little or no effect on dairy product yields)
present in the milk. Therefore, when milk is priced on the basis of its
true protein content rather than its content of protein measured by
total nitrogen, the price per pound of protein should be higher.
Currently, nearly all testing of milk for payment purposes is
performed using infrared electronic testing equipment. At the wave-
length filter at which protein is measured, only true protein is
detectable. To calibrate for total nitrogen a bias factor has to be
used to compensate for the non-protein nitrogen. It is also likely that
the level of non-protein nitrogen will vary in every set of calibration
samples, creating more problems in accurately calibrating electronic
infrared instruments. Calibration for the true protein content of milk
is more accurate than the calibration for total nitrogen protein.
Because the accuracy of testing for true protein is higher than for
total nitrogen protein, which has relatively little value, Federal milk
orders should price milk on the basis of its true protein content
rather than its total nitrogen protein content.
[[Page 16099]]
Comments on the proposed rule included discussion of the proposal
to incorporate the difference in butterfat value between cheese and
butter within the protein price. NMPF suggested that the .90 factor
that results in a 1.582 multiplier should, instead, be .91 and result
in a 1.60 multiplier because that factor more closely reflects the
current retention of butterfat in cheddar cheese manufacturing. The
IDFA comment argued that using the 1.60 multiplier would increase an
already-high protein price. Another comment urged that the Grade A
butter price be used instead of the AA price, because the value of
butterfat in cheese shouldn't be increased over its value in butter.
Further, the comment argued that the additional value of butterfat in
cheese is added by the cheesemakers, and shouldn't be used to increase
prices to producers.
Since Class III includes other types of cheese, such as mozzarella
that has a lower fat retention than cheddar cheese, increasing the
value attributed to that retention is not appropriate. Increasing the
protein price for all milk used in Class III based on only a portion of
the products included in Class III would put the other Class III
products at a competitive disadvantage. Calculation of a minimum price
will enable handlers to adjust prices paid to producers to account for
additional value above the minimum Federal order prices. Therefore, the
1.582 factor will be used in the protein price formula contained in
this decision.
Since Class III and Class IV use the same butterfat price,
accounting for the difference in value of butterfat in cheese versus
the value of butterfat in butter is necessary. This difference in value
is included with the protein price calculation as a means of
quantifying the amount by which the value of butterfat in cheese varies
from the value of butterfat in butter. Attributing the additional value
to protein is possible because it is the casein in protein that forms
the molecular matrix that retains the butterfat in cheese. Without
enough protein in milk to retain the butterfat in cheese, the butterfat
would have a lower value in whey butter in most months. The ratio of
butterfat to protein, 1:1.28, is calculated from the protein and
butterfat yield factors of 1.405 and 1.582.
An alternative to incorporating the butterfat value in cheese with
the protein price is to compute a separate butterfat price for Class
III. This would be a relatively simple formula to compute. However,
having multiple butterfat prices would require full plant
accountability of components in all manufacturing plants. The resulting
increased accounting, reporting, and administrative costs were
determined to not be warranted when viewed against the small gain from
having an additional butterfat price.
Use of the protein price formula adopted in this decision will
increase the protein price by approximately 15 cents per pound when
compared with calculating the protein price on the basis of total
nitrogen protein. However, the increase is almost entirely negated by
the lower content of true protein than of total nitrogen protein in
milk. On a hundredweight basis, the change to true protein results in
an increase to the Class III price of an average of 2 cents when
compared to the formula using total nitrogen protein.
Use of true protein instead of total nitrogen protein for
determining payments to producers should have a minimal impact on
producer revenues. Producers with relatively high levels of non-protein
nitrogen in their milk could see a slight drop in their revenue derived
from the protein content of their milk.
In addition to changing the coefficients in the protein price
formula to adjust for the use of true protein, the fixed protein and
other solids values used in computing a per hundredweight Class III
price must be adjusted. Accordingly, the Class III price will be
computed by multiplying the butterfat price by 3.5 and adding the
result of multiplying .965 times the sum of 3.1 times the protein price
and 5.9 times the other solids price.
In comments filed in response to the proposed rule, NMPF suggested
a $.1575 whey make allowance plus the $.0015 marketing cost, for
$.1590, rather than the $.10 proposed. IDFA argued that a $.171 make
allowance would be more appropriate. Wisconsin Cheesemakers indicated
that the Class III price should not include a value for whey, as it
frequently represents a cost to manufacturers. The Dairy Institute of
California agreed that a whey factor should not be included, but that
if it is, the yield factor (divisor) should be .98 (instead of .968).
The formula used for computing the other solids price is:
Other solids price = ((NASS dry whey survey price-.137)/0.968).
The determination of the $0.137 make allowances was based on
several factors. Whereas the other make allowances were based on a
weighted average of the RCBS study and California make allowances, the
other solids make allowance is based primarily on the Cornell study of
dry whey and whey protein concentrate make allowances. The Cornell
study was used since California does not audit dry whey manufacturing
costs and the RCBS survey has very limited data on dry whey
manufacturing costs. The data on dry whey in the RCBS study expresses
the costs on a per pound of cheese basis rather than on a per pound of
dry whey basis. The $0.137 figure is slightly above the average cost of
the model plants in the Cornell study and the same as was used for
nonfat solids.
A value for other solids is included in Class III to assure that
the Class III price reflects most of the value of milk used in Class
III products. In the Federal milk orders currently pricing three
components, the other solids price is determined by subtracting the
value of butterfat and protein from the BFP. In this final rule the
other solids price is established independently of the butterfat and
protein price. Even though there is not a market for other solids as
such, the dry whey price was determined to be the best indicator of
value for other solids and provides a method of accounting for and
distributing the value in Class III milk that is not accounted for in
the protein and butterfat components. Other potential price series that
could be used to determine the value of other solids were whey protein
concentrate and lactose. Under present market conditions, dry whey
offers more market activity with less specialization than either whey
protein concentrate or lactose, and therefore constitutes a better
price series for determining a minimum Federal order price. Comments
filed by several parties supported the use of dry whey for the
determination of the other solids price. The 0.968 factor in the
formula represents the pounds of solids contained in a pound of dry
whey.
Since the make allowances are applied on a component basis rather
than on a hundredweight of milk basis comparisons to traditional make
allowances may be difficult. Also, a make allowance that may seem
reasonable when applied to a component may be seen as inappropriate
when combined with the other components in the finished product. To
evaluate the make allowances on a per hundredweight basis the Class III
and Class IV milk prices were compared to the value of cheese and
butter/powder using the CCC yield factors. These results were compared
to the same calculation using the current BFP and the CCC yield
factors. A comparison over time between the current level of class
prices paid for producer milk and the value of
[[Page 16100]]
the manufactured products made from that price class of milk shows a
reasonably stable difference between the two levels. This difference is
the implied make allowance.
The implied make allowance for butter/powder using the current BFP
for the period January 1994 through July 1998 was $0.83 per
hundredweight, while the implied make allowance for butter/powder
versus the Class III-A price was $1.37 per hundredweight. The implied
make allowance calculated for the Class IV price, based on historical
prices, would have been $1.41 per hundredweight. With the implied make
allowance for the Class IV price being only $0.04 from the actual
implied Class III-A make allowance, the butter make allowance and the
nonfat dry milk make allowance, in combination, appear to approximate
the current implied make allowance.
Determination of the make allowance for Class III is more difficult
than for Class IV, in which butterfat and skim solids make two unique
finished products. In cheese manufacture, most of the butterfat remains
in the cheese with most of the protein, and a portion of the protein,
butterfat and remaining nonfat solids are contained in the whey, which
can be made into various products. The combination of the butterfat,
protein, and other solids make allowances resulted in an implied make
allowance of $2.72 for Class III (cheese) compared to the implied make
allowance of $2.21 for the current BFP. Even though the implied make
allowance using the Class III formulas in this decision is greater than
the current implied make allowance it is appropriate since the CCC
formula is basically a cheddar cheese yield formula whereas Class III
contains multiple varieties of cheese and certain other products. A
slightly larger make allowance in Class III will not place makers of
products that have significantly different cost structures than cheddar
cheese at a competitive disadvantage when participating in Federal
orders relative to handlers who do not participate in the Federal
orders.
Changes in make allowances will affect component prices and per
hundredweight milk values. A one-cent per pound change in the butter
make allowance will affect the butterfat price in the opposite
direction by $0.0122 per pound. This would be $0.0427 per hundredweight
for milk at 3.5 percent butterfat. The butterfat price also is used in
the computation of the protein price. The protein price will change
inversely to the butter make allowance by $0.0146 per pound or $0.046
per hundredweight for milk with 3.15 percent protein. A positive make
allowance change for nonfat dry milk will result in a decline in the
nonfat solids price. A one-cent change in the nonfat dry milk make
allowance will result in a $0.0098 per pound or $0.0882 per
hundredweight opposite change in the nonfat solids price. A one-cent
change in the protein make allowance will cause an opposite change in
the protein price by $0.0322 per pound or $0.1014 per hundredweight for
milk with 3.15 percent protein. Finally, a one-cent change in the other
solids (dry whey) make allowance will change the other solids price by
$0.0103 per pound or $0.0567 per hundredweight in the opposite
direction.
This pricing system eliminates the need for regional yields based
on regional differences in milk composition. The value of milk will be
adjusted automatically based on the level of components contained in
the milk in each order even though the component prices are the same
nationally. This automatic adjustment means that handlers will pay the
same price per pound of component but may have differing per
hundredweight values based on the milk component levels, creating
equity in the minimum cost of milk used for manufacturing purposes.
Several comments were received suggesting that regional BFP
replacement prices be used rather than a national BFP replacement. The
commenters explained that cheese, butter, and nonfat dry milk have
different values in different regions of the country, and that the
Cornell study described a price surface for milk used in manufactured
products across the United States. Therefore, they concluded, the
replacement BFP also should be determined regionally.
This decision replaces the current BFP with a national Class III
price and a national Class IV price. Although there may be some
justification for regional pricing, there are two principal reasons for
using national pricing. First, pricing milk on the basis of the pounds
of components contained in the milk eliminates some of the regional
differences in milk prices. Second, regional commodity price data, and
for that matter regional competitive pay price data, are unavailable.
Resulting attempts to estimate regional differences, with the ensuing
regional differences of opinion, would yield minimal benefits.
An analysis of the basic formula price replacement requires several
assumptions. Historical commodity price surveys are not available for
all of the commodities. Prices used as substitutes for historical price
survey data in this analysis include a cheese price computed by
comparing the current NASS cheese price series to the comparable NCE/
CME price series for the purpose of determining a historical protein
price. The NCE/CME series was then adjusted by means of a regression
analysis to reflect the differences between the NASS prices and the
exchanges. The resulting price series simulates the use of the NASS
series for the time period studied. For the butter price, the data from
the ``BFP Committee Commodity Price Study'' was compared to the CME
Grade AA cash butter price series. The CME Grade AA price series was
then adjusted accordingly to make it more comparable with the Committee
Price Study. Available survey prices used were nonfat dry milk prices
and dry whey prices, both of which are published monthly by NASS in
``Dairy Products''. While a nonfat dry milk price and dry whey price
are published in ``Dairy Products'' at the beginning of each month for
the second previous month, the new weekly NASS survey discussed earlier
is necessary to determine prices on a more current basis.
One of the initial requirements of a basic formula price
replacement, based on the assumption that the national supply and
demand for manufacturing milk as reflected in the current BFP is in
relatively good balance, is that the price level not deviate greatly
from the current basic formula price. The examples contained in the
proposed rule resulted in the Class III portion of the BFP replacement
averaging $0.45 per hundredweight above the current Class III price,
and the Class IV portion of the BFP replacement averaging $0.13 per
hundredweight above the current Class III price, both for the 48-month
period January 1994 through December 1997.
In addition to comparing the Class III and Class IV price series to
the current BFP, the Class III price was also compared to the
California 4b price, while the Class IV price was compared to the Class
III-A price and to the California 4a price. Comparisons to the
California prices are included because many commenters expressed the
view that the proposed rule resulted in prices that put plants
regulated by Federal orders at a competitive disadvantage to California
plants and that alignment with California pricing was essential. Most
commenters did not express the view that Federal order prices should
equal California prices, but that Federal order prices should be in
alignment, i.e. ``reasonably close''. For comparison purposes all
prices are expressed on a
[[Page 16101]]
per hundredweight basis with 3.5 percent butterfat. The Class III price
was determined by using 3.1 pounds of protein and 5.9 pounds of other
solids in 100 pounds of skim milk. To compute a 3.5 percent
hundredweight price the skim milk value was multiplied by .965 and
added to the butterfat price that was multiplied by 3.5. The same
procedure was used for the Class IV price, with 9 pounds of nonfat
solids in a hundred pounds of skim milk.
For the period January 1994 through December 1998, the Class III
price averaged $0.47 below the current BFP and $0.20 above the
California 4b price, while the Class IV price averaged $0.50 cents
below the current BFP, $.04 cents below the current Class III-A price,
and $0.15 above the California 4a price.
In addition to comparing the value differences between the Class
III and Class IV prices and the current BFP, it is important to compare
the relationship in price movements between the Class III and Class IV
prices and the current basic formula price. Correlation coefficients
were computed to statistically test the relationships between the Class
III and Class IV prices, the current basic formula price, and the
California prices. The correlation coefficient between the Class III
price and the current basic formula price is above .98 while the
correlation coefficient between the Class IV price and the current
basic formula price is approximately .74. The correlation between the
Class IV price and the current Class III-A price is .99. The
correlations between the Class III and Class IV prices and California
prices are also quite high, with the Class III price and the California
4b price having a correlation coefficient of .97 while the Class IV
price and the California 4a price show a correlation coefficient of
.99. These relationships are expected since the current basic formula
price is weighted more heavily on milk used for the manufacture of
cheese than on the value of milk used in the manufacture of butter and
nonfat dry milk.
The Class III and Class IV formulas are computed from product
prices representing the use of milk in each class. That is, the Class
III price is derived from the value of cheese while the Class IV price
is derived from the value of butter and nonfat dry milk. Therefore the
Class III and Class IV prices can be expected to vary significantly
from the current BFP in individual months, reflecting the economic
(supply and demand) conditions for cheese, butter, and nonfat dry milk.
This situation is particularly true of the Class IV price. For example,
during 1993 and 1994 the price of butter and nonfat dry milk was
relatively low and stable compared to the price of cheese. The degree
of variability of individual months' prices from the average for the
year is expressed by a standard deviation. A lower standard deviation
indicates that individual observations (in this case, monthly product
prices) vary less from the mean than would be indicated by higher
standard deviations. These statistical descriptions indicate the
difference in variability of prices between butter/powder and cheese in
1993 and 1994.
During 1994 the Class IV price would have averaged $10.26 with a
standard deviation of $0.11, compared to the 1994 BFP average of $12.00
with a standard deviation of $0.57, and the average Class III price of
$11.47 with a standard deviation of $0.69. For 1998, when the economic
conditions for butter and nonfat dry milk had changed and prices became
more volatile, the Class IV price would have averaged $14.79 with a
standard deviation of $2.13 versus the 1998 BFP average of $14.20 with
a standard deviation of $1.97, and the Class III average price
calculation of $13.84 with a standard deviation of $2.14.
The Class III and Class IV prices clearly reflect the value of the
milk used in the respective manufactured products, whereas the current
basic formula price reflects primarily the value of milk used to
manufacture cheese in a particular region of the U.S. (Minnesota and
Wisconsin).
Class I
As in the proposed rule and currently, the basic formula price
replacement will act as a mover for the Class I price in addition to
establishing prices for milk used in Class III and Class IV. Also as
proposed, the Class I value will be separated into two parts: skim milk
and butterfat. However, instead of the proposed six-month declining
average of the higher of each month's Class III and Class IV skim and
butterfat prices, the Class I price mover will be determined by the
most recent manufacturing product prices available. The advanced price
aspect of the Class I price mover will also be shortened from the
current and proposed timing of the Class I price announcement. Both the
Class I skim and butterfat components will be announced on the 23rd day
of the preceding month using advance pricing factors based on product
prices for the most recent two weeks. The Class II skim milk price will
be announced similarly. This change from the proposed rule is being
made to respond to numerous handler comments on the proposed rule and
to address class price inversion that occurred during the second half
of 1998.
Comments relating to replacement of the BFP as a Class I price
mover that were filed before issuance of the proposed rule ranged from
favoring continuation of the current system to establishment of the
Class I price independently of the basic formula price(s) for milk used
in manufactured products. One comment suggested eliminating the basic
formula price and pooling only the Class I and Class II differentials.
These comments were fully considered in the proposed rule.
Numerous comments received in response to the proposed rule favored
advance pricing of Class I skim and butterfat separately. However, a
number of commenters expressed concern that use of the higher of the
Class III or Class IV prices in the calculation of the Class I price
mover would result in undue enhancement of Class I prices. The most
controversial aspect of the Class I price mover proposal was the use of
a 6-month declining average. Many of the comments received concerning
the Class I mover expressed the view that the Class I price must be
closely and directly linked to the manufacturing price in the same
manner that occurs currently. Commenters expressed the view that the
current system, two-month advance pricing, closely links the
manufacturing value of milk to Class I and therefore gives appropriate
price signals to producers. They opposed the six-month declining
average on the basis that the delay in linkage with the Class I price
would be too long and that Class I pricing would be counter cyclical.
Some who opposed the time lag built into the 6-month declining average
suggested that a 3-month average would do as well at attaining some
stability without as much ``de-linking.''
Several commenters opposed building less volatility into Class I
prices than into manufacturing class prices. Among the reasons given
were that added stability for Class I would mean greater volatility in
prices for manufactured products, and that added stability would favor
producers in high Class I markets.
Other comments on the proposed rule supported variations of a 12-
month rolling average Class I price mover, some with seasonal
adjustments. A number of comments favored the stability of the longer-
term basis for Class I prices. One graph submitted shows a very close
relationship between the 6-month declining average mover and the
current BFP.
[[Page 16102]]
There are several conflicting issues that must be balanced when
establishing the Class I price mover. First, the retail demand for
Class I milk is independent of the demand for manufactured dairy
products. Second, the raw material used in both Class I products and
manufactured dairy products is the same and therefore the separate uses
must compete for the given supply of milk. Third, the elasticity of
demand for the various dairy products is significantly different,
creating different consumer responses to the changing prices for
various dairy products. The Federal milk orders have attempted to
address these issues through classified pricing. This system allows a
higher price to be applied to milk used for Class I uses due to
inelastic demand for Class I products. This higher price also allows
Class I uses of milk to compete for the raw milk supply against
manufactured dairy products. At the same time, marketers of Class I
products support some degree of forward pricing, requiring processors
of Class I products to know the Class I price in advance.
Most of those commenting on the proposed rule and the Department
perceive the need to reflect changes in the prices for milk used in
manufactured products in the price of milk used in fluid products.
Since Class I handlers must compete with manufacturing plants for a
supply of milk, the Class I price must be related to the price of milk
used for manufacturing.
It is apparent from the price patterns of a large part of 1998 that
the current two-month lag between manufacturing and fluid pricing does
not establish as close a relationship between the two price levels as
is desirable. Indeed, from an analysis of the differences between
prices generated by a six-month declining average and the current
pricing system, it is clear that the current two-month lag does not
accomplish any closer relationship between manufacturing and fluid
prices than would the six-month declining average.
When manufactured dairy product prices are relatively stable the
advance pricing of Class I milk works quite well. However, since 1988
the volatility in the manufactured dairy product market has caused
problems with the advance pricing of Class I milk. The first problem is
readily evident in class price relationships during the latter part of
1998. The frequent occurrence of price inversions during that period
indicates that some alteration to both the proposed and current methods
of computing and announcing Class I prices may be necessary. Class
price inversion occurs when a markets's regulated price for milk used
in manufacturing exceeds the Class I (fluid) milk price in a given
month, and causes serious competitive inequities among dairy farmers
and regulated handlers. Advanced pricing of Class I milk actually
causes this situation when manufactured product prices are increasing
rapidly.
Since the Class I price is announced in advance, in a rapidly
changing market the Class I price may not reflect the value needed to
compete for the necessary raw milk supply or the Class I price may be
overvalued relative to the raw milk price. Undervaluing Class I milk is
a particular problem since it reduces producers' pay prices at a time
when the producers should be receiving a positive price signal. As an
example, in July 1998 the Class I price in every Federal order market
except one was below the Class III price. Although July is not a period
of very high Class I demand, it is a time when Class I demand is
starting to increase in some regions relative to total milk production.
At this same time producers in these regions received lower pay prices.
Many Federal milk orders also experienced a Class I price below the
Class III price in August as a result of two-month advance pricing of
Class I. Demand for Class I milk increases substantially in August.
While producer prices rose in August, the increase would have been
larger had Class I prices been based on more current Class III prices.
Under these pricing relationships, the Class I handler may have a more
difficult time acquiring milk as the minimum Federal order Class I
price puts the handler at a disadvantage to handlers demanding milk for
manufacturing purposes. Since Class I handlers must compete with
manufacturing plants for a supply of milk, the Class I price must be
related to the price of milk for manufacturing.
Another problem inherent in the current method of announcing Class
I prices in advance is that the price for milk established in advance
is for milk containing 3.5 percent butterfat. The current system does
not determine the price of butterfat in advance, therefore the Class I
handler does not know the value of milk at butterfat contents other
than 3.5, until the butterfat differential is announced in the month
following sale of the processed product. Under this final decision,
Class I handlers will have advanced price information for both the skim
and butterfat portions of the Class I price.
The purpose of the minimum Class I differential is to generate
enough revenue to assure that the fluid market is adequately supplied.
As a result of advance pricing, the effective Class I differential--
that is, the actual difference between the Class I and manufacturing
use prices in a month--is not the same as the Class I differential
stated in an order. While the effective Class I differential varies
monthly, it generally has remained positive. Recent increased
volatility in the manufactured product markets has resulted in more
instances in which the effective Class I differential has been
negative, especially in markets with low minimum Class I differentials.
In the past when price inversions have occurred, the industry has
contended with them by taking a loss on the milk that had to be pooled
because of commitments to the Class I market, and by choosing not to
pool large volumes of milk that normally would have been associated
with Federal milk order pools. When the effective Class I differential
is negative, it places fluid milk processors and dairy farmers or
cooperatives who service the Class I market at a competitive
disadvantage relative to those who service the manufacturing milk
market.
Milk used in Class I in Federal order markets must be pooled, but
milk for manufacturing is pooled voluntarily and will not be pooled if
the returns from manufacturing exceed the blend price of the marketwide
pool. Thus, an inequitable situation has developed where milk for
manufacturing is pooled only when associating it with a marketwide pool
increases returns.
Illustrative of the worsening class price inversion problem are the
growing volumes of milk that, while normally associated with Federal
milk orders, are not being pooled due to price inversion problems. When
the Class II, III, and/or III-A prices are higher than a handler's
blend price adjusted for location, it becomes disadvantageous for
handlers processing soft and hard manufactured products to pool milk.
That is, instead of drawing money out of the pool, they have to pay
money into the pool. In 1995, the volume of milk not pooled due to
class price inversion was 5.3 billion pounds. In 1997, nearly 7.8
billion pounds were not pooled for this reason. In 1998, 14.1 billion
pounds were not pooled due to class price inversions. During each of
five of the seven months of June through December 1998, the volume of
milk not pooled exceeded 2 billion pounds. In July 1998, class price
inversion occurred in all Federal order markets except Southeastern
Florida, and in 19 markets some milk was not pooled due to class price
inversion.
Since volatility in the manufactured product markets is expected to
[[Page 16103]]
continue, the Class I price mover developed as part of this Federal
milk order reform process should address this disorderly marketing
situation.
The advanced pricing procedure provided in this final decision
results in a Class I price that is based on a more recent manufacturing
use price, thus reducing (but not eliminating) the time lag that
contributes to class price inversion. For example, the January 1999
Class I price for each market would be announced on December 23, 1998
and would be based on product prices reported on December 10 and 17.
(The prices reported on these dates are for the weeks ending December 4
and 11.) Under the current procedure, the January Class I price was
announced on December 3, 1998 and was based on product prices reported
for weeks ending November 6, 13, 20, and 27.
While the advance pricing procedure in this decision reduces the
time period of advance notice by about 18 days, the reduction in
advance notice of Class I and II prices should not add significant risk
or burden to handlers. The pricing formulas are based solely on product
prices which are announced weekly; therefore, handlers can update
formulas on a weekly basis to estimate what the Class I price will be
before the price is announced. Also, as more NASS product price survey
observations become available, basis differences from earlier traded/
issued product price surveys such as those from the Chicago Mercantile
Exchange or Dairy Market News will be more predictable and, therefore,
should provide for more accurate predictions of future price levels. In
addition, futures markets have been established for the four dairy
products in the NASS price surveys. While trading to date in these
contracts has not been large, interest in these markets may increase as
the industry learns to use them as effective hedges to the component
values determined under this final decision. These markets also will
assist handlers in estimating the Class I price.
Using the current two-month advance pricing system, but
substituting for the current BFP the higher of the Class III or IV
prices as defined under this rule, markets with a Class I differential
of $1.60 per hundredweight or less would have faced a price inversion
in four of the last seven months of 1998. The range of the price
inversion would have been $.21 to $1.49. In a fifth month, price
inversion would have occurred at a Class I differential of $1.49 or
lower. In September 1998, price inversion would have occurred in all
Federal order markets except Florida. However, using the shortened
advance period adopted in this decision, for markets with a Class I
differential of $1.60 per cwt., price inversion would have occurred in
only two of the last seven months of 1998. The range of the price
inversion would have been $.02 to $.86. The shortened period of advance
pricing reduces both the occurrences and level of price inversion.
To further illustrate that the advance pricing procedure in this
final decision provides a Class I price level that is less likely to be
below the manufacturing use price, the following analysis was done.
Averages of the 1998 NASS product prices for the current month, the
second preceding month, and the two-week period available on the 23rd
of the preceding month were computed and compared. For all four
products, the preceding month two-week average provided a better
estimate of the current month average than did the average for the
second preceding month. Looking at the Cheddar cheese price series, the
two-week preceding month price was $.03 closer to the current month on
a simple average basis, and $.04 closer on an absolute average basis.
This means that using preceding month two-week average Cheddar cheese
price would result in a Class III skim milk price that would be about
$.40 per cwt. closer to the following month's Class III skim milk price
than if the second preceding month's price is used.
As stated earlier, advance pricing affects the function of the
minimum Class I differential. The advance pricing procedure in this
decision reduces the difference between the manufacturing use price
used to establish the Class I price and the manufacturing use price in
the current month. This procedure will result in an effective Class I
differential that would be closer to the Class I differential stated in
each order. Thus, reducing the time lag of the Class I pricing advance
improves the functionality of the minimum Class I differential.
Comments filed by some southern interests indicated that stability
in pricing in the southeast U.S. should incorporate seasonal price
incentive programs as a necessary part of adequately supplying the
fluid markets of the southeast. According to the commenters, such a
program would encourage balancing production with fluid milk demand.
The comments state that because such a pricing plan would be revenue
neutral, it would allow for more price stability and more reliable
price signals than is currently available for producers in high Class I
utilization areas.
Addition of seasonal adjustments for marketing areas would disrupt
the uniformity in pricing between marketing areas that is a goal of
this pricing plan. The seasonal patterns of milk production and
consumption are not the same between regions, and it would be
difficult, if not impossible, to attempt to work out seasonal pricing
as a part of the BFP replacement.
As discussed previously, the price link between Class I use and
Grade A milk used to manufacture Class III and Class IV products should
be maintained since Grade A milk can be used for fluid uses as well as
for manufacturing uses. Because handlers compete for the same milk for
different uses, Class I prices should exceed Class III and Class IV
prices to assure an adequate supply of milk for fluid use. Federal milk
orders traditionally have viewed fluid use as having a higher value
than manufacturing use. The replacement Class I price mover reflects
this philosophy by using the higher of the Class III or Class IV price
for computing the Class I price.
In some markets the use of a simple or even weighted average of the
various manufacturing values may inhibit the ability of Class I
handlers to procure milk supplies in competition with those plants that
make the higher-valued of the manufactured products. Use of the higher
of the Class III or Class IV price will make it more difficult to draw
milk away from Class I uses for manufacturing. For example, if the
Class IV price were used as the Class I price mover there would be
months in which the Class III price would be more than two dollars
above the Class IV price. As a result, the Class I differential would
have to be well over two dollars for the Class I price to remain above
the Class III price. If the Class III price is used as the Class I
price mover, the reverse situation of having the Class IV price well
above the Class III price would result in the same problem. The
potential of having a Class III or IV price in excess of the Class I
price is not entirely eliminated by using the higher of the Class III
or Class IV price because of the advance Class I pricing feature.
However, reducing the time period for which Class I pricing is advanced
should reduce the potential considerably, allowing Class I handlers to
compete more effectively with manufacturing plants for fluid milk.
Class II
Under this final decision, the value of Class II skim milk will be
computed by multiplying the hundredweight of producer skim milk
allocated to Class II by the sum of an advanced Class IV skim price,
calculated from nonfat dry milk product prices reported by NASS
[[Page 16104]]
for the most recent two-week period for which prices are available on
the 23rd day of the preceding month, and the 70-cent Class II
differential. The price used for valuing Class II butterfat will be the
current month's butterfat price determined from the NASS-reported
butter price, as in Classes III and IV, plus .7 cents per pound to
incorporate the Class II differential.
Generally, the source of inputs alternative to producer milk for
the manufacture of Class II products is dry milk products and butterfat
that otherwise would be used in butter. Basing the price of milk used
to make Class II products on these alternative ingredients should help
considerably to remedy a situation in which it is perceived that a
separate product class for dry milk (Class III-A) has resulted in a
competitive advantage over producer milk used to produce Class II
products. The 70-cent differential between the Class IV and Class II
skim milk prices is an estimate of the cost of drying condensed milk
and re-wetting the solids to be used in Class II products. One
commenter suggested that there should be a $1.00 difference between
Class IV and Class II.
Comments filed in response to the proposed rule generally supported
basing the Class II price on the Class IV price. However, many
commenters, including operators of plants manufacturing food products,
argued that the proposed $0.70 differential is too high. In many cases
they stated that the cost for rehydration is substantially lower than
$0.70, if the nonfat dry milk is rehydrated at all.
Only a small portion of the $0.70 differential is intended to
represent the cost of rehydration. The majority of the $0.70, $0.57,
represents the cost of drying condensed milk. Comments filed by Kraft,
Inc., stated that the cost of using nonfat dry milk (NFDM) in Class II
is 0-3 cents per pound. At a rate of 9 pounds of NFDM per hundredweight
of skim milk, this cost could represent as much as 27 cents per
hundredweight. When added to the 57-cent cost of drying condensed milk,
the 70-cent differential appears to be justified. It should be noted
that the cost to purchase or manufacture NFDM for use in Class II
products would include not only the cost of milk at the Class IV price,
but the cost of making NFDM (in excess of $1.20 per hundredweight of
skim milk when the make allowance for a pound of NFDM is multiplied by
the yield).
Many of the commenters suggested that a rate of $0.30 is
appropriate since that is what is used currently in the Federal orders.
The current Class II differential, $0.30, was established by a national
hearing conducted in 1991. At that hearing proponents of a $0.30 Class
II differential explained that the average difference between Class II
prices and Class III prices over a recent time period had averaged
$0.30. The $0.30 difference was not based on the actual cost
differences between existing classes of milk.
The Class II price level determined under this final rule should
not, on average, be higher than its predecessor. The concern of
commenters that the level of the proposed Class II price would be
excessive should be mitigated somewhat by the reduction in the level of
the Class IV formula adopted in this rule. For the period January 1994
through December 1998, the Class II price as determined in this final
rule averaged $0.01 higher than the current Class II price. There is a
very large variation from year to year in the differences between the
current and adopted Class II prices. In 1994, the current Class II
price averaged $1.50 more than the Class II price calculated according
to this decision. For 1998, however, with butter prices at record
levels, the Class II price computed from butter and powder prices
averaged $1.58 higher than the current Class II price. These price
differences illustrate the result of pricing Class II milk on the basis
of manufactured ingredients instead of on the basis of cheese.
Many of the comments received concerning the Class II price opposed
the proposal to price Class II on a current basis rather than on an
advance basis as is currently the case. The commenters argued that
since Class II products are sold on an advance basis similar to Class I
products the continuation of advance pricing of Class II is essential.
Other commenters expressed the view that the skim portion of Class II
could be forward priced but butterfat should be priced on a current
basis since competing uses for butterfat such as cheese and butter
would be priced on a current basis. Class II products high in
butterfat, such as ice cream, could be placed at a competitive
disadvantage in procuring butterfat if the current month's butterfat
prices are substantially different than the advanced priced butterfat
price.
The Class II price adopted under this rule will result in forward
pricing the skim milk portion of Class II while pricing butterfat on a
current basis. Butterfat used in Class II products competes on a
current-month basis with butterfat for used in cheese and butter, and
its price should be determined on the basis of the same month's values.
Forward pricing of skim milk will, of course, eliminate some of the
desired direct linkage between the nonfat solids price in Class II and
the nonfat solids price in Class IV. However, especially with the
shortened period of advanced pricing, in most cases the linkage should
remain close enough so that the Class II differential does not
encourage the drying of milk for Class II uses just to receive a price
advantage. This alignment also should reduce perceived problems in the
use of nonfat dry milk to make Class II products. Tying the Class II
price to the Class IV price by this fixed differential, even with
advanced pricing for Class II skim, should reduce the incentive to
produce nonfat dry milk for use in Class II products.
Quality Adjustments
This final decision provides for the adjustment of producer
payments for the somatic cell count of producers' milk under most
orders using multiple component pricing. Payments made by handlers for
milk used in Class II, Class III, and Class IV also will be adjusted on
the basis of the somatic cell count of the milk.
A somatic cell count (SCC) adjustment is appropriate for several
reasons. First, SCCs are not only an indicator of general milk quality,
but also are an indicator of the potential yield of milk in cheese and
other products that require casein for their structure and body.
Research has shown a direct link between increased SCCs and decreased
cheese yields.
Second, many producers currently are subject to some type of
multiple component pricing plan or quality premium program that adjusts
their pay prices for somatic cell levels even if the order in which
their milk is pooled does not incorporate such adjustments. Although
many producers' returns are affected by the SCC of the milk, there is
little, if any, oversight of the testing for somatic cells if the order
does not include pricing adjustments. Fair and accurate testing can be
assured by incorporating multiple component pricing and somatic cell
adjustments into Federal orders.
The somatic cell adjustment will apply on a hundredweight basis and
be computed by subtracting the SCC (in thousands) from 350 and
multiplying the result by the product of .0005 times the monthly
average cheese price used to compute the protein price. This level of
adjustment has worked well in orders currently containing somatic cell
adjustments, and is supported by data and research contained in Federal
milk order hearing records.
[[Page 16105]]
There was not a great deal of agreement on how to determine which
orders should provide for SCC adjustments. Some commenters favored
their inclusion in all markets and some favored a SCC adjustment on all
milk priced under multiple component pricing. NMPF favored SCC
adjustments for regions that want them. A Northeast producer group
argued that the limited effect of SCCs on Class II and Class IV uses
makes them unsuitable for use as an adjustment factor for milk in the
Northeast. One fluid milk handler opposed their application to Class I
use, while several others opposed excluding Class I milk from using
somatic cell count as a cost component because such an adjustment could
result in fluid handlers receiving lower-quality milk.
The application of somatic cell adjustments will be limited to
orders providing for multiple component pricing, since the detrimental
economic effect of somatic cells has been shown to occur principally
with respect to the protein component of milk. SCCs unquestionably do
have detrimental effects on the flavor and keeping quality of fluid
milk products, and undoubtedly on other dairy products as well, but the
economic quantification of those effects is not part of the information
available for this decision. There are three order areas in which
producer sentiment is opposed to the inclusion of SCC adjustments, and
these adjustments are not adopted for the three orders. In the case of
the Pacific Northwest and Western consolidated orders, most producers
already are covered under very effective SCC payment programs, and the
average SCC in these markets is less than 250,000 (below the neutral
level for SCC value adjustments). There would seem to be little reason
to require additional SCC programs for these orders. In addition, the
Northeast order does not contain a SCC adjustment. Comments filed by
Northeast interested persons argued that the predominant use of milk
for manufacturing in that area is nonfat dry milk and butter, and that
yields of these products are not affected by SCCs. A somatic cell value
adjustment is not, therefore, included in the Northeast order.
As in the proposed rule, for the orders containing a somatic cell
adjustment provision the adjustment will be applied to milk used in
Classes II, III and IV for handler billings, and to all producer milk
for payment to producers. This application of a SCC adjustment has
worked well in the orders currently providing for it, and should result
in no additional marketing, testing or accounting requirements in those
orders. At least some portions of most of the consolidated orders for
which the SCC adjustment is provided already contain such provisions.
Several comments suggested including a maximum count of 25,000
psychrotrophic bacteria as a criterion for payment of positive SCC
adjustments. Even though there may be a valid reason for including
psychrotrophic bacteria for payment purposes, bacteria counts will not
be included with this decision. Somatic cell counts are the only
quality adjustments in this final decision. The issue of whether to
include psychrotropic bacteria as a payment criteria is better left to
a Federal order hearing that specifically addresses the issue. In
contrast to a somatic cell adjustment, which already is contained in
many of the orders with multiple component pricing, none of the orders
currently provide for adjustments for bacteria counts.
Application of the Replacement Basic Formula Price(s)
Under this final rule, producers in most Federal order markets will
be paid on a multiple component basis since the basic formula price
replacement is based on individual milk component prices. Producers
will be paid for the pounds of butterfat, pounds of protein, pounds of
other solids, a per hundredweight price known as the producer price
differential, and a per hundredweight somatic cell adjustment. The
producer price differential returns to producers their pro rata share
of the proceeds of the classified pricing system. The butterfat,
protein, and other solids prices paid to producers will be the same as
the prices for those components announced for Class III use regardless
of the utilization of the milk. Handler obligations and producer
payments under the Federal orders that do not provide for component
pricing will be based on hundredweight prices computed from these
component prices.
Although several comments supported the proposal that multiple
component pricing (MCP) be applied only to milk used in Classes II, III
and IV, several comments from the Southwest area argued that it should
be applied to all milk or not adopted at all. National Farmers
Organization (NFO) also favored the adoption of component pricing for
all classes of milk, and other comments favored the adoption of MCP for
all Federal milk orders.
Several New York comments stated that MCP would not benefit
producers, would serve only to impose higher costs on handlers, and
shouldn't be adopted for the Northeast. Michigan Milk Producers
expressed concern that the adjustment of protein value to reflect the
effect of additional butterfat in cheese would increase costs in the
Mideast because of the high percentage of milk used in (lowfat) Italian
and Swiss cheese in that market, and requested that the Mideast market
provide for the same kind of MCP pricing currently used in the Southern
Michigan market.
All Federal orders outside of the three southeast orders with
relatively high Class I use (Appalachian, Florida and Southeast) and
Arizona-Las Vegas should contain the same component pricing plan. The
affected orders have a large portion of their milk used in manufactured
products, and the components in that milk that determine the yield of
product available for handlers to sell are the most appropriate basis
for determining its value. At the same time, there is no indication
that MCP should apply to Class I milk, and it is difficult to justify
pricing fluid milk on an MCP basis in terms of the economic value of
components in those products.
Although the proposed rule included provisions for the Mideast
order that would continue elements of the current Southern Michigan MCP
plan, further study supports the conclusion that there is no benefit to
establishing a component pricing plan under one order that differs
significantly from the rest of the consolidated orders. This issue is
discussed more thoroughly in the Mideast section of this decision.
All of the Federal milk orders will require changes to accommodate
replacement of the current BFP with the multiple component pricing plan
or with its hundredweight price equivalent. There will no longer be a
butterfat differential under any order, but butterfat prices. The same
butterfat price will be used for butterfat in Class II (with an
addition of .7 cents per pound to reflect the Class II differential),
Class III, and Class IV, while a separate butterfat price, announced in
advance, will apply to butterfat used in Class I.
For purposes of allocation of producer receipts the assumption will
be made that the total nonfat solids, protein and other (nonfat) solids
cannot be separated easily from skim milk. These nonfat solids will
therefore be allocated proportionately with the skim milk based on the
percentage of protein and other solids in the skim milk received from
producers.
For the Market Administrator to compute the producer price
differential, handlers will need to supply additional information on
their monthly reports of receipts and utilization. Handlers that are
filing reports in orders that currently
[[Page 16106]]
have multiple component pricing and a somatic cell adjustment will see
little or no change in their reporting requirements. Under orders that
are adopting component pricing for the first time, the pounds of
protein, the pounds of other solids, and somatic cell information will
be needed in addition to the product pounds and the butterfat currently
reported. This data will be required from each handler for all producer
receipts, including milk diverted by the handler, receipts from
cooperatives as 9(c) handlers and, in some cases, receipts of bulk milk
received by transfer or diversion.
Payments by handlers to cooperative associations for Class I milk
will be calculated on the basis of the hundredweight of Class I skim
milk times the Class I skim price plus the pounds of Class I butterfat
times the Class I butterfat price. Payment for Class II milk will be
determined on the basis of the Class II pounds of nonfat solids times
the Class II nonfat solids price (or, in non-MCP orders, the Class II
skim milk price times the hundredweight of Class II skim milk), and the
pounds of butterfat in Class II times the Class II butterfat price. The
Class II nonfat solids price is computed by dividing the Class II skim
milk price by 9. Class III milk will be paid for based on the pounds of
protein in Class III times the protein price, the pounds of other
solids in Class III times the other solids price, and the pounds of
butterfat in Class III times the butterfat price. The pounds of nonfat
solids in Class IV times the nonfat solids price, and the pounds of
butterfat in Class IV times the butterfat price will be used to
calculate obligations for Class IV milk. Milk used in Classes III and
IV in orders that do not include MCP will be paid for on the basis of
the butterfat price per pound and the applicable skim milk price per
hundredweight. The appropriate somatic cell adjustment will apply to
milk in Class II, Class III, and Class IV.
The Class I value of milk to handlers will be calculated by
multiplying the hundredweight of producer skim milk in Class I times
the Class I skim price plus the pounds of Class I butterfat times the
Class I butterfat price. Class II milk value will be computed on the
basis of the Class II nonfat solids price times the pounds of total
nonfat solids in skim milk allocated to Class II and the pounds of
butterfat in Class II times the Class II butterfat price. Class III
milk value will be computed based on the pounds of protein in Class III
times the protein price, the pounds of other solids in Class III times
the other solids price, and the pounds of butterfat in Class III times
the butterfat price. The pounds of nonfat solids in Class IV times the
nonfat solids price, and the pounds of butterfat in Class IV times the
butterfat price will comprise the value of Class IV producer milk. Milk
used in Classes III and IV in orders that do not include MCP will be
paid for on the basis of the butterfat price per pound and the
applicable skim milk price per hundredweight. Also included will be the
appropriate somatic cell adjustment applied to milk in Class II, Class
III, and Class IV, the value of overage, the value of inventory
reclassification, the value of other source receipts and receipts from
unregulated supply plants allocated to Class I, and the value of
handler location adjustments.
For each marketwide pool using MCP, a producer price differential
price per hundredweight will be computed that will represent producers'
shares of the value of the pool. The total value of milk to handlers in
excess of the value of producer protein, other nonfat solids and
butterfat at the applicable component prices will be determined by
dividing that value by the hundredweight of milk in the pool. For
orders without MCP, the value of milk to handlers will be divided by
the hundredweight of producer milk to compute a uniform price per
hundredweight to producers.
The handler's obligation to the producer settlement fund under MCP
orders will be determined by subtracting from the handler's value of
milk the following values: (a) The total pounds of producer milk times
the producer price differential adjusted for location, (b) the total
pounds of butterfat times the butterfat price, (c) the total pounds of
protein times the protein price, (d) the total pounds of other solids
times the other solids price, (e) the total value of the somatic cell
adjustments to producers' milk, and (f) the value of other source milk
in Class I at the producer price differential with any applicable
location adjustment at the plant from which the milk was shipped
deducted from the handler's value of milk. In orders without MCP,
handler obligations will be computed by subtracting the value of
producer milk at the uniform price per hundredweight from the value of
milk to the handler.
Payments to producers traditionally have been made in two payments,
a partial payment based, in most cases, on the prior month's Class III
price and a final payment at the uniform price to producers. This
traditional payment system will continue, with any exceptions for local
marketing practices noted in the regional discussions. The partial
payment will be paid on a per hundredweight basis with the price
equaling the combined value of the skim and butterfat prices for the
lowest-priced class in the previous month. By computing the partial
payment on a hundredweight basis, confusion about the use of partial
month component test averages will be eliminated and handler's partial
payroll processing costs should not be affected. Final payments to
producers and for 9(c) milk will be based on: (a) the hundredweight of
milk times the producer price differential adjusted for location, (b)
the pounds of protein times the protein price, (c) the pounds of other
solids times the other solids price, (d) the pounds of butterfat times
the butterfat price, and (e) the somatic cell adjustment rate times the
hundredweight of milk.
Since producers will be receiving payments based on the component
levels of their milk, the payroll reports that handlers supply to
producers and to the Market Administrator must reflect the basis for
such payment. Therefore the handler will be required to supply the
producer not only with the information currently supplied, but also:
(a) The pounds of butterfat, protein, and other solids in the
producer's milk, as well as the average somatic cell count of the
producer's milk, and (b) the minimum rates that are required for
payment for each pricing factor and, if a different rate is paid, the
effective rate also. The requirement that payment factors be reported
to producers when producers are paid currently exists in all of the
orders. Addition of the component information is purely a conforming
change. Administration of these provisions should not be changed from
current practices.
With advance pricing of Class I and the inherent instability of the
commodity markets there may be occasions when the computation of the
producer price differential results in a value of zero or below. The
orders should contain no provision to prevent the producer price
differential from being a negative value.
The following tables contain the prices computed based on the
formulas and data series described in this final decision for the
period of January 1994 through December 1998. The prices are shown for
information purposes only. These prices result from the strict
application of the formulas to prior marketing situations. These prices
should not be interpreted as prices that would have actually occurred
throughout the data period because industry participants likely would
have reacted differently to the price levels that would have resulted
from the
[[Page 16107]]
revised pricing plan than they reacted to the actual price levels.
BILLING CODE 3410-02-P
Actual Class Prices and Final Decision Class Prices and Class I Price Mover,* by Month, January 1994 Through December 1998
[Dollars per cwt.]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Basic Final class
Year and month formula I price Final class Class III-A Final class Class II Final class
price mover * III price price IV price price II price
--------------------------------------------------------------------------------------------------------------------------------------------------------
1994
January...................................................... $12.41 $11.72 $11.49 $10.22 $10.22 $13.25 $11.05
February..................................................... 12.41 11.73 11.64 10.23 10.19 12.26 10.90
March........................................................ 12.77 12.02 12.33 10.32 10.33 12.61 11.01
April........................................................ 12.99 12.90 12.89 10.34 10.41 13.19 11.10
May.......................................................... 11.51 12.15 11.05 10.24 10.17 13.88 11.06
June......................................................... 11.25 10.56 10.37 10.09 10.10 12.18 10.72
July......................................................... 11.41 11.10 10.90 10.13 10.18 10.35 10.80
August....................................................... 11.73 11.63 11.06 10.38 10.42 11.84 11.03
September.................................................... 12.04 11.84 11.76 10.35 10.32 12.95 10.93
October...................................................... 12.29 11.92 11.74 10.36 10.31 12.15 10.90
November..................................................... 11.86 11.80 11.49 10.40 10.36 12.53 11.01
December..................................................... 11.38 10.91 10.88 10.17 10.16 12.24 10.87
Average...................................................... 12.00 11.69 11.47 10.27 10.26 12.45 10.95
1995
January...................................................... 11.35 10.64 10.66 10.06 10.07 11.02 10.71
February..................................................... 11.79 11.19 11.33 10.12 10.23 11.35 10.85
March........................................................ 11.89 11.59 11.49 10.22 10.25 12.20 10.85
April........................................................ 11.16 11.07 11.08 10.27 10.28 12.09 10.89
May.......................................................... 11.12 10.74 10.55 10.21 10.29 12.19 10.89
June......................................................... 11.42 10.78 10.56 10.37 10.36 11.46 11.04
July......................................................... 11.23 11.10 10.64 10.61 10.60 11.42 11.23
August....................................................... 11.55 11.00 10.88 10.82 10.94 11.72 11.52
September.................................................... 12.08 12.51 12.37 10.90 10.89 11.53 11.52
October...................................................... 12.61 12.93 12.69 11.66 11.46 11.85 12.09
November..................................................... 12.87 13.19 12.96 12.40 11.95 12.38 12.52
December..................................................... 12.91 13.34 12.84 11.24 11.13 12.91 11.61
Average...................................................... 11.83 11.67 11.50 10.74 10.70 11.84 11.31
1996
January...................................................... 12.73 12.82 12.32 11.16 11.15 13.17 11.84
February..................................................... 12.59 12.62 12.37 10.39 10.70 13.21 11.63
March........................................................ 12.70 12.66 12.52 10.32 10.49 13.03 11.17
April........................................................ 13.09 12.84 13.15 10.52 10.65 12.89 11.29
May.......................................................... 13.77 13.68 13.12 11.90 11.74 13.00 12.12
June......................................................... 13.92 14.28 13.31 15.12 14.25 13.39 14.07
July......................................................... 14.49 15.41 13.41 16.01 15.32 14.07 15.95
August....................................................... 14.94 15.32 14.02 15.82 15.44 14.22 16.35
September.................................................... 15.37 15.74 15.17 15.85 16.09 14.79 15.89
October...................................................... 14.13 15.28 13.54 14.94 14.82 15.24 15.62
November..................................................... 11.61 12.33 11.33 12.18 12.10 15.67 13.03
December..................................................... 11.34 11.06 10.68 11.75 11.76 14.43 12.67
Average...................................................... 13.39 13.67 12.91 13.00 12.88 13.93 13.47
1997
January...................................................... 11.94 11.62 11.05 11.50 11.68 11.91 12.52
February..................................................... 12.46 11.95 11.56 12.36 12.34 11.64 13.02
March........................................................ 12.49 12.74 11.55 12.78 12.80 12.24 13.33
April........................................................ 11.44 12.65 11.23 12.10 12.13 12.76 12.87
May.......................................................... 10.70 11.20 10.23 11.56 11.58 12.79 12.53
June......................................................... 10.74 11.95 9.96 12.22 12.06 11.74 12.77
July......................................................... 10.86 11.98 10.13 12.06 11.93 11.00 12.54
August....................................................... 12.07 11.97 11.50 11.88 11.91 11.04 12.63
September.................................................... 12.79 12.42 12.32 11.87 11.83 11.16 12.55
October...................................................... 12.83 12.76 12.54 13.50 13.29 12.37 13.98
November..................................................... 12.96 13.80 12.59 14.01 13.86 13.09 14.56
December..................................................... 13.29 13.81 12.55 12.46 12.72 13.13 13.43
Average...................................................... 12.05 12.40 11.43 12.36 12.34 12.07 13.06
1998
January...................................................... 13.25 12.76 12.51 12.04 12.29 13.26 13.02
February..................................................... 13.32 13.03 12.87 12.89 13.07 13.59 13.78
March........................................................ 12.81 12.75 12.50 12.67 12.79 13.55 13.49
[[Page 16108]]
April........................................................ 12.01 12.69 11.50 12.88 12.90 13.62 13.59
May.......................................................... 10.88 13.27 10.65 13.96 13.54 13.11 14.24
June......................................................... 13.10 14.20 12.65 15.38 14.89 12.31 15.54
July......................................................... 14.77 15.35 14.12 15.59 15.62 11.18 16.15
August....................................................... 14.99 16.25 14.21 16.52 16.38 13.40 16.96
September.................................................... 15.10 18.32 14.66 19.81 18.71 15.07 19.28
October...................................................... 16.04 18.06 16.05 18.13 18.19 15.29 18.67
November..................................................... 16.84 16.82 16.90 14.87 15.71 15.40 16.39
December..................................................... 17.34 17.44 17.51 13.48 13.39 16.34 13.98
Average...................................................... 14.20 15.08 13.84 14.85 14.79 13.84 15.42
60-Month Avg................................................. 12.70 12.90 12.23 12.24 12.20 12.83 12.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Developed for informational purposes only. Advanced skim milk and butterfat prices will be used to calculate Class I price for succeeding month.
BILLING CODE 3410-02-M
3. Class I Pricing Structure
This decision adopts a Class I pricing structure that provides
incentives for greater structural efficiencies in the assembly and
shipment of milk and dairy products. In conjunction with other reforms
discussed in this decision, the adopted Class I price structure
provides the necessary changes needed to improve milk pricing in the
consolidated markets. The adopted Class I pricing structure results
from additional quantitative and qualitative analyses of Option 1A and
Option 1B that were presented in the proposed rule issued January 21,
1998 (the PR), consideration of public comments received to these
options, and the legislative requirements of the AMAA. The adopted
Class I pricing structure utilizes USDSS model results adjusted for all
known plant locations and establishes differential levels that will
generate sufficient revenue to assure an adequate supply of milk while
maintaining equity among handlers in the minimum prices they pay for
milk bought from dairy farmers.
Background
Although not required by the 1996 Farm Bill, the legislation
provided authorization for the Secretary to review the Class I price
structure as part of the consolidation of the orders including the
consideration of utilization rates and multiple basing points for
developing a pricing system. In any event, the consolidation of orders
requires the review of the pricing system because historically, Class I
pricing provisions, as well as other Federal order provisions, have
been reviewed primarily on an individual market basis. The reform
effort provides the opportunity to consider and establish a nationally
coordinated Class I pricing surface that uses location adjustments to
the differential levels to price milk for fluid use in every county in
the United States.
The PR provided an extensive review of 7 options that were
developed and considered. After qualitative and/or quantitative
analysis, all but Option 1A and Option 1B were preliminarily eliminated
for various stated reasons. Nonetheless, the PR invited comments on any
of the seven pricing options or any other pricing ideas. Also, the
Department indicated a preference for Option 1B for a number of
reasons. Nearly all of the public comments received in response to the
PR on Class I price structure focused on the relative merits of Option
1A and Option 1B. No persuasive comments were received to cause the
Department to further consider the other five options.
The USDSS Model
Option 1A and Option 1B were based to a significant degree on the
U.S. Dairy Sector Simulator Model (USDSS). The USDSS was used to
evaluate the geographic or ``spatial'' value of milk and milk
components across the U.S. Using 240 supply locations, 334 consumption
locations, 622 dairy processing plant locations, 5 product groups, 2
milk components (fat and solids-not-fat) and transportation and
distribution costs among all locations, USDSS determines economic
efficient location values for milk and milk components. The model
initially used data from May and October 1995, and for this decision
used updated data from May and October 1997.
The supply and consumption of milk used by the model are aggregated
to geographic points--consumption points and supply points--to simplify
a very complex problem. The production of milk and the consumption of
dairy products are fixed at the various supply and consumption points
used by the model. Plant locations were restricted to those presently
processing products but plant processing locations were not constrained
with respect to the volume processed. Processing costs were assumed to
be uniform between locations and across plant volumes (no economies of
scale). Therefore, the model allowed processing to move among available
locations to find the least cost solution in terms of assembly from
supply points through distribution to consumption points.
Transportation costs in the model include costs of raw milk
assembly, interplant bulk shipment, and the cost of hauling finished
products. Transportation costs among regions reflected not only
distance traveled, but also differences in wage rates and State highway
weight limit restrictions. While assembly costs and interplant bulk
shipments were calculated using a linear cost function, the finished
product functions were non-linear. In fact, finished product hauling
costs (e.g., packaged milk) fell below raw milk assembly and hauling
costs on an equivalent unit basis in many cases at distances more than
900 miles. Previous spatial modeling had assumed constantly higher
finished product transportation costs versus raw milk assembly and
shipping costs for all distances. The updated model results were based
on transportation cost analyses, particularly the reduction in
distribution costs for finished products resulting in distribution
costs for these products on par with bulk milk assembly and hauling
costs.
[[Page 16109]]
The output from the USDSS model provided information as to optimal
processing locations and volumes at those locations, milk assembly, and
intermediate and finished product distribution flows. It represented a
least cost, or ``most efficient'' organization of the industry.
Importantly for the research, the model provided the marginal values
(i.e., the value of one more unit) of milk at each location. These
values, technically known as shadow prices, are indicative of values
that are consistent with the optimized solution. A shadow price on one
unit of milk at any processing location can be interpreted as follows:
If the processor at a particular location had one more unit of milk,
the entire pattern of milk assembly, and product transportation could
be reorganized in such a way that marketing costs, equal to the shadow
price, could be saved. This notion of marginal value is consistent with
economic theory on how prices are determined in a competitive market.
The significance of the shadow value in terms of milk price
regulation may be stated: If the regulated price, or cost of milk, is
arbitrarily set higher than the shadow price at a particular processing
location, a lower cost solution could be found by processing more milk
at another location. This would imply higher transportation costs for
either raw milk assembly, finished product distribution, or both. Such
a result clearly leads to a higher cost, less efficient system. It is
also contrary to what is generally thought of as the ``orderly
marketing'' of milk which is a fundamental reason for the existence and
goal of Federal milk marketing orders.
It should be stressed that the calculated shadow prices of the
model output provide information regarding the relationship of the
prices among geographic locations. They do not provide guidance
regarding the overall level of Class I prices or differential values.
That is, the model does not help us understand whether the Class I
differential should arrive at a Class I price of $14 in Minneapolis and
$15 in New York City, or $15 in Minneapolis and $16 in New York City.
However, it does tell us that the resulting Class I price difference
between the two locations should be about one dollar.
A positive aspect of the USDSS model is the degree of detail
available in the output. This detail is achieved through the careful
assembly of spatially disaggregated data. However, it should be
remembered that by its construction, the USDSS is a ``model'' and thus
a simplification of a complex dairy industry. That notwithstanding, the
USDSS model does provide an objective and quantitative guidepost from
which to compare current federal order differentials and in considering
possible alternatives.
Several factors were considered in selecting a replacement for the
current 14 Class I price structure that served to form the
criteria used to examine options. First, a Class I price structure must
be considered from a national, as well as a local or regional,
perspective. Many comments from industry addressed Class I pricing
issues from a local or regional perspective in the development of
options presented in the PR. These comments provided valuable
information about particular markets but generally did not consider the
feasibility or impact of a local or regional issue on a national basis.
While remaining mindful of local and regional concerns, USDA has also
evaluated alternative Class I pricing structures from a national
perspective, as should be expected, given the national concerns
expressed about milk pricing.
---------------------------------------------------------------------------
\14\ Any references to the ``current'' system of Class I prices
or the ``current'' price structure are to be interpreted as those
established in or after the final decision based on the 1990
national hearing issued March 5, 1993 (58 FR 12634).
---------------------------------------------------------------------------
Second, a Class I price structure must recognize the location value
of milk. Results from the USDSS model confirm that milk has value at
location. As described earlier, the model provided shadow prices
reflecting the relative values of milk and milk components at
geographic locations. While the model shadow prices did not suggest
Class I differentials for specific locations, they do provide a means
to evaluate price relationships among locations.
Third, a Class I price structure must recognize all uses of milk.
The classified pricing system contained in the Federal milk order
program values milk for fluid use higher than milk used for soft or
hard manufactured products. The higher Class I price encourages all
milk to be used first to satisfy Class I needs. At the point where the
cost of moving milk from an alternate location for Class I use is equal
to the cost to supply milk for manufactured products, demand for
manufactured products influences a market's ability to procure milk for
Class I needs. Thus, all uses of milk must be considered when
evaluating a national Class I pricing structure.
Finally, a Class I price structure must meet the requirements of
the AMAA. The broad tenet of the AMAA is to establish and maintain
orderly marketing conditions. For the Federal milk order program, this
is achieved primarily through classified pricing and pooling. With
regard to pricing, it is recognized that the objective of the AMAA is
to stabilize the marketplace with minimum prices, not to set market
prices. The pricing criterion of the AMAA, section 608c(18), requires
prices that are reflective of economic conditions affecting supply and
demand for milk and its products. In this regard, consideration was
given to whether the proposed prices would generate sufficient revenue
for producers necessary to maintain an adequate supply of milk. Equally
important, the prices need to provide equity to handlers with regard to
raw product costs as required by section 608c(5) of the AMAA.
Evaluation Criteria
In evaluating the final Class I pricing options, nine performance
criteria, based upon regulatory objectives and requirements of the
AMAA, were again used as they were in the PR. The evaluation criteria
are divided into two categories, objective and administrative. The
objective criteria are as follows:
1. Ensure an adequate supply of milk for fluid use. Class I price
levels need to provide a sufficient price signal to maintain an
adequate supply of milk for fluid use. This supply level can be
achieved through either the movement of milk to where it is needed,
increased production, or some combination of both.
2. Recognize quality (Grade A) value of milk. Grade A milk is
required for fluid use. Additional costs of obtaining and maintaining
Grade A status need to be reflected in Class I prices.
3. Provide appropriate market signals. A Class I price should send
timely signals to the market regarding supply/demand conditions.
4. Recognize value of milk at location. Basic economic theory,
validated by actual market observations and University-based research,
affirms that milk for Class I use has a different value at different
locations. This value needs to be reflected in the Class I price in
order for the system to recognize and resemble the market rather than
interfere with the market.
5. Facilitate orderly marketing with coordinated system of prices.
A system of Class I prices needs to be coordinated on a national level.
Appropriate levels of prices will provide alignment both within and
among marketing areas. This coordination is necessary for the efficient
and orderly marketing of milk.
6. Recognize handler equity with regard to raw product costs.
Appropriate levels of Class I prices provide known and visible prices
at all locations thereby ensuring that handlers
[[Page 16110]]
are able to compete for available milk supplies on an equitable basis.
Three administrative criteria are identified and described as
follows:
1. Minimize regulatory burden. The Class I price structure should
not significantly increase the burden on handlers, particularly small
businesses. This would include increased reporting requirements and
record keeping, as well as possible increases in administrative
assessments should Market Administrators be required to manage a more
complex regulatory system.
2. Minimize impact on small businesses. The Class I price should be
set at a level that does not disadvantage small businesses in
competition with large businesses.
3. Provide long-term viability. The Class I price structure should
be expected to operate for an extended time period without major
modifications.
The nine evaluation criteria listed above are used to qualitatively
evaluate each of the options. Each option is evaluated based on how the
option performed compared to the current system, either better than,
worse than, or the same as, for each performance criterion. The results
of the qualitative analysis provided a preliminary framework for
quantitative analysis using a multi-regional model developed by the
Economic Research Service (ERS) of the Department.
As previously indicated, Option 2--Relative Use Differentials,
Option 3A--Flat Differentials, Option 3B--Modified Flat Differentials,
Option 4--Demand-Based Differentials, and Option 5--Decoupled Baseline
Class I Prices with Adjustors, were eliminated from further
consideration. They were eliminated for various reasons including
failure to adhere to AMAA requirements, the likelihood of creating
disorderly marketing conditions, and impacts on small businesses. A
discussion of the five eliminated options, including the evaluation
against the criteria and/or quantitative analysis were described in
detail in the PR.
The Final Options
Three options formed the basis for final consideration and are
described below. All options present national Class I pricing
structures developed utilizing the USDSS model. The options continue to
vary in their reliance and application of the USDSS model but all
remain based on economic principles contained within the model. These
options include Option 1A, a modified Option 1B, and the adopted Class
I pricing structure.
Option 1A: Location-Specific Differentials
Option 1A establishes a $1.60 per hundredweight fixed differential
for three surplus zones (Upper Midwest, West, and Southwest) within a
nine-zone national price surface, and for the other six zones, an added
component that reflects regional differences in the value of fluid and
manufacturing milk. This option emphasized current supply and demand
conditions with the USDSS model output.
Some minor changes were made to the Option 1A differential levels
presented in the PR. The changes only involved adjusting certain county
specific differentials to provide for more appropriate price alignment
in several counties in the northeast, seven counties in Florida, and
one county in North Carolina. Other than these minor changes, Option 1A
is the same as published in the PR.
Modified Option 1B: Relative Value-Specific Differentials
This option continues to establish Class I differentials based on a
relationship between prices and geographic location as indicated by the
USDSS model, but uses more current data. Modifications were made to
Option 1B with respect to how adjusted Class I differentials were
established for each county in the United States. This modified version
of Option 1B continues to establish differential levels by setting and
equating the relative value-specific differential of $1.20 per
hundredweight in Minneapolis, Minnesota. The Option 1B differentials in
the PR relied on an algorithm to set location adjusted differentials in
every county. The modified Option 1B price surface takes into full
account all known plant locations as was done in the development of
Option 1A. This approach ensures that all plants similarly located
would have similar prices.
The Adopted Class I Price Structure
The adopted Class I pricing structure establishes a price surface
that also utilizes USDSS model results adjusted for all known plant
locations and establishes differential levels that will result in
prices that generate sufficient revenue to assure an adequate supply of
milk. The differential levels will better maintain equity by raising
the level 40 cents per hundredweight higher than the level proposed in
Option 1B and in modified Option 1B. The higher differential level
reduces the likelihood of class-price inversions, where the Class I
prices are below the manufacturing milk prices for the month.
The USDA Multi-Regional Dairy Sector Model
Option 1A, modified Option 1B and the adopted Class I pricing
structure were evaluated qualitatively against the evaluation criteria
and quantitatively utilizing the USDA multi-regional dairy sector
model. This model was developed to answer some very specific questions
about possible changes in the dairy sector, particularly changes being
considered in milk marketing orders. The main focus of the model's
development and use was to quantitatively examine the impacts of the
changes under consideration in the classified pricing of milk and dairy
products in the milk order system on an order-by-order and regional
basis, and for other areas of the country not currently a part of the
milk order system.
The multi-regional model establishes a baseline consistent with the
USDA official baseline projections for the dairy sector. It assumes 36
regions. These include: 32 Federal Milk Marketing Order areas
(including Tennessee Valley that was terminated on October 1, 1997) and
four non-Federally regulated areas (California, Other Unregulated
Western Counties, Unregulated Northern New York and New England and
Other Unregulated Eastern Counties) and projects baseline information
through the year 2005. The demarcation between the unregulated Western
and Eastern counties follows a line extending north to south on the
eastern State borders of North Dakota, South Dakota, Nebraska, Kansas,
Oklahoma and Texas.
The model baseline also assumes that the Class III price would be
the Basic Formula Price (BFP), the Class II price would be the BFP plus
30 cents, each region's Class I price would be the BFP plus the current
Class I differential and the Class III-a price would continue. All
other changes to milk order provisions together with the three price
surface alternatives are presented as changes from the baseline over
the period of the years 2000 through 2005. Each of the alternatives
include the impact of consolidation into 11 regional markets and moving
to wholesale product price formulas in setting the class prices.
From its baseline, the model has the ability to quantify the
impacts of pricing changes in the consolidated regions and in
estimating how the end use of milk may be expected to change with the
changes in how the order program will price milk. The model can
generate long-term supply, demand, and price
[[Page 16111]]
projections that are consistent with the USDA official baseline
projections.
The model estimates regional milk production based estimates of
milk-per-cow and number-of-cows for the 36 defined areas. The milk cow
inventory and milk-per-cow estimates for each area is based upon
reported state data. Changes in the inventory of cow numbers and
output-per-cow for each region are related to regional farm milk prices
and feed costs, and past regional net returns to dairy farmers (a
measure of profitability). Milk marketings in the region are in direct
relationship to milk production in the region.
Once the volume of regional milk marketings is determined,
marketings are distributed to seven uses: bottled whole milk, bottled
low-fat milk, soft manufactured dairy products, American cheese, other
cheese, butter, and nonfat dry milk. Each of the seven uses has a
retail demand equation. Generally, the demand for the specific product
is a function of per capita income, the retail price or the Consumer
Price Index (CPI) of the product, and the price or CPI of a substitute
product (e.g. margarine for butter).
Demands for raw milk for use in fluid milk products and soft
manufactured dairy products have priority in the model and such demands
are filled regionally from the region's raw milk supply before the
national demands of the hard manufactured product markets are met. The
Class I and Class II uses of milk in each region are based upon
differences in prices and population by region. A CPI for fluid milk
and other dairy products are estimated for each region based upon a
margin mark-up equation and the region's Class I and Class II prices.
These values are used to estimate regional per capita use, and when
multiplied by projected population for each region, determine the
amount of milk allocated to Class I and Class II uses.
The sum of each region's raw milk supply less the milk used in
Class I and Class II results in a measure of the national manufacturing
milk supply. The model solves for equilibrium in supply and demand by
solving for wholesale prices of cheese, butter, and nonfat dry milk
that equate the supply and demand in the hard manufactured dairy
product markets. The hard manufactured product markets, the Class I
markets, the Class II markets, and the farm level raw milk supply are
linked through price equations that relate the changes in wholesale
product prices to changes in prices for milk used in Class I, Class II,
Class III, Class III-a (or Class IV) and the farm level all-milk price.
A Class III and Class III-a (or Class IV) price is calculated from
the model's estimates of wholesale cheese, butter, and nonfat dry milk
prices; and these Class III and Class III-a (or Class IV) prices are
used to predict Class I and Class II prices. Changes in Class I and
Class II prices affect demand for Class I and Class II products and the
amount of milk available nationally for cheese, butter, and nonfat dry
milk production. Likewise, the amount of milk used in each class in
each region and the regional class prices affect the farm level all-
milk price and the supply of raw milk in the region and therefore the
amount of milk available nationally for cheese, butter, and nonfat dry
milk production. The model iterates until an equilibrium is achieved
for the year in the wholesale product markets and then advances to the
next year.
A brief summary of the quantitative impacts of each alternative
price surface is included with the qualitative analysis presented
below. A detailed description of the USDA multi-regional dairy model,
as well as a complete discussion of the impacts of the pricing
alternatives are contained in the Final RIA.
Option 1A: Location-Specific Differentials
Option 1A would establish a nationally coordinated system of
location-specific Class I differentials reflecting the relative
economic value of milk by location. An important feature of the option
is the location adjustments that geographically align minimum Class I
milk prices paid by fluid milk processors nationwide regardless of the
defined milk marketing area boundaries or order pooling provisions. A
basic premise of Option 1A is that the value of milk varies according
to location across the United States.
Compared to the modified Option 1B and the adopted Class I price
structure, this option tends to most reflect the current Class I
pricing surface. Although extremely similar to the current Class I
price surface, there are distinct differences. Option 1A would
establish a nationally coordinated price surface that uses location
adjustments to adjust the price of milk for fluid use for every county
of the United States.
Under Option 1A, Class I differentials are the lowest in
geographical areas evidencing the largest supplies of milk relative to
local/regional fluid milk needs. The differentials become progressively
higher as they move from these areas to markets with less production
relative to demand for fluid milk. Nine differential zones provide the
basis for establishing the price structure. These zones were
established based on results of the USDSS model, knowledge of current
supply and demand conditions, and recognition of other marketing
conditions such as fluid versus manufacturing markets, urban versus
rural areas, and surplus versus deficit markets.
Class I differentials under this option range from a low of $1.60
per hundredweight in the lowest valued zones of the Upper Midwest,
Southwest, and West, where there are abundant supplies of milk in
excess of fluid milk use, to a high of $4.30 per hundredweight in
Florida, where there are deficit supplies of milk for fluid use.
Analysis Based on Evaluation Criteria. Option 1A performs equal to
or better than the current Class I system in each of the evaluation
criteria. This is largely explained by the adjustments, improvements,
and fine-tuning made to the current system of Class I differentials
Option 1A was evaluated against the objective criteria as follows:
1. Ensure an adequate supply of milk for fluid use. Option 1A
performs essentially the same as the current price structure in
ensuring an adequate supply of milk for fluid use. Option 1A changes
current differential levels in some regions to more accurately reflect
current milk supply-demand conditions. Option 1A will have minimal
impacts on farm level milk prices and should ensure adequate supplies
of milk for fluid use.
2. Recognize quality (Grade A) value of milk. Option 1A recognizes
the quality value (Grade A) of milk through the addition of a
differential that begins at $1.60 per hundredweight in the base zone.
3. Provide appropriate market signals. Option 1A adjusts and
refines the existing Class I price structure to provide appropriate
market signals. In some geographical areas, Class I differentials would
be increased. These changes indicate that current Class I differential
levels are not high enough to attract adequate supplies of milk to the
applicable fluid milk markets. In certain other areas, Class I
differentials would be lowered, indicating that they exceed levels
necessary to adequately supply the associated markets with their fluid
milk needs.
4. Recognize value of milk at location. The spatial values of milk
reflected in Option 1A recognize the value of milk at location more
accurately than the current system for two principal considerations.
First, in structuring the differentials in Option 1A, the effect of
current Class I differential levels on milk supplies, demand, and dairy
farmer returns regionally during the past decade were considered.
Second, the
[[Page 16112]]
relative values of milk and milk components at geographic locations
throughout the United States from the USDSS model results were
considered.
5. Facilitate orderly marketing with coordinated system of prices.
Option 1A provides a comprehensive national pricing surface for Class I
milk that establishes a value for Class I milk in every county. Thus
the price any processor would pay for milk would be the same regardless
of which order the processor is regulated under. As such, Option 1A is
an improvement over the current price structure which evolved in a
piecemeal fashion. Additionally, the Class I differentials and location
adjustments in Option 1A would facilitate more efficient and orderly
marketing of milk for fluid use through the nationwide coordination of
prices when compared to the current system.
6. Recognize handler equity with regard to raw product costs. Class
I differentials proposed under Option 1A are consistent with the
inherent economic value of milk at location. The coordination and
alignment of prices, based upon cost differences and current marketing
conditions, better ensures handlers of equity in competing for
available milk supplies.
Option 1A was evaluated against the objective criteria as follows:
1. Minimize regulatory burden. Option 1A would not change the
regulatory burden of the Federal order program. Option 1A would not
result in increased reporting, record keeping, compliance, or
administrative costs to handlers.
2. Minimize impact on small businesses. In regions where more of
the actual value of fluid milk would be reflected in the differentials
than is currently reflected, small businesses may have a marginal
improvement in their relative competitive bargaining position vis-a-vis
large businesses. This is based on the concept that large businesses
(producers, cooperatives or handlers) are better able to negotiate
premiums above minimum order prices due to advantages attained from
their size. Overall, this option is not expected to materially impact
small businesses differently than the current price structure.
3. Provide long-term viability. To the extent the location adjusted
Class I differentials under Option 1A will correct instances of price
misalignment and more accurately reflect the economic value of milk by
location, the long-term viability of Option 1A is expected to exceed
that of the current price structure.
Because the USDSS model only determines the relative value
differences for fluid milk between location, it could not be used for
determining an appropriate differential level. Option 1A utilizes $1.60
per hundredweight as the minimum differential level. A complete
explanation of the factors that developed and explain this differential
level was set forth in the PR. In summary of those reasons, the $1.60
per hundredweight differential level is used in Option 1A because it
would ensure a sufficient supply of milk for fluid uses in the most
surplus regions.
Option 1A will have little impact on small businesses, either
producers and processors. In certain situations, it may improve a small
business' competitive marketing position as compared to current levels.
Because the $1.60 base zone differential includes a competitive factor
as discussed previously, more of the actual value of fluid milk will be
reflected in the minimum Federal order price. This may decrease the
level of the over-order value that must be negotiated between
processors and producers. Doing this would provide small businesses
with a more equitable competitive position.
Quantitative analysis of Option 1A using the USDA multi-regional
model evaluated the various impacts of this pricing option. Overall,
the magnitude of price and income changes under Option 1A is relatively
small when compared to the baseline. Option 1A results in an 8-cent
increase in the average Class I price for all current Federal orders.
Further details of the impact of these Class I price changes, and
others, that are based on the USDA model results are available in the
final Regulatory Impact Analysis (RIA).
Modified Option 1B--Relative Value-Specific Differentials
Modified Option 1B would also establish a nationally coordinated
system of Class I differentials and adjustments that recognizes several
low pricing areas. Modified Option 1B more directly applies the USDSS
model's optimal solution in developing the Class I price structure.
The modified Option 1B differentials differ from those published in
the PR. The differences are explained largely by a more complete
consideration of all known plant locations. The Option 1B differential
values published in the PR relied on an algorithm to establish
differential levels for those counties that were not part of the
optimal solution. However, all plant locations need to be considered
for setting prices at these locations and prices must be aligned
between locations. This has been done in modified Option 1B and results
in a ``zoned'' structure of relative price differences that are
aligned.
Modified 1B Differential Level
As pointed out in the Option 1A discussion, the USDSS model only
provided information regarding relative differences in prices between
geographic locations and offers no information for determining the
level of Class I differentials used in setting Class I prices. The same
is true for modified Option 1B. Modified Option 1B relies much more
directly on the geographic price relationship results of the USDSS
model in defining the structure and relative differences represented in
its differential schedule for all locations.
While modified Option 1A establishes a $1.70 Class I differential
at Minneapolis, adjusted from a minimum level of $1.60 (the lowest
differential level at any location in Option 1A), modified Option 1B
sets a Class I differential at Minneapolis at the current level of
$1.20 per hundredweight. It is important to note that any modified
Option 1B zone could be discussed as the ``starting'' point
differential. This decision only refers to and references Minneapolis
at the $1.20 level for illustrative purposes since it provides a degree
of continuity in how Option 1B was presented and discussed in the PR.
Because Option 1B was expected to result in a significant change to
the industry in both the pricing surface and the level of Class I
differentials, it was proposed in the PR in conjunction with three
alternative transitional phase-in programs. However, none of the phase-
in programs received public support.
The final RIA statement provides the full measure of the USDA
multi-regional model analysis of this option. In short, modified Option
1B is rejected because the differential levels it would set would
result in minimum prices that would not generate sufficient revenue to
assure an adequate milk supply. Additionally, for markets with lower
differential levels, there is a greater potential for class-price
inversions that would increase the likelihood of disorderly marketing
conditions.
The Adopted Class I Price Structure
The adopted Class I pricing structure results from additional
quantitative and qualitative analyses of Option 1A and Option 1B,
consideration of public comments received to these options, and the
legislative requirements of the AMAA. The adopted Class I pricing
structure utilizes USDSS model results adjusted for all known plant
locations and establishes differential levels that will generate
sufficient revenue to
[[Page 16113]]
assure an adequate supply of milk and better maintain equity among
handlers by raising the level 40 cents per hundredweight higher than
the level used in modified Option 1B.
The Class I differential level was set by determining the
differential level that results in prices which will generate
sufficient revenue to bring forth an adequate supply of milk throughout
the Federal order system. As in both Option 1A and modified Option 1B,
the adopted Class I pricing structure adds a differential value to the
basic formula price in setting Class I milk prices. Additionally, it is
set at a level that minimizes the likelihood of class-price inversions,
discussed in the BFP section of this decision. The $1.60 Class I
differential level (at Minneapolis) achieves these objectives for a
nationally coordinated Class I pricing structure.
Increasing the differential level by 40 cents per hundredweight at
all locations does diminish the reliance on the marketplace and over-
order premiums in establishing market prices inherent in modified
Option 1B. However, the adopted Class I pricing structure retains the
more efficient pricing structure that offers increased cost savings in
the organization of the nation's milk supply and in the transportation
of milk and dairy products.
The adopted Class I pricing structure moves the dairy industry into
a better organized and aligned pricing system while continuing to
assure orderly marketing conditions for producers and handlers.
Restructuring the relative-value differential relationships at the
level specified will, among other things, generate sufficient revenue
in the national system of Federal orders to bring forth an adequate
supply of milk. The higher level will also minimize instances of class-
price inversions. The location adjusted differentials established for
each county are set forth in the Class I Price Structure Maps, and in
the General Provisions Sec. 1000.52. The following table sets forth the
location adjusted differentials at selected cities.
Comparative Class I Differentials at Selected Cities Under the Adopted
Class I Price Structure
[Dollars per hundredweight]
------------------------------------------------------------------------
City Current Adopted Difference
------------------------------------------------------------------------
New York City, NY............... 3.14 2.50 (0.64)
Charlotte, NC................... 3.08 2.55 (0.53)
Atlanta, GA..................... 3.08 2.90 (0.18)
Tampa, FL....................... 3.88 4.20 0.32
Cleveland, OH................... 2.00 2.00 0.00
Kansas City, MO................. 1.92 1.90 (0.02)
Minneapolis, MN................. 1.20 1.60 0.40
Chicago, IL..................... 1.40 1.95 0.55
Dallas, TX...................... 3.16 2.10 (1.06)
Salt Lake City, UT.............. 1.90 1.50 (0.40)
Phoenix, AZ..................... 2.52 1.55 (0.97)
Seattle, WA..................... 1.90 1.45 (0.45)
------------------------------------------------------------------------
The adopted Class I pricing structure was evaluated against the
objective criteria as follows:
1. Ensure an adequate supply of milk for fluid use. The adopted
Class I pricing structure establishes lower differentials than current
levels in many of the proposed markets. Because the differential level
is higher than under modified Option 1B, the adopted Class I pricing
structure relies less on the use of over-order premiums as the method
to attract adequate milk supplies for fluid purposes. While over-order
premiums will remain useful for allowing the market to find the final
value of Class I milk, the higher-level differentials of the adopted
Class I pricing structure will better serve to ensure that the minimum
prices set by the orders will attract an adequate supply of milk for
fluid use.
2. Recognize quality (Grade A) value of milk. As with Option 1A and
modified Option 1B, the adopted Class I pricing structure similarly
recognizes the quality (Grade A) value of milk through the use of a
differential added to the basic formula price.
3. Provide appropriate market signals. The adopted Class I pricing
structure provides appropriate market signals in all markets even
though the adopted Class I pricing structure lowers differentials in
some markets. Over-order pricing will likely function in most, if not
all markets, even with the higher-level differentials. However, the
higher differential level better ensures that the minimum prices
established under the orders will generate a sufficient supply of milk
and better ensures equitable minimum prices among regulated handlers
than does modified Option 1B. Additionally, because class-price
inversions are mitigated, more appropriate price signals are provided
to the marketplace.
4. Recognize value of milk at location. The adopted Class I pricing
structure appropriately recognizes the value of milk at location. It is
based on the location value of milk as determined by the May 1997
results of the USDSS model. It also aligns the relative-value
differences while adhering to spatial-value differences determined by
the model giving full consideration to all plant locations. Thus, in
utilizing the model results that determine the most efficient spatial
value of milk for fluid use to establish the price surface, the adopted
Class I pricing structure should perform better than the current
system.
5. Facilitate orderly marketing with coordinated system of prices.
The adopted Class I pricing structure establishes a coordinated system
of differentials with appropriate location adjustments. Like the other
two options, a comprehensive national pricing surface has been
developed that establishes a value for Class I milk in every county. As
a result, a processor's regulated price will be the same regardless of
the order regulating it.
6. Recognize handler equity with regard to raw product costs. With
the 40-cent per hundredweight increase in the differential level,
processor equity is better maintained under the adopted Class I pricing
structure. With price increases or decreases in some areas, the markets
will need to adapt to the new pricing structure. While it is not the
intent of the Federal order system to set market prices, the reflection
of a larger portion of the price under regulation provided by the
adopted Class I pricing structure, better assures handlers a reasonable
degree of equity with regard to raw product costs.
The adopted Class I pricing structure was evaluated against the
administrative criteria as follows:
[[Page 16114]]
1. Minimize regulatory burden. The adopted Class I pricing
structure would not change the regulatory burden of the Federal order
program in terms of reporting, recordkeeping, compliance, and
administrative costs to handlers.
2. Minimize impact on small businesses. Under the adopted Class I
pricing structure, a fuller measure of the Class I value needed to
attract adequate milk supplies will come from regulated prices.
Reliance on over-order payments negotiated outside the Federal order
system is diminished, but continues to be recognized as in either the
current system or in Option 1A. As a result, it is likely that small
handlers who might have been disadvantaged by the original Option 1B
will not be under this modified version.
Federal order Class I prices are mandatory and affect processors in
a specific area equally as minimum enforced price levels. Since more of
the actual value of Class I milk is represented in regulated prices,
the potential for large handlers to have an advantage over small
handlers is mitigated in competing for a supply of milk under the
adopted Class I pricing structure. Large processors often have
advantages related to economies of scale and may be able to temporarily
inflate over-order prices they are willing to pay until they have
forced smaller businesses out of business who could not afford to pay
higher prices.
Additionally, with higher differentials and resulting higher
producer blend prices, the balance of market power between producers
and processors is better maintained. Producers will not need to
negotiate with processors to obtain a better price for their milk to
the extent that would have been expected under modified Option 1B.
Small dairy farmers have less production volume, and typically have
higher per hundredweight production costs. Hence, small producers who
are less able to negotiate for prices that may be higher than the
Federal order minimum price will be better served under the adopted
Class I pricing structure. When too much reliance is placed on the use
of over-order premiums (as in modified Option 1B), it is likely that
dairy farmers defined as small businesses would benefit less from the
regulation of milk marketing.
Small businesses may be impacted under the adopted Class I pricing
structure as adjustments are made in response to the new pricing
structure. However, to the extent that small producers may not be able
to bargain with processors for over-order premiums to adequately cover
their costs, the increased differential level in the adopted Class I
pricing structure minimizes this potential outcome. The inability of
small processors to compete with large processors at price levels above
Federal order minimums is similarly eased.
3. Provide long-term viability. The adopted Class I pricing
structure provides for a more efficient pricing structure. This option
is an alternative from the current way the Federal order program has
approached Class I pricing. Historically the Class I price established
under Federal orders represented the minimum value of Class I milk in
the marketplace based on the cost of maintaining Grade A milk and
associated marketing costs together with the cost of alternative milk
supplies. The adopted Class I pricing structure provides the
opportunity for increased marketing efficiencies by promoting a more
optimal organization in the assembly and distribution of milk products
while establishing prices that will assure an adequate milk supply. In
this way, it is expected to have long-term viability.
Quantitative analysis of the adopted Class I pricing structure
using the USDA multi-regional model evaluated the various impacts of
this pricing option. The evaluation assumed the eleven market order
consolidation, four classes of milk use, and the BFP replacement
presented earlier in this decision. Class I differentials are reduced
from current levels in about half of the marketing orders. The
reductions range from 4 cents per hundredweight in the Ohio Valley
order to as much as $1.18 per hundredweight in the Eastern Colorado
order. The Class I differential for the Eastern Ohio-Western
Pennsylvania order would be unchanged. For the other markets, the Class
I differential is increased, ranging from 8 cents per hundredweight in
the Greater Kansas City order, to 57 cents in the Southeastern Florida
order.
Under the adopted Class I pricing structure, six current milk
orders would have Class I differentials lower than the differential
established at Minneapolis. This gives explicit recognition that these
other areas have adequate milk supplies to satisfy Class I demands at
lower costs. For areas needing supplemental supplies of milk for fluid
use, the Class I differentials are reflective of transportation costs
from the closest alternative supply area.
According to the USDA model analysis, the adopted Class I pricing
structure differential level would increase order marketings over the
six-year analytical period of the years 2000-2005 when compared to the
baseline. Raising the differential, in conjunction with shortening the
advance pricing notice of Class I prices by 18 days as discussed in the
BFP section of this decision, minimizes class-price inversions. The
rise in the all-milk price in the first year of implementation is
expected to stimulate additional milk production in the milk order
system. This additional milk production results primarily from Class I
prices being established by using the expected higher Class IV prices
in the year 2000. Over the six-year analytical period, the annual all-
milk price is expected to drop by about two cents per hundredweight,
but the annual average of marketings in the entire milk order system is
expected to increase by about 8.3 million pounds when compared to the
baseline. This increase in marketings is largely explained by the
pooling of milk that was not pooled in recent years because of class-
price inversions.
The USDA analytical model suggests that annual cash receipts, or
revenue, for producers under the adopted Class I pricing structure will
increase in many markets when compared to the baseline. The marketing
areas expected to have the largest average annual increases in producer
revenue include the following orders: Chicago Regional--$43.1 million,
New York-New Jersey--$18.7 million, Iowa--$17.5 million, Southern
Michigan--$14.1 million, and Tampa Bay--$12.2 million. Other markets
would be expected to have lower estimated annual cash receipts over a
six-year analytical period of the years 2000-2005 from the baseline.
The marketing orders with the largest reductions include: Texas (-$39.7
million), Middle Atlantic (-$39.5 million), Eastern Colorado (-$11.4
million), Southwest Plains (-$11.3 million) and Central Arizona (-$10.4
million).
The USDA analytical model suggests that as the adopted Class I
pricing structure results in lower Class I prices in many markets, the
average annual impact on retail prices to the consumer for fluid milk
will be about 2 cents per gallon less, on average, over the six-year
period of the years 2000-2005 when compared to the baseline. From a
national perspective, this translates into consumer savings of about
$79 million for fluid milk products annually. Sales of manufactured
dairy products over the same time period are expected to decrease
somewhat, but expenditures for these products will be higher.
While only summarized here, the complete USDA multi-regional model
analysis of Options 1A, modified Option 1B and the adopted Class I
pricing
[[Page 16115]]
structure are included in the final RIA statement.
Comparison of Option 1A and the Adopted Class I Price Structure
Option 1A and the adopted Class I pricing structure have
similarities but rely on differing methods in constructing a nationally
coordinated Class I price structure. Both recognize that milk has a
location value. Both utilized the USDSS model results to establish the
price surface. Both establish Class I prices by adding a fixed
differential to the implied value of milk used in manufacturing. Both
establish a price surface that assigns a price to every county in the
United States and would assure that a price at any particular location
will not vary depending upon the marketing order under which the milk
is pooled.
Although similar in the above respects, they also differ. First,
they differ in the method of determining the level of the Class I
differential. Option 1A relies on finding that Class I differentials
would be established at a level that more fully reflects the additional
value of Class I milk in the most surplus regions. The adopted Class I
pricing structure relies on the finding that the national system of
milk order needs to result in prices that will generate sufficient
revenue to bring forth an adequate milk supply.
Secondly, they differ in how the price surface should be
established regardless of the level. Option 1A provides for the
alignment of resulting Class I prices by evaluating the cost of
alternative supplies based upon the current Class I differential
structure. This results in a surface that is smoother and flows
primarily from north to south and west to east. However, the adopted
Class I pricing structure relies on a cost minimization model to
provide for a more efficient organization and structure in milk supply
and distribution. Thus, it results in more limited relative price
differences and in a price surface that is flatter.
Thirdly, they differ in their reliance on the USDSS model results.
Option 1A recognizes the value associated with the model results but
relies on knowledge of specific marketing conditions and practices to
make adjustments to existing differentials. The adopted Class I pricing
structure, on the other hand, relies more directly on the USDSS model
results that indicate the optimal spatial values for fluid milk which
serve to promote market efficiencies, and implements this structure to
encourage market efficiency within the dairy industry.
Public Comments
The majority of comments received in response to the PR dealt with
the Class I price structure. In all, 4,217 comments were received on
this issue. Of this number, 3,579 comments indicated support for the
adoption of Option 1A and 436 comments supported the adoption of Option
1B. Some support USDA of both Class I pricing options called for
changes in each of the Option's details. No comments were received that
supported any sort of transition programs suggested in adopting Option
1B. Some comments, while supporting Option 1B in its general theme,
proposed adopting Option 1A initially and phasing in the adoption of
Option 1B over an extended time period.
It is clear from the comments received that there is broad-based
support for adopting Option 1A. These commenters explained what they
thought were and should be the most important goals of the milk
marketing order program, the pricing policies and features that it
should contain to achieve these goals, and their view of the
legislative requirements that must be incorporated into milk orders.
Such was similarly expressed in explaining both the support for, and
opposition to, Option 1B.
Supporters for Option 1A generally saw it as the best Class I
pricing option that would properly reflect the fullest measure of the
AMAA's articulated goals and requirements. These supporters expressed
the limitations of relying too much on the free market in setting milk
prices. For example, supporters of Option 1A indicated that milk
marketing orders exist because dairy farmers are at a distinct
disadvantage in their marketing relationship with handlers who buy
their milk. They cited the characteristics of milk--that it is highly
perishable, bulky, is produced daily and must be marketed nearly as
often, and is expensive to transport--as making it a unique commodity.
Unlike other commodities, grains for example, milk cannot be withheld
from the market in the hope for a better price, nor can it be shipped
long distances in search of a higher price because transportation costs
quickly erode the benefits of a higher price. Dairy farmers don't even
know the price they will receive for their milk in advance of having to
ship to market, they noted.
Also, supporters of Option 1A were of the opinion that marketing
conditions faced by dairy farmers today are fundamentally no different
than they were when the order program first began. They point out that
even though there are fewer and larger dairy farms with greater milk
production, the number of plants at which to sell milk are fewer than
when the order program first began. Implicit in this relationship, they
said, is the degree of uneven market power that handlers have over
producers. One commenter noted that the ratio of dairy farmers to milk
plants today has increased threefold since 1960, an indicator of the
growth in the concentration of market power among handlers. Even the
prominence of dairy farmer cooperatives over the years has had little
significant impact on the relative bargaining power of dairy farmers,
noted many commenters. While these organizations have served with
varying degrees of success in negotiating for higher milk prices for
their members, they said, cooperatives do not and cannot have the
ability to significantly impact prices because no entity can control or
limit the supply of milk to the marketplace. Because dairy farmers face
such a skewed marketing situation, most commenters view milk marketing
orders as the only practicable tool to assure farmers receive a fair
price for their milk.
Supporters of Option 1A indicated that because of the continuing
marketing situation they face, no basis exists for concluding that more
emphasis should be placed on a dairy farmer's ability to negotiate
prices with handlers. According to these commenters, relying too much
on the marketplace would only provide the incentive for producers to
needlessly compete with each other to supply the higher-valued fluid
market. Those that are successful might receive more for their milk
than those who could not, but to this end, there is no guarantee that
all handlers would pay the same price for milk. Nor is there a
guarantee that handlers would share the higher-valued use of milk
equitably with those producers. This, they said, results in disorderly
marketing conditions and the pitting of farmer against farmer in
unnecessary and destructive price competition. It was these conditions,
they note, that led to creation of milk orders and justified the
marketwide pooling and minimum pricing provisions contained in milk
orders today. Only Option 1A, say its supporters, best establishes the
proper value of milk that, together with classified pricing and
marketwide pooling, assures the highest degree of equity for both
producers and handlers.
Supporters of Option 1A agreed and recognized that it is important
to have a Class I pricing structure that is national and more
reflective of
[[Page 16116]]
marketing conditions for milk. Some commenters were of the opinion that
the geographic pattern of milk production can be expected to remain as
it is today. They noted further that Option 1A gives explicit
recognition to more than a single reserve supply area in the country,
and that Option 1A would assign the lowest differential in each of
these reserve supply areas, what many supporters of Option 1A viewed as
significant pricing reform.
Option 1A supporters also thought that the USDSS model served as an
excellent tool in developing a Class I price structure. However, they
also recognized the limitations of relying too much on this analytical
model because it does not bring into consideration all of the other
necessary judgements and factors that cannot be included in a model.
For example, many commenters pointed out that while Option 1A used the
USDSS model as a guide, it cannot be relied upon for making adjustments
to conform with known relationships between and among geographic and
actual plant locations. Further, said supporters of Option 1A, the
model is static, and cannot estimate the dynamics of changes that may
result in supply and demand conditions over time.
In summary, Option 1A supporters indicated Option 1A best assures
the continuation of dairy farmers receiving a fair price for their
milk. Processors, they also pointed out, would not see a significant
change in their ability to compete for a milk supply since most of the
value of fluid milk would be contained in the regulated minimum price.
They concluded that any changes to milk orders that would diminish
these outcomes would be harmful to the dairy industry and to the public
interest.
Opponents to Option 1A view it as maintaining too much of the
status quo and not addressing the reform needed in Class I pricing. The
opponents of Option 1A also view the current Class I pricing structure
as seriously flawed. In their view, the current system relies on
recognizing the Upper Midwest region as the reserve supply of milk for
the country when this is no longer the case. They see Option 1A as
largely maintaining this viewpoint.
Opponents to Option 1A and the current Class I pricing structure
are of the opinion that today's differential levels and Option 1A
differential levels are too high, or at least higher than necessary to
attract adequate milk supplies in many areas. Because Class I
differentials are too high, they said, improper economic incentives
exist in many areas for increased milk production--in fact
overproduction--beyond what is needed to meet Class I demand. When this
happens, opponents to the current system and Option 1A said, all
producers nationally are negatively impacted because the overproduced
milk supply drives down prices for milk used in manufactured dairy
products which compete in a national market. They noted this is
especially injurious to dairy farmers in markets where most of the milk
produced is used in manufactured dairy products.
Adding to this, the opponents of the current Class I pricing system
and Option 1A are also of the opinion that technology is available
today to meet the supplemental milk needs of any milk-deficit area. Not
only do they think that higher-than-necessary Class I differentials
result in artificially-induced overproduction, they also believe that
resulting high Class I prices may be reducing fluid milk consumption by
consumers. They are of the opinion that it is more appropriate and
efficient to attract milk to meet fluid demands by compensating those
who incur the cost of shipping milk from surplus areas rather than
paying a high price to local producers in milk-deficit areas to bring
forth a sufficient supply of local milk to meet fluid demands.
Supporters of Option 1B indicated support for the more market-
oriented theme reflected in this Class I pricing option. These
supporters commented that Option 1B will allow milk prices to respond
more appropriately to changing supply and demand conditions. Because of
this, they said, the milk order program will become more market-
oriented. The overall pricing structure offered in Option 1B, they say,
flattens the resulting level of Class I prices throughout a larger
portion of the country, thereby providing more of a level playing field
for producers everywhere.
Supporters of Option 1B view the increased market-oriented theme as
the proper direction in which to bring the Class I pricing structure as
the milk order program is reformed. Not only is it consistent, in their
view, with the reform mandates established by Congress in enacting the
1996 Farm Bill, the movement to a more market-oriented milk order
program will provide incentives for private sector innovations that
will benefit dairy farmers and consumers.
Supporters of Option 1B take a fundamentally different view than
supporters of Option 1A on the appropriate level of the Class I
differential. Supporters of Option 1A are of the opinion that Class I
differential levels should be set high enough to assure the least
amount of price inequity among handlers and should also be at levels
high enough to not lower returns to producers. However, the supporters
of Option 1B think that Class I differential levels should be set at
minimum levels that will allow the effective price for milk to be much
more determined by the marketplace. In this way, they said, milk
production and prices would respond more effectively to changing supply
and demand conditions. By taking this approach, they say, Option 1B
Class I differential levels will provide a sufficient degree of the
structure needed for producers and handlers, while reducing market
distortions that result from regulation-induced prices that
discriminate against producers, especially in the Upper Midwest region.
As mentioned above, supporters of Option 1B called for certain
modifications. The most significant change included the lowering of the
Class I differential level for Minneapolis, Minnesota. These commenters
offered a $1.08 per hundredweight Class I differential level for this
location. They based this recommendation on their own study and survey
of prevailing conditions in the Minneapolis area. This proposal is
consistent with their view that Class I differential levels should be
set at minimum levels. This level included, they said, premiums above
the Upper Midwest's order blend price, quantity and quality premiums,
and hauling subsidies. From this level, all other differential levels
should be set and adjusted.
These commenters also cited the USDSS model's limitation in
determining the proper alignment of Class I differential levels, a
similar criticism voiced by Option 1A supporters. These commenters are
also of the opinion that, due to more than 60 years of Federal
regulation, the relative value differences implied in the model results
were too much like existing value differences than would be the case in
an unregulated market. They indicated that the USDSS model's optimal
solution values should be used conservatively as maximums in setting
relative geographic differences to the Class I pricing structure. Some
commenters suggested that because the model establishes geographic
values for all milk uses, a bias results toward higher Class I values
relative to manufacturing values in many markets.
Opponents to Option 1B did not like the idea of making the milk
order program more market-oriented by reducing Class I differentials in
setting Class I milk prices. If this is done, say Option 1B opponents,
a cascading series
[[Page 16117]]
of events will result that seem not only contrary to why marketing
orders exist, but will return the dairy industry to the marketing
situations that led to their establishment. Most important, they said,
Option 1B would result in, and in fact calls for, the altering of
current supply and demand conditions for milk. These commenters are of
the opinion that the Department should not act to cause changes in
either prices or marketing conditions. Additionally, they are also of
the opinion that it was not the intent of Congress to have milk order
reform result in either an increase or decrease in returns to dairy
farmers.
Opponents of Option 1B were of the opinion that too much reliance
was placed on directly applying the USDSS model results as the Class I
pricing structure, and that inappropriate reliance was also placed on
the role of over-order premiums in achieving a more market-oriented
pricing plan for the milk order program. Opponents argued that today's
over-order premiums are directly tied to the differential levels and
the alignment of Class I prices established under the existing orders.
Additionally noted, current and consolidated markets have, and will
continue to have, different circumstances that will disproportionately
affect the ability of producers to negotiate over-order premiums,
especially in those markets where Class I differentials are lowered
most from current levels.
Because Option 1B calls for reductions from current differential
levels nearly everywhere, they observed, less of a minimum order price
is assured to producers. In those markets where minimum order Class I
prices are reduced the most, a greater burden is placed on producers
and handlers in negotiating actual prices relative to those orders
where price levels are not as affected, they said. In other words,
noted one commenter, producers in milk-deficit areas would have Class I
differentials reduced the most and would be required to be much more
market-oriented than producers in milk-surplus area where the
differential level is maintained or increased. One commenter noted,
that once over-order premiums are established, they can easily collapse
because no one has the ability to control or limit milk production or
the flow of milk to market. Very small additional volumes of milk to a
market can destroy over-order premiums, this commenter added. On the
producer side of relying too much on over-order premiums, they said,
prices received would be much less equitably shared and uniform, and
would tend to force dairy farmers to engage in ruinous price
competition in seeking Class I outlets. On the handler side, they
noted, order prices will not be high enough to bring forth that mix of
local and distant milk supplies to meet Class I needs. Related to this,
some commenters noted that the relative differences in prices that
would be set under Option 1B would not provide enough of a price
difference to cause milk to move from surplus to deficit areas as would
be provided in Option 1A. Relying too much on over-order premiums will
benefit large handlers to the competitive disadvantage of small
handlers, they said. Because actual milk prices paid by handlers would
increasingly be determined outside of the order's minimum pricing
provisions, they concluded, handlers would be much less assured of the
price their competitors are paying for milk.
Conclusion
Milk is a unique agricultural commodity and faces unique marketing
circumstances. It is highly perishable, is produced daily and therefore
needs to be marketed in a very committed and continuous production-and-
marketing cycle. These characteristics, together with the fact that
there are many more dairy farmers than milk buyers, presents the
opportunity for marketing problems to occur that can be disruptive and
destructive to dairy farmers. This sort of marketing situation places
producers at a marketing disadvantage relative to handlers, and without
some government involvement, equitable terms of trade between these two
entities can be difficult to achieve. These unique features of milk and
the marketing situation faced by dairy farmers were noted in public
comments and are reflected in the legislation authorizing milk
marketing orders. Milk marketing orders, using the tools of classified
pricing and marketwide pooling, can significantly mitigate the
undesirable effects of this marketing situation and still satisfy the
public interest by having an adequate supply of milk at reasonable
prices.
As noted in public comments, the structure of today's dairy
industry, characterized by many dairy farmers and relatively few
buyers, is basically the same as it was when the milk order program
first began. No dairy farmer, dairy farmer cooperative or bargaining
organization can effectively serve to either control milk production or
limit the supply of milk to the marketplace to achieve a measure of
reasonable price certainty. This can, from time-to-time, be achieved
but such instances are generally short-lived and cannot be relied upon
for serving the public's interest in having a sustainable, stable and
reliable milk supply at reasonable prices.
It is clear from the many public comments received that dairy
farmers are largely content with the current way the Federal milk order
program has approached Class I milk pricing, both in its structure and
the degree to which it is has returned equitable prices to producers
and handlers. But some changes are needed to assure that this program
remains viable to serve the needs of the dairy industry and the public
well into the 21st century.
The need to reform the milk order program is clearly and uniformly
recognized by industry participants and the public. To this end, most
producers and handler entities are of the opinion that the reform
effort should result in limited change in the prices that are
established under the orders, and that any changes to the system be
governed by a minimum of change in the prices and the terms of trade
between producers and handlers. Other producer and handler entities are
of the opinion that the ``traditional'' methods of Class I milk pricing
are seriously flawed, resulting in a program that has become viewed as
economically discriminatory to dairy farmers in certain regions of the
country and is institutionally resistant to change. The public too,
expects that the program should be operated in a manner that will
provide and promote efficiency and offer the potential for a less
expensive milk supply.
It is the Class I pricing structure that provides additional
revenue above the basic value for milk to producers. Because of this,
Class I pricing is often viewed as the cornerstone of the milk order
program's pricing policy. This is so because the Class I fluid use of
milk commands the highest-valued use in the marketplace and is the
preferred outlet for milk by producers. It is also this use of milk
that has the greatest effect on determining the location value of all
milk and in determining the differences in blend prices that are
received by producers.
Because milk value varies by location, it is appropriate, in using
a classified pricing plan, to establish Class I prices that reflect
these location value differences. Supporters of Option 1A and Option 1B
agree this is best accomplished with a system of Class I differentials
that properly links and aligns milk value. In evaluating how best to
accomplish this, it is also important to recognize the significant
changes that have taken place within the dairy industry since the full
measure of Class I pricing was last undertaken at a 43-day national
hearing in 1990.
[[Page 16118]]
Today, and as evidenced in the hearing record of 1990, there was
general satisfaction with the way Class I milk pricing was developed
and employed in a system of orders that had evolved over nearly 60
years. The record of that hearing evidenced that technological and
structural changes were underway, but the record did not contain
sufficient evidence for changes at that time. The Upper Midwest region
of the country can no longer be considered the single reserve supply of
milk that the country can rely upon for a supply of milk to meet fluid
needs in deficit areas. In fact, the reform effort has clearly revealed
that there are several reserve supply areas, and the Class I pricing
structure changes adopted are reflective of this change. Other issues--
technological factors, improved assembly and distribution systems
allowing for sales competition of ever-larger geographic areas, the
growing importance of milk value based on the value of its components--
all speak to the need for reforming the Federal order system.
The PR preliminarily narrowed the Class I pricing structure to two
options. Both have similarities and differences that have been
discussed in detail. The adopted Class I pricing structure will work in
conjunction with other reforms to milk order provisions, especially the
more transparent product price formulas and the reduced amount of
advance notice for Class I and Class II prices. Taken as a whole, the
package of reforms retain the features that are desired and needed to
achieve the goals of the AMAA articulated by Option 1A supporters while
also providing the appropriate changes needed to obtain greater
economic efficiency and equity--an objective voiced by supporters of
Option 1B. The adopted class I pricing structure will establish Class I
milk prices that will result in a sufficient supply of milk for the
national system of reformed and consolidated milk orders.
The adopted Class I pricing structure recognizes and addresses the
concerns of Option 1A supporters in their view of the limitations of
relying on the marketplace in establishing milk prices to producers
that are equitable and reasonable given the marketing situation they
face. Similarly, the adopted Class I pricing structure recognizes that
handlers will be assured a higher degree of minimum price equity. As
importantly, the adopted Class I pricing structure provides the
necessary structural reform needed in the dairy industry. The adopted
structure provides the incentives necessary for increased efficiency in
the organization and distribution of the milk supply and dairy products
that is not offered by the price structure of Option 1A.
As discussed earlier, it is important and appropriate that the
Class I price structure recognize all uses of milk. The classified
pricing system of the Federal milk order program will continue to value
fluid milk in the highest-priced class. The higher-priced
classification encourages all milk to first satisfy Class I needs and
the adopted Class I pricing structure accomplishes this. Additionally,
it continues to consider the cost of moving milk from an alternate
location for Class I use, a consideration important to both Option 1A
and Option 1B supporters. This is reflected in its aligned structure,
recognizing that in supplying milk for manufactured products, demand
for manufactured products influences a market's ability to procure milk
for Class I needs. In this way, the adopted Class I pricing structure
appropriately considers all uses of milk as a national Class I pricing
structure.
Finally, the adopted Class I pricing structure meets the
requirements of the AMAA. The broad tenet of the AMAA is to establish
and maintain marketing stability and orderly marketing conditions for
milk. The Federal milk order program will continue to achieve these
goals primarily through classified pricing and marketwide pooling. As
to pricing requirements, the AMAA objective to stabilize the
marketplace with minimum prices and not set market prices is also
achieved. As a national Class I pricing structure, it specifically
addresses, and adequately sets, appropriate Class I differential levels
that will result in milk prices that are high enough to generate
sufficient revenue for producers so that an adequate supply of milk can
be maintained while continuing to provide equity to handlers.
BILLING CODE 3410-02-P
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4. Classification of Milk and Related Issues
The Federal milk order system should continue to contain uniform
classification provisions, but with some modification. The proposed
modifications are consistent with the Agricultural Marketing Agreement
Act of 1937, which requires that milk must be classified ``in
accordance with the form in which or the purpose for which it is
used.''
The uniform provisions contained in this final decision provide for
4 classes of use. They are similar to the uniform classification
provisions contained in the proposed rule, but with some modifications.
In particular, cream cheese has been moved from Class II to Class III,
and the proposed fluid milk product exclusion for products packaged in
``all-metal, hermetically-sealed containers'' has been changed back to
the present standard: ``formulas especially prepared for infant feeding
or dietary use (meal replacement) that are packaged in hermetically-
sealed containers.''
In addition to these changes, the proposed shrinkage provisions
have been revised to more closely resemble the provisions that are now
in the orders, and the provision for milk that is dumped or used for
animal feed has been added back to the orders, but has been moved from
Class III to a new paragraph, Sec. 1000.40(e), which specifies other
uses of milk that are to be priced at the ``lowest class price for the
month,'' be it I, II, III, or IV. Milk that is lost in an accident,
flood, or fire (i.e., Sec. 1000.40(c)(3) in the proposed rule published
on January 30, 1998, at 63 FR 4972) has been combined with milk that is
dumped or used for animal feed in the new paragraph (e). Finally, the
classification for inventory of fluid milk products and fluid cream
products in bulk form has been moved from Class III to Class IV.
Changes in the proposed rule that have been carried forward to this
final decision include the reclassification of eggnog from Class II to
Class I, the formation of a new Class IV which includes milk used to
produce butter and any milk product in dried form, and elimination of
the term filled milk from the orders.
In addition to changes in the class uses of milk, this final
decision modifies the definitions of fluid milk and commercial food
processing establishment. Also, this decision contains modified
administrative rules related to the classification of milk. These
include rules for classifying skim milk and butterfat that is
transferred or diverted between plants, general rules pertaining to the
classification of producer milk (including the determination of
shrinkage and overage), rules describing how to allocate a handler's
receipts of skim milk and butterfat to the handler's utilization of
such receipts, and provisions concerning the market administrator's
reports and announcements concerning classification. The classification
and classification-related provisions have been restructured, in part,
to standardize and simplify the regulatory program.
Further details concerning these changes are explained in the
following discussion.
4a. Fluid Milk Product (Sec. 1000.15)
The new orders contain a modified fluid milk product definition in
Sec. 1000.15. The changes to the fluid milk product definition include
eliminating the term filled milk, including eggnog in the list of
specified fluid milk products, and revising the word buttermilk to read
cultured buttermilk. The revised fluid milk product definition reads
``any milk products in fluid or frozen form containing less than 9
percent butterfat and more than 6.5% nonfat milk solids that are
intended to be used as beverages. Such products include, but are not
limited to, milk, skim milk, lowfat milk, milk drinks, eggnog, and
cultured buttermilk, including any such beverage products that are
flavored, cultured, modified with added nonfat milk solids, sterilized,
concentrated (to not more than 50% total milk solids), or
reconstituted.''
The term ``buttermilk,'' as used in the fluid milk product
definition, is changed to read ``cultured buttermilk.'' The revised
term clearly distinguishes the ``beverage'' buttermilk product from the
buttermilk byproduct which is produced from a continuous churning
operation.
The fluid milk product definition also is modified to exclude
``filled milk'' and to include eggnog in its list of products. Although
it is apparent that eggnog is a beverage milk product and clearly meets
many of the criteria for being considered a fluid milk product, it is
not now included in the list of products identified as fluid milk
products. The addition of eggnog to the list of fluid milk products
results in a change of the product's classification from a Class II
product to a Class I product. The elimination of the term ``filled
milk'' from the fluid milk product definition is discussed later.
In the proposed rule, certain changes were proposed for section
15(b)(1) of the fluid milk product definition. Currently, this section
exempts from the fluid milk product definition ``formulas especially
prepared for infant feeding or dietary use that are packaged in
hermetically-sealed containers.'' As contained in the proposed rule,
this exemption would have applied to ``formulas especially prepared for
infant feeding or meal replacement'--without regard to the type of
container--and ``any products packaged in all-metal, hermetically-
sealed containers.'' These changes were not widely supported and have
been dropped because they could result in reclassifying certain fluid
milk products from Class I to Class II. The language in this final
decision is identical to Section 15(b)(1) of the present orders.
4b. Fluid Cream Product (Sec. 1000.16)
No change has been made to the fluid cream product definition. The
current definition is uniform under all the orders and should be used
in the newly merged orders. There were no comments supporting a change
in this provision.
4c. Filled Milk
The definition of filled milk has been eliminated from all milk
orders and the term has been removed from the fluid milk product
definition and other provisions within the orders. Filled milk is a
product that contains a combination of nonmilk fat or oil with skim
milk (whether fresh, cultured, reconstituted, or modified by the
addition of nonfat milk solids). Filled milk was first produced and
marketed in the 1960s. In 1968, the orders were amended to provide a
definition of filled milk. Currently, there is little or no filled milk
being produced under Federal orders. The term filled milk is used 18
times in each of the milk orders. It serves little purpose today except
to complicate and lengthen the regulatory language. For this reason,
any reference to filled milk has been removed from all orders.
The form of filled milk and purpose for which it is used are the
same as the form and purpose for which whole milk is used. Filled milk
is marketed by handlers in the same types of packages and in the same
trade channels as whole milk, and is mainly intended to be used as a
beverage substitute for milk. Whether made from vegetable fat and fresh
or reconstituted skim milk, or any combination thereof, the resulting
product resembles whole milk in appearance. Therefore, any filled milk
produced and marketed in the future will be classified as a Class I
product under the revised fluid milk product definition.
[[Page 16123]]
No letters were received commenting on this change.
4d. Commercial Food Processing Establishment (Sec. 1000.19)
The definition of commercial food processing establishment (CFPE)
has been revised by removing the filled milk reference, for the reasons
previously discussed, and by removing the word ``bulk'' from the
definition. The removal of the word ``bulk'' will allow a CFPE to
receive fluid milk products and fluid cream products for Class II use
in certain sized packages as well as in bulk.
Presently, the CFPE definition prohibits the receipt of fluid milk
products for Class II use in relatively small pre-measured packages
that might reduce the CFPE's production costs. While packaged fluid
milk products should be permitted to be transferred to a CFPE in any
size, only those products that are shipped in larger-than-consumer-
sized packages (i.e., larger than one gallon) should be eligible for a
Class II classification. If milk is received in gallon containers or
smaller, the milk should be priced as Class I milk since there is no
way of guaranteeing that such products will not be sold for fluid use.
Permitting milk in any sized container to be sold to a CFPE for Class
II use if the container had a special label, such as ``for commercial
food processing use only,'' was considered, but such a provision would
be impractical and it would be prohibitively expensive for a handler to
prepare specially labeled products for small accounts. The current
restriction barring a CFPE from having any disposition of fluid milk
products other than those in consumer-sized packages (one gallon or
less) should be retained under the new orders.
These two restrictions are based upon practical considerations. The
integrity of the classified pricing system would be much more difficult
to maintain if the market administrator were forced to audit every CFPE
on a regular basis. By prohibiting the sale of fluid milk products in
consumer-sized packages to a CFPE for anything but Class I use, there
would be less need to regularly audit CFPE's to be sure that such
products are not being sold to the public. Similarly, since packaged
fluid milk products in containers larger than one gallon are rarely, if
ever, found in retail outlets, it is unlikely that such products will
be sold for fluid use. By restricting fluid milk product disposition by
CFPE's to packaged products not larger than one gallon in size, there
is reasonable assurance that milk priced as Class II will not be
disposed of as fluid milk sold by the glass from a bulk dispenser.
There were no comment letters that addressed these recommendations
in response to the proposed rule.
4e. Classes of Utilization (Sec. 1000.40)
Historically, the fluid or beverage uses of milk have been
classified in the highest-priced class (Class I), and soft or spoonable
products, those from which some of the moisture has been removed, have
been classified in the intermediate class of milk (Class II). The final
decision issued on February 5, 1993 (58 FR 12634) provided 3 uniform
classes of milk for all orders. Classes I and II continued the
traditional classification of milk, while the lowest-priced class
(Class III) contained the hard, storable products. In a final decision
that became effective December 1993, a fourth class--Class III-A
(actually a sub-section of Class III)--was established for most orders
for milk used to produce nonfat dry milk.
This final decision continues to provide a Class I classification
for milk used for fluid and beverage use, with certain exceptions for
formulas especially prepared for infant feeding or dietary use in
hermetically-sealed containers and products with less than 6.5 percent
nonfat milk solids. Soft or spoonable products, most soft cheeses, and
milk that is used in the manufacture of other food products or
sweetened condensed milk will continue to be classified as Class II.
Class III will continue to apply to milk used in hard cheeses, cream
cheese, and other spreadable cheese, but will no longer apply to
butter. Finally, the new Class IV applies to all skim milk and
butterfat used to produce butter or any milk product in dried form.
Class IV will also apply to bulk milk that is in inventory at the end
of the month.
A new paragraph (e) has been added to Sec. 1000.40 that classifies
other uses of milk that are priced at the ``lowest-priced class'' for
the month.
Under the pricing formulas proposed for the new orders, it is not
certain whether the Class III price or the Class IV price will be the
lowest class price for the month. In view of this price uncertainty, a
new paragraph has been added to Sec. 1000.40 to guarantee that milk
that is lost in an accident, dumped, or used for livestock feed is
accounted for at the month's lowest class price.
Comments filed regarding the number of classes of utilization for
the proposed merged orders varied from supporters of one class, which
would eliminate all manufacturing classes, to supporters of 5 classes
of milk. Comments concerning the addition of an export class were also
received. However, a large majority of the comments on this issue
supported 4 classes of utilization as proposed.
4f. Class I Milk
In this final decision, Class I milk includes all skim milk and
butterfat contained in milk products that are intended to be consumed
in fluid form as beverages, with certain exceptions. These exceptions
include plain or sweetened evaporated or condensed milk, milk that is
used in formulas especially prepared for infant feeding or meal
replacement if such products are packaged in hermetically-sealed
containers, and any product that contains by weight less than 6.5
percent nonfat milk solids.
Under this final decision, eggnog will join lowfat eggnog as a
Class I product. Class I products are generally classified on the basis
of their fluid form and intended use. Eggnog, a highly seasonal
product, is clearly intended to be consumed as a beverage. Since this
product is manufactured, packaged and distributed to the consumer as a
drinkable beverage, it should be classified as a Class I product.
Comments received regarding the reclassification of eggnog were
generally in support of its reclassification into Class I, although a
few handlers submitted comments opposing this change, arguing that it
would increase the cost of eggnog and, therefore, reduce consumer
demand for this product.
Class I Used-to-Produce. In order to simplify the accountability
for milk products classified as Class I that may contain nonmilk
ingredients and/or previously processed and priced skim milk and
butterfat, the proposed rule recommended adding a ``used-to-produce''
category to Class I. The proposed rule stated that the used-to-produce
accountability method would preclude the need to develop and maintain
nonstandard conversion factors and non-milk credits (i.e., salt,
flavoring, stabilizers) for milk product accountability and would
improve the accuracy of handler reporting and minimize audit
corrections without sacrificing any statistical information, pricing
considerations, or classification criteria.
Several comment letters were received arguing that the proposed
Class I used-to-produce category would not simplify the accounting
system but instead would complicate it. No comments were received
endorsing this proposal.
Our analysis of the proposed Class I used-to-produce category
generally supports those who argued against it. If there were no need
to follow a pool
[[Page 16124]]
distributing plant's route disposition to its ultimate source to
determine under which order the plant would be regulated, it would be
possible to simplify accounting by adopting a Class I used-to-produce
category. However, with the pooling standards adopted in this final
decision, the proposed used-to-produce category would simply require
dual accounting with no offsetting benefit. Accordingly, the Class I
used-to-produce proposal has been dropped from this final decision.
4g. Class II, III, and IV Milk
The classification of milk used in Class II, III, and IV uses and
products is essentially the same as contained in the proposed rule with
a few exceptions.
First, cream cheese is moved from Class II to Class III, where it
has been for many years.
Second, fluid milk products and bulk fluid cream products in
inventory at the end of the month have been moved from Class III to
Class IV.
Third, the skim milk equivalent of nonfat solids used to modify a
fluid milk product that has not been accounted for in Class I has been
moved from Class III to Class IV.
Fourth, the proposed Class II classification for any fluid product
in an ``all-metal, hermetically-sealed container'' is changed to what
is now in the orders: i.e., ``formulas especially prepared for infant
feeding or dietary use (meal replacement) that are packaged in
hermetically-sealed containers''.
Finally, the surplus classification for milk that is dumped or used
for animal feed is added back to the orders, but, as described earlier,
it has been placed in a new paragraph (e) of Sec. 1000.40 which prices
milk in the lowest-priced class for the month. For the same reasons
cited previously, milk which is lost in a fire, flood, or accident also
has been moved from Class III to the ``other uses'' class.
Under the proposed rule, the classification of cream cheese would
have been changed from Class III to Class II. The rationale for this
change was that the milk used in Class II products is used to process
or manufacture products for which handlers know a consumer demand
exists and that such products are neither as perishable as fluid
products nor perform a balancing function for the market, as do butter,
powder, and the hard cheeses.
This proposal was not well received by a large majority of the
handlers and producer organizations that commented on it. The
International Dairy Foods Association argued that the pricing of milk
used for cream cheese under California's state order is below the
Federal order Class II or III price and moving cream cheese from Class
III to Class II would create a huge competitive disadvantage for milk
used in cream cheese under Federal milk orders. The National Milk
Producers Federation, Dairy Farmers of America, and numerous individual
handlers repeated essentially the same argument.
Some comments addressed the classification of cottage cheese and
ricotta cheese, in addition to cream cheese. A national manufacturer of
cheese argued that milk used in cottage cheese and ricotta cheese
should be reclassified from Class II to Class III. The handler stated
that due to falling demand for cottage cheese, it should be placed with
other cheeses in Class III. Another cottage cheese manufacturer made
the same suggestion. Several comment letters also pointed out that
ricotta cheese was priced under California's Class 4-b, giving
California processors an advantage over processors making ricotta from
milk priced under Federal milk orders. While these comments may have
some merit, we believe that more information is needed before these
changes can be considered.
Ending inventory of fluid milk products and fluid cream products in
bulk form should be moved to Class IV. Since the Class IV price is
expected to be the lowest class price in the long run, it is logical to
classify ending inventory in Class IV. Also, paragraph (c)(4) of
Sec. 1000.40, should be moved from Class III to Class IV. This
paragraph prices the skim milk equivalent of nonfat milk solids used to
modify a fluid milk product. With the inclusion of a Class IV
classification for all products in dried form, the nonfat milk solids
used to modify a fluid milk product should be priced as Class IV,
together with other dried products, rather than Class III.
Products lost by a handler in a fire, flood, or vehicular accident
and products that are dumped or used for animal feed have been moved
from Class III to a new paragraph (Sec. 1000.40(e)) which would price
skim milk and butterfat in such uses at the lowest class price for the
month. Under the pricing formulas proposed for the new orders, the
Class III price or Class IV price is likely to be the lowest class
price for the month, but it is possible under some orders that the
Class I or II price could be the lowest class price for the month if
component values were increasing rapidly. In view of this price
uncertainty, a new paragraph has been added to Sec. 1000.40 to
guarantee that milk that is lost in an accident, dumped, or used for
livestock feed is accounted for at the month's lowest class price.
As previously noted, formulas especially prepared for infant
feeding or dietary use (meal replacement) that are packaged in
hermetically-sealed containers should continue to be classified as
Class II products. Although the proposed rule suggested a modification
of this exemption, there was insufficient support to move forward with
this suggestion. Accordingly, no change was made from the language that
is now in the orders.
The treatment of buttermilk should remain unchanged from the
proposed rule. No comments were received in opposition to the proposed
distinction between buttermilk for drinking purposes and buttermilk for
baking purposes. As set forth in the proposed rule, drinking buttermilk
would have to be labeled as ``cultured buttermilk'' while buttermilk
for baking must contain food starch in excess of 2% of the total solids
in the product and the product must be labeled to indicate the food
starch content.
The proposal to account for all Class II products on a used-to-
produce basis was unopposed. Accordingly, this accounting method, which
now applies to all Class II products, except for some fluid cream
products, is extended to the remaining Class II products that are
currently accounted for on a disposition basis.
As noted above, a large majority of the comment letters supported
the 4 classes of utilization as set forth in the proposed rule,
including the separate Class IV for butter and milk products in dried
form. Therefore, no change has been made to Class IV in this final
decision except for the addition of the items already discussed.
Several commenters reiterated requests made prior to the proposed
rule to reclassify bulk sweetened condensed milk from Class II to Class
IV. The commenters explained that sweetened condensed milk is primarily
used in commercial food processing establishments and in the
confections industry and that it is interchangeable with powdered milk
products and sugar in ingredient markets for processed foods and candy.
They argued that manufacturers of sweetened condensed milk are
currently at a competitive disadvantage with manufacturers of nonfat
dry milk and urged that the 2 products be classified identically.
According to one commenter, the Galloway Company, the current system of
classification places sweetened condensed milk at a significant
disadvantage and has virtually
[[Page 16125]]
destroyed the market for sweetened condensed milk.
Hershey Foods Corporation filed a comment letter objecting to the
difference in classification for fresh milk used to make chocolate
compared to fresh milk used to make powder that is used to make
chocolate. Specifically, Hershey argued that the Class II
classification for fresh milk used to make chocolate, compared to the
Class IV classification for milk used to make powder that is
subsequently used in chocolate violates the Act because such milk
starts out in the same form and is used for the same purpose.
Hershey explained that whole milk, sugar, cocoa butter, and
chocolate liquor are used to make ``chocolate crumb,'' which is further
processed to make chocolate. According to Hershey, the chocolate crumb
has a moisture content of only 1 percent, which means that if a
manufacturer receives fresh whole milk, it must remove 99 percent of
the water from it in order for the milk to perform its function in the
chocolate. An alternative to starting with whole milk and drying it is
to purchase whole milk powder and mix it with the sugar, cocoa butter,
and chocolate liquor to make the chocolate crumb.
Hershey argues that maintaining the current disparate
classifications for fresh milk used to make chocolate and fresh milk
that is first dried and then used to make chocolate, in combination
with the proposed 70-cent Class II differential, will pressure
manufacturers to change their manufacturing processes and formulas,
reduce the use of fresh milk and increase the use of milk powders,
reduce milk solids in product formulas, replace milk solids with lower
cost alternatives, and might even influence the location of chocolate
manufacturing plants. Hershey also notes that the State of California
does not discriminate between manufacturers of chocolate, but instead
prices all milk used to manufacture chocolate in the same class whether
the chocolate manufacturer begins its process with fluid milk,
sweetened condensed milk, evaporated milk, nonfat dry milk, or whole
milk powder.
Galloway and Hershey conclude that there is no justification for
pricing milk used to make sweetened condensed milk or chocolate crumb
in a higher class than milk used to produce powdered milk. However,
Galloway states, if sweetened condensed milk is kept in a class higher
than powder, the differential for that class should be no more than 30
cents per hundredweight.
Bulk sweetened condensed milk/skim milk is used as an intermediate
product in ice cream, candy, and other manufactured products. However,
these manufactured products can also be made from powdered milk. When
powder prices are low relative to the Class II price, there is an
economic incentive for powder to be substituted for bulk sweetened
condensed milk. As a result, there must be an economic relationship
between the Class II price and the cost of using alternative dry or
concentrated products to make Class II products. Under current pricing
provisions, the Class II price can be excessive relative to using
nonfat dry milk since the Class II price is a measure of the value of
milk in cheese (the Class III price) plus a differential.
Conceptually, we do not believe that the value of milk used in
demand-driven products like chocolate and sweetened condensed milk that
is used in food products is the same as milk that is sometimes made
into powder for lack of any other use. The major point of the ability
to substitute among forms of milk, sweetened condensed milk, and nonfat
dry milk in certain uses is that there is a fixed relationship between
the Class II and Class IV price. The appropriate price relationship is
discussed in the Class II pricing section of this decision.
In the proposed rule, no allowance was provided for dumped milk or
milk used for animal feed, and a Class III classification was
recommended for milk lost in a fire, flood, or accident. Many handlers
and the National Milk Producers Federation objected to the removal of
the Class III classification for milk that is dumped or used as animal
feed.
On the basis of the comments filed on this issue, a surplus use has
been established for milk that is dumped or used as animal feed. The
price applicable to such use will be the lowest class price for the
month.
4h. Shrinkage and Overage
Shrinkage is experienced by handlers in milk processing operations
and in the receipt of farm bulk tank milk at receiving stations and
processing plants. Milk is unavoidably lost as it remains in pipe
lines, adheres to tanker walls and/or other plant equipment, and is
washed away in the cleaning operations. In addition, unexpected losses,
including spillage or leaking packages, also contribute to shrinkage.
In the proposed rule, we proposed a pro rata assignment of
shrinkage based on a handler's utilization. In other words, each
handler's shrinkage would have been classified according to the
handler's use of milk that was not lost in transit or processing. We
believed that the adoption of such a provision would have simplified
both order language and accounting procedures, and we thought that it
would be acceptable to handlers because, although in some cases it
increased their costs slightly, the change applied equally to everyone.
There were very few comment letters that supported the proposal and
an overwhelming number of comments urging us to keep the current
provision. Many of the opponents were high Class I utilization handlers
who complained that the proposed change would reclassify their
shrinkage from Class III to Class I, increasing their costs for this
lost milk.
It was not only handlers that disliked the proposed shrinkage
provision. Several producer organizations, including Dairy Farmers of
America and the National Milk Producers Federation, also voiced their
opposition to the proposal. Most of the comment letters urged us to
retain the key features of the present shrinkage provision, but there
were comments suggesting a simpler provision.
Based on the comments received, this final decision retains, in
large part, the present method of calculating shrinkage allowances and
pricing shrinkage, but with certain modifications. Just as in the
current provisions, there are specified allowances for shrinkage. The
major difference is that shrinkage is not automatically assigned to a
specified class, as it is now, but rather is assigned to the ``lowest-
priced class.'' This change was made to conform with the new 4-class
pricing system and, more importantly, to recognize that there is no
fixed relationship between class prices because of the different
formulas used to compute them. For example, because the formulas for
Class III and IV prices are not directly related, it cannot be known in
advance which class price will be lowest. Since the relationship
between class prices will vary from one month to the next, under the
provision adopted here shrinkage may be priced in Class III one month
and in Class IV the next. It is necessary to price shrinkage in the
lowest-priced class to avoid the situation where a cheese plant, for
example, would have to pay more for its shrinkage than it would for
milk used in cheese. Such would be the case if shrinkage was always
priced in Class IV and the Class IV price exceeded the Class III price.
Pricing shrinkage in the lowest-priced class prevents this problem.
As noted, the current shrinkage allowances has been retained in the
revised provision. Thus, a pool plant operator would receive a lowest-
priced class shrinkage allowance based on 2
[[Page 16126]]
percent of the total quantity of milk physically received at the plant
directly from producers' farms on the basis of farm weights and tests,
plus 1.5 percent of bulk milk received on a basis other than farm
weights and tests, and minus 1.5 percent of the quantity of bulk milk
transferred to other plants, excluding concentrated milk transferred to
another plant for an agreed-upon use other than Class I. A cooperative
association handler that delivers milk to pool plants on a basis other
than farm weights and tests would receive a shrinkage allowance of .5
percent of the total quantity of milk picked up at producers' farms.
Shrinkage in excess of these allowances will be assigned in series
starting with Class I to the extent of available utilization.
The shrinkage provision adopted for the new orders contains
language to accommodate shrinkage associated with ``concentrated
milk.'' Prior to the 1993 classification decision, condensed milk,
which is made for use in ice cream and other manufactured products, was
not a fluid milk product. Hence, it was not addressed by the shrinkage
provision. This changed after the decision, however, when condensed
milk became a fluid milk product. In making this change to the fluid
milk product definition, certain conforming changes that should have
been made in the shrinkage provisions were overlooked. The current
proceeding involving all Federal orders has been the first opportunity
to rectify this oversight. During the interim period, the unique
problem associated with condensed milk has been handled
administratively. Thus, the new language added to the shrinkage
provision does not represent a change from the way the rules have been
administered but merely codifies them.
Some plants receive milk from producers, condense (i.e.,
concentrate) the milk into a product that contains not more than 50
percent total milk solids, and then transfer this product on an agreed-
upon basis to another plant for use in some product other than a fluid
milk product (e.g., ice cream). In this case, the first plant should
retain the full 2 percent shrinkage allowance because it incurs
processing shrinkage in the course of concentrating--i.e., most likely
condensing--the milk. The plant purchasing this concentrated (i.e.,
condensed) milk should get no shrinkage allowance on this milk since
the designated use of this milk is for non-fluid use. Accordingly, the
value of any shrinkage incurred in further processing this concentrated
milk would not be much less than its use value.
As noted elsewhere in this decision, a recent development in milk
processing is the use of on-farm filtering equipment (e.g., reverse
osmosis or ultra-filtration) to concentrate milk before it is shipped
to a plant for use in a variety of milk products. Although this milk
falls under the same broad ``concentrated milk'' category as condensed
milk, it is actually a very different product which can conceivably be
used for fluid use as well as in a manufactured product such as cheese
or ice cream. Thus, language is needed in the shrinkage provision to
differentiate this type of concentrated milk from condensed milk. We
have accommodated these 2 types of concentrated milk by allowing the
shipping and receiving handlers to agree on the use of this milk.
Accordingly, if a handler receives concentrated milk from another plant
by agreement for use in Class II, III, or IV, the receiving handler
will get no shrinkage on this milk. If no such agreement is specified,
however, the receiving handler will get the 1.5 percent shrinkage
allowance, just as would be the case for unconcentrated milk that was
received from another plant.
For example, milk may be concentrated at a plant by using reverse
osmosis or ultra-filtration techniques and then be transferred to a 2nd
plant for use in a fluid milk product. In such case, the milk will not
be transferred by agreement for other than Class I use, but instead
will be allocated to use at the 2nd plant receiving this concentrated
milk. In this instance, it is appropriate to treat this milk just like
unconcentrated milk that is received at a plant and then transferred to
a 2nd plant. Thus, the first plant will initially get a 2 percent
shrinkage allowance for the milk received from producers, but will be
required to subtract 1.5 percent from the 2 percent when the milk, even
though concentrated, is transferred to the 2nd plant. The 2nd plant
will get a shrinkage allowance based on 1.5 percent of the
reconstituted volume of the concentrated milk. In other words, for
accounting purposes the water that was initially removed from the milk
will be added back to the concentrated milk before computing the 1.5
percent shrinkage allowance for the 2nd plant.
In the example above, the concentrated milk will likely be from a
farm plant which concentrates its milk before shipping it using either
reverse osmosis (RO) or ultra-filtration (UF). As explained in the
uniform provision discussion in this final decision, milk from a single
farm with RO or UF equipment will be treated as producer milk of the
first pool plant receiving this milk. However, when the milk of 2 or
more producers is commingled on a farm with RO or UF equipment, that
farm will be treated as a plant and the dairy farmer owning or leasing
the farm will be the responsible handler for all of the milk processed
that month.
The shrinkage provision in this final decision differs from the
current shrinkage provisions in one other respect. At the present time,
when a manufacturing facility that has absolutely no Class I
utilization has ``excess shrinkage'' (i.e., shrinkage that exceeds its
2 percent shrinkage allowance) the excess shrinkage is assigned to
Class I even though the plant has no Class I utilization. Thus, the
milk that is ``lost'' by the plant is actually priced higher than the
milk that is ``used'' by the plant.
Under the proposed provision, such excess shrinkage would be
assigned to whatever utilization the plant has, starting with Class I.
In the case of a cheese plant that has no utilization other than Class
III, the excess shrinkage would be assigned to Class III.
After shrinkage is assigned pursuant to Sec. 1000.43(b) of the
proposed orders, it will be added to a handler's reported utilization
to arrive at the ``gross utilization in each class.'' The gross
utilization in each class will then be carried over to Sec. 1000.44,
where it will be used to allocate the handler's receipts to its gross
utilization of such receipts.
Overage occurs when the reported utilization of producer milk
exceeds the reported quantity of producer milk received. Overage, as
well as shrinkage, can occur for a number of reasons but is usually the
result of record-keeping and measurement errors.
As set forth in the proposed rule, overage would have been
classified by being prorated to a handler's reported utilization. It
then would have been subtracted from the handler's reported utilization
to arrive at the gross utilization in each class which would have been
used to allocate a handler's receipts in Sec. 1000.44.
No comments were received specifically focusing on the proposed
treatment of overage, undoubtedly because the proration of overage does
not have the same financial impact as the proration of shrinkage.
Nevertheless, in conjunction with the change in the treatment of
shrinkage, the treatment of overage also should remain the same as it
is now in the orders. Accordingly, in this final decision, overage is
classified in Sec. 1000.44(a)(11) by subtracting the excess pounds of
skim milk and butterfat from each class, beginning with Class IV. This
treatment is identical to the way overage is classified under the
present orders in section
[[Page 16127]]
44(a)(14), except for the fact that now--since there is no Class IV--
the allocation begins with Class III.
4i. Classification of Transfers and Diversions (Sec. 1000.42)
Certain changes have been made to the classification of transfers
and diversions section of the orders to simplify and clarify order
language. The changes discussed in this final decision are virtually
identical to those contained in the proposed rule, except for minor
corrections and conforming changes necessitated by other changes in
order provisions. There were very few comments pertaining to this
section of the proposed rule. Those that were received supported the
changes proposed.
At the present time, in many orders if any milk that is diverted
from one order to another for requested Class II or III use is assigned
to Class I, the dairy farmer who shipped that milk is defined as a
producer under the order receiving the milk with respect to that
portion of the milk assigned to Class I. In other orders under similar
conditions, the dairy farmer becomes a producer on the receiving order
for all of the milk diverted even though only a portion of the milk was
classified as Class I. When this type of adjustment is necessary, the
diverting handler is informed by the market administrator's office that
there is not enough Class II or III use remaining in the receiving
plant to absorb all of the milk diverted. In such case, the diverting
handler may pick which load or loads of diverted milk will become
producer milk under the receiving order.
Since the orders are not precisely clear on how inter-order
diverted milk should be handled, some modification is needed in the
order language. Under most orders, and as provided in this final
decision, milk may be diverted from one order to another for a
requested use other than Class I. However, if there is not enough Class
II, III, or IV utilization in the receiving plant to be assigned to the
diverted milk, some milk may have to be assigned to Class I. When this
happens, the practical administrative problems involve determining
which milk of which dairy farmers and which loads of milk will be
shifted as producer milk from one order to another.
Market administrators should be given some flexibility to handle
these administrative problems on a market-by-market and case-by-case
basis. As a practical matter, most milk diverted between orders is
diverted by cooperative associations that reblend proceeds to their
members. In most cases, it makes little difference to a cooperative
association whether a dairy farmer is a producer on one order or
another order; any differences in blend prices between the orders will
be washed out in the reblending process. In the case of milk of
nonmember producers that is diverted between orders, however,
differences could arise in a producer's net proceeds for the month
depending upon how much milk was pooled in each order. Therefore, these
situations should be handled in such a way as to be least disruptive to
individual dairy farmers.
A market administrator does not know until handlers' reports have
been received that some portion of milk reported as diverted to another
order cannot be absorbed by the amount of non-Class I utilization in
the receiving order's plant. In such case, the diverting handler should
be given the option of designating the entire load of diverted milk as
producer milk at the plant physically receiving the milk.
Alternatively, if the diverting handler wishes, it may designate which
dairy farmers on the diverted load of milk will be designated as
producers under the order physically receiving the milk. As a last
resort, the market administrator will prorate the portion of diverted
milk among all the dairy farmers whose milk was received from the
diverting handler on the last day of the month, then the second-to-last
day, and continuing in that fashion until the diverted milk that is in
excess of Class II, III, and IV use has been assigned as producer milk
under the receiving order.
A conforming change that should be made in each order relates to
milk that is transferred or diverted for Class II or III use.
Presently, milk may be transferred or diverted on a requested Class II
or III basis. However, with 4 classes of utilization in the new orders,
milk could be diverted for requested Class IV use also. Rather than
specifying ``Class II, III, or IV,'' however, the orders should simply
state ``other than Class I'' to accommodate a system of more than 3
classes. This language is simpler, shorter, and accomplishes the same
end.
To simplify and clarify the classification of transfers and
diversions of bulk fluid milk products and bulk fluid cream products
from a pool plant to a nonpool plant, which are classified by assigning
the nonpool plant's utilization to its receipts, the phrase,
``excluding the milk equivalent of both nonfat milk solids and
concentrated milk used in the plant during the month,'' has been added
in Sec. 1000.42(d)(2)(i). This language will help to clarify the steps
to be followed in verifying the utilization of bulk fluid milk and
cream at the nonpool plant. It has been added to ensure administrative
consistency and does not represent a change in the application of this
provision.
In Sec. 1000.42(d)(2)(vi), the allocation process for bulk fluid
milk transferred from pool plants to nonpool plants is modified such
that any remaining unassigned receipts of bulk fluid products be
assigned, pro rata among such plants, to the extent possible first to
any remaining Class I utilization and then to all other utilization, in
sequence beginning with the lowest class at the nonpool plant. This
change returns the order language to the assignment sequence that was
adopted in the Uniform Classification Decision of 1974. Receipts from
pool plants should not be given preference by assigning such milk to
the available Class II use before assigning receipts from dairy farmers
who constitute the regular source of milk for such nonpool plant.
Generally, milk transferred or diverted from pool plants to nonpool
plants is surplus milk and would be used in storable manufactured
products, such as nonfat dry milk and butter. By assigning transferred
or diverted milk to a nonpool plant's Class II utilization first, the
pool plant operator is forced to account for this milk at the Class II
price, even though the nonfat dry milk or other surplus product that
was made with the milk is of a lesser value. This process will prevent
the assignment of receipts at a higher utilization than the actual
utilization.
Receipts of bulk fluid cream products at nonpool plants from pool
plants and plants regulated under other Federal orders, similarly, will
be assigned to the lowest class utilization first. Generally, a plant
operator will use its regular source of supply in the highest valued
uses before using alternative supplies. Thus, if a nonpool plant
receives cream from a pool plant or a plant regulated under another
Federal order, it is likely that the regulated plants were trying to
dispose of their excess cream. The nonpool plant receiving the cream
will most likely use it for manufacturing purposes; therefore, it
should be assigned to the lowest class first. The priority given to
regular source supplies is recognized and the provision modified to
reflect this.
4j. General Classification Rules (Sec. 1000.43)
For classification purposes, the milk of a cooperative bulk tank
handler--i.e., a ``9(c) handler''--that is delivered to a pool plant
will be treated as ``producer milk'' of the pool plant operator. This
[[Page 16128]]
change will shorten and simplify the allocation section.
The computation and classification of shrinkage and overage have
been added to this section. This will eliminate Section 41, the section
previously used for this purpose. Also, the last paragraph of Section
43 has been removed because milk for Class IV use now would be
classified in Section 44 of the orders.
No comments were received pertaining to this section.
4k. Classification of Producer Milk (Sec. 1000.44)
A handler may receive milk from a producer, a cooperative
association acting as a handler on bulk tank milk, by transfer from
another pool plant, or from ``other sources'' such as nonpool plants,
partially regulated plants, and plants that are regulated under other
orders. Because of this diversity in sources of receipt, it is
necessary in a milk order to go through an allocation sequence to
determine which source of milk gets priority to a particular class of
utilization and to determine how producer milk was used. In some
orders, this allocation sequence is done on a system-wide basis; in
others, it is done for each plant receiving producer milk.
Section 44 is one of the most complicated and difficult-to-
understand sections in a milk order. Consequently, an attempt has been
made to simplify and shorten it. Part of this task was made easier by
proposed changes to other sections (e.g., elimination of filled milk,
elimination of individual handler pools, and modification of the
treatment of inter-order transfers and diversions).
All orders are not now uniform in the classification of producer
milk. For example, some orders (e.g., Chicago Regional) provide for
system allocation while others allocate receipts on a plant-by-plant
basis for a multiple plant handler.
Under the consolidated orders, milk will be allocated on a plant-
by-plant basis, as modified to reflect other changes proposed herein.
The system allocation method that is found in some orders is based upon
a set of marketing conditions concerning the locations of handlers'
plants and the market's available milk supply in relation to those
plants. These provisions were intended to stop abuses that occurred
when milk was transferred from one market to another. Rather than
permit an inter-order transfer to be assigned at a handler's high Class
I utilization plant, while the handler's producer milk was assigned to
lower use value at another of its plants, the system allocation
provisions assigned the transfers on the basis of the handler's
utilization at all plants combined. The objective was to prevent more
distant other order milk from being assigned to Class I use at the
expense of producers who were located nearer to the city markets and
who represented the normal source of supply for the markets' fluid milk
needs.
The 11 new orders do not fit within the parameters of the classical
model where a major consumption area is surrounded by production areas.
The marketing areas proposed for the consolidated orders span several
states and have a number of major population centers. They also have
pockets of milk production that, in a number of cases, are in higher-
priced areas than some of the fluid milk plants within the marketing
area. This milk may not be economically available to a fluid milk plant
several hundred miles away. In fact, it may be that a plant near the
periphery of a multi-state market may find its closest and cheapest
source of supply from outside the market rather than from within the
marketing area. Accordingly, the system allocation rules are not
supported by current marketing conditions. Therefore, all orders have
been modified to allocate milk only on a plant-by-plant basis rather
than on a system basis.
Another change that has been made in the allocation section
concerns the ``98/2'' rule. At the present time, only 98 percent of the
packaged fluid milk products transferred between orders is allocated to
Class I; the remaining 2 percent is allocated to Class III. This
provision, originating from the June 19, 1964, ``compensatory payment''
decision, was adopted to provide an allowance for ``route returns.''
According to that decision, ``it is reasonable to expect some route
returns will be associated with inter-market transfers just as there
are in connection with milk locally processed in the receiving market .
. . a small allowance of 2 percent for such returns, which must fall
into surplus use, should be included to avoid such over-assignment in
Class I.'' (29 FR 9120).
This final decision classifies route returns based upon the use of
such returns. If route returns are used for animal feed, an ``other
use'' classification is provided and such milk is priced at the lowest
class price for the month. If route returns are used to make another
product, such as cottage cheese for example, the milk would be
reclassified as Class II. This classification not only applies to
packaged products made from producer milk, but also includes packaged
products that were received from other plants, distributed on routes,
and then returned to the last plant of receipt.
A handler transferring packaged fluid milk products to another
handler's plant may incur some lost product en route to the buying
handler's plant. In such case, the transferring handler may report such
product as route returns and account for the milk used in such product
at the lowest class price.
In view of the reclassification for route returns for either
handler involved in an inter-order transfer who reports such returns,
subject to market administrator verification, it is not necessary to
classify interorder transfers of fluid milk products at 98 percent
Class I and 2 percent Class III because this rule overcompensates
handlers for route returns and unfairly reduces income to producers.
For these reasons, the ``98/2'' rule has been eliminated.
In addition to the changes discussed above, Section 44 has been
shortened and simplified by removing unnecessary references that serve
to confuse the language rather than make it easier to understand. Where
possible, simpler language has been used to replace lengthy section
references.
No comments were received supporting or opposing these
recommendations.
4l. Conforming Changes to Other Sections (Secs. ----.14, ----.41, and
----.60).
Paragraph (b) of the other source milk definition has been removed
to reflect the fact that all packaged fluid cream products now would be
accounted for on a used-to-produce basis. Also, as previously noted,
the simpler and shorter treatment for shrinkage shortens the existing
shrinkage provision to the point where it is no longer necessary to
keep a separate section for it. Therefore, a separate section for
shrinkage is eliminated and the revised contents of that section are
now incorporated as a new paragraph (b) in Sec. 1000.43. Finally,
conforming changes have been made to Sec. ----.60 (Handler's value of
milk for computing the uniform price) to reflect the elimination of
filled milk from the order, and to reflect changes in references due to
other modifications such as the changes in the treatment of shrinkage
and overage.
4m. Organic milk
During the development stage of the order reform process, a
proposal was received from Horizon Foods to exempt organic milk from
pricing and pooling under Federal milk orders.
In 1990, Congress passed, and the President signed into law, the
Organic Food Production Act of 1990 (7 U.S.C.
[[Page 16129]]
6501 et seq.), establishing the first Federal standards for organic
food products. A proposed rule was issued on December 5, 1997, and
published in the Federal Register on December 16, 1997 (62 FR 65849),
to implement the National Organic Program.
Organic dairy products can now be found in many, if not most, major
grocery chains in metropolitan areas. The retail price of organic dairy
products is well above non-organic products. In addition to carrying
organic milk, many supermarkets now also carry organic yogurt, sour
cream, butter, and other organic dairy products. All of these products
are priced well above their non-organic counterparts.
Processors of organic milk have asked for exemption from Federal
regulation. In a May 20, 1997, letter to the Department, Horizon Foods
argued that (1) organic milk is a different commodity; (2) the market
for organic dairy products is a niche market; and (3) Federal order
regulation of organic milk is contrary to the intent of the Organic
Foods Production Act because it does not ``facilitate interstate
commerce in fresh and processed food that is organically produced.''
Horizon's proposed solution was to exempt organic milk from the
producer milk definition if the milk is produced on a certified organic
farm and if the broker pays the producer at least 110% of the month's
Class I price for such milk.
The proposal to exempt organic milk from Federal order pricing is
denied for several reasons. First, contrary to the assertions of
Horizon Foods that all organic milk is priced at 110% of the Class I
price, regardless of how the milk is used, there is evidence that some
organic milk has been pooled and priced as non-organic milk under some
orders, including the Chicago Regional and Southern Michigan orders,
for example. Second, although the retail price of organic milk is well
above non-organic milk, we believe that organic milk competes with the
regulated market and, therefore, also must be fully regulated. Third,
if Congress wished to exempt organic milk from Federal milk order
regulation, they could have done so either in the Organic Foods
Production Act or in the 1996 Federal Agricultural Improvement and
Reform Act; but they did not. Fourth, there is no indication that all
processors of organic milk price their receipts the same way as Horizon
Foods. Even if they did, however, the one class/one price system
currently used by Horizon could be a temporary phenomenon due to the
rapidly expanding market for organic products. The day may come when
the organic market becomes saturated and milk in excess of fluid needs
must be disposed of at competitive prices. If and when this happens, it
is likely that some form of classified pricing will be implemented.
Finally, the Act provides for classifying and pricing milk on the basis
of its form and use. As a result, different costs that may be
associated with producing organic milk or other types of milk are not
relevant. For these reasons, it would be inappropriate at this time to
exempt organic milk from pooling or to provide any other type of
special treatment for it under the guise of Federal order reform.
No comments were filed concerning this issue with the exception of
Horizon Foods, which continued to support its proposal.
4n. Allocation of Location Adjustment Credits
A provision that is now common to most orders has not been carried
forward to the consolidated orders. This provision, which allocates
location adjustment credits that are applied to transfers of bulk fluid
milk products between pool plants, is commonly found in Section 52 of
most current orders (See, for example, Secs. 1001.53(h), 1007.52(b),
1030.52(c), or 1079.52(d)).
Under most orders, intra market shipments of milk between handlers
are assigned to Class I use, unless both handlers agree on a lower
classification. Milk that is assigned to Class I use is priced at the
receiving plant subject to a location adjustment credit that may apply
if it is demonstrated that such milk is actually needed for Class I
use. If the credit is applied, the milk is priced at the transferring
plant. This assignment of location adjustment credits is intended to
prevent the use of pool proceeds to pay the hauling cost for the
transfer of bulk milk between pool plants when the intended use of the
milk is for other than Class I use.
To carry out this concept, the provision typically assigns a pool
distributing plant's Class I use first to its milk receipts directly
from producers, then to bulk milk received from a cooperative bulk tank
handler, then to milk received by diversion from another pool plant,
and then to packaged fluid milk products received from other pool
plants. The remaining Class I use in the distributing plant is then
assigned to bulk milk received by transfer from other pool plants. In
some orders, this remaining Class I use is assigned pro rata to all of
the pool plants from which bulk milk was obtained. In other orders, the
remaining Class I milk is first assigned to pool plants with the same
Class I price and then, in sequence, to pool plants with progressively
lower Class I prices.
This final decision is based on the premise that Class I milk does
not have the same value at every location. For this reason, Class I
differentials have been established for each order with location
adjustments that result in establishing a unified Class I price
structure that applies to every county and city in the contiguous 48
states. Given this approach, it is no longer appropriate to classify a
bulk movement of milk as Class I milk in one section of the order and
then in another section of the order depart from the principle of
pricing such Class I milk at the plant where it was physically
received.
In actual practice, a distributing plant does not receive a fixed
amount of milk each day of the week. Some days are heavy bottling days
when more milk is needed for Class I use. On such days, a distributing
plant may not be able to obtain enough local milk to meet its Class I
needs and may have to import plant milk from more distant locations. At
the end of the month, however, when the allocation of location
adjustment credits takes place, it may appear that there was more than
enough local milk to meet the distributing plant's fluid needs, even
though this was not the case when recapped on a daily basis.
Nevertheless, the allocation provision allocates location adjustment
credits based on monthly volumes of milk, not daily volumes, so the
supply plant could be in a position where it receives no Class I
location adjustment credit even though the milk was indeed shipped for
Class I use.
Some of the new orders have transportation credit provisions that
provide for hauling credits on bulk milk received by transfer from a
plant regulated under another Federal order and assigned to Class I use
at the receiving plant. To arrive at the classification of such milk,
the milk is assigned to the lower of the receiving plant's or the
receiving market's Class I utilization. When milk is purchased in this
manner, the transportation cost of the milk assigned to Class I is
absorbed, for the most part, by the transportation credit that is
provided for the handler purchasing the milk without regard to whether
milk could have been purchased from a closer source of supply.
Finally, the current application of the provision in question can
result in a situation where there is more incentive to receive bulk
milk transferred from a plant regulated under another Federal order
than from a plant regulated under the same order, whether or not any
other transportation credits are
[[Page 16130]]
involved. Should this occur, it can result in a transfer of Class I
sales to the transferring plant's Federal order market.
For all of the reasons cited above, the allocation of location
adjustment credits has been removed from the orders. Several comment
letters were received supporting this change; none were received in
opposition to it.
5. Provisions Applicable to All Orders
In addition to the terms and conditions of milk orders previously
described, there are a number of other provisions common to all milk
orders that describe and define those persons and plants affected by
the regulatory plan of the program. Different marketing conditions in
the consolidated areas, together with institutional factors, do not
lend themselves to an entirely uniform set of provisions for all
orders. Consequently, in each of the consolidated orders there are
provisions that are unique to each order.
This part of the final decision discusses the nature of these
common order provisions, their purpose, and whether or not a provision
can be uniformly applied to all orders. When a provision does not lend
itself to uniform application, it is discussed in subsequent sections
of this final rule together with the provisions unique to each of the
individual orders.
To the extent that provisions can be uniformly applicable for all
of the consolidated orders, they are included in Part 1000, the General
Provisions of Federal Milk Marketing Orders which are, by reference,
already a part of each milk order. Thus, as provided here, the General
Provisions include the definitions of route disposition, plant,
distributing plant, supply plant, nonpool plant, handler, other source
milk, fluid milk product, fluid cream product, cooperative association,
and commercial food processing establishment. In addition, the General
Provisions include the milk classification section of the order,
pricing provisions, and some of the provisions relating to payments.
These additions to the General Provisions should make milk order
provisions more understandable to the general public by removing the
differences that now exist and by consolidating uniform provisions in
one place. Thus, an interested person would only have to read one
``nonpool plant'' section, for instance, to understand how that term is
applied to all orders. By contrast, at the present time, ``nonpool
plant'' is defined in every order and there are slight differences in
the definition from one order to the next.
No comments to the proposed rule were received with regard to most
of the provisions discussed in this section. To the extent that there
were comments, they are specifically discussed below. Most of the
provisions in the proposed rule are adopted without substantive change.
Any substantive changes are specifically discussed below.
The Concept of Pooling Milk Proceeds
All Federal milk orders today, save one, provide for the marketwide
pooling of milk proceeds among all producers supplying the market. The
one exception to this form of pooling is found in the Michigan Upper
Peninsula market, where individual handler pooling has been used.
Marketwide sharing of the classified use value of milk among all
producers in a market is one of the most important features of a
Federal milk marketing order. It ensures that all producers supplying
handlers in a marketing area receive the same uniform price for their
milk, regardless of how their milk is used. This method of pooling is
widely supported by the dairy industry and has been universally adopted
for the 11 consolidated orders.
There were a number of proposals and public comments considered in
determining how Federal milk orders should pool milk and which
producers should be eligible to have their milk pooled in the
consolidated orders. Many of these comments advocated a policy of
liberal pooling, thereby allowing the greatest number of dairy farmers
to share in the economic benefits that arise from the classified
pricing of milk.
A number of comments supported identical pooling provisions in all
orders, but others stated that pooling provisions should reflect the
unique and prevailing supply and demand conditions in each marketing
area. Fundamental to most pooling proposals and comments was the notion
that the pooling of producer milk should be performance-oriented in
meeting the needs of the fluid market. This, of course, is logical
since a purpose of the Federal milk order program is to ensure an
adequate supply of milk for fluid use.
A suggestion for ``open pooling,'' where milk can be pooled
anywhere, has not been adopted, principally because open pooling
provides no reasonable assurance that milk will be made available in
satisfying the fluid needs of a market. Proposals to create and fund
``stand-by'' pools are similarly rejected for the same reason.
The pooling provisions for the consolidated orders provide a
reasonable balance between encouraging handlers to supply milk for
fluid use and ensuring orderly marketing by providing a reasonable
means for producers within a common marketing area to establish an
association with the fluid market. Obviously, matching these goals to
the very disparate marketing conditions found in different parts of the
country requires customized provisions to meet the needs of each
market. For example, in the Florida marketing area, where close to 90
percent of the milk in the pool will be used for fluid use, pooling
standards will require a high degree of association with the fluid
market and will permit a relatively small amount of milk to be sent to
manufacturing plants for use in lower-valued products. In the Upper
Midwest market, on the other hand, a relatively small percentage of
milk will be needed for fluid use. Accordingly, under the pooling
standards for that order smaller amounts of milk will be required to be
delivered to fluid milk plants and larger amounts of milk will be
permitted to be sent to manufacturing plants for use in storable
products such as butter, nonfat dry milk, and hard cheese. The specific
pooling provisions adopted for each order are discussed in detail in
the sections of this document pertaining to each of the consolidated
orders.
Route Disposition
Route disposition is a measure of fluid milk sales in commercial
channels. It is defined to mean the amount of milk delivered by a
distributing plant to a retail or wholesale outlet (except a plant),
either directly or through any distribution facility (including
disposition from a plant store, vendor or vending machine), of a fluid
milk product in consumer-type packages or dispenser units that is
classified as Class I milk.
The route disposition definition adopted here differs from the
definition contained in some current orders. Presently, the route
disposition definition of several orders makes reference to plant
movements of packaged fluid milk products between distributing plants
with respect to determining if such transfers should be considered
``route disposition'' of the transferring plant or the receiving plant.
As provided here, however, this issue is addressed in section 7(a) of
the pool plant section, which essentially treats such transfers as if
they were route disposition.
Plant
A plant definition is included in all orders to specify what
constitutes an operating entity for pricing and regulatory purposes. As
provided in
[[Page 16131]]
Sec. 1000.4 of the General Provisions, a plant is the land, buildings,
facilities, and equipment constituting a single operating unit or
establishment at which milk or milk products are received, processed,
or packaged. This is meant to encompass all departments, including
those where milk products are stored, such as a cooler. The plant
definition does not include a physically separate facility without
stationary storage tanks that is used only as a reload point for
transferring bulk milk from one tank to another, or a physically
separate facility that is used only as a distribution point for storing
packaged fluid milk products in transit for route disposition.
To account for regional differences and practices in transporting
milk, some of the consolidated orders provide for the use of reload
points for transporting bulk milk that do not have stationary storage
tanks.
Farm-Separated Milk
With the advent of new technology for on-farm separation of milk
into its components, some additional regulatory language has been added
to the plant definition to specify who is the responsible handler for
the milk or milk components leaving the farm and how these components
will be classified and priced. This determination will be based, in
part, on whether the farm processing facility is a plant.
Ultrafiltration (UF) is a membrane process that transfers water and
low-molecular weight compounds through a membrane while retaining
suspended solids, colloids, and large organic molecules. It selectively
fractionates some milk solids components and selectively concentrates
other solids components of milk.
When a UF membrane is used, water, lactose, uncomplexed minerals
and other low-molecular-weight organic compounds pass through the
membrane. For example, if unaltered milk containing 3.5 percent fat,
3.1 percent protein, and 4.9 percent lactose is run through a UF
membrane until half of the original volume is eliminated, the remaining
product not passing through the membrane (i.e., retentate) will contain
all of the fat and protein but only half of the lactose. The permeate
(i.e., that part of the original milk that does pass through the
membrane) will contain water, lactose, non-protein nitrogen, and about
one-sixth of the minerals.
Reverse osmosis (RO) is also a membrane process, but the membranes
have much smaller pores than UF membranes, allowing only the water to
pass through. The end product essentially is concentrated milk.
At the present time, both reverse osmosis and ultrafiltration
systems are being utilized on some farms, principally large farms in
the southwestern United States. The product shipped from these farms
(i.e., the retentate) currently is sent to processing plants for use in
manufactured products but it could be used in a range of milk products.
The retentate received from a farm with a UF or RO system will be
treated as producer milk at the pool plant at which the milk is
physically received or, if the retentate is shipped to a nonpool plant,
as producer milk diverted to a nonpool plant. In either case, the milk
or milk components will be priced at the pool plant or nonpool plant
where the milk is physically received.
To be considered a farm and a producer, as opposed to a plant and a
handler, an RO or UF unit must be under the same ownership as the farm
on which it is located and only milk from that farm or other farms
under the same ownership may be processed through the unit. The
producer operating the unit shall be responsible for providing records
of the daily weights of the milk going through the unit. Also, the
producer must provide samples for each load of milk going through the
unit and must furnish the receiving plant with a manifest on each load
of retentate showing the scale weight along with samples of the
retentate. Finally, the producer operating the RO or UF unit must
maintain records of all transactions which must be available to the
Market Administrator upon request. If the producer does not meet these
recordkeeping and reporting requirements, the unit will be considered
to be a plant.
RO and UF retentate will be considered to be producer milk at the
plant which receives it. The pounds of RO and UF retentate received
will be priced according to the skim-equivalent pounds of such milk.
The skim-equivalent pounds for RO retentate will be determined by
dividing the solids-not-fat pounds in the retentate by the average
producer solids-not-fat in the skim portion of the producer milk used
in the product. The butterfat pounds would then be added to this number
to arrive at the product skim-equivalent pounds.
In computing the fluid equivalent of UF retentate, the fluid
equivalent factor should be computed by dividing the true protein test
in the skim milk portion of the retentate by the true protein test in
the skim milk portion of the producer milk used in the product. Adding
the butterfat pounds to this computation will yield the product
equivalent pounds.
In addition to having UF and RO equipment, some farms today may
have a separator to separate skim milk from cream before they leave the
farm. Rules are also established for this type of operation.
Skim milk and cream going through a farm separator also should be
treated as producer milk if received at a pool plant or diverted to a
nonpool plant. The producer will be required to obtain scale weights
and tests on each load of skim and cream shipped along with samples of
each. The same ownership, recordkeeping, sampling and reporting
requirements that apply to RO and UF units will also be applicable.
In formulating a policy for the treatment of RO and UF retentate,
it is important to recognize that the milk produced on a farm with RO
or UF equipment is fully available to meet the needs of the fluid
market, either before or after passing through such units. Therefore,
there should be no question concerning the propriety of pooling this
milk along with other producers' milk.
At this writing, the Food and Drug Administration (FDA) has not yet
decided whether UF retentate can be reconstituted and sold as fluid
milk. However, FDA has approved the use of UF retentate in certain
cheese products on a trial basis. Therefore, before receiving UF
retentate for use in any product, handlers should be certain that such
use has been approved by the FDA.
Distributing Plant
A distributing plant is defined as a plant that is approved by a
duly constituted regulatory agency to handle Grade A milk and at which
fluid milk products are processed or packaged and from which there is
route disposition or transfers of packaged fluid milk products to other
plants. This definition, and the following supply plant definition, are
essentially the same as those found in present orders, except for minor
changes made to conform with the pool plant provisions adopted for the
consolidated orders.
Supply Plant
A supply plant is a regular or reserve supplier of bulk milk for
the fluid market that helps to coordinate the supply of milk with the
demand for milk in a market. As defined in this decision, a supply
plant is a plant approved by a duly constituted regulatory agency for
the handling of Grade A milk that receives milk directly from dairy
farmers and transfers or diverts fluid milk products to other
[[Page 16132]]
plants or manufactures dairy products on its premises.
Pool Plant
The pool plant definition of each order describes those plants
which receive milk that shares in the marketwide pool. It provides
standards to identify those plants engaged in serving the fluid needs
of the marketing area. Pool plants serve the fluid market to a degree
that warrants their producers sharing in the added value that derives
from the classified pricing of milk. While the pool plant definition in
every consolidated order provides for a set of common principles, the
standards applicable to pool plants differ among the consolidated
orders, reflecting the fact that marketing conditions vary across the
country. The goal in drafting pooling standards is to ensure both an
adequate supply of milk for fluid use and orderly marketing by allowing
all milk in a marketing area the opportunity to serve the fluid market
and thereby share in the pool.
There are 2 performance standards applicable to pool distributing
plants in the consolidated orders. The first standard, which varies
among orders, requires a distributing plant to have a minimum Class I
utilization. Since route disposition includes only Class I milk, the
specific standard is a measure of a distributing plant's route
disposition as a percent of its total receipts of fluid milk products.
This standard is generally directly related to the market's Class I
utilization. Accordingly, in the higher Class I utilization markets in
the Southeast, the overall route disposition standard is 50 percent. In
a market such as the Upper Midwest, on the other hand, where Class I
utilization will be much lower, the overall route disposition standard
is only 15 percent. The specific standards for each consolidated order
are discussed in Section 6 of this decision.
One change common to all orders from the proposed rule to this
final decision is the substitution of ``total receipts of fluid milk
products'' for ``receipts of bulk fluid milk products'' in computing
the total and in-area disposition for a distributing plant. This change
was made to achieve consistency in accounting for packaged receipts at
a distributing plant that are subsequently disposed of as route
disposition or transferred to another plant. Since all such disposition
will count towards meeting an order's specified pooling standards,
receipts of such products from another plant also should be counted as
part of the plant's receipts.
Once it is determined that a distributing plant is sufficiently
associated with the fluid market to share in the pool, a second
standard determines if the plant is sufficiently associated with a
particular market to share in the pool applicable to that market. The
``in-area'' standard adopted for the consolidated orders requires that
a distributing plant have 25 percent of its route disposition within a
marketing area before it can be fully regulated by the order covering
that marketing area.
The 15 percent in-area standard in the proposed rule has been
changed to 25 percent for all orders to reflect the larger, merged
marketing areas that are adopted. This change should not affect the
regulatory status of any current distributing plant.
At the present time, some orders describe the in-area route
disposition standard as a percent of plant receipts, while in other
orders it is described as a percent of route disposition. For the new
orders, the in-area standard for all orders is expressed as a percent
of total route disposition. This methodology will ensure that the in-
area route disposition standard never exceeds the total route
disposition standard, a situation that is now possible under the terms
of the present Upper Midwest order. For most orders, this change will
make little difference and should not result in regulating any plant
that is now unregulated.
Under the consolidated orders, a distributing plant that has sales
in more than one Federal order marketing area will be regulated, for
the most part, under the order in which it has the most sales. There
are certain exceptions to this rule, however, particularly in the 3
Southeast orders, where the shifting of plants among markets has
created disorderly marketing conditions in recent times. In the
Florida, Southeast, and Appalachia orders, a distributing plant that is
located within the marketing area and that meets the order's pooling
standards will be regulated under that order even though it might have
more route disposition in some other marketing area.
When the regulation of a plant does shift from one order to
another, the shift will only occur after the plant has had greater
sales in such other market for 3 consecutive months. This provision
will provide some stability to avoid the frequent shifting of
regulation between orders.
To facilitate proper administration and accounting, all orders
currently provide that packaged fluid milk products transferred from
one handler to another be treated as inter-handler transfers, with each
transaction properly identified and specifically reported to affected
market administrators. This should continue in the consolidated orders.
However, for the single purpose of qualifying a plant as a pool
distributing plant, the pool distributing plant definition has been
modified to treat transfers of packaged fluid milk products to other
plants as if they were route disposition of the transferring plant for
the purpose of identifying the plant's association with the fluid
market. This is necessary to preclude a plant from becoming partially
regulated if the plant shipped significant quantities of packaged fluid
milk products to another distributing plant. A conforming change has
been made to the distributing plant definition in Sec. 1000.5 to
reflect this change.
A special pool distributing plant provision (i.e., Section 7(b) of
the consolidated orders) has been adopted for distributing plants that
distribute ultra-pasteurized or aseptically-processed fluid milk
products. Such plants must be located in the marketing area and must
process a certain percentage of their milk receipts into ultra-
pasteurized or aseptically-processed fluid milk products during the
month. The minimum percentage used for each order in Section 7(b) is
equal to the total route disposition percentage required in Section
7(a) of the order for distributing plants processing standard shelf-
life fluid milk products. However, unlike the standards for a 7(a)
plant, there is no route disposition standard for a 7(b) plant to meet.
Plants specializing in ultra-pasteurized or aseptically-processed
fluid milk products tend to have erratic processing and distribution
patterns reflecting the long-life nature of the product they process.
In some months, they may process fluid milk products but have little or
no route disposition because the products are stored in inventory. In
addition, these plants often have much wider distribution patterns than
do other distributing plants and, under current orders, frequently
shift regulation from one order to another. This shifting regulation is
disruptive to the producers and/or cooperatives supplying these plants
and is an additional regulatory burden to the plant operator.
To provide regulatory stability for these plants, they will be
treated as a fully regulated plant if they process a minimum percent of
their milk receipts into ultra-pasteurized or aseptically-processed
fluid milk products during the month. Having met this standard, which
varies among orders, they will not shift regulation to another order
simply because they have more route disposition in such other order's
[[Page 16133]]
marketing area. In fact, they need not have any route disposition in
the order in which they are located to remain regulated. However, if
they do not meet the processing standard of the order in which they are
located but do meet the 7(a) standards for a distributing plant under
one or more other orders, they will become regulated under the order in
which they have the most route disposition. If they continue to qualify
for pool status on this basis, they may be subject to regulatory shifts
depending upon the pattern of their route disposition.
Pool Supply Plant
Performance standards for pool supply plants are designed to
attract an adequate supply of milk to meet the demands for fluid milk
in a market. Pool supply plants move milk to pool distributing plants
that service the marketing area.
The pool supply plant definition, like the distributing plant
definition, does not lend itself to uniform application in all
consolidated orders. Consequently, pool supply plant performance
standards should be established according to regional needs. The
specific standards adopted in each order are described in section 7(c)
of each new order and are explained in more detail in the regional
discussions of this document.
In most current orders, a pool supply plant does not include any
portion of a plant that is not approved for handling Grade A milk and
that is physically separated from a portion of the plant that has such
approval. Some inspection agencies render only one type of approval for
an operation. To accommodate those areas where split operations are
permitted, some of the consolidated orders provide for a physically
separated portion of the plant as a ``nonpool plant.''
Pooling Options
Unit Pooling
Unit pooling allows 2 or more plants located in the marketing area
and operated by the same handler to qualify for pool status as a unit
by meeting the total and in-area route disposition standard as if they
were a single pool distributing plant. To qualify as a unit, at least
one of the plants in the unit--i.e., the primary plant-- must qualify
as a pool distributing plant on its own standing and the other plants
in the unit must process only Class I or Class II milk products.
Unit pooling serves to accommodate and provide a flexible
regulatory approach in addressing the specialization of plant
operations. It also minimizes unintended regulatory effects that may
cause the uneconomical and inefficient movement of milk for the sole
purpose of retaining pool status. However, some conditions need to be
satisfied for unit pooling. The ``other'' plant(s) of the pool unit--
i.e., the plants that would not qualify for pool status as a single
plant--must be located in an equivalent or a lower price zone than the
primary pool distributing plant. This condition is required to assure
that the transportation of milk for Class II uses will not be
subsidized through the marketwide pool and to assure pricing equity to
all handlers processing Class II products that do not use unit pooling.
Unit pooling status must be requested in writing and approved by the
market administrator for its proper implementation and administration.
System Pooling
Supply plants and reserve supply plants provide a benefit to the
market because they are required to meet certain performance standards
in supplying the needs of the fluid market. They also serve to balance
the market. Because handlers often operate more than one supply plant
within the market, some of the merged orders allow a single proprietary
handler or one or more cooperative associations to combine their plants
into systems for the purpose of meeting the order's performance
standards for pooling. Under system pooling, 2 or more plants in a
system can qualify for pool status by meeting the applicable
performance standards in the same manner as a single plant. However,
not all plants in a system of supply plants must transfer or divert
milk to a distributing plant. In recognition of this fact, the supply
plant definition in Sec. 1000.6 has been modified to conform with this
provision.
Adjustment of Pooling Standards
The consolidated orders provide the market administrator with
authority to adjust shipping standards for supply plants, reserve
supply plants, balancing plants, and supply plant units if he/she finds
that such revision is necessary to encourage needed shipments or to
prevent uneconomic shipments of milk. A finding by the market
administrator that adjustments are warranted would follow an
investigation conducted on the market administrator's own initiative or
at the request of interested parties. Before making a finding that
revisions are warranted, the market administrator would notify
interested parties of this possibility and invite data, views, and
arguments. If the market administrator determines that a revision is
warranted, he/she shall provide written notification to interested
parties of such revision at least one day before the revision goes into
effect.
This provision allows the market administrator to respond promptly
to changes in local marketing conditions and should result in better
service to the dairy industry and to the public. The authority given to
the market administrator to make needed adjustments in the manner
specified is commensurate with the authorities already delegated by the
Secretary to the market administrator.
As provided in the proposed rule, the market administrator would
have had the authority to adjust pooling standards for distributing
plants as well as supply plants. However, such authority has not been
provided in any of the current marketing orders except for the
Southeast, and in that market it has never been needed. Consequently,
it was concluded that any changes that may need to be made to pool
distributing plant standards can best be handled through normal
amendatory and suspension procedures.
Treatment of Concentrated Milk
An issue related to pooling that should be clarified with the
issuance of new orders is the treatment of concentrated milk that is
shipped between plants.
Prior to the 1993 classification decision, condensed milk was not
defined as a fluid milk product. Accordingly, when condensed milk was
shipped from a supply plant to a distributing plant it was not counted
as a qualifying shipment for the purpose of determining the pool status
of the supply plant. By the same token, when a distributing plant
received a shipment of condensed milk from another plant, the condensed
milk was excluded from the distributing plant's receipts for the
purpose of computing the pool plant status of the distributing plant.
In the 1993 classification decision, condensed milk was redefined
as concentrated milk 15 and was included in the fluid milk
product definition. An unintended consequence of this change was that
certain plants which had never been pool plants before suddenly became
pool plants because of their shipments of condensed milk, and
[[Page 16134]]
certain distributing plants that had been pool plants suddenly found
themselves unable to qualify as pool plants because their receipts of
``fluid milk products'' were enlarged to include their condensed milk
receipts. When handlers complained about these unforseen and
unexplained changes, it was decided administratively to continue the
previous treatment for condensed milk until the orders could be
amended.
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\15\ As used in parts 1000 through 1135, the term concentrated
milk means milk that contains not less than 25.5 percent, and not
more than 50 percent, total milk solids. It may include milk that
has been condensed or milk that has been filtered using such methods
as reverse osmosis and ultra-filtration. Concentrated milk may be
pasteurized and it may be homogenized.
---------------------------------------------------------------------------
The consolidated orders should continue this special treatment for
condensed milk. Although condensed milk conceivably may be
reconstituted for fluid use, as a practical matter this is rarely, if
ever, done. Sometimes, condensed milk is used to fortify fluid milk,
but for the most part condensed milk is made to be used in ice cream
mix or some other manufactured dairy product.
When condensed milk is transferred from the plant of origin to a
distributing plant in the same or another order, it is generally
transferred, by agreement, for Class II or III use. Using this criteria
as a distinguishing feature of this product, the pool supply plant
provision of each order should exclude from qualifying shipments to
distributing plants ``concentrated milk transferred, by agreement, for
other than Class I use.'' By the same token, a distributing plant also
should exclude from its receipts, for pooling purposes, ``concentrated
milk received, by agreement, for other than Class I use.''
Using this language will preserve the regulatory treatment that has
applied to condensed milk for many years. At the same time, however,
this language allows flexibility for different treatment in the case of
concentrated milk that is not destined for Class II or III use.
In recent years, there has been much greater use of filtering
equipment to remove water from milk at the farm. This technology may be
used to reduce hauling costs in shipping milk long distances for use as
fluid milk products. Although this concentrated milk is not at present
being used for fluid use, this situation may change in the future. For
this reason, it is reasonable to provide some flexibility in handling
this type of product for both shrinkage and pooling purposes. At this
point in time, we believe that the best way to provide this flexibility
is to allow the handlers involved in making and using this product to
decide among themselves how it will be used and reported, knowing ahead
of time the shrinkage and pooling implications involved with these
decisions. Thus, if concentrated milk is purchased from another plant
by agreement for other than Class I use, the buying handler understands
that there will be no shrinkage allowance allowed on the milk. The
buying handler also knows that the volume of concentrated milk received
will not be counted as a plant receipt for the purpose of determining
its pool status.
A supply plant shipping concentrated milk for Class II use may or
may not wish to be pooled under a Federal order. If the plant wished to
be treated as a nonpool plant, concentrated milk could be transferred
for Class II or III use by agreement with the receiving handler. In
such case, the transfer of concentrated milk would not be counted as a
qualifying shipment in meeting the pool supply plant shipping standards
and the receipt of concentrated milk at the distributing plant would
not be counted as part of the distributing plant's receipts for
purposes of computing its total route disposition. Of course, the
agreement to transfer milk for a pre-arranged use is contingent upon
the receiving distributing plant having sufficient Class II or III
utilization to absorb these receipts.
On the other hand, if a supply plant making concentrated milk
wished to qualify for pool status, it could simply transfer
concentrated milk to a pool distributing plant without specifying its
designated use. In such case, the shipment would count as a qualifying
shipment for the purpose of meeting the order's pool supply plant
shipping requirements provided that the distributing plant receiving
the concentrated milk was a pool plant. Since the receipt of
concentrated milk would be counted as part of the receiving
distributing plant's receipts in determining the distributing plant's
pool status under the order, the plant would have to have sufficient
Class I sales to maintain its identity with the fluid market. If the
distributing plant did not have sufficient Class I use to meet the
order's pooling standards, it would not be qualified to have its
receipts pooled under the order and, by extension, neither would the
supply plant that shipped the concentrated milk to the distributing
plant.
This regulatory flexibility for concentrated milk should
accommodate varied situations in the consolidated orders. It will
follow the historical treatment for condensed milk but, at the same
time, it will provide for new uses and treatment for other types of
concentrated milk.
Nonpool Plant
A definition is provided in all orders describing plants which
receive, process or package milk, but which do not satisfy the
standards for being a pool plant. While providing for such a definition
may appear redundant, this provision is useful to more clearly define
the extent of regulation applicable to plants.
Nonpool plants should include a plant that is fully regulated under
another Federal order, a producer-handler plant, a partially regulated
distributing plant, an unregulated supply plant, and an exempt plant.
The definitions for these nonpool plants are not materially different
than those provided in the current orders with the possible exception
of an ``exempt plant.''
Certain plants are exempt from regulation under Federal milk
orders. These plants fall into 4 categories: (1) Plants that are
operated by a governmental agency which have no route disposition in
commercial channels; (2) plants operated by a college or university
that dispose of fluid milk products only through their own facilities
with no route disposition in commercial channels; (3) plants from which
the total route disposition is for individuals or institutions for
charitable purposes without remuneration; and (4) plants that have
route disposition of 150,000 pounds or less during the month. These
types of plants have little impact on the regulated market and need not
be regulated to ensure the integrity of the regulatory plan.
A number of Federal orders exempt from regulation small
distributing plants which, because of their size, do not significantly
impact competitive relationships among handlers in the market. The
level of route disposition required before an exempt plant becomes
regulated varies in the current orders. As adopted for the merged
orders, any plant with route disposition during the month of 150,000
pounds or less would be exempt from regulation. This limit reflects the
maximum amount of fluid milk products allowed by an exempt plant in any
current Federal milk order and ensures that plants currently exempt
from regulation will remain exempt.
Many current Federal orders also provide regulatory exemption for a
plant operated by a state or Federal governmental agency. For example,
some states have dairy farm and plant operations that provide milk for
their prison populations. As provided herein, regulatory exemption
would be continued under the consolidated orders unless pool plant
status is requested.
Regulatory exemption also should apply to colleges, universities,
and charitable institutions because these institutions generally handle
fluid milk
[[Page 16135]]
products internally and have no impact in the mainstream commercial
market. However, in the event that these entities distribute fluid milk
through commercial channels, route sales by such entities, including
government agencies, will be monitored to determine if Federal
regulation should apply.
The determination and verification of exempt plant status will,
from time to time, necessitate the need for the market administrator to
require reports and information deemed appropriate for the sole purpose
of making this determination. Such authority is currently provided in
orders and should continue.
Handler
Federal milk orders regulate those persons who buy milk from dairy
farmers. Such persons are called handlers under the order. These
persons have a financial responsibility for payments to dairy farmers
for milk in accordance with its classified use. They must file reports
with the market administrator detailing their receipts and utilization
of milk.
The handler definition adopted for the consolidated orders includes
the operator of a pool plant, a cooperative association that diverts
milk to nonpool plants or delivers milk to pool plants for its account,
and the operator of a ``nonpool plant,'' which would encompass a
producer-handler, a partially regulated distributing plant, a plant
fully regulated under another Federal order, an unregulated supply
plant, and an exempt plant.
In addition, ``third party'' organizations that are not otherwise
regulated under provisions of an order are included in the handler
definition. This category includes any person who engages in the
business of receiving milk from any plant for resale and distribution
to wholesale and retail outlets, brokers or others who negotiate the
purchase or sale of fluid milk products or fluid cream products from or
to any plant, and persons who, by purchase or direction, cause the milk
of producers to be picked up at the farm and/or moved to a plant. Such
intermediaries provide a service to the dairy industry. These persons
are not, however, recognized or regulated as entities required to make
minimum payments to producers. The expanded marketing chain brought
about by such intermediaries has made it increasingly difficult for the
market administrator to track the movement of milk from farms to
consumers. The revised handler definition enables the market
administrator to more readily identify those entities.
Producer-Handler
It has been a long-standing policy to exempt from full regulation
many of those entities that operate as both a producer and a handler.
Generally, a producer-handler is any person who provides satisfactory
proof to the market administrator that the care and management of the
dairy farm and other resources necessary for own-farm production and
the management and operation of the processing plant are the personal
enterprise and risk of such person. A primary basis for exempting
producer-handlers from the pricing and pooling provisions of a milk
order is that these entities are customarily small businesses that
operate essentially in a self-sufficient manner. Also, during the
history of producer-handler exemption from full regulation there has
been no demonstration that such entities have an advantage as either
producers or handlers so long as they are responsible for balancing
their fluid milk needs and cannot transfer balancing costs, including
the cost of disposing of reserve milk supplies, to other market
participants.
The current orders have varying producer-handler definitions that
address specific marketing conditions and circumstances. For example,
they specify different limits on the amount of milk that producer-
handlers may purchase and retain their exempt status. Some
modifications have been made to the producer-handler provisions in the
consolidated orders for standardization. However, no changes have been
made that would intentionally regulate a producer-handler that is
currently exempt from regulation under their current operating
procedures. Because the producer-handler provision is slightly
different from one order to the next, the specific details regarding
each definition are described in the regional discussions that follow.
Any general provision in the proposed rule, such as the phrase ``or
acquired for distribution'' in Sec. 1000.44(a)(3)(iv), that would have
changed the status of a current producer-handler has been eliminated.
Public comments were received regarding the extent of regulation
that should apply to producer-handlers. The majority of public comments
supported the status-quo regarding the regulatory treatment of
producer-handlers, emphasizing that they should remain exempt from
regulation in accordance with current order provisions and that the
provisions should be regional in nature so as not to affect or change
the current regulatory status of producer-handlers.
One of the public comments received proposed that the exemption of
producer-handlers from the regulatory plan of milk orders be
eliminated. This proposal is denied. In the legislative actions taken
by the Congress to amend the AMAA since 1965, the legislation has
consistently and specifically exempted producer-handlers from
regulation. The 1996 Farm Bill, unlike previous legislation, did not
amend the AMAA and was silent on continuing to preserve the exemption
of producer-handlers from regulation. However, past legislative history
is replete with the specific intent of Congress to exempt producer-
handlers from regulation. If it had been the intent of Congress to
remove the exemption, Congress would likely have spoken directly to the
issue rather than through omission of language that had, for over 30
years, specifically addressed the regulatory treatment of producer-
handlers.
Since producer-handlers are intended to be exempt from most
regulation, some means must be provided to determine and to verify
producer-handler status. Accordingly, the market administrator is
provided with the authority to require reports and other information
deemed appropriate to determine that an entity satisfies the
requirements for producer-handler status. Such authority is currently
provided in the orders and should continue.
Producer
Under all orders, producers are dairy farmers that supply the
market with milk for fluid use or who are at least capable of doing so
if necessary. Producers are eligible to share in the revenue that
accrues from marketwide pooling of milk. The producer definitions of
the individual orders are described under the regional discussions
later in this document. Responding to regional needs, producer
definitions will differ by order with respect to the degree of
association that a dairy farmer must demonstrate with a market.
A dairy farmer may not be considered a producer under more than one
Federal milk order with respect to the same milk. If a dairy farmer's
milk is diverted by a handler regulated under one Federal order to a
plant regulated under another Federal order, and the milk is allocated
at the receiving plant (by request of the diverting handler) to Class
II, III or IV, the dairy farmer will maintain producer status in the
original order from which milk was diverted.
[[Page 16136]]
Since producer-handlers and exempt plants are specifically exempt
from Federal order pricing provisions, the term producer should not
include a producer-handler as defined in any Federal order. Likewise,
the term producer should not apply to any person whose milk is
delivered to an exempt plant, excluding producer milk diverted to such
exempt plant. Some of the new orders (See Orders 1001, 1124, 1131, and
1134) also exclude from producer status a dairy farmer whose milk is
received at a nonpool plant as other than producer milk. The reasons
for including this provision are explained in the regional discussions
describing those orders.
Producer Milk
The producer milk definition identifies the milk of producers which
is eligible for inclusion in a particular marketwide pool. This
definition is specific to each consolidated order, reflecting the fact
that marketing conditions differ among regions.
In general, the definition of producer milk for all consolidated
orders continues to include the milk of a producer which is received at
a pool plant or which is received by a cooperative association in its
capacity as a handler. Most current orders consider milk to be
``received'' when it is physically unloaded at the plant and the
consolidated orders would continue that treatment.
In order to promote the efficient handling of milk, all orders
currently allow a handler to move producer milk, within certain
specified limits, from a producer's farm to a plant other than the
handler's own plant. This is referred to as a ``diversion'' of milk.
Under the consolidated orders, the definition of producer milk allows
unlimited diversions to other pool plants, thereby providing maximum
flexibility in efficiently supplying the fluid market.
Under some orders, unlimited diversions to nonpool plants would
also be allowed once a dairy farmer has become associated with a
particular order. Under other orders, however, a producer would be
required to ``touch base'' at a pool plant one or more times each month
and, in addition, aggregate diversion limits may be applied to a
handlers' total diversions. The specific touch base and diversion
limits are described in the regional discussions pertaining to each
order.
Even for orders without any diversion limits, there is a practical
limit to how much milk may be diverted from a pool plant because of the
pooling standards that must be met. For a pool supply plant, for
example, there is a standard computed by dividing the amount of milk
shipped to distributing plants by a plant's total receipts. As provided
in the orders, ``receipts'' include milk that is physically received at
the plant as well as diverted to nonpool plants. This inclusion of
diverted milk in a plant's receipts automatically limits the amount of
milk that may be diverted by those plants. Thus, the maximum quantity
of milk that such plants would be able to divert and still maintain
their pool plant status would be 100 percent less the pool plant
shipping standards for the month.
This treatment of diverted milk will mitigate the need for
suspending order diversion limitations, an action that is quite common
in some of the current orders. Unlimited diversions for many of the new
orders will allow for maximum efficiency in balancing the market's milk
supply. The market administrator's ability to adjust shipping
percentages for pool supply plants, pool reserve supply plants, and
balancing plants will ensure that an adequate supply of milk is
available for the fluid market without the imposition of diversion
limits.
While a one-time producer ``touch base'' standard and virtually
unlimited diversions are appropriate for most of the consolidated
Federal orders, they are not appropriate for certain ``deficit''
markets in the Southeast. For these orders, touch base requirements and
diversion limits provide another tool to ensure that an adequate supply
of fluid milk is available to meet the markets' needs. The specific
standards for these orders are discussed in the regional section of
this document.
In order to provide regulatory flexibility and marketing
efficiencies, all of the new orders having diversion limits allow the
market administrator to increase or decrease these limits on relatively
short notice. This provision currently exists in some Federal orders
and has proven to be a responsive, efficient, and effective way to deal
with rapidly changing marketing conditions.
Cooperative Association
All current orders provide a definition for dairy farmer
cooperative associations that market milk on behalf of their dairy
farmer members. Providing for a uniform definition of a cooperative
association facilitates the administration of the various order
provisions as they apply to such producer organizations and recognizes
the unique standing granted to dairy farmer cooperatives under the
Capper-Volstead Act. Dairy farmer cooperatives are responsible for
marketing the majority of the milk supplied to regulated handlers under
the Federal order system.
As provided herein, a cooperative association means any cooperative
marketing association of producers which the Secretary determines,
after application for such recognition by the cooperative, is qualified
as such under the provisions of the Act of Congress of February 18,
1922, as amended, known as the ``Capper-Volstead Act''. Additionally,
the new orders continue to require that a cooperative association have
full authority in the sale of the milk of its members and that it be
engaged in making collective sales or marketings of milk or milk
products for its dairy farmer members.
Several current orders provide a definition for a federation of 2
or more cooperative associations. As adopted here, all consolidated
orders recognize a federation of cooperatives as satisfying the
cooperative definition for the purposes of determining milk payments
and pooling. Individual cooperatives of a federation of cooperatives
must also meet the criteria as set forth for individual cooperative
associations and their federations as incorporated under state laws.
Handler Reports
All current orders require handlers to submit monthly reports
detailing the sources and uses of milk and milk products so that market
average use values, or blend prices, can be determined and
administered. Payroll reports and other reports required by the market
administrator are also provided for in the orders. The order language
for the consolidated orders is similar to that contained in current
orders. The dates when reports are due in the market administrator's
office differ slightly by order according to custom and industry
practice.
Announcements by the Market Administrator
In the course of administering the order, the market administrator
is required to make several announcements each month with respect to
classification, class prices and component prices, an ``equivalent
price'' when necessary, and various producer prices. As adopted here,
these provisions are uniform and are nearly identical to current order
provisions, with the exception of section 62 (Announcement of producer
prices), which differs to some extent among orders depending on the
degree of component pricing used in the order.
[[Page 16137]]
Producer-Settlement Fund
In all of the current and consolidated orders, handlers are
required to pay minimum class prices for the milk received from
producers. These proceeds are blended through the marketwide pool so
that producers are returned a uniform, or blend, price for their milk.
The mechanism for the equalization of a handler's use value of milk is
the producer-settlement fund. It is established and administered by the
market administrator for each order.
The producer-settlement fund ensures that all handlers are able to
return the market blend price to producers whose milk was pooled under
the order. Payments into the producer-settlement fund are made each
month by handlers whose total classified use value of milk exceeds the
value of such milk calculated at the uniform price (or at component
prices for those orders with component pricing). Similarly, payments
out of the producer-settlement fund are made each month to any handler
whose use value is below the value of milk at the uniform price or
component prices, as the case may be. The transfer of funds enables
handlers with a use value below the average for the market to pay their
producers the same uniform price as handlers whose Class I utilization
exceeds the market average. This provision is uniform for all
consolidated orders.
The consolidated orders vary with respect to dates for payments to
the producer-settlement fund, due largely to industry practices and
regional preferences. Each consolidated order provides for payment
dates, and they are specific for each consolidated order.
In view of the need to make timely payment to handlers from the
producer-settlement fund, it is essential that money due the fund be
received by the due date. Accordingly, under all of the new orders
payment to the producer-settlement fund will be considered made upon
receipt by the market administrator.
The new orders specify that payment cannot be received on a
nonbusiness day. Therefore, if the due date for a payment, including a
payment to or from the producer-settlement fund, falls on a Saturday,
Sunday, or national holiday, the payment would not be due until the
next business day. This is specified in Sec. 1000.90 of the General
Provisions.
Payments to Producers and Cooperative Associations
The AMAA provides that handlers must pay to all producers and
producer associations the uniform price. The existing orders generally
allow proper deductions authorized by the producer in writing. Proper
deductions are those that are unrelated to the minimum value of milk in
the transaction between the producer and handler. Producer associations
are allowed by the statue to ``reblend'' their payments to their
producer members. The Capper Volstead Act and the AMAA make it clear
that cooperative associations have a unique role in this regard.
The payment provisions to producers and cooperatives for the
consolidated orders vary with respect to payment frequency, timing, and
amount. These differences are generally consistent with current order
provisions and with industry practices and customs in each of the new
marketing areas.
Each of the new orders will require handlers to make at least one
partial payment to producers in advance of the announcement of the
applicable uniform prices. The Florida order will require 2 partial
payments, mirroring the payment schedule now provided in the 3 separate
Florida orders.
The amount of the partial payment varies among the new orders,
reflecting the anticipated uniform price. Thus, for example, in the
Upper Midwest order, the partial payment rate for milk received during
the first 15 days of the month will be not less than the lowest
announced class price for the preceding month. By comparison, the
partial payment for the Florida order for milk received during the
first 15 days of the month will be at a rate that is not less than 85
percent of the preceding month's uniform price, adjusted for plant
location.
The final payment for milk under the new orders will be required to
be made so that it is received by producers no later than 2 days after
the required pay-out date of monies from the producer-settlement fund.
Cooperatives will be paid by handlers for bulk milk and skim milk
on the terms described for individual producers except that payment
will be due one day earlier. Providing for an earlier payment date for
cooperative associations is warranted because it will permit the
cooperative association the time needed to distribute payments to
individual producer members. The cooperative payment language in each
of the consolidated orders has been expanded to include bulk milk and
skim sold by cooperatives from their pool plants as well as by
cooperatives acting as handlers for milk delivered directly from
producers' farms.
When bulk milk is received by transfer from a cooperative's pool
plant, a minimum payment should be required for such milk just as if it
were producer milk received directly from producers' farms. Many, but
not all, of the current orders have such a provision.
For Class I bulk milk that is received from a cooperative's pool
plant, the minimum Class I price level for such milk should be the
price applicable at the location of the receiving handler's plant. In
the case of such transfers, it is presumed that milk will move from
lower-priced areas to higher-priced areas. Under these circumstances,
part of the transportation cost in moving the milk is covered by the
difference in the Class I prices at the receiving plant and shipping
plant.
Pricing Class I transfers at the receiving plant's location ensures
that a handler would not have an incentive to receive more distant
plant milk instead of closer milk directly from producers' farms. It
also ensures that all similarly-located pool plants will pay the same
minimum prices for their receipts regardless of whether the milk comes
from another plant or directly from producers. Finally, it ensures that
the handler receiving transferred milk pays at least a portion of the
transportation cost to move the milk to its plant. Since transportation
cost is likely to exceed the difference in prices between the
transferor and transferee plants, the difference in cost will have to
be made up through over-order premiums.
All of the payment dates are receipt dates. Since payment cannot be
received on a non-business day, payment dates that fall on a Saturday,
Sunday, or national holiday will be delayed until the next business
day. While this has the effect of delaying payment to cooperatives and
producers, the delay is offset by the shift from ``date of payment'' to
``date of payment receipt.''
Minimum Payments to Producers
In a proceeding involving the current Carolina, Southeast,
Louisville-Lexington-Evansville, and the former Tennessee Valley
Federal milk orders (Orders 5, 7, 46, and 11, respectively), a proposal
was made to clarify what constitutes a minimum payment to producers.
The proposal was recommended by Hunter Farms (Hunter) and Milkco Inc.
(Milkco), 2 handlers regulated under the current Carolina order. Under
the proposal, a handler (except a cooperative acting in its capacity as
a handler pursuant to paragraph 9(b) or 9(c)) may not reduce its
obligations to producers or cooperatives by permitting producers or
cooperatives to provide services which are the responsibility of the
handler. According to the Hunter/Milkco proposal, such services
include: (1)
[[Page 16138]]
Preparation of producer payroll; (2) conduct of screening tests of
tanker loads of milk; and (3) any services for processing or marketing
of raw milk or marketing of packaged milk by the handler.
At the May 1996 hearing, representatives of Hunter and Milkco
testified that both handlers receive milk from cooperative associations
and Piedmont Milk Sales, a marketing agent handling the milk of non-
member producers. The Hunter representative explained that due to
competitive marketing conditions in the Southeast in late 1994 and
early 1995 handlers were able to purchase milk supplies at Federal
order minimum prices without any over-order premiums being charged. As
a result of the absence of over-order premiums, the representative
stated, Hunter received underpayment notices from the market
administrator on milk that it had received from Piedmont Milk Sales.
Hunter argued that the problem of what constitutes a minimum
payment to producers should be clarified to preclude another
underpayment situation should premiums again disappear in the future.
If this issue is not resolved, according to Hunter, it will suffer a
loss of milk sales and its producers will receive lower prices. Hunter
stated that the current policy is discriminatory and unfair and that
everyone would benefit from a clarification of the rules defining
Federal order minimum prices.
Based on the testimony presented at the public hearing and comments
received, the Department issued a final decision on July 16, 1998 (63
FR 39039), denying the Hunter/Milkco proposal. However, the decision
stated that this issue should be revisited as part of Federal order
reform.
In the proposed rule for Federal order reform, interested parties
were invited to comment on this issue. Only one Federal order reform
comment, besides Hunter/Milkco's, discussed this issue. This comment
letter, filed by the same law firm that represents Hunter/Milkco,
expressed sentiments nearly identical to those that have been expressed
by Hunter/Milkco.
Based on our review of these comments, we continue to believe that
incorporation of Hunter/Milkco's proposed language in the consolidated
Federal orders will not necessarily solve the handler equity problem
but could create a host of additional problems. For the reasons stated
in the aforementioned final decision, the proposal is again denied for
the consolidated orders.
Payment Obligation of a Partially Regulated Distributing Plant
All current and consolidated orders provide a method for
determining the payment obligations due to producers by handlers that
operate plants which are not fully regulated under any Federal order.
These unregulated handlers are not required under the scope of Federal
milk order regulation to account to dairy farmers for their milk at
classified prices or to return a minimum uniform price to producers who
have supplied the handler with milk. However, such handlers may sell
fluid milk on routes in a regulated area in competition with handlers
who are fully regulated. Therefore, the regulatory plan of Federal milk
orders provides a minimum degree of regulation to all handlers who have
routes sales in a regulated marketing area. This is necessary so that
classified pricing and pooling provisions of an order can be
maintained. It is also necessary so that orderly marketing conditions
can be assured with respect to handlers being charged the classified
value under an order for the milk they purchase from dairy farmers.
Without this provision, milk prices in an order would not be uniform
among handlers competing for sales in the marketing area, a milk
pricing requirement of the AMAA.
There are 3 regulatory options available to a partially regulated
handler. First, the handler can purchase Class I milk that is priced
under a Federal order in an amount equal to, or in excess of,
quantities sold in the marketing area. Second, a payment may be made by
the partially regulated handler into the producer-settlement fund of
the regulated market at a rate equal to the difference between the
Class I price and the uniform price of the regulated market. Finally,
the operator of a partially regulated plant can demonstrate that the
payment for its total supply of milk received from dairy farmers was
equal to the amount which the partially regulated plant would have been
required to pay if the plant had been fully regulated. This amount may
be paid entirely to the dairy farmers that supplied the handler or in
part to those dairy farmers with the balance paid into the producer-
settlement fund of the regulated market.
The regulatory options described above and the payment option for
reconstituted milk have worked well in the current orders and are
continued uniformly in Sec. 1000.76 for the consolidated orders.
Adjustment of Accounts
All current orders provide for the market administrator to adjust,
based on verification of a handler's reports, books, records, or
accounts, any amount due to or from the market administrator, or to a
producer or a cooperative association. This provision is continued in
the consolidated orders. The provision requires the market
administrator to provide prompt notification to a handler of any amount
so due and requires payment adjustment to be made on or before the next
date for making payments as set forth in the provisions under which the
error(s) occurred.
Charges on Overdue Accounts
All current orders provide for an additional charge to handlers who
fail to make required payments to the producer-settlement fund when
due. Such payments include payments to the producer-settlement fund,
payments to producers and cooperative associations, payments by a
partially regulated distributing plant, assessments for order
administration and marketing service, and certain other payment
obligations in orders with specialized provisions such as
transportation credits. This should continue to be provided for in the
consolidated orders.
In order to discourage late payments, a 1.0 percent charge per
month is incorporated in the consolidated orders. This rate represents
the mid-point in the range of charges by all orders presently. Overdue
charges shall begin the day following the date an obligation was due.
Any remaining amount due will be increased at the rate of 1.0 percent
on the corresponding day of each month until the obligation is paid in
full.
All overdue charges would accrue to the administrative assessment
fund. The late-payment charge is to be a penalty that is meant to
induce compliance with the payment terms of the order. If late-payment
charges for monies due on producer milk were to accrue to the balance
owed to either producers, cooperatives or producers/cooperatives via
the producer-settlement fund, it could result in such producers and
cooperatives being less concerned whether they are paid on time. By
placing late-payment charges in the administrative fund, however,
cooperatives and producers would not be placed in a position where they
would prefer to be paid several days late so that they would receive
the late-payment charges (or increase the level of producer prices due
to late payment fee accrual to the producer-settlement fund). This is
of particular concern in
[[Page 16139]]
markets with a single dominant cooperative. Additionally, by having
late-payment fees accrue to the administrative fund, monies are made
available to enforce late-payment provisions that would otherwise have
to be generated through handlers' administrative assessments.
Assessment for Order Administration
The AMAA provides that the cost of order administration shall be
financed by an assessment on handlers. Under the consolidated orders, a
maximum rate of 5 cents per hundredweight is provided. This assessment
would apply to all of a handler's receipts pooled under the order.
Deduction for Marketing Services
As in most current orders, the consolidated orders provide for the
furnishing of marketing services to producers for whom cooperative
associations do not perform services. Such services include providing
market information and establishing or verifying weights, samples, and
tests of milk received from such producers. In accordance with the Act,
a marketing services provision must benefit all nonmember producers
under the order.
The market administrator may contract with a qualified agent,
including a cooperative association, to provide such services. The cost
of such services should be borne by the producers for whom the services
are provided. Accordingly, each handler will be required to deduct a
maximum of 7 cents per hundredweight from amounts due each producer for
whom a cooperative association is not providing such services. All
amounts deducted must be paid to the market administrator not later
than the due date for payments to the producer-settlement fund.
6a. Northeast Region
The Northeast Marketing Area
The recommended consolidated Northeast order differs significantly
from other consolidated orders. In addition to merging three existing
Federal milk orders, the Northeast order also calls for expansion in
the northern region of New York state, and all currently unregulated
areas of the New England states (except Maine).
While the current New England (Order 1) and Middle Atlantic (Order
4) orders have similar provisions for adjusting producer blend prices
in a manner identical to plant price adjustments for location, the
current New York-New Jersey (Order 2) order employs a ``farm-point''
pricing method. This decision adopts a plant-point pricing methodology
in the consolidated Northeast order. This method is used in every other
current marketing area and in every consolidated marketing area. This
represents a considerable change in how milk will be priced for those
handlers and producers whose milk currently is priced under the
provisions of the New York-New Jersey order.
In addition to the different pricing provisions of the three
existing orders, other important differences and related provisions
need to be addressed in the Northeast regional order that will
accomplish the goals of the AMAA. These include what is commonly
referred to in the New York-New Jersey order as the ``pass through''
provision; the need for providing marketwide service payments in the
form of cooperative service payments and balancing payments that
currently exist in the New York-New Jersey order and do not exist in
either the current New England or Middle Atlantic orders. Additionally,
the three current northeast orders also provide for seasonal
adjustments to the Class III and IIIA price.
It is fair to observe that the current order most affected by the
consolidation is the New York-New Jersey order. In addition to the
differences already described, certain terms and provisions of the
Northeast order are also different in how they are described and
presented but are nevertheless consistent with existing provisions that
accomplish the goals of the AMAA. This is less of an issue for those
entities that are accustomed to the terminology of provisions used in
the New England and Middle Atlantic orders. The following presents a
discussion of the recommended order provisions and issues that are
unique to the consolidated Northeast order.
Plant
The plant definition for the consolidated Northeast order should
differ from that of the other consolidated orders by allowing
stationary storage tanks to be used as reload points. This exception to
the plant definition is warranted for the consolidated Northeast order
due to certain unique conditions that affect the ability of handlers
and haulers to assemble milk in an efficient manner and subsequently
transport it to a plant that actually processes milk into finished
dairy products, including fluid milk products. This exception would not
consider the reload point or facility as a point from which to price
producer milk. Rather, milk once assembled would be shipped to a
processing plant where it would be priced.
A portion of the Northeast milk supply is derived from some 200
small dairy farms located in Maine. Because much of this state is
serviced by secondary and rural winding roads, the current New England
order has provided for reload points as a workable solution to the
inherent hauling difficulties in transporting relatively small loads of
milk from the countryside to reload points and facilities with
stationary storage tanks that do not serve as a pricing point. This
should continue to be provided for in the consolidated Northeast order.
Not to provide this accommodation would adversely affect a substantial
number of small producers and the milk haulers that service them.
Pool Plant
The pool distributing and pool supply plant definitions of the
consolidated Northeast order use the standard order language format
used in other orders, combined with performance standards that are
adapted to marketing conditions in the Northeast.
The pool distributing plant definition specifies that a pool
distributing plant must have 25 percent or more of its total physical
receipts of fluid milk distributed as route disposition and that at
least 25 percent of route disposition be within the marketing area. The
25 percent level of total receipts distributed on routes is reasonably
high enough to establish a distributing plant's association with the
fluid milk market. The in-area route distribution performance standard
level of 25 percent is adopted because it tends to minimize changing
the regulatory status of handlers from their current regulatory status
by the Federal order program that may result from the consolidation of
existing orders. The 25 percent in-area sales standard is also a
reasonable measure for identifying a level at which a distributing
plant is sufficiently associated with the marketing area.
As already discussed, the consolidated Northeast order and other
nearby consolidated marketing orders do not call for expansion to
include certain currently unregulated areas. This includes areas in the
states of New York, Pennsylvania, Virginia, and the entire state of
Maine. Some distributing plants in these areas are not currently
regulated, or are only partially regulated to the extent they have some
Class I sales in regulated areas. A 25 percent in-area route
distribution level will serve to ensure or minimize any changes in
their current regulatory status under the Federal program that result
from
[[Page 16140]]
consolidation of the three northeast marketing areas into a single new
order.
Unit pooling, wherein two or more plants operated by the same
handler located in the marketing area can qualify for pooling as a unit
by meeting the total and in-area route distribution requirements of a
pool distributing plant, is included in the consolidated Northeast
order. Providing for unit pooling provides a degree of regulatory
flexibility for handlers by recognizing specialization of plant
operations.
Due primarily to positions offered by many of the major Northeast
dairy cooperatives and their recommendations on appropriate pool supply
plant performance requirements, the consolidated Northeast order supply
plant performance requirements initially should be set to require that
in the months of August and December, at least 10 percent of the total
quantity of bulk milk that is received at a supply plant be shipped to
distributing plants. For the months of September through November, such
shipments by pool supply plants should be at least 20 percent. To the
extent that a supply plant has met these performance requirements, no
performance requirement is recommended for the months of January
through July. However, a supply plant that has not met these
performance requirements will need to meet a 10 percent performance
requirement in each of the months of January through July in order to
qualify as a pool supply plant.
This decision also provides for a system of supply plants for the
consolidated Northeast order. This provision allows two or more supply
plants operated by the same handler, or by one or more cooperative
associations to be qualified for pool plant status by meeting the
shipping standards in the same manner as a single supply plant subject
to certain conditions. These conditions include written notification to
the market administrator of the plants that will be included in the
system, how pool status of plants will be affected if individual plants
are removed from the system, and provisions for adding plants to the
system.
Producer-Handler
The producer-handler definition for the consolidated Northeast
order limits receipts to no more than 150,000 pounds of fluid milk
products from handlers fully regulated under any Federal order. While
the proposed rule addressed significant limitations on producer-
handlers with respect to how it distributes their milk, this decision
removes such limitations. The intent of providing an appropriate
producer-handler definition was to cause no change in the regulatory
status of any known producer-handler currently in operation in the
Northeast order region. However, the three orders being consolidated
have significant differences in the extent of control a producer-
handler must retain over its distribution practices. The current Middle
Atlantic region does not limit the distribution facilities that may be
used by a producer-handler. Thus, any limitation with respect to
distribution could either cause a current producer-handler to loose
such status, or may cause the need for a producer-handler to modify its
business practices. Therefore, the producer-handler definition adopted
herein removes any restrictions on how it distributes its products.
Also removed from the producer-handler definition is the provision
that a producer-handler would not include any producer who also
operates a distributing plant if it is requested that their dairy farm
and plant be operated as separate entities. Removing this component of
the producer-handler definition tends to strengthen the principle that
producer-handlers rely primarily on their own farm production to bear
the burden of balancing their fluid sales and to find outlets for their
surplus production.
Producer
The producer definition of the consolidated Northeast order defines
and describes those dairy farmers who are properly associated with the
Northeast marketing area and who will share in the benefits that accrue
from the marketwide pooling of milk under the order.
The producer definition establishes seasonal limitations for
determining if a dairy farmer is considered to be a producer under the
order. Basically, the order prohibits a dairy farmer from being a
producer under the order during the flush production period if the
dairy farmer did not supply the market during the months of relatively
short production when milk supplies are needed most to meet fluid
demands. Accordingly, the producer definition does not include dairy
farmers whose milk during any month of December through June is
received at a pool plant or by a cooperative association handler if the
operator of the pool plant or the cooperative association caused the
milk from such producer's farm to be delivered to any plant as other
than producer milk as defined in the producer milk provision of the
Northeast order, or any other Federal milk order during the same month,
in either of the two preceding months, or during any of the months of
July through November.
Similarly, a dairy farmer would not be considered a producer under
the order for any month of July through November if any milk of the
dairy farmer is received at a pool plant or by a cooperative
association handler if the pool plant operator or the cooperative
association caused the dairy farmer's milk to be delivered to any plant
as other than producer milk, as defined in this proposed order, or in
any other Federal milk order during the same month.
Producer Milk
The producer milk definition of the consolidated Northeast order
follows the general structure and format of other consolidated orders.
It differs from other consolidated orders in that it requires
cooperative handlers to organize reports of producer receipts that
originate outside of the states included in the marketing area, or the
states of Maine or West Virginia, into reporting units with each unit
separately reporting receipts.
No diversion limits are established as they are in other
consolidated orders. However, diversions are limited in functional
terms. The maximum quantity of milk that a supply plant would be able
to divert and still maintain pool plant status would be 100 percent
minus the applicable shipping standard. This should provide for a
maximum amount of flexibility in marketing milk in the most efficient
manner to balance fluid milk needs.
Component Pricing
The consolidated Northeast order will employ a component pricing
plan in the classified pricing of milk under the order as previously
discussed in the BFP section of this decision. This is consistent with
positions taken and proposals offered by major cooperative groups in
the Northeast who supply a large percentage of the milk needs of the
market. However, on the basis of public comments, the consolidated
Northeast order will not contain a somatic-cell adjustor.
In response to the proposed rule, one major association
representing primarily milk processors and dairy product manufacturers
in New York expressed opposition to employing a multiple component
pricing plan in the Northeast order. Their objection to its adoption is
that it will be burdensome for handlers. This was expressed primarily
as burdens associated with changing from farm-point pricing to plant-
point pricing of milk and changes that handlers would need to make for
producer pay-roll purposes and in the
[[Page 16141]]
accounting software that they contend would entail considerable cost
outlays. Also expressed in opposition to its adoption was that multiple
component pricing does not favor fluid milk handlers, that it is
designed primarily for high-solids producers and manufacturers, that it
may result in manufacturers having to pay premiums to attract high-
solids milk, and that it rewards some producers while reducing pay
prices to others.
These objections are unpersuasive. Multiple component pricing is a
method for determining, among other things, how producer milk will be
priced under the order on a basis beyond just skim milk and butterfat.
Components of milk have values that are recognized by the marketplace
and producers have expressed the desire for having their pay prices
adjusted according to such values. Nevertheless, it does not affect the
total per hundredweight value of milk. Additionally, multiple component
pricing does not either favor or disfavor fluid milk handlers as the
multiple component pricing plan adopted for the Northeast order will
continue to price Class I milk on the basis of skim milk and butterfat.
It should be noted that there are many multiple component pricing
plans operated by many handlers in the northeast region. The existence
of such plans provides evidence that it is appropriate and reasonable
to formalize a multiple component pricing plan for the consolidated
Northeast marketing order, especially when there is strong support for
it by producers. To the extent that there are so many similar plans, it
should not be particularly burdensome for a one-time change by handlers
in their accounting systems for determining producer payroll.
Farm-Point vs. Plant Point Pricing
At issue in merging the three northeast marketing areas is the use
of two distinct pricing methods for milk. The Middle Atlantic and New
England marketing areas employ a system of plant-point pricing. This
pricing method is also employed in every other marketing area in the
Federal order system. Only the New York-New Jersey marketing area uses
what is called ``farm-point'' pricing. This decision adopts plant-point
pricing as the pricing method for the consolidated Northeast order.
Plant-point pricing of milk that is pooled under an order prices
milk f.o.b. the plant of first receipt. The cost of hauling from the
farm to the plant is the responsibility of the producer. When the
receiving handler is also the hauler, orders permit the handlers in
making payments to each producer to deduct hauling costs up to the full
amount authorized in writing by the producer.
As originally employed in the New York-New Jersey order (Order 2),
farm-point pricing establishes the price for milk by the zone (distance
from market computed from the nearer of the basing points) of the
township in which a producer's milkhouse is located. While termed
``farm-point,'' farms are grouped by their township location because
this is the nearest practicable proxy for actual farm location. In
functional terms, when a handler picks up milk at a producer's farm,
the handler takes title of the milk at the time and point of pickup.
Accordingly, there were no adjustments in payments to producers to
cover any part of the cost of pickup or hauling in moving milk to the
handler's plant. Farm-point pricing fundamentally shifts the cost of
transporting milk from the producer to the handler. Farm-point pricing
has been in effect in Order 2 since 1961. While the fundamental concept
of farm-point pricing has been retained with respect to its overall
structure of mileage zones, other order provisions were adopted
subsequent to its establishment and modified over time so that farm-
point pricing could remain viable while allowing handlers to charge
some of the cost of hauling producers' milk to the plant of first
receipt.
In the decision that established farm-point pricing (25 FR 8610,
Sept. 7, 1960), prevailing marketing conditions served to warrant this
type of pricing system. At that time, the emergence of bulk-tank milk
began to take on a degree of prominence in the milk supply of Order 2.
Prior to the adoption of farm-point pricing (1959), about 8 percent of
the producers had bulk tanks, accounting for at least 14 percent of the
volume of milk associated with the market. About 92 percent of
producers delivered their milk at their own expense directly to plants
in 40 quart cans. Most of the milk can-delivered was from farms within
a radius of not more than 15 miles from the plant. The milk of
producers who had converted to bulk tanks, in some instances, was
hauled more than 200 miles from farm to city plants, but the majority
of bulk tank milk was moved much shorter distances to country receiving
plants. The decision cited that in October, 1959, milk was received
from 49,719 producers at 691 plants.
When milk was delivered in cans to a handler's plant, the plant was
the location at which milk was weighed, sampled for butterfat and
quality, and where cans were washed. It was at the plant that milk was
accepted or rejected. It was the place where milk was cooled and co-
mingled with other individual producer's milk. More importantly, it was
the place where control of the milk passed from producer to the plant
operator or from which the milk was moved by the plant to other plants
for fluid or manufacturing uses. Minimum prices required by the order
to be paid by handlers were adjusted for the location of the plant at
which milk was received from dairy farmers.
Bulk tank milk brought a set of new factors. When milk was
transferred from a producer's bulk tank to the hauler, the point of
transfer was also the point where several functions are performed. Milk
in a producer's bulk tank has already been cooled, and therefore is not
subject to the early delivery deadlines. The weight of milk was
determined at the bulk tank, and samples were taken for butterfat and
quality. It was also here that the individual producer's milk was
rejected or accepted and lost its identity by being co-mingled with
other milk.
Numerous problems arose in regulating the handling of bulk tank
milk in an order where pooling depended upon direct delivery from the
farm to a pool plant and under which minimum class prices and the
uniform prices to be paid to producers was reflective of the location
of the plant where delivery was made:
1. Administrative problems associated with bulk tank handling
arose, particularly where and when milk was regarded to have been
received. Bulk tank milk provided the opportunity to deliver milk to
different plants, some pool and some nonpool. Where a given tank load
of milk was unloaded if it went to two or more plants of the same or
different handlers on the same day was difficult to determine.
2. The incentive arose (because of the administrative difficulty of
determining when and where milk was received) for handlers to behave in
a way that would result in the maximum exclusion of milk from the pool
for fluid use outside the marketing area.
3. The incentive arose for the maximum inclusion in the pool of
milk in fluid and manufacturing uses.
4. The incentive and opportunity arose for handlers to select one
of several plants for receipt of bulk tank milk, with or without
manipulation of hauling charges. This distorted and impinged upon the
effectiveness of the minimum price provisions of the order, especially
in the case of relatively long hauls of bulk tank milk.
The 1961 decision that established farm-point pricing provided
eight scenarios that demonstrated how handlers behaved so as to
minimize
[[Page 16142]]
their pricing obligations to producers. Most of the scenarios arose
from the inability to determine when milk was received at a plant. In
order to mitigate such circumstances, several things were done.
Foremost was the establishment of farm-point pricing on the basis of
bulk tank units and the designation of each bulk tank unit as either a
pool or nonpool unit and defining the circumstances under which such
designations could be changed.
The pricing of milk at the farm eliminated the incentive for
handlers to attempt to make it appear that the plant of receipt was
other than the plant where milk is actually received and handled. It
was made crystal clear that delivery and receipt of bulk milk takes
place at the farm. Once acquired by the handler, the plant or plants to
which the milk may be delivered depended on decision of the handler,
not the producer. Under these circumstances, where the milk was
actually used was not a factor to be reflected in the minimum producer
price. The operator of the bulk tank unit was defined as the handler
and the point of receipt of milk. This entity was responsible for
establishing the unit, and it held the responsibility for reporting,
accounting, pooling and paying producers. Additionally, the decision
concluded that the price at which the farm bulk tank is accounted for
to the pool should be the minimum class price adjusted for location of
the farm, and that payments by handlers directly to producers be
adjusted to reflect all location differentials based on where farms are
located and where bulk tank milk was received.
A proposal that would have allowed a tank truck service charge
authorized by the producer but not in excess of 20 cents per
hundredweight (cwt.), and establish that payments to cooperatives which
serve as handlers operating a bulk tank unit should be at the price
reflecting transportation and (the then existing) direct delivery
differential applicable at the handler's plant where milk is delivered
by the cooperative was not incorporated into the order. At that time,
it was found that plant hauling charges averaged nearly 20 cents per
cwt. This was offered as rationale for a negotiable 20 cent per cwt.
charge by handlers for hauling. Arguments not withstanding, the
underlying concepts embodied in farm-point pricing caused the
Department to not allow for any hauling deduction by handlers.
Shortly after the implementation of farm-point pricing, the need to
amend the order to keep farm-point pricing viable arose. The first
occurrence was in 1963. In the 1963 decision (28 FR 11956, Oct. 31,
1963), it was noted that there had been significant changes in
marketing conditions that arose from establishing farm-point pricing in
1961. These included the reduction in premiums to bulk tank producers
in general; the reluctance of proprietary handlers to receive bulk tank
milk from individual producers because of the hauling costs they would
incur; the differences in pricing can and bulk tank milk; and a
slowdown in the trend of conversion from can milk to bulk tank milk.
The 1963 decision, in acknowledgment of changing marketing conditions,
incorporated an authorized 10-cent per cwt. charge for hauling under
the Order, provided that producers authorized this maximum level in
writing.
In the 1963 decision, the Secretary found that allowing for a
limited authorized service charge for hauling bulk tank milk at a
maximum rate of 10 cents per cwt. was sufficient. This was largely
based on the fact that handlers were not then charging for bulk tank
pickup and hauling, but rather were paying premiums for bulk tank milk.
Additionally, can-milk direct delivered by producers to plants was
still very much the norm. While bulk tank milk was growing, it had not
yet accounted for a majority of milk pooled on the order.
This decision raised, for the first time with respect to farm-point
pricing, the maintenance of orderly conditions and uniform pricing to
handlers on all milk priced and pooled under the order. Because bulk
tank milk is priced by township zone, (the best proxy for a farm's
location) all farms in any particular township have the same value
assigned to their milk. However, the decision found it necessary to
reflect appropriate uniform pricing of bulk tank milk because it has
differing values dependent on the accessibility and relative location
of individual farms within the township. With this finding, it was
determined that responsibility for hauling to the township pricing
point should be borne by the producer with appropriate safeguards to
protect the producer. Therefore, a maximum negotiable hauling charge
from handlers of 10 cents per cwt. was brought under the order.
By 1970, marketing conditions in the New York-New Jersey market had
changed to the point where handlers were authorized to receive a full
10-cent hauling credit for each cwt. of bulk tank milk which was
disposed of for manufacturing uses. Additionally, the negotiable 10-
cent hauling charge to producers for a handler's cost offset
established by the 1963 decision was retained. However, the 10-cent
negotiable limit was limited to manufacturing milk. Can-milk at this
time represented about 25 percent of the total amount of milk pooled in
Order 2, with the balance being bulk tank milk.
Proponents supporting this change to the order claimed, and the
decision affirmed, that the manufacturing price for milk in Order 2 was
not properly aligned with manufacturing class prices in adjacent
Federal orders. In this decision (35 FR 15927, Oct. 9, 1970) the
Secretary found that to the extent that Order 2 handlers had borne the
transportation costs associated with the pickup and movement of bulk
tank milk used in manufacturing from the farm to the plant, Order 2
handler costs exceeded the price which handlers in adjacent order
markets were required to pay for milk used in manufacturing. By
adopting this transportation credit for handlers, there was no need to
adopt other proposals that would have lowered the manufacturing price
for milk under the other northeastern orders or lower the Class I price
for milk in Order 2 as had been proposed.
By 1977, some 16 years after the adoption of farm-point pricing,
marketing conditions had changed again and the issue of providing for
more equitable competition among handlers both within the Order 2
market and between other orders took on primary importance. By this
time, can-milk was about 3 percent of the market, with the balance
represented by bulk tank milk, the near inverse of the marketing
conditions prevailing in 1961. The transportation credit that had been
established for handlers in the 1970 decision for manufacturing milk
was now extended to all milk received by handlers. The transportation
credit was increased to 15 cents per cwt., plus an additional 15-cent
maximum negotiable credit above the ``automatic'' 15 cents because
total average transportation costs were found to be about 30 cents per
cwt. For reasons nearly identical to the 1963 and 1970 decisions,
``formalizing'' the negotiable hauling charge was not adopted because
of needed flexibility in accounting for milk movements from the farm to
the township pricing point (42 FR 41582, Aug. 17, 1977). In that
decision the Secretary also raised the direct delivery differential
from 5 cents to 15 cents per cwt. in the 1-70 mile zone for can-milk
delivered by farmers to plants within this zone, and changed the
transportation adjustment rate from 1.2 cents per cwt. for each 10
miles to 1.5 cents per cwt. for each 10-mile zone beyond the 201-210
zone, and 1.8 cents
[[Page 16143]]
per cwt. for each 10-mile zone within the 201-210 mile zone.
Cooperatives were of the strong opinion that the cost of milk
assembly and transportation are the marketing costs of the handler and
not producers. However, they also indicated that changes were warranted
in the order because of the failure of neighboring markets to adopt
farm-point pricing.
Comparative examples of handler price inequities with respect to
their cost of milk was amply demonstrated for both intra and inter
market situations. With respect to inappropriate price alignment
between orders, the competitive relationships between Order 2 and Order
4 were closely examined. On intra-order movements of milk, it was shown
that Class I handlers in New York City had a significantly lower
procurement cost for direct-ship over bulk tank milk because bulk tank
milk from ``distant'' supply plants had higher transfer and over-the-
road hauling costs. Supply plant milk at the city represented about 80
percent of milk receipts at city plants. The inter-market situation
demonstrated that handlers in Philadelphia accounted for milk at prices
lower than New York handlers. Order 4 handlers were in a position to
establish lower resale prices for fluid milk than their competitors in
the New York market because the burden of increased hauling costs fell
largely on Order 2 handlers. As in 1970, other proposals were denied in
light of adopting the 15-cent hauling credit for handlers. These other
proposals included lowering Class I and the manufacturing price for
milk in the order by 15 cents per cwt.
By 1981, bulk tank milk accounted for nearly the entire milk supply
pooled on Order 2--about 99.6 percent. As the result of a hearing held
in June 1980, in the final decision (FR 46 33008, June 25, 1981) the
Secretary again amended the transportation credit provisions of the
order. The 15 cents per cwt credit for handlers was retained; however,
the 15-cent negotiable transportation service charge was modified to
allow handlers to negotiate with producers for any farm-to-first plant
hauling cost in excess of the 15-cent transportation credit, plus ``the
amount that the class use value of the milk at the location of the
plant of first receipt was in excess of its class use value at the
location where milk was received in the bulk tank unit from which the
milk was transferred.'' According to the 1981 decision, this amendment
would adjust hauling allowances for handlers to more closely relate the
location value of milk to the costs incurred in transporting milk from
farms and country plants to distributing plants in the major
consumption areas of the market. Additionally, the decision indicated
that this change was necessary to reflect current marketing conditions
and permit a more equitable competitive situation for regulated
handlers, both on an intra market and inter market basis. The decision
also applied a 15-cent direct delivery differential for bulk tank milk
received at plants within 70 miles of New York City on the basis that a
direct delivery differential is applicable to milk received in cans at
a plant in the 1-70 mile zone.
In the 1981 decision, the Secretary found that the majority of milk
moved to distributing plants in 1979 from the 1-70 mile zone moved
directly from farms. This accounted for about 58 percent of the milk in
this zone with 48 percent being reloaded. Moreover, the decision found
that Order 2 plants located in northern New Jersey received direct
shipped milk as did handlers located in Order 4. Thus, inter market
price alignment needed to be structured primarily on the basis of
handlers obtaining direct shipped milk.
A federation of cooperative associations representing Order 4
producers proposed that Order 2 be amended to return to plant-point
pricing, with the direct delivery differential being reduced to 10
cents per cwt, and that the Class I differential at the base zone of
Order 2 be increased from the $2.25 level then in effect, to $2.40.
This federation of cooperatives believed that this ``package'' of order
modifications would provide for proper price alignment between Order 2
and Order 4. While the decision did apply different transportation
rates at a rate of 1.8 cents per cwt. outside the base zone of the
Order (201-210) and a rate of 2.2 cents per cwt. inside the base zone,
it did not provide for a return to plant-point pricing.
While the decision did not adopt plant point pricing, the decision
did acknowledge that the amendments adopted tended to establish plant
pricing with respect to the classified prices to handlers. However,
farm-point pricing was retained with respect to how producers were
paid. With this being the case, the basic substantive difference
between the amendments and plant pricing is the impact on the movement
of milk to higher-priced zones for manufacturing use. Under plant
pricing, the minimum uniform price payable to producers applies at the
location of the plant of first receipt and handlers receive a credit
from the producer settlement fund at such uniform price. The decision
also concluded that plant-point pricing for producers would provide a
greater incentive to haul direct-shipped milk to city plants for
manufacturing uses, since there would be a credit from the pool for the
full amount by which the uniform price transportation differential at
the city plant exceeds the transportation differential for the zone of
the bulk tank unit. Adopting plant-point pricing for producers would
have had the effect of encouraging milk to move long distances to city
plants for manufacturing uses when transportation savings could be
realized if such milk stayed nearer to manufacturing plants generally
located in the milkshed.
Farm-point pricing has undergone many evolutionary changes from its
inception in 1961. The original rationale for farm-point pricing, free
hauling and the administrative difficulty of determining when milk from
bulk tank units was received seems far removed from present-day
marketing conditions and the rationale for continuing it. There were a
number of years that hearings were necessary to first recognize that
the burden of transportation costs rested with handlers. This resulted
in handlers being able to successfully argue that with this burden, it
became much more difficult for the order to establish and maintain
uniform prices to handlers as required by section 608(5)(c) of the
AMAA. This is evidenced by the nature of the decisions of 1963, 1970,
1977, and 1981. Much ``repair'' to other order provisions were also
needed to retain farm-point pricing.
Few comments were received in response to the recommended adoption
of plant-point pricing by current Order 2 entities. One New Jersey
entity thought that its elimination would eventually lead to increased
hauling costs borne by producers. Another comment received from a trade
organization representing fluid milk processors and dairy product
manufacturers, thought that too much emphasis was placed on the ``free-
hauling'' to the detriment of other desirable features embodied in
farm-point pricing. Most important was this entity's view that farm-
point pricing provides for increased flexibility and in providing for
automatic incentives for the most efficient hauls of milk for/by
handlers in assembling and moving milk while not affecting the price
paid to dairy farmers.
The arguments for retaining farm-point pricing are not persuasive
in light of the detailed discussion on the entire life-cycle of its
history discussed above. This is not to discount the importance of the
certain desirable features of farm-point pricing that led to its
adoption and that have been articulated over the
[[Page 16144]]
years for its retention in the New York-New Jersey marketing area.
Nevertheless, farm-point pricing has outlived its intended purpose and
the Secretary determines that it will not be retained in a consolidated
Northeast order.
The Need for a Producer-Price Mechanism
As discussed above, farm-point pricing for producers did provide
some rational pricing incentives to promote efficiency within the Order
2 marketing area. This can reasonably be summed up by concluding that
farm-point pricing would not provide, as plant-point pricing would,
incentives to haul direct-shipped milk to city plants for manufacturing
uses, since there would not be a credit from the pool for the full
amount by which a uniform price transportation differential at the city
plant exceeds the transportation differential for the zone of the bulk
tank unit. Adopting plant pricing would have had the effect of
encouraging milk to move long distances to city plants for
manufacturing uses when transportation savings could be realized if
such milk stayed nearer to manufacturing plants generally located in
the milkshed.
In an effort to address the dairy industry structures that have
evolved over the past four decades in the three current northeast
marketing areas, efforts were undertaken by a major group of dairy
farmer cooperatives in the northeast to address what the pricing
implications are to producers and handlers as the region moves to a
unified plant-point pricing method. This has resulted in a proposal by
the Association of Dairy Cooperatives in the Northeast (ADCNE) that
include St. Albans Cooperative Creamery, Inc., Land O'Lakes, Upstate
Farms Cooperative, Inc., Agri-Mark, Inc., Dairy Farmers of America,
Inc., Dairylea Cooperative Inc., and Maryland & Virginia Milk Producers
Cooperative Association Inc. These dairy farmer cooperatives account
for well over half of the milk that would be pooled and priced under
the proposed consolidated Northeast order. Their proposal calls for
establishing a producer differential structure that would ``overlay''
the Class I differential structure that would apply in the consolidated
Northeast order.
The structure proposed is a county-based plant-point price
structure, providing for 14 zones that accommodate the need to reflect
existing and longstanding competitive price relationships among plants,
while integrating the farm and plant point pricing systems currently
used in Orders 1, 2, and 4 and with currently state-regulated areas
that fall outside of the proposed marketing area. Further, the ADCNE
proposed prices at the major cities in the Northeast, including Boston,
New York City, Philadelphia, Baltimore, and Washington, D.C., included
specific Class I differential levels that are somewhat different from
those presented in the Option 1A Class I price surface. For example,
the recommended decision recommended a New York City Class I
differential of $3.15, while ADCNE proposed $3.20. In general, the
ADCNE proposal assumed that the Class I differential structure that
would be adopted was Option 1A, which is the Class I pricing option
they strongly support, and also is the Class I pricing option
overwhelmingly supported in public comments received from interested
parties from the northeast.
With respect to a producer differential surface, the ADCNE proposed
that a debit of 5 cents per cwt. be made to the blend price applicable
at non-distributing plants in certain zones. The need for the debit,
according to the ADCNE proposal, is to make deliveries to distributing
plants somewhat more attractive to producers, while decreasing the
amount by which manufacturing plants draw on the marketwide pool for
transportation values, offering also that such a debit is economically
justified and authorized by the AMAA. According to ADCNE, it is
distributing plants that provide the revenue--in the form of Class I
values--which form the blend price paid to producers. Deliveries to
manufacturing plants do not contribute to increasing the value to the
marketwide pool. The debit, according to ADCNE, is a reflection in part
of the Order 2 system, which has priced some 50 percent of the milk in
the northeast region, and which does not provide location-based
transportation payments for movements from farms to manufacturing
plants. The ADCNE proposal provides that deliveries to Class I plants
are rewarded under this system with an additional 5-cent payment from
the pool for the marketwide benefit conferred by a distributing plant's
utilization.
For the Western New York State order area, ADCNE also proposed a
broad area in which a producer differential of $2.40 per cwt. to
producers would be payable on deliveries of producer milk at all plant
locations in this area. This portion of the price surface proposed by
ADCNE purports to be reflective of the major historical movements of
milk from east to west in the region which returned the eastern farm
point price to dairy farmers under Order 2's farm-point price system,
and that the Western New York State order has not had any location
differentials, thereby establishing a ``flat'' price surface in the
area. If those plants, for producer pricing purposes, were zoned lower
in value reflecting the westerly and northerly distance from New York
City or Philadelphia, ADCNE is of the view that the ability of both
distributing and supply plants to attract an adequate supply of milk
could be in jeopardy. Furthermore, the expectation that Class I
utilization of the proposed Mideast order will be nearly 10 percent
higher than the Class I utilization in the Northeast order was also
offered in support of the ADCNE-proposed producer differential level in
this area.
The ADCNE proposal also recommended producer differential levels in
areas that they believed should be included in either the consolidated
Northeast order or the Mideast order. Additionally, the ADCNE proposal
also addressed producer differential levels at other locations outside
of the Northeast region.
Additional supporting and amplifying comments were also provided by
Dairylea. These comments supported the major themes offered in the
ADCNE proposal for a producer differential overlay to Class I
differential levels. Dairylea stated that moving directly to a plant-
point pricing method would accentuate ``existing inequities and market
dysfunctions.'' Dairylea further commented that a plant-point
differential schedule would maintain current inter-plant price
differences in the current New England and Middle Atlantic orders, but
would worsen them for New York manufacturing plants, many of which are
cooperatively owned. Their view of the ADCNE pricing proposal was that
it maintains economic incentives for milk to move to Class I
distributing plants, would provide for more balanced procurement equity
among competing manufacturing plants, maintains equitable producer
pricing when milk is marketed by transporting it from a higher priced
zone to a lower priced zone, and provides a structure that allows for
adequate blend price levels in all areas of the Northeast milkshed.
Dairylea further commented that under plant-point pricing, existing
``near-in'' manufacturing plants (plants located in a relatively high
differential location) would enjoy a procurement advantage relative to
their competitors that are located in a lower-priced location. Dairylea
recommended narrowing the price differences between manufacturing
plants that compete for producer milk. To do this, Dairylea supported
lowering producer differentials for manufacturing plants
[[Page 16145]]
that are located in high-valued locations and increasing those
differentials at manufacturing plants in areas that have lower location
values. Dairylea advocated the ADCNE proposal for a producer
differential that is 5 cents lower than those of Class I plants when
such plants are located in the same pricing zones. Dairylea's view of
this design results in maintaining, or slightly increasing, producer
differentials applicable at Class I plants and reducing those
applicable at ``near-in'' manufacturing plants. At the same time, this
would provide for increasing producer differentials at manufacturing
plants in central, western, and northern New York. According to
Dairylea, this producer pricing surface would present a more equitable
marketing environment than strict plant-point pricing currently
employed in Orders 1 and 4, while at the same time not threatening the
viability of manufacturing plants in those areas of a consolidated
Northeast marketing area.
A major theme of Dairylea was its view that Federal milk orders and
their provisions should foster an environment under which manufacturing
plants are provided equal cost and procurement ability, and not
disfavor such manufacturing plants located in high milk production
areas where Class I differentials are lower. Dairylea also stated that
the final rule of 1991 that realigned intra-order prices in Order 2
resulted in harm to producers in northern and western New York. While
it is not appropriate to specifically revisit this issue and decision
here, official notice is taken of the final decision (55 FR 50934,
December 11, 1990) that realigned Class I differentials in the three
existing northeast marketing areas.
Comments supporting the ADCNE proposal for a producer pricing
surface were also offered by Upstate Farms Cooperative, Inc. The
Upstate Farms views served to reiterate the major themes developed in
the ADCNE proposal.
Agri-Mark, a part of ADCNE, filed separate and dissenting views on
the ADCNE proposal. Conceptually, Agri-Mark noted that plant and farm-
point pricing are different, but noted further that the differences are
not always unfavorable. Agri-Mark submitted that under plant-point
pricing, all producers shipping to the same plant receive the same
minimum order blend price regardless of where their farm is located.
Under farm-point pricing, farmers shipping to the same plant receive
different prices under the order depending on where their farm is
located. Farms closer to New York City, Agri-Mark noted, receive a
higher price than farms farther from the city, even though their milk
ends up in the same place.
Agri-Mark noted that most manufacturing plants, especially cheese
plants, were built in the northeast prior to the adoption of farm-point
pricing and not in response to it. Rather, says Agri-Mark, these plants
were built at their present locations because of their proximity to
abundant milk supplies. The procurement problems for manufacturing
plants that Order 2 entities alert us to did not arise in New England
manufacturing plants under plant-point pricing even though these plants
were located as far north as possible within the milkshed for New
England.
Simply put, Agri-Mark believes that rather than decreasing the
differential between manufacturing plants and city distributing plants,
an increase is justified. They are also of the opinion that
manufacturing plants located far from higher-priced zones will maintain
an advantage even with the adoption of strict plant-point pricing
because this milk does not need to travel long distances to reach
manufacturing plants. Agri-Mark indicates that the ADCNE proposal would
cause Agri-Mark producers to receive lower prices that competitive
price relationships do not warrant.
The Agri-Mark view of Federal milk marketing orders differed
substantially from the views expressed by Dairylea. Agri-Mark stated
that the role of Federal milk marketing orders is to treat all
producers equitably relative to how their milk is used and not to
weaken price integrity by causing destructive competition among
producers for sale to Class I outlets. This is best accomplished,
according to Agri-Mark, with appropriate pooling requirements and Class
I differentials to satisfy the Class I demands of the market. Agri-Mark
fears that if the regulatory pricing plan gives a distributing plant an
advantage over a cooperative manufacturing/balancing plant in the same
zone, that plant can use this advantage for itself instead of passing
it along to farmers to offset transporting their milk to market.
Lastly, in their opposition to the ADCNE proposal, Agri-Mark noted
that no manufacturing plant has been built in any city zone for
decades, noting that the only significant plants in such areas for the
northeast are older plants producing nonfat dry milk and butter and
which serve to balance the Class I needs of city markets, concluding
that such plants are there for common sense and efficiency reasons. In
support of this observation, Agri-Mark noted that existing Class I
differentials have not been adjusted to more fully account for
increases in hauling costs.
A producer pricing differential structure that differs from a Class
I differential is denied. The issue before the Department is to
minimize the impact of the change from farm-point to plant-point
pricing on producers as part of adopting plant-point pricing for the
new consolidated order. The change to plant-point pricing will affect
approximately one-half of the producers in the consolidated marketing
area and is a significant departure from historical methods of
distributing the revenue that accrues from classified pricing to
producers whose milk is pooled under the current New York-New Jersey
order. Plants, however, will not experience significant change since
plants currently regulated under Order 2 already account to the
marketwide pool at the Class I location differential value. The issue
then, tends to focus on how to pool and distribute the revenue as
equitably as possible to producers. Of the few public comments that
were received on this issue in response to the January 30, 1998,
proposed rule, it was requested that this issue be reconsidered.
However, no new or persuasive arguments were advanced that would cause
a change in denying this proposal.
Competitive equity between manufacturing plants is already ensured
by the classified prices applicable to handlers who operate such
plants. In fact, this decision adopts uniform Class III and Class IV
prices that are applicable for all locations. The more appropriate
issue this proposal seems to address is that manufacturing plants are
often cooperatively owned. All entities, including cooperatives in
their capacity as handlers, account to the marketwide pool at the
manufacturing price for milk received at their plants. The price paid
to producers is the blend price for all milk pooled on the market that
was priced according to its use. Cooperatively owned manufacturing
plants located in higher priced areas will pay a higher blend price to
producers who deliver milk to that location provided they meet the
performance requirements for being pooled, thereby demonstrating the
appropriate degree of association with the market. In this regard, it
is worthy to note that not all manufacturing plants in the high-valued
zones in the New York marketing area are pool plants. Blend prices are
adjusted everywhere according to the location value of the plant.
Adjusting producer blend prices on the basis of whether or not milk was
delivered to a distributing plant or to a
[[Page 16146]]
manufacturing plant seems to create a form of producer price
discrimination that classified pricing and the mechanism of marketwide
pooling and its related provisions attempt to mitigate. Such marketwide
pooling provisions provide a degree of equity to producers in the form
of a uniform blend price adjusted only for the location value on all
milk pooled on the market. Classified pricing and marketwide pooling
have served well to mitigate the price competition between producers
seeking preferred higher-valued outlets for their milk, while at the
same time ensuring handlers uniform prices, adjusted only for location,
in the prices they pay for milk.
Marketwide Service Payments
Cooperative Service Payments--Cooperative service payments, as part
of a marketwide service payment provision for the consolidated
Northeast order, should not be included in a consolidated Northeast
order. As originally proposed by ADCNE, a 2-cent per cwt. payment would
be made out of the marketwide pool to cooperatives and non-cooperative
entities for funding information-gathering and services related to
amending Federal milk marketing order provisions that would be of
marketwide benefit. Cooperative service payments of this sort currently
are provided for under terms of the New York-New Jersey order, but are
not provided for in either the New England or Middle Atlantic orders.
However, under the New York-New Jersey order, cooperative service
payments are made only to qualified cooperatives that meet the
conditions specified under the order and does not provide for such
payments to non-cooperative entities. In comments provided in response
to the proposed rule published on January 30, 1998, the ADCNE withdrew
this component of their marketwide service payment proposal.
Rationale offered in support of a cooperative service type payment
to cooperatives and non-cooperative entities was based on recognizing
that in a regulatory pool structure, private parties provide important
services that are of benefit to everyone involved in the marketwide
pool, including the promulgation, amendments to, and administration of
the order. Not to provide a mechanism for the recovery of a portion of
the expense involved in providing such services would disadvantage
those incurring these expenses while everyone in the market benefits as
a result of these services.
Qualification criteria presented for entities eligible to receive
this payment included a demonstration to the market administrator that
it provides information with respect to market order prices and
marketing conditions, that it has retained legal and economic staff or
consulting personnel available to participate in marketing order
amendatory proceedings, to consult with the market administrator with
respect to marketing order issues, and that the entity pool at least
2.5 percent of the order's total milk volume.
There is not a compelling reason to adopt this sort of compensatory
plan to reimburse those entities that incur these costs. Market
administrators and their staffs make themselves available to meet with,
discuss, and aid in formulating positions that reflect marketing
conditions as a normal part of their duties. Additionally, there are
numerous provisions in the order that require as a matter of course the
issuance of reports, prices, and other information that affect all
marketing order participants and that provide a service to the entities
affected by the regulatory plan of the order. Finally, no other current
or consolidated order provides for such cost compensation. Cooperative
and proprietary handlers in the New England and Middle Atlantic
marketing areas included in the consolidated Northeast order, as well
as entities in all other marketing areas have not experienced or have
demonstrated any of the harm or ``disadvantage'' that arises, or may
arise, if such costs are not shared by the entire pool of producers in
the marketing area. This decision can only assume that industry
participants that have an interest in developing the promulgation and
amendments to marketing orders would be willing to do so at their own
expense. The positions and arguments offered are largely issues of the
self-interest of entities. As such, self-interest may or may not be of
marketwide benefit.
Balancing Payments--A marketwide service payment plan which would
compensate qualified handlers that perform market balancing should not
be included in the consolidated Northeast order at this time.
The original proposal for providing balancing payments from the
marketwide pool was intended to reflect the additional costs that
handlers incur in balancing the Class I needs of the market and
clearing the market of temporary milk surpluses. According to the
proponents, these balancing costs are not fully recoverable from Class
I handlers; however, the benefit that results from this service being
provided is a benefit of all producers in the market.
Handlers that incur the costs would be those handlers that would
receive partial cost reimbursement of 4 cents per cwt. Cooperatives
would be eligible to form common marketing agencies or federations for
purposes of qualifying for balancing payments. Such handlers would
include those who: (1) Demonstrate ownership or operation of a
balancing plant with the capacity to process a million pounds of milk
per day into storable products such as cheese, butter, and nonfat dry
milk and who also represent at least 2.5 percent of the total volume of
milk pooled under the order; (2) have under contract, and the
obligation to pool on a year-round basis, at least 8 percent of the
market's milk volume; (3) own a balancing plant that must be made
available to other handlers or cooperatives at the request of the
market administrator; (4) qualify to provide pool producers with a
temporary market for their milk for up to 30 days at the request of the
market administrator; and (5) demonstrate to the market administrator
that their utilization of milk in Class I uses is greater than the
minimum shipments required for pool plant qualification under the
order.
ADCNE modified the above described original proposal for balancing
payments. The modified proposal calls for a balancing payment of 6
cents per cwt. and revised criteria for those entities eligible to
receive balancing payments from the marketwide pool. As with their
original proposal, they are of the opinion that a system of
reimbursement is necessary to offset costs associated with absorbing,
or balancing, the daily, weekly, and seasonal fluctuation in Class I
demand in the market. Balancing payments would be made on qualifying
pounds of pooled milk delivered to manufacturing milk plants.
Additionally, this milk would be subject to a ``call'' by the market
administrator during times when there is additional need for milk by
distributing plants in the market.
The modified proposal would provide balancing payments to any
handler in any month in which the handler's deliveries of milk to
distributing plants are greater than 20 percent but less than 65
percent of its total pooled milk volume. According to ADCNE, the lower
percentage requires handlers to maintain a constant, significant
association with the Class I market and is higher than the level
required by other handlers for pooling qualification. Additionally, the
65 percent, says ADCNE, serves to limit participation to handlers with
substantial quantities of reserve milk not dedicated to the Class I
market. Qualifying deliveries would be determined on a ``net shipment''
basis to prevent the reshipment of milk
[[Page 16147]]
deliveries that would otherwise qualify for balancing payments. Payment
would be made on the reserve volumes of milk. In the event that the
market administrator issues a ``call'' for additional milk deliveries
to distributing plants, the volume of milk delivered to non-
distributing plants in the prior month by handlers subject to the call
would be used as a basis for requiring handlers to make additional
shipments to distributing plants on a pro-rata basis. For example, if
participating handlers in the prior month had delivered 100 million
pounds of milk to non-distributing plants and the market needed 10
million pounds of milk delivered to distributing plants, each handler
subject to the call would be obligated to deliver an additional volume
of milk to distributing plants equal to 10 percent of its deliveries to
non-distributing plants in the prior month. ADCNE viewed their
balancing payment provision as establishing a ``standby pool'' of milk
among qualifying handlers who elect to participate. Participation in
the pool would entitle the qualified handler to a payment of 6 cents
per hundredweight, determined monthly, on the handler's deliveries to
manufacturing plants, but would also obligate the handler to deliver
additional quantities in the event of a ``call'' for up to one year
after a balancing payment has been received.
According to ADCNE, the costs involved with matching the demands of
the Class I market with the total production of milk are costs which
marketing handlers, proprietary and cooperative alike, must absorb.
These costs are neither fully reflected in Class I prices, nor in over-
order handling charges and are not uniformly shared throughout the
market, while the Class I value is shared equally within the marketwide
pool, says ADCNE. The unique structural characteristics of the
northeast's markets and the preponderance of producers delivering
directly to proprietary Class I handlers on a regular basis, says
ADCNE, prevents supplying handlers from recovering these costs from
Class I handlers.
According to the ADCNE, the proposed Northeast marketing area will
comprise the largest Class I market in the Federal order system and
also represent the largest pool in the country in terms of producer
milk. According to ADCNE, monthly Class I sales will be approximately
900 million pounds and will be more than 65 percent greater than the
next largest consolidated order's Class I pool. ADCNE says this huge
Class I market presents significant challenges to its suppliers with
respect to balancing daily, weekly and seasonal needs and sets the
Northeast order apart from other orders.
The ADCNE offers additional justification for balancing payments,
in part, by drawing on the example of other orders providing for
marketwide service payments for offsetting the additional costs of
moving milk from assembly areas and for plant-to-plant movements of
milk. ADCNE notes that such payments from the marketwide pool are
provided for in recognition of the marketwide benefit that accrues to
all market participants when the costs of milk assembly and the
movement of milk are shared by all producers.
Other public comments similarly articulated the uniqueness of the
current New York market and its role as part of the consolidated
Northeast marketing area. One commenter observed that the Northeast
marketing area, and New York in particular, is unique in terms of the
mix of producers who are represented by cooperative membership and
those that are not. According to this commenter, about 65 percent of
the producers in New York are represented by cooperatives, while the
remaining 35 percent are independent producers to the market. Further,
noted this commenter, it has been cooperatives that have, since the
1960's, taken over the role of balancing the Class I needs of the
market by moving milk around on a daily basis between distributing and
manufacturing plants. According to this commenter, such was and should
continue to be an important factor to consider for the larger
consolidated market that expects to need about two thirds of its milk
supply balanced between an expected 45 percent Class I and about 20
percent Class II utilization. This commenter was of the opinion that
markets characterized by very high cooperative membership already
spread the costs of balancing uniformly over a large pool of producers.
All other public comments supported inclusion of balancing payments
in the consolidated Northeast order. These comments similarly called
attention to the unique structure of the Northeast marketing area,
primarily in terms of the number of producers represented by
cooperatives and the relatively high number of independent milk
producers and the unequal costs that would be incurred by producers who
incur the additional costs of balancing the fluid needs of the market.
While there was specific recognition of the important role that
cooperatives play in balancing the market, it was generally thought
that if balancing payments would be provided for in the consolidated
order, they should be made available to cooperative and proprietary
handlers alike.
The consolidated Northeast marketing area is expected to retain a
unique feature of the existing New York-New Jersey marketing area--a
relatively high percentage of producers who are not members of
cooperatives. As of December 1997, the current New York-New Jersey
market had about 68 percent of its milk and about 69 percent of its
producers represented by cooperatives. In the consolidated Northeast
marketing area, the expected amount of milk represented by cooperatives
will increase to about 76 percent with about 75 percent of the number
of producer represented by cooperatives. While the percent of milk
volume and number of producers represented by cooperatives is growing,
the volume of milk and number of independent producers remains
significant. This is especially important given the role of
cooperatives who operate manufacturing plants and who provide and incur
the costs associated with balancing the Class I needs of the market.
Without providing for some cost offset for balancing, about 26 percent
of the milk and about 25 percent of the producers would not be sharing
in the burden of balancing the market.
The revised criteria presented by the ADCNE seem reasonable in
determining which handlers would be eligible to receive balancing
payments from the marketwide pool. The qualification standards for
receiving balancing payments (to any handler that ships at least 20
percent, but less than 65 percent of the total volume of milk pooled on
the market to distributing plants) also seems reasonable in light of
the order's pooling standards. Further, determining qualifying
shipments on a ``net shipment'' basis is similarly a prudent safeguard
to reasonably assure that milk is delivered into, and not shipped back
out of distributing plants and supply plants for the sole purpose of
qualifying for balancing payments. It also provides for ensuring a
temporary market (up to 31 days) to any producers who would have lost
their normal market outlet as a condition for eligibility in receiving
balancing payments.
However, the revised proposal would have payments made only on milk
used in manufacturing products. In practice this would mean that
handlers with the greatest volume of milk going to manufacturing plants
would receive a larger share of balancing payments while at the same
time would be required to provide the least additional Class I milk to
the market. Observed
[[Page 16148]]
another way, the less commitment a handler has to the Class I market,
the larger the balancing payments. Additionally, basing balancing
payments criteria on only manufacturing milk seems to provide a
disincentive to handlers in serving the Class I market needs because
handlers that would provide additional Class I milk would lose 6 cents
per cwt. Lastly, basing balancing payments on just manufacturing milk
seems to provide an unwarranted monetary incentive to cause additional
milk to associate with the marketwide pool for the sole purpose of
receiving an additional 6 cents per cwt.
In addition to the above concern on limiting balancing payments to
manufacturing milk, the reasons for not recommending balancing payments
for the consolidated Northeast order articulated in the proposed rule
were not all sufficiently addressed. The proposed Northeast order
consolidates two current orders, New England and the Middle Atlantic,
that do not currently provide for balancing cost offsets to handlers
for such purposes. These markets have not experienced any undue harm or
disadvantage by not providing for this sort of cost offset. To the
extent that further analysis on the need for balancing payments can
rest upon the high percentage of independent milk that is expected to
be represented in the consolidated Northeast order, such analysis does
provide a legitimate and important factor in further considering the
appropriateness of a balancing payment provision.
The proposed rule also indicated that balancing payments should not
be adopted because an appropriate class price has been provided for
market clearing purposes--the Class IIIA price. It is a price that is
applicable in all current northeast orders, and is continued in this
decision as the Class IV price. While these two class prices are not
the same, (as explained in the BFP section of this decision) they are
conceptually similar in that handlers have been provided with a market
clearing price and further compensation beyond this does not appear to
be warranted.
Lastly, the proposed rule indicated that the original 4-cent per
cwt. balancing payment level was unexplained with respect to how
adequately it tends to offset balancing costs. The same is also
observed for the modified payment level of 6 cents per cwt. Subsequent
to the publication of the proposed rule, public comments received in
letters and from public forums and ``listening sessions'' did result in
being able to extrapolate a single cooperative entity's cost for
balancing, however, this measure may or may not be appropriate for
characterizing or determining the proposed payment level.
The ``Pass-Through'' Provision
Currently, the New York order provides for what is commonly
referred to as the ``pass-through'' provision. The intent of this
provision is to provide for a degree of competitive equity for handlers
that must pay at least the order's Class I price for milk so that they
can compete with handlers in unregulated areas that do not. This
provision has been in place in the New York order since 1957 and is a
part of how the order allocates and classifies milk. In functional
terms, the pass-through provision removes the amount of milk
distributed outside of the marketing area from the full Class I
allocation provisions of the order, thereby providing a degree of price
relief to handlers who compete with other handlers who are not held to
the pricing provisions of the order in unregulated areas. Regulated New
York handlers currently compete with unregulated handlers in the
unregulated areas of Pennsylvania and other areas in the northeast
region.
The current provisions of the New England and Middle Atlantic
orders do not have this provision although they too adjoin similar non-
Federally regulated areas. Handlers regulated by these two orders also
compete with these same unregulated handlers for Class I sales. The
merging and expansion of these three northeast orders continue to
result in areas that adjoin the recommended Northeast order that would
not be regulated.
While there were proposals both for and against retaining a pass-
through provision in the consolidated order, the need for it was
expressed on the basis of the extent to which the Northeast
consolidated order would be expanded to include currently unregulated
areas. Generally, handlers support continuing to provide for a pass-
through provision, and this position can only be considered reinforced
given the limited degree of expansion of the consolidated Northeast
order. If the entire Northeast region would fall under Federal milk
order regulation, the need for the pass-through would be moot. These
observations remain valid in light of the public comments received in
response to the proposed rule published on January 30, 1998.
The pass-through provision, notwithstanding the limited extent of
marketing area expansion, or in light of few public comments supporting
its continuation, is not included in the consolidated Northeast order
for the same compelling reasons articulated in the proposed rule
published on January 30, 1998. Class I prices charged to handlers that
compete within the marketing area for fluid sales are determined by the
location value of milk delivered to their plants. The Class I
differential structure adopted in this decision recognizes the location
value of milk for Class I uses and is designed to cause milk to be
delivered to bottling plants to satisfy fluid demands. Accordingly,
handlers located in high-valued pricing areas will be charged for the
location value of Class I milk at their plant locations regardless of
whether or not they compete with other handlers for fluid sales in
areas where the location value of Class I milk at these plant locations
are lower. This location value pricing principle is extended to
handlers competing for sales with handlers who do not pay the same
price for Class I milk in unregulated areas.
Seasonal Adjustments to the Class III and Class IV Prices
The three northeast orders to be consolidated into a single
Northeast order currently provide for a seasonal adjustor on Class III
and Class IIIA milk prices. These provisions have been a part of these
three orders for more than 30 years. Prior to the adoption of the
Minnesota-Wisconsin (M-W) price series in the mid-1970's, these markets
established the equivalent of the modern Class III price on the basis
of what was known as the U.S. Average Manufacturing Grade Milk Price
Series (U.S. Average Price Series).
The U.S. Average Price Series was a competitive pay price series,
but differed from the M-W in that it recorded price averages
consistently below the M-W that was rapidly being adopted elsewhere in
the country as the appropriate price for surplus uses of milk and used
as a price mover for higher-valued class prices. Given the national
marketplace in which surplus dairy products compete for sales, a
mechanism was needed to align these two differing price series.
Accordingly, seasonal adjustments to the Class III price were developed
and made a part of these orders. These seasonal adjustors were found
not only to be warranted for better price coordination between these
two price series, but also served to encourage handlers to dispose of
the maximum amount of milk in Class I uses.
By the mid-1970's, the M-W was adopted to replace the U.S. Average
Price Series and the seasonal adjustors
[[Page 16149]]
were retained. The reason for retaining these adjustments were to
encourage handlers to make more milk readily available for fluid use in
the short production months and to facilitate the orderly disposition
of excess reserve milk supplies in flush production months. Although
some regional price disparity was acknowledged to result from retaining
these adjustments, they were nevertheless retained because there was no
evidence that providing for such adjustment had led to any
interregional problems in the marketing of the reserve milk supply.
Agri-Mark, a major cooperative in the northeast, proposed that
seasonal adjustments continue in the consolidated Northeast order. The
main thrust of their proposal was that markets with relatively high
Class I use create a burden on the manufacturing sector in their areas.
They view seasonal adjustments as also assisting in sending the proper
economic signal to manufacturers. This is important, according to Agri-
Mark, because the seasonal adjustment provides an economic
``disincentive'' for Class III and Class IV manufacturers to use milk
in the fall when less producer milk is available and additional
supplies are needed for Class I uses.
Seasonal adjustors to the Class III and Class IV prices are not
incorporated into the provisions of the consolidated Northeast order.
This decision provides a much more permanent replacement for the
current BFP. Because Class III and Class IV product price formulas are
incorporated in all consolidated orders, there is no compelling reason
offered to contemplate continuing seasonal adjustments to Class III and
Class IV prices. They are also not provided in orders that are expected
to have Class I utilizations similar to that anticipated in the
consolidated Northeast order and who similarly have important
manufacturing activity.
6b. Southeast Region
The 3 proposed orders for the Southeastern United States--Florida,
Southeast, and Appalachian--are faced with a different set of marketing
conditions than other orders. The Southeastern United States is one of
the fastest growing areas of the country in terms of population growth
and is the most deficit area in terms of milk production per capita.
From 1988 to 1997, the population of the 12 Southeastern states rose
from 57.9 million to 65.1 million.
While population has been increasing in the Southeast, milk
production in the 12 Southeast States (i.e., Alabama, Arkansas,
Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina,
South Carolina, Tennessee, Virginia, and West Virginia) has been
decreasing--from 15.4 billion pounds in 1988 to 13.6 billion pounds in
1997. The net result of these opposite trends is a widening gap between
the local supply of milk for fluid use and the demand for such milk.
This is evident by the drop in per capita milk production for these 12
states, from 265 pounds per capita in 1988 to 210 pounds per capita in
1997.
Unlike other parts of the country, the Southeast has few facilities
for handling surplus milk. Consequently, surplus production during the
months of January through June must, in some cases, be shipped hundreds
of miles for processing at manufacturing plants generally to the north.
For this reason, the provisions in these orders must be aimed at the
twin goals of encouraging supplemental milk to move to these markets
during the short production months--generally July through December--
and they must also discourage supplemental milk from moving to these
markets when it is not needed in the flush production months--generally
January through June--because such milk would simply displace local
milk and increase the cost of disposing of such milk for surplus use.
Very few comments were received with respect to the order
provisions proposed for the Appalachian, Florida, and Southeast orders.
Most of the comments that were received endorsed the proposed
provisions. A few comment letters stated that seasonal pricing
provisions should be included in the Southeast orders and a few comment
letters suggested that the Class I price mover for the Southeast should
be a 12-month moving average rather than the proposed 6-month moving
average. These comments are discussed in the pricing sections of this
final decision. Other comments received are discussed below.
Transportation credits. As a result of the need to import milk to
the Southeast from many areas outside the Southeast during certain
months of the year, transportation credit provisions were incorporated
in the Carolina, Southeast, Tennessee Valley, and Louisville-Lexington-
Evansville orders in August 1996. These provisions provide credits to
handlers who incur additional costs to import supplemental milk for
fluid use for markets during the short production months of July
through December. The provisions restrict the use of credits by
handlers to milk received from producers and plants located outside of
the marketing areas. The credits are also restricted to milk received
from producers who supply the markets only during the short season and
are not applicable to milk of producers who supply the market
throughout the year.
Following the initial implementation of transportation credits in
August 1996, the provisions were modified in a final decision issued on
May 12, 1997. The amendments became effective on August 1, 1997.
Transportation credit provisions are retained in the new Southeast
and Appalachian orders but have not been included in the Florida order.
Only a few comments filed in response to the proposed rule
specifically addressed the issue of transportation credits. Two
producers requested that transportation credits be removed from the
orders because they have not performed as expected. A handler who
supported transportation credits for the Southeast and Appalachian
orders suggested that the provisions also be included in the Florida
order.
In the past 5 years, dairy cooperatives representing the large
majority of producers in the Southeast have strongly supported
transportation credit provisions for the Southeast and Appalachian
orders because the provisions have been helpful in obtaining
supplemental supplies of milk for fluid use and in sharing the costs
associated with those supplemental supplies more equitably among all
handlers in the market. They have not, however, been supported by the 2
cooperative associations which supply the Florida market and there is
no indication that such provisions are needed to more equitably share
the costs of supplying that market with supplemental milk. There was no
indication from the public comments that were received that these
cooperative positions have changed.
With the addition of northwest Arkansas and southern Missouri to
the Southeast marketing area, milk from these 2 areas will be
ineligible for transportation credits under the Southeast and
Appalachian orders. This change in the application of the credits is
consistent with the logic for incorporating these 2 areas in the
Southeast marketing area. Specifically, northwest Arkansas and southern
Missouri are regular sources of supply for handlers in the Southeast
marketing area and, in addition, include plants that compete for sales
with handlers regulated under the Southeast order. Accordingly, the
producers in these 2 areas will share in the pool proceeds of the
Southeast market. Of course, since
[[Page 16150]]
transportation credits are designed to attract supplemental milk to the
market for fluid use from producers who are not regularly associated
with the market, transportation credits should not apply to a farm or a
plant in northwest Arkansas or that portion of southern Missouri that
is to be included in the Southeast marketing area.
Two other changes have been made in the transportation credit
provisions of Orders 5 and 7. First, at the present time, if a dairy
farmer is a producer under the order for more than 2 months of the
January through June period and more than 50 percent of the dairy
farmer's milk is received as producer milk under the order during those
2 months, the dairy farmer's milk is ineligible for transportation
credits during the following months of July through December. This rule
should be modified.
Experience with the transportation credit provision in the
Southeast indicates that the months of January and June are transition
months. In some years, supplemental milk is needed during those months,
but in other years it is not. Indeed, it is for this reason that the
market administrator has been given the authority to extend
transportation credits to these months upon finding that the extension
is necessary to assure the market of an adequate supply of milk for
fluid use. When the market administrator makes a finding that January
or June should be included in the transportation credit period, these
months are excluded from the restriction of the orders, as described
above. Sometimes, however, in these 2 months it is not apparent that
supplemental milk will be needed until after the month begins. In this
case, it is too late for the market administrator to include these
months in the transportation credit period, but it is not too late for
a cooperative association or handler needing supplemental milk from
arranging for such milk to be brought into the market. The problem in
doing so, however, is that without being very careful it is easy to
disqualify a dairy farmer's milk for transportation credits by
receiving producer milk from the dairy farmer for more than 2 months or
by exceeding the 50 percent limit.
In view of this problem, the months during which a dairy farmer may
not be a producer have been changed from January through June to
February through May. This will provide greater flexibility to receive
supplemental milk when needed without disqualifying a dairy farmer's
milk from transportation credits.
The other change that has been made to the transportation credit
provisions has to do with the computation of the credit with respect to
milk shipped directly from producers' farms. At present, the market
administrator must determine an origination point for this milk and
once the point is determined ascertain what the Class I differential,
adjusted for location, would be at that point. If the origination point
is within a Federal order marketing area, the applicable Class I
differential is the one that would apply at the origination point under
the order regulating that area. However, if the origination point is in
an unregulated county, a Class I differential, adjusted for location,
is computed based upon the provisions of the order receiving the milk
(i.e., at present Order 5, 7, or 46).
The different methods now used to compute the Class I differential
at the origination point for a load of milk occasionally leads to very
different transportation credits for a load of milk originating within
a Federal order marketing area compared to another load of milk that
originates from a point just outside of that marketing area. At the
time when the transportation credit provisions were adopted, there was
not a better way of determining the Class I differential at an
origination point outside of a marketing area because there was no
single Class I pricing surface. Consequently, with 31 different orders,
there were probably 31 different Class I differentials that would have
applied in that unregulated county based on the location adjustments
provided in the 31 different orders. Under the circumstances, it
appeared to be most reasonable to use the Class I differential that
would apply under the order receiving the milk.
With the national Class I price surface adopted in this final
decision, there is a single Class I differential for every county in
the 48 states. Consequently, Sec. 1005.82(d)(3)(v) and
Sec. 1007.82(d)(3)(v) have been changed to use the Class I differential
specified in Sec. 1000.52 for purposes of determining the price to be
used at the origination point of a load of milk shipped directly from
producers' farms. This change will remove the large disparities that
can now exist in computing transportation credits for similarly-located
milk.
One final change has been made in paragraph (d)(3)(i) of
Secs. 1005.82 and 1007.82. At the present time, 2 methods are provided
for determining the origination point for a load of supplemental milk
directly from producers' farms. The origination point may be the city
nearest to the farm of the last producer whose milk is on a tank truck.
Alternatively, the hauler may stop at an independently-operated truck
stop and obtain a weight certificate indicating the weight of the truck
and its contents, the date and time of weighing, and the location of
the truck stop.
The latter option has never been used to establish an origination
point during the life of this provision, perhaps because it is not cost
effective to stop and weigh a load of milk. For this reason, it should
be removed from the order.
Pooling standards. Several comment letters from producers and
producer organizations expressed support for the pooling provisions
recommended in the proposed rule for the proposed southeast orders. The
comments emphasized the necessity to incorporate strict performance
standards in these orders. Commentors argued that such standards would
ensure that the markets are adequately supplied throughout the year in
an orderly manner and prevent opportunistic pooling which, they
contend, would lower the blend prices to producers serving these
markets throughout the year, thereby decreasing production in these
already-deficit markets and forcing handlers to pay higher prices to
obtain supplementary milk.
The comments leading to the proposed rule and those submitted in
response to it endorsed pooling standards at levels that are as strict
or stricter than current regulations and emphasized that the
southeastern milk marketing orders should provide pooling standards
that reflect the deficit nature of these markets. These comments are
embodied in the standards adopted for these orders.
The pool plant provisions adopted for the Appalachian, Florida, and
Southeast orders closely follow the provisions now contained in the
southeast orders. These provisions are appropriate for the needs of
these seasonally-deficit markets.
Section 7(a) of each Federal milk order describes the pooling
standards for a distributing plant. To qualify for pooling under each
of the 3 orders, a distributing plant must have route disposition equal
to at least 50 percent of the total fluid milk products physically
received at the plant. In addition, at least 25 percent of the plant's
receipts must be disposed of as route disposition in the marketing
area. These standards will ensure that a distributing plant meeting
them is closely associated with the fluid market and, therefore, should
be part of the marketwide pool.
At the present time, the Carolina order has a 15 percent in-area
route disposition standard, while the
[[Page 16151]]
Southeast, Upper Florida, Tampa Bay, Southeastern Florida, and
Louisville-Lexington-Evansville orders have a 10 percent standard. This
level is raised to 25 percent under the merged orders. The reason for
raising this standard to 25 percent is to better identify those plants
which should be fully regulated under the larger, merged orders. With
11 large markets, instead of 31 smaller markets, the higher 25 percent
standard, which is uniform for all 11 markets, will better maintain the
regulatory status of plants throughout the country. It will leave
unregulated, or partially regulated, those plants which have only a
small amount of their sales within a Federal order marketing area.
Paragraph (b) of section 7 will accommodate the pooling of plants
that specialize in extended shelf-life fluid milk products (i.e., 60-90
days) requiring refrigeration. There are at least 3 such plants in the
southeast markets: the Ryan Foods Company plants in Jacksonville,
Florida, and Murray, Kentucky, and the Dasi Products plant in Decatur,
Alabama.
Unlike a typical distributing plant, a plant specializing in
extended shelf-life products may have a more erratic processing
schedule, reflecting the longer shelf life of the products packaged at
the plant. Consequently, a plant's Class I utilization may vary
considerably from month to month. In the past, such variability has
resulted in shifting pool status for some of these plants from one
order to another. In some months, the plant may have been partially
regulated, even though all of the milk received at the plant was priced
under the order. This type of regulatory instability is not conducive
to orderly marketing. To provide greater regulatory stability for these
plants, they should be fully regulated pool plants if they are located
in the marketing area, have route disposition in the marketing area
during the month, and process a majority of their milk receipts into
fluid milk products. This provision will not guarantee that a plant
qualifies as a fully-regulated pool plant every month; some months a
plant may fail to process a ``majority'' of its milk receipts into
fluid milk products. Nevertheless, the provision will guarantee that
when a plant qualifies for pool plant status, it will be qualified
under the same order all the time unless it fails to have any route
disposition in the marketing area in which it is located.
One change in section 7(a) and (b) of each order will help to
stabilize the pool status of an extended shelf-life plant. At the
present time in most orders, when packaged fluid milk products that are
transferred from one plant to another plant are ultimately delivered
from the 2nd plant to a retail or wholesale outlet, these sales are
considered to be the route disposition of the 2nd plant. However, as
adopted in this final decision, such transfers will be treated as route
disposition from the 1st plant for the purpose of determining its pool
status. Since some plants specializing in extended shelf-life products
transfer such products between plants, this change will make it more
likely that such plants will have route disposition in the marketing
area.
Almost all of the dairy product manufacturing plants in the
Southeast are ``balancing plants'' operated by cooperative
associations. These ``balancing plants'' qualify for pooling based upon
the performance of the cooperative association, not upon shipments from
the plant alone.
A balancing plant may qualify for pool plant status based upon
shipments directly from producers' farms as well as shipments from the
plant. To qualify as a balancing plant, the plant must be located
within the order's marketing area. This requirement ensures that milk
pooled through the balancing plant is economically available to
processors of fluid milk if needed. However, in the case of the
Appalachian order only, a balancing plant also may be located in the
State of Virginia. This provision has been in the Carolina order and
should be continued in the Appalachian order. The performance standards
for a balancing plant require that 60 percent of a cooperative's
producer receipts be delivered to pool distributing plants every month
of the year. This provision is identical under the 3 southeast orders.
Each of the 3 orders also contains pooling standards for a supply
plant. For the Appalachian and Southeast orders, a supply plant must
ship at least 50 percent of the milk received during the month from
dairy farmers and cooperative bulk tank handlers. The plant's receipts
include milk that is diverted from the plant as well as milk physically
received at the plant. In the case of the Florida order, the shipping
percentage is slightly higher at 60 percent.
Unlike supply plant provisions in other orders, the supply plant
provisions in the 3 southeast orders do not recognize shipments
directly from producers' farms as qualifying shipments for a supply
plant. At the present time, there are no plants qualifying as ``pool
supply plants'' under any of the southeast orders.
Kraft Foods, Inc., submitted a comment in opposition to the supply
plant provision proposed for the Southeast order, arguing that it
should be permitted to pool its Bentonville, Arkansas, cheese plant
based on milk diverted from this plant directly from producers' farms
to pool distributing plants. Kraft argues that the proposed pool supply
plant provision of Order 7 would require it to physically receive milk
at its plant, reload it onto a truck, and ship it to pool distributing
plants in order for the Bentonville plant to meet the supply plant
shipping standards of Order 7.
Currently, there are no pool supply plants on the Southeast,
Appalachian, or Florida orders. When supplemental milk is needed for
these markets, most of the milk comes directly from producers' farms,
some of which can fill an over-the-road tank truck several times a day.
With farms of this size, there is obviously no need to aggregate the
milk from several farms at a supply plant.
A primary mission of most cooperatives supplying the Southeast is
to provide milk to handlers for fluid use and to dispose of milk when
not needed for fluid use efficiently. The order provisions should
accommodate and encourage efficient milk handling practices.
The cooperative balancing plant provision is intended to allow
cooperatives to supply the fluid market in the most efficient manner
possible and also to process milk efficiently when such milk is not
needed for fluid use. In the Southeast region, the dominant cooperative
operates butter-powder plants in Kentucky and Louisiana and one cheese
plant in Tennessee. Oftentimes during the year, these plants are
completely idle when all available milk is needed for Class I and II
use.
In the Southeast, where fluid handlers are subject to relatively
high Class I prices, order provisions should aid them in procuring milk
supplies by providing stringent pooling standards. This will help to
ensure that the Class I prices applicable to these handlers will serve
their purpose in generating uniform prices that will attract milk for
fluid use. The supply plant provisions proposed by Kraft are neither
needed nor supported by the vast majority of participants in these
markets and therefore are not adopted.
It is not necessary to seasonally adjust the supply plant and
balancing plant shipping requirements for the 3 southeast orders
because the standards proposed are flexible enough to accommodate the
disposal of surplus milk during the flush production season. In
addition, each of the 3 orders contains a provision to allow the market
[[Page 16152]]
administrator to increase or decrease shipping requirements and other
pooling standards by up to 10 percentage points. This provision also is
included in the producer milk section of all 3 orders with respect to
the percentage of milk that may be diverted and in the number of days
that a producer's milk must be received at a pool plant.
In addition to the provisions described above, each of the
southeast orders contains a provision to allow unit pooling of
distributing plants operated by the same handler. This provision has
been in the Southeast order since 1995.
Some distributing plants may meet the pooling standards of more
than one order. Consequently, it is necessary to specify the rules for
determining where a plant will be regulated. Under the southeast
orders, if a plant meets the pooling standards of the order and is
located in the order's respective marketing area, the plant will be
regulated under that order even if it has greater sales in some other
order's marketing area. This provision has evolved as a result of
several price alignment problems in the Southeast involving a plant
located in one marketing area but regulated under another order. In
every such case, a plant's supply of milk was put in jeopardy as a
result of a lower blend price under the order in which it became
regulated based on its sales. Notwithstanding the merging of several of
the smaller markets in the Southeast, this provision should be retained
for the southeast orders to preclude a repetition of this problem.
There was widespread support in comment letters for retention of this
provision.
In the case of a distributing plant that is not located within any
order's marketing area, a different standard should apply. Since, in
this case, it cannot be presumed with certainty that a plant is most
closely associated with the market in which it is located, its
association with a market should be determined based upon where it has
the most sales.
Producer-handler. The producer-handler provision for the 3
southeast orders is very similar to the current provisions. There were
no comments received in opposition to this provision.
To qualify as a producer-handler, a dairy farmer would have to have
route disposition in excess of 150,000 pounds per month; otherwise, the
producer's plant would be exempt from regulation pursuant to a
provision that has been uniformly adopted for all orders. In addition,
a dairy farmer may receive no fluid milk products from sources other
than his or her farm. Finally, the dairy farmer must provide proof
satisfactory to the market administrator that the care and management
of the dairy animals and other resources necessary to produce all Class
I milk handled, and the processing and packaging operations, are his/
her own enterprise and are operated at his/her own risk.
At the present time, there are fewer than 5 producer-handlers
operating in the southeast markets. The status of these handlers
occasionally fluctuates between being fully regulated plants in some
months and producer-handlers in other months. None of these operations
would lose their status as producer-handlers under the provision
adopted for the new southeast orders.
Producer/Producer milk. The producer and producer milk definitions
adopted for the 3 southeast orders are nearly identical to the
provisions now in the individual orders. These provisions define which
dairy farmers are eligible to share in the proceeds of the marketwide
pool.
A producer is defined as a dairy farmer whose milk is received at a
pool plant, diverted to a nonpool plant, or received by a cooperative
association acting as a bulk tank handler. It excludes a producer-
handler, a dairy farmer whose milk is delivered to an exempt plant, or
a dairy farmer whose milk is reported as diverted milk under the
provisions of another Federal order.
The diversion limits that are specified in the producer milk
section of the new orders are slightly different among the 3 southeast
orders. To qualify for diversion to a nonpool plant, a minimum amount
of a producer's milk must be received at a pool plant during the month
(i.e., this is called a ``touch-base'' requirement). Under the
Appalachian order, 6 days'' production must be received at a pool plant
during each of the months of July through December, and 2 days'
production must be received at a pool plant during each of the other
months of the year. Under the Southeast order, 10 days' production is
required to be delivered to a pool plant during each of the months of
July through December to qualify a producer's milk for diversion to a
nonpool plant. During the months of January through June, 4 days'
production is be required to be delivered to a pool plant.
Under the proposed Florida order, which will have a higher Class I
utilization and less need to divert milk, a producer is required to
deliver at least 10 days' production to a pool plant during every month
of the year in order to be eligible for diversion to a nonpool plant.
These proposed standards are comparable to those required under the
separate Florida orders.
The total quantity of milk which may be diverted by a pool plant
operator or cooperative association during the month also varies by
market as well as by month. Under the Appalachian order, a pool plant
operator or cooperative association is permitted to divert 25 percent
of its producer milk during the months of July through November,
January and February. During the months of December and March through
June, the total diversion limit increases to 40 percent of producer
milk receipts. In the Southeast order, a total diversion limit of 33
percent is provided during the months of July through December, and 50
percent during the other months. The diversion limits under the Florida
order are 20 percent during the months of July through November, 25
percent during the months of December through February, and 40 percent
during all other months.
The ``touch base'' requirements and gross diversion limits
described above are adjustable by the market administrator to assure
orderly marketing and/or efficient handling of milk in the marketing
area. This procedure is described in Secs. 1005.13(d)(7),
1006.13(d)(6), and 1007.13(d)(7).
Although a ``dairy farmer for other markets'' provision was
requested for the new orders by some producer organizations, it was
opposed by others. This provision is not included in the 3 southeast
orders at this time. Such a provision could restrict the free movement
of milk as needed among markets. The proposed diversion limits and
touch-base requirements in the southeast orders should preclude the
association of milk with these markets when such milk is not needed at
pool plants.
Reports of receipts and utilization. To accommodate the payment
schedule desired for the 3 southeast orders, the handler's report of
receipts and utilization must be in the market administrator's office
no later than the 7th day of the month. The producer payroll report
will be required by the 20th day of the month. The information to be
included in these proposed reports is essentially identical to the
current order provisions.
Payments for milk. The southeast orders provide uniform payment
schedules for payments to and from the producer-settlement fund.
Payment to the producer-settlement fund must be made by the 12th day of
the month and payment from the producer-settlement fund must be made
one day later.
[[Page 16153]]
In the case of payments to producers and cooperative associations,
the merged Florida order will maintain the longstanding 3-payment
schedule that has been part of the present Florida orders for many
years. The partial payments to producers under the new Florida order
must be made on the 20th day of the month for milk received during the
first 15 days of the month and on the 5th day of the following month
for milk received during the remainder of the month. The rate of
payment will be at not less than 85 percent of the preceding month's
uniform price, adjusted for plant location and for proper deductions
authorized in writing by the producer. The final payment for milk
received during the previous month must be made on or before the 15th
day of the month.
The Appalachian and Southeast orders adopted here have identical
payment schedules. The partial payment for milk received during the
first 15 days of the month must be made on the 26th day of the month,
and the rate of payment must be 90 percent of the preceding month's
uniform price. The final payment must be received by the producer on or
before the 14th day of the following month. The rate of final payment
for all 3 orders is the preceding month's uniform price adjusted for
butterfat, plant location, partial payments, marketing services, and
proper deductions authorized in writing by the producer. Each order
will require payment to a cooperative association to be made one day
earlier than the payment to an individual producer.
It should be noted that the payment dates described above may be
delayed if the payment is due on a Saturday, Sunday, or national
holiday. In such case, the payment will be due on the next day that the
market administrator's office is open for business. This new rule is
provided in Sec. 1000.90.
6c. Midwest Region
Upper Midwest Order
Pool Plant
The pool distributing and pool supply plant definitions of the
consolidated Upper Midwest order should use the standard order language
used in other orders, adapted to marketing conditions in the Upper
Midwest.
The pool distributing plant definition specifies that for a plant
to be a pool distributing plant, it must have 15 percent or more of its
total receipts of fluid milk distributed as route disposition. This
percentage is considerably lower than the percentage used in the
Chicago Regional order, which varies from 30 percent to 45 percent
depending on the month. However, the current Upper Midwest order uses a
percentage based on the marketwide Class I percentage for the same
month of the previous year. During ``normal'' months this percentage is
approximately 15 percent. When some milk is held off the pool for
economic reasons (primarily unusual price differences between classes),
the percentage may vary considerably, ranging from the ``normal'' 15
percent to over 50 percent.
In addition to specifying the route disposition percentage at 15
percent, the percentage would be calculated on the basis of the total
receipts of fluid milk products physically received at the distributing
plant. Currently both the Chicago Regional and Upper Midwest orders
include milk diverted from the distributing plant in the total bulk
receipts used to compute the route disposition percentage. Use of a
constant percentage at approximately the market Class I percentage, and
removing diverted milk from a distributing plant's receipts in
determining its regulatory status, will reduce the current
opportunities available to distributing plants to become partially
regulated by manipulating their reported receipts and diversions of
milk. In addition, the language adopted should eliminate month-to-month
uncertainty caused by basing handlers' regulatory status on the
market's fluctuating utilization percentage.
The Identical Provisions Committee recommended that the in-area
distribution criteria for pool distributing plants be 15 percent of
total route disposition, and that percentage was included in the
proposed rule. However, it was determined that a 25-percent standard
for in-area sales would be appropriate for all markets to assure that
handlers not already regulated would not become regulated solely
because of order consolidation. The Committee explained that use of
total route disposition rather than bulk receipts as the denominator
would reduce opportunities for handlers to manipulate the manner in
which they may report their operations to avoid regulation. Currently
in the Chicago Regional and Upper Midwest orders the in-area route
disposition standard (10 percent in Chicago Regional and 15 percent in
Upper Midwest) is computed using the same basis (bulk receipts,
including diversions) as is used to determine whether a plant meets the
definition of a pool distributing plant.
Provision is made for a single handler to form a unit of
distributing plants and manufacturing plants, all of which must be
located within the marketing area. The unit would have to meet the
requirements for a pool distributing plant and at least one of the
plants in the unit must meet the pool distributing plant requirements
as a separate plant. Plants not meeting the pool distributing plant
definition will be required to have disposition of packaged fluid milk
products, packaged fluid cream products, or cottage cheese and other
soft manufactured products of at least half of their receipts of Grade
A bulk fluid milk products, including milk diverted by the plant
operator.
Manufacturing plants traditionally have been included in units with
distributing plants because the manufacturing plants produced products
such as packaged fluid cream, sour cream, and cottage cheese that are
marketed in conjunction with bottled fluid milk products. In addition,
some of these plants produce a limited quantity of fluid milk products.
Handlers have argued that the operator of a free-standing manufacturing
plant that manufactures these complementary products should be able to
pool its milk supply for both (or for several) plants as if all of the
products were made in the bottling plant.
Both the Chicago Regional and Upper Midwest orders contain a
provision for a distributing plant unit. Although the current Chicago
Regional order does not specify the types of products that may be
manufactured at plants in the unit, the Upper Midwest order does. It is
reasonable to place restrictions on the types of products that are
disposed of from the manufacturing plants in the unit, since these
plants will receive the benefits reserved for pool distributing plants
and shipments from supply plants to the plants in the unit will be
considered in determining pool supply plant qualifications.
A pool supply plant operator should ship as qualifying shipments at
least 10 percent of the plant's receipts of milk from producers,
including milk diverted by the handler, each month. As in the current
Chicago Regional order, such shipments may be made to pool distributing
plants, pool distributing plant units, plants of producer-handlers,
partially regulated distributing plants, or distributing plants fully
regulated by other Federal milk orders. The extent of shipments to
partially regulated distributing plants to be used for qualification
would be limited to the quantity classified as Class I. Qualifying
shipments to distributing plants regulated by other Federal milk orders
should be limited to the quantity shipped to pool distributing plants,
and
[[Page 16154]]
may not be agreed-upon Class II, Class III or Class IV utilization.
Shipments directly from farms to pool distributing plants and to plants
contained in pool distributing plant units should be included as
shipments that help to meet the percentage qualification standard.
The 10 percent shipping requirement adopted in this decision is
approximately 5 percentage points less than the anticipated Class I
percentage for the consolidated Upper Midwest order. The 10 percent
shipping standard is greater than the current individual supply plant
shipping standard and equal to the maximum shipping percentage required
of pool units during the qualifying period in the current Chicago
Regional order. The standard under the current Upper Midwest order,
which uses the Class I use percentage of the same month in the previous
year as the supply plant shipping percentage, would exceed the adopted
percentage. Also under the current Upper Midwest order, a reserve
supply plant must ship 10 percent of its receipts to pool distributing
plants during January through June, and the marketwide Class I
percentage for the same months of the preceding year for the months of
July through December.
Several handlers, including a large cooperative association, a
cheesemakers' organization, and a fluid milk handler, filed comments
stating that the 10 percent shipping standard for supply plants is too
high for this market with a Class I utilization percentage that rarely
would exceed 20 percent.
The 10-percent shipping percentage is below the estimated Class I
percentage for the consolidated Upper Midwest order and should be
appropriate, even in view of the fact that many distributing plants
have a supply of milk from their own producers. In September 1997,
approximately 27 percent of the milk pooled or received at distributing
plants in the Chicago Regional order was pooled as producer milk with
the distributing plant operators as the handlers, rather than as
producer milk pooled by cooperatives and other handlers. The milk
pooled by distributing plant handlers accounted for approximately 12
percent of the total milk pooled in September 1997 (or approximately 5
percent of the total milk that would have been pooled if all of the
milk eligible to be pooled in September 1997 had been pooled).
Approximately 7 percent of the Class I producer milk, or approximately
2 percent of the total producer milk, pooled under the Upper Midwest
order is pooled by distributing plant operators. The combination of the
supply plant shipping percentage and the percentage of milk pooled
directly by distributing plant handlers would appear sufficient to meet
anticipated Class I needs in the consolidated Upper Midwest order. The
10 percent supply plant shipping percentage also should be appropriate
to avoid unnecessary and uneconomic shipments.
It should be remembered that the provisions adopted in this
decision will allow the market administrator to increase or decrease
the required shipping percentage on a marketwide or selected area basis
if deemed necessary to assure an adequate supply of milk to pool
distributing plants or to prevent uneconomic shipments of milk. If the
shipping percentage is increased by the market administrator, shipments
made for the purpose of meeting the increased percentage may be made
only to pool distributing plants or plants contained in pool
distributing plant units.
A comment filed by a cheesemakers' organization expressed concern
about the potential competitive inequities of a provision enabling the
market administrator to change the shipping percentage for a selected
portion of the marketing area. This provision has existed in the
current Upper Midwest order for some time without resulting in any
controversy. The provision probably will be more useful with the
considerable enlargement of the marketing area through consolidation.
It may be more inequitable to require increased shipments from plants
in, for instance, Grand Forks, North Dakota, to supply deficits in the
Chicago area (700 miles distant) than it currently would be to require
those plants to increase qualifying shipments so that distributing
plants in the Twin Cities area (300 miles away) will be able to obtain
needed supplies. It should be remembered that there are plentiful
supplies of milk produced within 100-200 miles of any part of this
marketing area. Certainly care will be taken to assure that handlers
are not placed at significant competitive disadvantage.
Groups of two or more supply plants will be allowed to form systems
of supply plants for the purpose of meeting the shipping requirements,
by shipping the same percentage as that required for individual pool
supply plants that are not part of such a system. These pool supply
plant systems may consist of plants of the same handler or more than
one handler, and may contain both proprietary and cooperative handlers.
The only requirement affecting an individual plant within the unit is
that the plant must be physically located within the marketing area.
This restriction is necessary to prevent distant plants from receiving
the benefits of participating in the marketwide pool without having an
actual association with the market.
Several plants located outside the boundaries of the consolidated
marketing area currently are included in supply plant units by a
``grandfather clause'' in the Upper Midwest order. The order will
provide that these plants may continue to be included in a supply plant
system if they so desire as long as they maintain continuous pool plant
status.
Handlers may form supply plant systems by filing a written request
by July 15, listing the plants to be in the system. Such a system will
remain in effect from August 1 through July 31 of the following year.
These dates deviate from those provided for other orders because of the
difference in seasonal production variations between this and other
orders. The handler or handlers establishing the system may also delete
a plant from the system or dissolve the system by submitting a written
request to the market administrator. Any plant deleted from a system,
or plants that were part of a system that was discontinued, may not be
part of a system until the following August.
Provisions that allow handlers to add plants to a system under
certain circumstances and to allow systems to reorganize in the event a
plant changes ownership or in the event of a business failure by a
handler are also incorporated in the order. A system failing to meet
pooling standards will be allowed to drop plants from the system until
the system does qualify. The handler responsible for assuring that the
system qualifies must notify the market administrator of which plants
are to be deleted from the system. If the handler does not notify the
market administrator, the market administrator will exclude plants from
the system beginning with the plant at the bottom of the list of plants
submitted by the handler responsible for qualifying the system, and
continuing up the list until the system qualifies.
The provisions for supply plant systems are very similar to the
provisions currently contained in both the Chicago Regional and Upper
Midwest orders. Unlike the Chicago Regional and the Upper Midwest
orders, however, this order does not contain a specific shipping
requirement for individual plants within a supply plant system. In the
current Chicago Regional order, pool supply plant systems have twice
the percentage shipping standard of individual supply plants, with
individual plants within the systems required to ship 47,000 pounds or
three percent of their producer receipts,
[[Page 16155]]
whichever is less, in five of the six months of August through January.
The current Upper Midwest order requires handlers with supply plants in
a supply plant system to ship five percent of each handler's Grade A
receipts, including milk diverted by the handler to nonpool plants,
during one of the months of August through December.
This decision does not provide for the category of supply plants
referred to as reserve supply plants. Reserve supply plants ceased to
be included in the Chicago Regional order in 1987, while the Upper
Midwest continues to provide for them. With year-round shipping
requirements, the unlimited ability of the market administrator to
change shipping percentages both in level and in area, and the ability
of supply plants to form systems, there is no compelling reason to have
two categories of supply plants.
A provision to allow plants to remain qualified for up to two
consecutive months due to unavoidable circumstances, such as a natural
disaster, fire, breakdown of equipment, or work stoppage is included in
this decision. The provision is contained in the Chicago Regional order
and has worked quite well in giving handlers some administrative relief
in the face of certain unavoidable circumstances.
Comments filed by a cooperative association and a fluid milk
handler urged that the unit reporting, accounting and allocation
provisions of the Chicago Regional order be retained in the
consolidated order. This issue is considered and addressed in the
Classification section of this decision.
Producer Milk
The definition of producer milk determines which milk will be
eligible to participate in the Federal order pool. This decision
provides that milk received at a pool plant directly from producers or
from a cooperative association acting as a handler should be eligible
to be producer milk. Milk for which the operator of a pool plant is the
handler that is delivered directly from the farm to another pool plant
should also be considered producer milk. Under certain circumstances,
milk delivered to a nonpool plant may also be considered producer milk.
Milk delivered directly from a farm to a nonpool plant may be
considered producer milk if at least one day's production is received
at a pool plant during the dairy farmer's first month as a producer.
In order to qualify as producer milk the milk pooled by a
cooperative association acting as a handler described in
Sec. 1030.9(c), the cooperative must deliver at least 10 percent of the
milk for which it is the handler pursuant to Sec. 1030.9(c) to pool
distributing plants, units of pool distributing plants, plants of
producer-handlers, or partially regulated distributing plants. The
shipments to partially regulated distributing plants are limited to the
quantity classified as Class I. These are the same performance
requirements that apply to supply plants, with the exception of the
treatment of milk shipped direct from farms to distributing plants
regulated under other orders. If such milk is allocated to Class I
under the other order, it will become producer milk under that order.
The same performance requirements that apply to supply plants apply to
cooperative associations acting as handlers if the market administrator
adjusts the shipping percentages.
No significant differences in the treatment of milk received at
pool plants are provided under this decision than under the current
Chicago Regional or Upper Midwest orders. There are, however, several
differences relating to diverted milk. This decision allows the
operator of a pool plant to divert, or ship milk directly from the farm
to another pool plant, the milk of producers for which it is the
handler, and account for the milk as producer milk at the shipping
plant. Allowing either a proprietary pool plant or a cooperative pool
plant to divert milk to another pool plant is consistent with the
Chicago Regional order. In the Upper Midwest order, milk that is
received at a pool plant and for which a cooperative association is the
handler is considered producer milk at the receiving plant. The Upper
Midwest order specifies that a proprietary handler may divert milk to
another pool plant and that such milk will be considered producer milk
of the diverting proprietary handler. The language adopted under this
decision leaves to the discretion of the cooperative association the
option of diverting milk to another pool plant from its own pool plant
or delivering the milk to the pool plant in its capacity as a handler
of producer milk pursuant to Sec. 1030.9(c).
The consolidated Upper Midwest order requires that a new producer
or a producer who has broken association with the market have at least
one day's production received at a pool plant during the first month in
which the producer's milk is reported as producer milk. Currently the
Chicago Regional order requires a new producer on the market or a
producer who has broken association with the market to have at least
one day's production received at the pool plant at which the milk is
reported during the first month in which the producer's milk is
considered to be producer milk eligible for diversion to a nonpool
plant. In addition, at least one day's production of a producer's milk
must be received at a pool plant in each of the months of August
through January to be eligible for diversion to a nonpool plant. The
current Upper Midwest order requires that a new producer or a producer
who has broken association with the market be received at a pool plant
prior to the milk being diverted to a nonpool plant.
There is little or no justification for forcing producer milk to be
received at a pool plant to maintain or prove association with the
market. Supply plants and cooperatives will be required to ship a fixed
percentage of their total milk supply, not just that portion received
at their plants, to the fluid market. Since both cooperatives and
proprietary handlers can move milk directly from the farm to the fluid
market there is little reason to force milk into a pool plant solely
for regulatory purposes. Certainly the extra cost to the handler of
moving milk for regulatory purposes does not enhance economic
efficiency or milk quality and in fact decreases economic efficiency
and milk quality to the detriment of the entire market.
This decision provides that producer milk be priced in the month in
which it is delivered to the plant of first receipt, although the
proposed rule would have priced milk in the month in which it is picked
up at the farm. Some orders have allowed milk picked up on the last day
of a month but delivered to a plant in the next month to be priced in
the month in which it was picked up. A comment filed by Wisconsin
Cheesemakers favored continuation of this regulatory treatment. For
purposes of uniformity between the consolidated orders (which apply to
many handlers, cooperative and proprietary, who operate in more than
one order area) and clarity of plant accounting for milk received and
used during each month all orders now will provide that producer milk
is not received until it actually enters a plant.
Under the consolidated order, as in the proposed rule, producer
milk will be priced at the location of the plant at which the milk is
physically unloaded into processing facilities or a storage tank. In
the current Chicago Regional order milk is priced where milk is pumped
within the confines of a plant. The adopted order language will
eliminate the pricing of milk where it is pumped from truck to truck
and price the milk where it is eventually unloaded
[[Page 16156]]
into processing facilities or a storage tank.
Location Adjustments and Transportation Credits
To help move milk to the fluid market a transportation credit and
an assembly/procurement credit for Class I milk are contained in the
Upper Midwest order. The transportation credit will be computed by
multiplying the hundredweight of milk contained in transfers of bulk
fluid milk from pool plants to pool distributing plants and used in
Class I by the value obtained by multiplying .0028 times the number of
miles between the transferor plant and transferee plants with an offset
for a positive difference between the Class I prices at the transferee
and transferor plants. The transportation credit should be paid to the
receiving handler, as the milk will be pooled at the location from
which it is shipped and the credit will, to some extent, duplicate the
function of the location adjustment in helping to cover the cost of
moving it from supply plants to fluid milk handlers.
The transportation credit is similar to the transportation credit
currently contained in the Chicago Regional order. Both the
transportation credit adopted in this decision and the current credit,
which uses the same .0028 rate, are applied to Class I milk only.
However, in the current Chicago Regional order the credit is based on
110 percent of the Class I milk received at the pool distributing
plant. The proposed rule would have provided that the transportation
credit be paid to the shipping handler on the basis of Class I milk
transferred to fluid milk plants.
Several interested persons commented on the use of transportation
credits and assembly credits in this consolidated order, with most
favoring such provisions but disagreeing to some extent with their
proposed application. There was disagreement between the comments on
whether the credit should apply to the shipping or the receiving
handler and whether it should apply to all Class I milk, both direct-
shipped and from plants, or just to milk transferred from plants and
used in Class I. One commenter also stated that the proposed rate did
not cover enough of the actual cost of moving milk.
In the case of milk received at a distributing plant from a supply
plant operated by a cooperative association, the order provides that a
distributing plant pay the supply plant from which it receives milk at
not less than the price applicable at the distributing plant. The
shipping plant must account to the marketwide pool at the price
applicable at the shipping plant, where the milk was first received.
Payment of the distributing plant's Class I price for milk in Class I
uses will assure that cooperative associations are being paid the order
minimum price for such milk. The distributing plant, then, is
responsible for the cost of getting the milk from the supply plant
location to its own, with some assistance from the transportation
credit to the extent that the calculated cost exceeds the difference in
the Class I prices between the shipping and receiving plants.
There must be some contribution from consumers to the cost of
moving milk to deficit locations. However, incorporating the entire
cost of hauling milk in the transportation credit could have the effect
of encouraging handlers to procure milk from greater distances than
necessary. If milk is moved from a higher-priced zone to a lower-priced
zone (which may be necessary to obtain needed supplies of milk at
outlying distributing plants), there will be no offset for differences
in Class I prices between the shipping and receiving plants.
Unlike the transportation credit, which is based on mileage and
paid only on transfers of bulk milk to pool distributing plants, the
assembly/procurement credit is paid at the rate of 8 cents per
hundredweight of Class I milk transferred or diverted by a pool plant
to a pool distributing plant. An assembly/ procurement credit also will
be applied to milk received from producers and from cooperative
associations acting as handlers pursuant to Sec. 1030.9(c) based on the
pro rata share of producer milk delivered to a pool distributing plant
and allocated to Class I.
A comment filed by a cooperative association stated that assembly
credits should not apply to distributing plants' own milk supplies, but
only to milk obtained from supply plants or cooperatives. If such a
change were made, distributing plant operators who have arranged for
their own milk supplies would have an 8-cent disadvantage in procuring
milk in comparison with their competitors who obtain milk only from
supply plants and cooperatives.
A transportation credit and procurement credit are incorporated in
the order to assist handlers in supplying the Class I market. These
transportation and procurement credits, to be paid on Class I milk only
in combination with the Class I price surface discussed elsewhere in
this final decision, will help handlers move milk to the fluid market
by distributing the cost of supplying the fluid market to all market
participants who share in the marketwide pool. Handlers and producers
who supply the Class I market on a regular basis should not be expected
to bear the entire cost of supplying the Class I market while handlers
and producers who meet only the minimum requirements derive the
benefits of marketwide pooling. Incorporation of a transportation
credit and procurement credit on Class I milk in the marketwide pool
will assure that at least some of the cost of supplying the Class I
market is shared among all market participants.
Reporting and Payment Dates
Comments filed by two handlers opposed changing the reporting dates
for the consolidated order from the 10th to the 9th of the month
following receipt and use of the milk. It should be apparent,
especially to the cooperative association that filed this comment, that
payment to producers cannot be determined until the marketwide pooling
process is completed and minimum producer pay prices calculated. The
earlier the pooling process can begin, the sooner producers can be
paid. The reporting date of the 9th, adopted in this decision, is the
latest date for filing handler reports in any of the consolidated
orders. Two other orders specify the 9th, with one order requiring
reporting on the 8th and the other seven orders specifying that handler
reports be filed on or before the 7th of the following month. Because
reporting should be somewhat more uniform among the Upper Midwest
handlers after consolidation of the orders, their reporting burdens
should be reduced accordingly. Further, technology certainly has
improved the ability of all businesses to keep records and organize
data for reporting purposes since the current reporting dates were
established (over 35 years ago).
Wisconsin Cheesemakers' comment opposed reducing the time lag
between when producers deliver milk to handlers and when they are paid
for that milk. The current dates for paying producers for the milk
delivered in the first half of each month (the 3rd and 4th of the
following month) under these two orders are among the latest, if not
the latest, in the entire Federal milk order system. The date adopted
in this decision, the 26th of the same month, is the same as in three
other consolidated orders, later than in five of the other orders, and
earlier than in two of the orders (none of which is later than the last
day of the month). The date specified for final payment to producers
ranks similarly. Producers need to be paid for the milk they've
delivered several weeks before on as timely a basis
[[Page 16157]]
as possible. The adopted provisions will accomplish that goal.
Central Order
Many of the provisions of the consolidated Central order are
explained in the ``Identical Provisions'' portion of this decision, and
need not be addressed here. The provisions that deviate somewhat from
those adopted for other order areas are the provisions dealing with
standards for determining the pool status of producers and handlers. An
effort is made to explain significant differences between the pooling
provisions of the 9 individual orders included in this consolidation
and those of the consolidated order.
Pool Plant
The Central pool distributing plant definition follows closely the
provisions contained in most of the other consolidated orders. The
provisions adopted would make no difference in the pool status of
distributing plants currently pooled under the individual orders.
Specifically, the percentage of a handler's total route disposition
distributed within the marketing area that will result in the handler
being fully regulated under the Central order is the same 25-percent
standard adopted for all of the other 10 orders. The minimum percentage
of a pool distributing plant's actual physical receipts of fluid milk
products that would have to be distributed on routes is 25. Currently
most of the orders included in the consolidated Central order include
milk diverted from the distributing plant in the total bulk receipts
used to compute the route disposition percentages.
The consolidated Central order provides that a single handler be
allowed to form a unit of distributing plants and Class II
manufacturing plants, all of which must be located within the marketing
area. The unit must meet the requirements for a pool distributing
plant, and at least one of the plants in the unit is required to meet
the pool distributing plant requirements as a separate plant. Plants in
the unit that do not meet the pool distributing plant definition are
required to have disposition of packaged fluid milk products, packaged
fluid cream products, or cottage cheese and other Class II products of
at least half of their receipts of Grade A bulk fluid milk products,
including milk diverted by the plant operator.
Class II manufacturing plants are included in units with
distributing plants because the manufacturing plants produce products
such as packaged fluid cream, sour cream, and cottage cheese that are
marketed in conjunction with bottled fluid milk products. In addition,
some of these plants produce a limited quantity of fluid milk products.
Handlers have argued that the operator of a free-standing manufacturing
plant that manufactures these complementary products should be able to
pool its milk supply for both (or for several) plants as if all of the
products were made in the bottling plant.
The pool supply plant definition of the consolidated Central order
contains provisions that assure continued pool qualification for any
handlers or milk currently associated with the markets included in the
consolidated Central market. The Iowa order contains no limit on the
amount of direct-shipped milk that can be used to qualify a supply
plant, and several of the other orders allow such deliveries to make up
a portion of qualifying shipments. The consolidated order allows
direct-shipped milk to be counted as pool qualifying shipments without
limit.
The Greater Kansas City, Nebraska-Western Iowa, Southern Illinois-
Eastern Missouri, and Southwest Plains orders contain cooperative
balancing plant provisions, allowing cooperative-operated plants to be
pooled if the cooperative delivers a given percentage of the milk for
which it is the handler to pool distributing plants. The consolidated
Central order also contains such a provision, including in the pool
plant definition a plant operated by a cooperative association that
supplies at least 35 percent of the milk for which it is the handler to
pool distributing plants, either during the current month or for the
immediately preceding 12-month period. The deliveries to pool
distributing plants may include deliveries directly from the farms of
producers for whom the co-op is the handler, as well as transfers from
the cooperative's plant.
Cooperative association ``balancing plants'' serve the market as
the outlet of last resort. When surplus milk has no other place to go
on weekends, holidays, or during months of surplus production, it moves
to cooperative association ``balancing plants'' where it is
manufactured into storable products. When production decreases, these
plants operate at minimal capacity or may be shut down completely.
Cooperative members assume the burden and cost of processing surplus
milk through such plants.
Most of the Central orders allow a period during which supply
plants do not have to meet shipping percentages if they have done so
for the months during which milk production levels are low and demand
for fluid milk is high. The Iowa order has reduced shipping standards
for such months. The order provisions adopted with this decision
include a period during which supply plants that have served the needs
of the market when milk supplies are tight are not required to meet
shipping standards, but it is reduced from the 5-7 month period
existing in the current orders to a 3-month period from May through
July.
The percentage of receipts as qualifying shipments to distributing
plants currently ranges from 30 to 50 percent for these orders, with
the Iowa percentage reduced to 20 for the months of December through
August. The adopted shipping standards for pool supply plants under the
consolidated Central order are 35 percent for the months of September
through November and January and 25 percent for all other months, with
plants meeting the percentage standard for the months of August through
April being allowed to retain their pool status for the immediately
following months of May through July.
Groups of two or more supply plants are allowed to form systems of
supply plants for the purpose of meeting the shipping requirements by
shipping the same percentage as that required for individual pool
supply plants that are not part of such a system. These pool supply
plant systems may consist of plants of the same handler or more than
one handler, and may contain both proprietary and cooperative handlers.
The only requirement affecting each plant within the system is that the
plant must be physically located within the marketing area. This
restriction is necessary to prevent distant plants from receiving the
benefits of participating in the marketwide pool without having an
actual association with the market.
As in the other consolidated orders, the market administrator will
have the authority to increase or reduce the required shipping
percentage as marketing conditions change for the purpose of assuring
that an adequate supply of milk will be available for fluid use, or to
assure that the order does not require handlers to undertake uneconomic
movements of milk to maintain the pool status of their plants.
In addition, as in the consolidated Upper Midwest order, the
provisions adopted in this decision will allow the market administrator
to increase or decrease the required shipping percentage on a selected
area basis, as well as a marketwide basis, if deemed necessary to
reflect needed milk movements within this geographically
[[Page 16158]]
extensive marketing area. This provision has existed in the current
Upper Midwest order for some time without resulting in any controversy,
and is expected to be useful in view of the considerable enlargement of
the marketing area through consolidation. Care in using the provision
must be exercised to avoid placing handlers in areas in which shipping
percentages are temporarily increased or decreased at a competitive
disadvantage or advantage to handlers in areas that have not been so
affected. However, it would be more inequitable to require increased
shipments from plants in, for instance, Eastern Colorado, to ship milk
to plants in eastern Illinois to supply deficits in that portion of the
marketing area.
Producer Milk
The producer and producer milk provisions of the orders
consolidated in the Central order are quite similar to each other and
differ little from those to be incorporated in the other consolidated
orders. The principal difference between some of the individual orders
and the consolidated order is the limit on the percentage of a
handler's pooled producer milk that may be diverted to nonpool plants.
The percentage of a handler's milk that may be diverted to nonpool
plants varies under the individual orders from 20 percent of milk
received at pool plants during some months under the Eastern Colorado
order to 70 percent for some months under the Nebraska-Western Iowa and
Iowa orders. Most of the orders require each producer's milk to be
received at a pool plant at least once each month. The consolidated
Central order requires that a new producer or a producer who has broken
association with the market have at least one day's production
physically received as producer milk at a pool plant before the
producer's milk is eligible to be diverted to nonpool plants.
In order to assure that all of the milk that has been pooled under
these orders continues to qualify for pooling, the diversion limit
adopted for the Central order is 65 percent for the months of September
through November and January, and 75 percent for the months of February
through April and December. Allowable diversions for the months of May
through July are unlimited. There is no requirement that each
producer's milk be received at pool plants for a minimum number of days
per month. At the same time, the market administrator is authorized to
increase or reduce the diversion limit as needed to maintain orderly
marketing and efficient handling of milk in the marketing area.
Multiple Component Pricing
The reporting and payment provisions of the consolidated Central
order include those common to other orders with multiple component
pricing. These markets have a significant amount of milk used in
manufactured products, and component pricing will enable producers to
be paid according to the valuable components of their milk.
Mideast Order
Many of the provisions of the order for the consolidated Mideast
marketing area are explained in the ``Identical Provisions'' portion of
this final decision, and need not be addressed here. The provisions
that deviate somewhat from those provided for other order areas are the
provisions dealing with standards for determining the pool status of
producers and handlers. A significant change from the proposed rule is
that the uniform multiple component pricing plan provided for the six
other orders that use multiple component pricing is also incorporated
into the Mideast order, in place of the proposed pricing plan that
differed slightly from the one common to the other orders with multiple
component pricing provisions. This change is discussed more fully later
in this section of this decision.
For the most part, pooling provisions have less effect on the
current Michigan Upper Peninsula market than on the 4 other markets
included in this consolidated order because Michigan Upper Peninsula is
the only remaining individual handler pool in the current Federal order
system. Therefore, pooling provisions are discussed in relation to the
4 principal markets included in the consolidated Mideast order.
Pool Plant
The Mideast pool distributing plant definition, in which the in-
area route disposition qualification was proposed to exceed that
contained in most of the other proposed orders (30 percent instead of
15 percent) to make less likely the full Federal regulation of three
State-regulated plants, will instead use the same 25-percent standard
of in-area route dispositions of receipts that is being provided in all
of the other orders.
Several comments opposed use of an in-area standard higher than 15
percent, arguing that the standard in the Mideast area should not be
higher than in other areas, and that handlers outside the market should
be held to the ``current'' 15-percent standard. The adoption of a
uniform 25-percent standard of in-area sales as a percentage of total
route dispositions for all orders is discussed in the section of this
decision dealing with Provisions Common to all Orders.
As in the other consolidated orders, the total route disposition
percentage will be calculated on the basis of the total receipts of
fluid milk products physically received at the distributing plant.
Currently all four of the larger orders to be included in the
consolidated Mideast order include milk diverted from the distributing
plant in the total receipts used to compute the total route disposition
percentage.
One comment urged that a pass-through provision similar to that in
the current New York-New Jersey order (Order 2) be incorporated in the
consolidated order to deal with the in-area route dispositions of
handlers who do not meet the order's pooling requirements. Continuation
of such a provision in Order 2 was considered and rejected in this
decision, in the regional discussion of the Northeast order. There
would be no valid basis for adopting such a provision in the Mideast
order when it has been found not appropriate for use in the Northeast.
To assure continued pool qualification for all of the handlers who
currently are associated with the Mideast markets, the pool supply
plant definition of the consolidated Mideast order provides for all of
the types of supply plants that currently qualify for pooling under the
4 principal orders. The Eastern Ohio-Western Pennsylvania pool plant
provision includes a plant operated by a cooperative if the cooperative
association delivers to distributing plants at least 35 percent of the
milk for which it is the handler during the current month or over the
preceding 12 months. The Southern Michigan order (Order 40) includes as
pool supply plants: (a) A plant that has been a pool plant for 12
consecutive months and has a marketing agreement with a cooperative
association, and (b) a system of supply plants operated by one or more
handlers. Order 40 also includes some shipments to other Federal order
plants and partially regulated distributing plants, in addition to pool
distributing plants, as qualifying shipments by supply plants.
The percentage of receipts as qualifying shipments to distributing
plants currently ranges from 30 to 40 percent for these orders, with
direct deliveries from farms rather than plant transfers limited to
half of the required deliveries under three of the orders. All four of
the orders require performance of pooling standards by supply plants
for the months of September through February, followed by a ``free
ride'' period during which shipping
[[Page 16159]]
percentages need not be met by supply plants that met the shipping
standards during the required period. The Indiana order contains a
provision allowing the continued pooling of a plant that fails to meet
pooling standards because of circumstances beyond the handler's
control.
The shipping standards adopted under this decision for pool supply
plants are 30 percent for all months, with plants meeting the standard
for the months of September through February being allowed to retain
their pool status for the immediately following months of March through
August. For the purpose of making the 30 percent level of shipping
standard less burdensome, up to 90 percent of required shipments are
allowed to be made directly from farms to distributing plants. The
cooperative association plant defined as a pool plant in the Eastern
Ohio-Western Pennsylvania order is retained, as are the supply plant
provisions peculiar to the Southern Michigan order. These provisions
reflect marketing conditions specific to these current areas, and will
assure that plants currently qualified for pooling will retain such
status.
Producer Milk
The producer and producer milk provisions of the orders
consolidated in the Mideast order are quite similar to and differ
little from those incorporated in the other consolidated orders. The
principal difference between some of the individual orders and the
consolidated order would be the limit on the percentage of a handler's
pooled producer milk that may be diverted to nonpool plants. The Ohio
Valley, Indiana and Eastern Ohio-Western Pennsylvania orders all
contain 50 percent diversion limits for the months of September through
November, January and February and a 60 percent limit for the month of
December, with no diversion limit for the months of March through
August. The Southern Michigan order contains a 60-percent diversion
limit for the months of September through February, with no limit for
the months of March through August. In order to assure that all of the
milk that has been pooled under these orders continues to qualify for
pooling, the diversion limit adopted for the Mideast order is 60
percent for the months of September through February, with no limit for
the March through August period. At the same time, the market
administrator is authorized to increase or reduce the diversion limit
as needed to maintain orderly marketing and efficient handling of milk
in the marketing area.
Multiple Component Pricing
In a change from the proposed rule, the reporting and payment
provisions of the consolidated Mideast order adopted in this decision
now conform to those of the other consolidated orders that provide for
multiple component pricing (MCP). The proposed rule would have
incorporated a pricing plan similar to the current Southern Michigan
MCP plan in the consolidated order instead of the MCP plan proposed for
the other consolidated orders. The Southern Michigan MCP plan differs
from that included in the other current MCP orders only by pricing
``fluid carrier'' instead of ``other solids.''
The Farm Bill authorizes adoption of a ``uniform'' multiple
component pricing plan. As a result, the component pricing plan has
been modified to be the same as the plan contained in other MCP orders.
The differences between the adopted MCP plan and that originally
proposed for the consolidated Mideast order are not significant. The
same prices would be used to compute component values, the same protein
and butterfat prices would be used, and the proposed ``fluid carrier''
price was derived directly from the ``other solids'' price. The Mideast
order language is changed accordingly, and will result in very little
difference in total payments, either by handlers or to producers whose
milk is pooled under the differing provisions.
Somatic Cell Adjustment
Michigan Milk Producers Association (MMPA), a large cooperative
association in Michigan, opposed changing the present Southern Michigan
(Order 40) somatic cell count (SCC) adjustment schedule to the
adjustment schedule proposed uniformly for all of the MCP orders with
SCC adjustments. Changing the current Michigan SCC adjustment schedule
to the uniform schedule included in the proposed rule would have the
effect of reducing (from the current Order 40 level) the positive value
adjustments on milk containing less than 200,000 SCCs and reducing the
negative value adjustments on milk containing more than 700,000 SCCs.
Incorporating the proposed adjustment in all of the consolidated orders
that have somatic cell adjustments will make for a more uniform system
of pricing and may better reflect measurable differences in value.
Reporting and Payment Dates
MMPA proposed that handler reports be submitted one day earlier (on
the 6th instead of the 7th day after the end of each month) so that
producers can be paid a day earlier. The cooperative also advocated
that producers be paid with two partial payments instead of one (on the
21st day of the month for the first 15 days' production and the 6th of
the next month for the second half of the month's production instead of
one partial payment on the 26th day of the month for the first 15 days'
production, as proposed). Final payment for each month's milk would
then be made no later than the 16th of the following month, instead of
the 17th. The cooperative stated that reducing the time lag between
delivering milk and being paid for it would better accommodate the cash
flow requirements of modern larger dairy farms.
The Southern Michigan order currently requires that handler reports
be filed no later than the 5th of the next month, and that nonmember
producers be paid on the 15th. These dates are very early compared to
most other Federal orders. Two of the orders included in the
consolidated Mideast order currently have a reporting date of the 8th
and payment dates of the 18th.
The dates included in the proposed rule and adopted in this
decision represent an effort to find a middle ground between
significant differences in the orders to be consolidated. The desire to
accelerate payment to producers, both by increasing the number of
partial payments and advancing the final payment date, is
understandable. However, other interested parties in the consolidated
area had no opportunity to indicate agreement with or opposition to
such changes. These proposals would more properly be addressed in a
formal rulemaking proceeding after this proceeding is completed.
6d. Western Region
This final decision adopts four Federal milk orders (i.e.,
Southwest, Arizona-Las Vegas, Western, and Pacific Northwest orders)
for the western region. A number of comments were received in response
to the proposed rule. These comments are addressed below under the
applicable order discussion.
A number of changes have been made to the consolidated orders since
the proposed rule. The significant changes that have been made to all
or most of the consolidated orders are explained at the end of this
regional discussion, whereas, those modifications that are unique to an
individual order are discussed under the applicable order.
[[Page 16160]]
Southwest Order
The consolidated Southwest marketing area is comprised principally
of the current Texas and New Mexico-West Texas marketing areas. With
regard to milk production and population (consumption), these areas are
both in the process of change, but in different ways. Texas has one of
the fastest-growing populations in the U.S., and until recently has
been able to maintain milk production on a per capita basis. After a
significant increase in milk production during the 1988-1994 period,
Texas milk production has been declining somewhat, accompanied by the
exit of approximately 29 percent of the State's Grade A dairy farmers.
If the current trend continues, the Texas market could come to resemble
more closely those of the Southeast portion of the U.S., relying
significantly on more distant milk supplies to meet the market's Class
I and II needs. This situation currently exists for the southern parts
of Texas.
The State of New Mexico has experienced relatively slow population
growth, but dramatic increases in milk production--from 1.099 billion
pounds in 1988 to an estimated 4.020 billion pounds in 1997. With the
declining production in Texas, the New Mexico milk-shed will be drawn
upon more often to supply Class I and II needs in the Texas demand
centers, 500-600 miles distant. Procurement costs would be expected to
increase dramatically. In light of these circumstances, provisions in
the Southwest order must provide flexibility to cooperatives and
handlers supplying the market to prevent inefficient movements of milk
and unnecessary costs of operation incurred for the purpose of
participating in the market-wide pool.
Prior to enactment of the 1996 Farm Bill, cooperatives operating in
the southwestern markets had determined that the two milk orders in the
region were being operated as one and should be merged. Much discussion
took place, and proposed order provisions were developed by the
principal cooperatives involved. These comments, with numerous others,
were considered in the development of this final decision for the
Southwest marketing area.
Pooling standards
Most of the pooling standards in the Texas and New Mexico-West
Texas orders have been suspended for some time. The rapid expansion of
milk production in the region during the late 1980's created a
situation in which cooperatives and handlers operating in the region
could not meet the provisions of the orders while pooling all of their
milk supplies. For this reason, the pooling standards for the Southwest
order have been relaxed.
As adopted in this final decision, the pooling standards for a
distributing plant require the plant to have route disposition equal to
at least 25 percent of its fluid milk receipts at the plant during the
month. In addition, at least 25 percent of the plant's route
disposition must be in the marketing area.
One partially regulated plant located in the Texas marketing area
will become fully regulated under this provision. The plant has been
partially regulated under the Texas order and, periodically, fully
regulated under the Chicago Regional order. The lowering from 50
percent to 25 percent of total route disposition for a pool
distributing plant by the Southwest order will cause this plant to
become fully regulated under the Southwest order and, thereby,
alleviate the disorderly conditions caused by its shifts in regulation.
There should be no change in the plant's costs, since their supply of
milk comes from Southwest pool sources.
The pool plant provisions of the Southwest order have been revised
in this final decision. The modification provides for the pooling of
plants that specialize in ultra-pasteurized or aseptically-processed
fluid milk products. A detailed explanation of the changes is located
at the end of the western regional discussion.
There are no pool supply plants regulated under the present Texas
and New Mexico-West Texas orders. Nevertheless, as recommended in the
proposed rule and adopted in this final decision, provision is made for
such an operation under the Southwest order. As proposed, to qualify as
a pool plant, a supply plant must ship 50 percent or more of the total
quantity of milk that is physically received during the month from
dairy farmers and handlers described in Sec. 1000.9(c) to pool
distributing plants. The supply plant provisions have been modified in
this final decision to include milk that is diverted to other plants as
well as milk physically received at the plant to allow for more
efficient movement of milk to distributing plants when needed.
A provision for the pooling of cooperative association balancing
plants is also included in the consolidated order. A plant located
within the marketing area that is operated by a cooperative association
would qualify as a pool plant if pool plant status is requested for
such plant by the cooperative association and during the month at least
30 percent of the producer milk of members of such cooperative
association is delivered directly from farms to pool distributing
plants or is transferred to such plants as a fluid milk product from
the cooperative's plant. The requirement that the plant be located in
the marketing area ensures that milk pooled through the balancing plant
is economically available to processors of fluid milk if needed.
One comment was received regarding the proposed pooling standards
for supply plants. Kraft Foods, Inc. (Kraft), stated that the Southwest
order should adopt all the options and pooling efficiencies contained
in Section 7 of the proposed Central marketing order. Kraft asserts
that the two markets have virtually identical populations (21 million)
and Class I utilization (48 percent-49 percent). In addition, the
handler contends that the pool supply plant provisions of the Southwest
order provide intra-market inequity among handlers in the Southwest
market. Kraft indicated that a proprietary supply plant could qualify
for pooling only by transferring 50 percent of milk physically received
at the plant and noted that no farm to plant shipments are permitted to
count towards qualifying. However, the handler stated, a plant in the
marketing area operated by a cooperative association may make
qualifying shipments directly from farms. The performance level, Kraft
indicates, is 30 percent of all milk pooled by the cooperative.
A primary mission of most cooperatives supplying the Southwest
market is to provide milk to handlers for fluid use and to dispose of
milk efficiently when not needed for fluid use. The order provisions
should accommodate and encourage efficient milk handling practices. The
cooperative balancing plant provision is intended to allow cooperatives
to supply the fluid market in the most efficient manner possible and
also to process milk efficiently when such milk is not needed for fluid
use. Almost all of the dairy product manufacturing plants in the
current Texas and New Mexico-West Texas marketing orders are operated
by cooperatives.
As stated in the proposed rule, the pooling provisions for the
Southwest order are similar to the provisions in the present Texas and
New Mexico-West Texas orders. The pool supply plant standards are
consistent with and reflect the current marketing conditions of the
consolidated Southwest order. The standards should ensure that milk of
producers servicing the Class I needs of the market will be pooled. The
provisions for a supply plant in this
[[Page 16161]]
final decision does not recognize shipments directly from producers'
farms as qualifying shipments for a supply plant. However, there
currently are no supply plants regulated under the Texas or New Mexico-
West Texas orders. Accordingly, the provisions should not place
proprietary handlers at a competitive disadvantage and are appropriate
to meet the needs of the market.
It is not necessary to seasonally adjust the supply plant and
balancing plant shipping requirements for the Southwest order because
the standards proposed are flexible enough to accommodate the disposal
of surplus milk during the flush production season. Also, this order,
like the other new consolidated orders, contains a provision to allow
the market administrator to increase or decrease these shipping
requirements.
In addition to the provisions described above, the Southwest order
contains a provision to allow unit pooling of distributing plants
operated by the same handler.
Producer-Handler
The producer-handler provisions that were proposed have been
revised in this final decision to be very similar to the provisions in
the current Texas and New Mexico-West Texas orders. The revisions
should assure that the status of current producer-handlers will be
unchanged.
Producer Milk
The current Texas and New Mexico-West Texas orders have provisions
that require a producer's milk to be received at a pool plant, or touch
base, before milk of the producer is eligible to be diverted. The
proposed rule indicated that milk produced by producers located in the
marketing area should be eligible for pooling without a particular
percentage or number of days' production being required to be received
at a pool plant. For producers located outside the marketing area the
touch base provision of the proposed rule required that at least 15
percent of the production of producers be delivered to pool plants
during the month in order to be eligible for pooling. Based on comments
and a review of the different touch base requirements for producers
both in and out of the area, the provision in the final decision has
been changed. The provision in the final decision will allow diversion
of producer milk of a new producer, provided there is a delivery of at
least 40,000 pounds or one day's milk production, which ever is less,
to a pool plant during the month (rather than before diversions are
allowed). This dual ``touch base'' standard has been developed to
accommodate a market that is characterized by substantial differences
in size among dairy farmers. The requirement that one day's production
be delivered to a pool plant, is appropriate for many producers but is
unreasonable for those who produce as much as seven tanker loads a day.
The current Texas order allows an amount equal to one-third of the
milk delivered to pool plants to be diverted (this provision is
currently suspended), while the (currently suspended) New Mexico-West
Texas provision allows 50 percent of a handler's total milk supply to
be diverted. In addition, the current Texas order provisions base
allowable diversions on deliveries to individual pool plants, greatly
exacerbating the time and effort required to keep track of milk
movements. In the proposed rule the provision set the limit on
diversions of producer milk on the basis of at least 50 percent of the
milk pooled by a handler being received at pool plants for the
handler's entire milk supply to be pooled. The diversion limit in this
final decision is continued at 50 percent of a handler's total milk
supply. The total performance standard will allow handlers to meet
diversion limits more easily with more efficient movements of milk. In
addition, the increased percentage of allowable diversions will assure
that all of the producers whose milk would qualify for pooling under
either of the two orders being consolidated will continue to meet
pooling qualifications. A provision to allow the market administrator
to make adjustments is included in the producer milk section of the
order with respect to the percentage of milk that may be diverted.
Multiple Component Pricing
The reporting and payment provisions of the consolidated Southwest
order in the final decision include those common to other orders with
multiple component pricing. The multiple component pricing plan does
include a somatic cell adjustment for milk used in Classes II, III, and
IV. The current Texas and New Mexico-West Texas orders do not provide
multiple component pricing. However, the proposed provisions that were
developed by the cooperatives involved in discussions to merge the
current orders did include a multiple component pricing plan. As stated
above, those comments were considered in the development of this final
decision.
A comment was received from Leprino Foods Company (Leprino)
regarding the inclusion of multiple component pricing in the
consolidated Southwest order. Leprino strongly supports multiple
component pricing for both handlers and producers and states that it
has a direct interest in the consolidated Southwest order. Thus, there
is support on both the producer, as represented by cooperative
associations, and handler side of the Southwest dairy industry.
Transportation Credits for Surplus Milk
The Texas order currently has a market-wide service payment
provision that gives credits for hauling surplus milk located in
certain zones in Texas to nonpool plants outside the State for use in
manufactured products. The provision has not been included in the
consolidated Southwest order language because of declining production
and increasing balancing plant capacity in the affected areas of Texas.
Payment Provision
The Texas order is one of only a few marketing orders that requires
handlers to remit the full classified value during the month to the
Market Administrator. In turn, the Market Administrator acts as a
clearing house and forwards these proceeds on to the respective
organizations. Interested persons have expressed an interest in
retaining these provisions, not only for the proposed Southwest order,
but for all other orders.
The current Texas payment provision was found necessary because of
problems encountered in assuring timely payments by pooled handlers.
The provision has been in the Texas order since 1979, and the earlier
payment problems have been remedied. Such a provision involves a rather
large degree of regulatory intervention between milk processors and
their suppliers that should be shown to be necessary to correct
existing problems. There is no indication that such problems currently
exist, or would exist in the absence of the provision. Nearly all of
the milk that will be pooled under the consolidated Southwest order is
produced by cooperative members and pooled by the cooperatives. These
large, business-oriented organizations should be able to assure that
they receive full payment for their members' milk in a timely manner.
In addition, there are provisions in the General provisions (Part 1000)
that provide for enforcement of late or under-payment charges at one
percent per month of the amount due.
Arizona-Las Vegas Order
Many of the provisions of the consolidated Arizona-Las Vegas order
[[Page 16162]]
are explained in the ``Identical Provisions'' portion of this final
decision and need not be addressed here. Those provisions that deviate
to some extent from the ``Identical Provisions'' are addressed in this
discussion.
Pool Plant
The pool distributing plant definition is similar to that contained
in most of the other consolidated orders. The minimum percentage of a
pool distributing plant's physical receipts of bulk fluid milk products
that are disposed of as route disposition is 25 percent. The percentage
of a handler's total route disposition into the marketing area that
would result in a distributing plant becoming fully regulated under the
Arizona-Las Vegas order is also 25 percent. While this definition
differs slightly from the current order language, it provides
uniformity with other consolidated orders and should result in no
additional distributing plants being pooled under the Arizona-Las Vegas
order or any change in the pool status of distributing plants currently
pooled.
The pool plant provisions of the Arizona-Las Vegas order have been
revised in this final decision. The modification provides for the
pooling of plants that specialize in ultra-pasteurized or aseptically-
processed fluid milk products. A detailed explanation of the changes is
located at the end of the western regional discussion.
The proposed pool supply plant definition would have required a
supply plant to ship at least 50 percent of its physical receipts of
milk from dairy farmers to pool distributing plants during the month in
order to be a pool supply plant. In the proposed rule it was indicated
that this definition would provide for easy, effective order
administration and would result in no additional handlers being
regulated under the order. The supply plant definition has been
modified in this final decision to include milk that is diverted from
the plant as well as milk physically received at the plant. There are
currently no pool supply plants in the proposed marketing area.
The current Central Arizona order permits a manufacturing plant
located in the marketing area that is operated by a cooperative
association to be a pool plant, provided that the cooperative ships at
least 50 percent of its member milk to pool plants of other handlers
during the current month or the previous 12-month period ending with
the current month. This percentage requirement is currently suspended.
The proposed order suggested reducing this percentage to 35 percent and
authorizing the market administrator to increase or reduce the
percentage in response to market conditions. The 35 percent and the
authorization to make adjustments in the level is contained in this
final decision. The reduced performance standard should enable the
continued pooling of producer milk that currently is pooled without
resulting in uneconomic handling or disorderly marketing. The Arizona-
Las Vegas order provides that a single handler be allowed to form a
unit of distributing plants and Class II manufacturing plants provided
each plant is located within the marketing area. The unit in total
would be required to meet the requirements for a pool distributing
plant and at least one of the plants in the unit would be required to
meet the pool distributing plant definition individually. This
provision would provide uniformity with other federal orders and would
not change the status of any plants currently pooled. Class II
manufacturing plants are included for unit pooling with distributing
plants operated by the same handler because such plants produce
products that are marketed in conjunction with fluid milk products.
A provision permitting the market administrator to adjust the
percentages specified in the pool plant definition will provide the
flexibility to respond in a timely manner to changing marketing
conditions without the need for a formal hearing process.
Producer-Handler
The producer-handler provisions that were proposed have been
revised in this final decision to be very similar to the provisions in
the current Arizona order. The revisions should assure that the status
of current producers-handlers will be unchanged.
Producer
The consolidated order contains a dairy farmer for other markets
definition. A producer could not be pooled under the Arizona-Las Vegas
order unless all of the milk from the same farm was pooled under this
or some other federal order or unless such non-pooled milk went to a
plant with only Class III or Class IV utilization. This differs
slightly from the current definition in the Central Arizona order. Such
a provision is needed in the consolidated order to prevent dairy farms
whose milk is regularly used for fluid disposition in other markets
from pooling the surplus portion of their production under the Arizona-
Las Vegas order.
Producer Milk
The percentage of a handler's pooled milk that may be diverted to
nonpool plants is 50 percent in any month. The proposed rule
recommended a diversion limit of 20 percent in any month. Currently,
diversions under the Central Arizona order are limited to eight days'
production of a producer during four months of the year, with unlimited
diversions the remainder of the year. The recommended 20 percent
diversion limit was suggested because it was thought that this would
have resulted in the amount of milk eligible for diversion being
approximately equivalent to eight days' production and would have been
easier to administer than the current order provisions. In addition,
the proposed rule stated that the 20 percent limit year round would
have assured that pooled milk will have a close association with the
market's fluid processing plants.
Security Milk Producers Association (SMPA) expressed concern
regarding the recommended 20 percent limit on the volume of a handler's
pooled milk that may be diverted during any month. SMPA states that
diversion requirements set at anything less than 50 percent would be
financially detrimental to its producers. The cooperative requests that
a limit be implemented that will not detract from the orderly flow of
milk.
Based on the comments received by SMPA and an reevaluation of the
marketing conditions in the consolidated Arizona-Las Vegas order, and
noting that eight days production is about 40 percent, this final
decision adopts for the Arizona-Las Vegas order a diversion limit of 50
percent for each month of the year. The 50 percent diversion limit year
round is more flexible than the current order and the 20 percent limit
recommended in the proposed rule and it would be easy to administer. In
addition, the 50 percent diversion limit is consistent with the
diversion limit included in the Southwest order, which is adjacent to
the Arizona-Las Vegas Order. Thus, the 50 percent diversion limit each
month should allow the Class I needs of the market to be met while
ensuring the orderly disposition of milk. In addition, the market
administrator will have the authority to adjust the diversion
percentage.
Multiple Component Pricing
The Arizona-Las Vegas order does not provide for multiple component
pricing (MCP). There are six plants that are expected to be regulated
under the consolidated order: five proprietary
[[Page 16163]]
distributing plants, and one manufacturing plant operated by a
cooperative association. The Class I utilization for the order is
expected to be less than 50 percent, a level that would, in some other
orders, be an indication that component pricing would be appropriate.
However, the Class I utilization at the five distributing plants is
more than 80 percent. With the exception of the one cooperative
balancing plant, the handlers to be regulated constitute predominantly
a Class I market.
Prior to the issuance of the proposed rule, there were no comments
received in support of MCP for the Arizona-Las Vegas order. However,
Schreiber Foods, Inc. (Schreiber), Leprino, and SMPA have indicated
support for MCP in the consolidated order. Schreiber agrees with
National Milk Producers Federation that MCP is important in some but
not all orders, and the rule to adopt such a plan and quality
adjustments to minimum prices should be based on the dairy industry's
preference in each area. The handler asserts that its Class III
utilization of over 50 percent of the milk from the Arizona-Las Vegas
market is a strong indication for the need of MCP in the order.
Leprino indicates that less than half of the milk in the proposed
Arizona-Las Vegas order is used for Class I purposes. The handler
argues that competitive inequities due to differences between fat-skim
and MCP across manufacturers operating in different orders will become
more significant as the manufacturing sector grows. It claims that the
lack of MCP in the order will stimulate some disorderly marketing
conditions as low component milk from New Mexico seeks higher revenue
that will be available through the fat-skim pricing to the west.
Additionally, SMPA strongly suggests that a system that prices the
butterfat and protein components be incorporated in the order because
it is in the best interest of producers.
This final decision does not adopt MCP for the consolidated
Arizona-Las Vegas order. The current Central Arizona order does not
contain a multiple component pricing plan. The handlers proposed to be
regulated under the consolidated order are currently all, with one
exception, regulated under the current Central Arizona order. The
manufacturing of milk in the consolidated order is anticipated to be
done primarily by Schreiber, at a non-pool plant. Schreiber is almost
totally supplied by United Dairymen of Arizona (UDA). Due to these
marketing situations (i.e., one buyer and one seller), the
implementation of MCP in the consolidated Arizona-Las Vegas order would
only benefit some of the producers of the order. All of the producers
in the marketing area would not share equitably. As stated in the
proposed rule and explained above, the fluid nature of much of the
market and the current marketing situations do not warrant MCP at this
time.
Payment Obligation of a Partially Regulated Distributing Plant
SMPA recommended a proposal designed to equalize Class I costs
between California distributing plants and handlers fully regulated
under the proposed Arizona-Las Vegas order. SMPA explained that the
proposal is essentially a modification of the ``Wichita Option,'' which
represents a reasonable method for computing a partially regulated
distributing plant's obligation to the producer-settlement fund.
The ``Wichita Option'' compares the amounts paid to producers for
milk received by a nonpool distributing plant with the full class-use
value of milk that would have applied if the plant were fully regulated
under the order. To equalize the competitive positions of both fully
regulated plants and those plants not regulated under an order, any
amount by which the class-use value exceeds the value paid to producers
is due to the producer-settlement fund or can be paid to the producers
who supplied the handler. However, this option does not function
appropriately to handle milk from plants regulated under a State order
that provides for market-wide pooling. Thus, the modified ``Wichita
Option'' includes payment provisions for any plant regulated under such
a State-operated program.
The current Great Basin order provides payment provisions for any
handler operating a State-regulated distributing plant having route
disposition in the Great Basin order. This provision has been
incorporated in Section 76 of the General provisions in this final
decision and is applicable to all orders.
Western Order
Many of the provisions of the consolidated Western order are
explained in the ``Identical Provisions'' portion of this final
decision and need not be addressed here. Those provisions that differ
from those explained in the ``Identical Provisions,'' or those
currently contained in the orders to be consolidated, are discussed
below.
Pool plant
The pool distributing plant definition is similar to that contained
in most of the other orders. The minimum percentage of a pool
distributing plant's physical receipts of bulk fluid milk products that
are disposed of as route disposition is 25 percent. The percentage of a
handler's total route disposition distributed into the marketing area
that would result in a distributing plant becoming fully regulated
under the Western order is also 25 percent. While this definition
differs slightly from the current language of the orders included in
this consolidated Western order, it provides uniformity with other
consolidated orders and should result in no additional distributing
plants being pooled under the order or any change in the pool status of
distributing plants currently pooled.
The pool plant provisions of the Western order have been revised in
this final decision. The modification to the pool plant definition
provides for the pooling of plants that specialize in ultra-pasteurized
or aseptically-processed fluid milk products. A detailed explanation of
the changes is located at the end of the western regional discussion.
The proposed pool supply plant definition would have required a
supply plant operator to ship at least 35 percent of the milk pooled at
the supply plant, either by transfer or diversion, to pool distributing
plants during the month in order to qualify for pooling. The 35 percent
level is included in the final decision. The percentage is slightly
higher than that contained in the current Southwest Idaho-Eastern
Oregon order and slightly lower than that contained in the current
Great Basin order. This change should result in no milk that is
currently associated with either of the two orders losing such
association.
The pool supply plant definition in the final decision includes
provision for a March through August period during which a supply plant
that has met the order's shipping percentages for the preceding months
of September through February to be able to continue to be a pool plant
without meeting the shipping standards. As with other consolidated
orders, the market administrator will have the authority to increase or
decrease the order's supply plant pooling standards as marketing
conditions change.
The Western order final decision contains a provision that would
permit a manufacturing plant operated by a cooperative association and
located in
[[Page 16164]]
the marketing area to be a pool plant if 35 percent of the milk for
which the cooperative is the handler is received at pool distributing
plants during the month or during the immediately preceding 12-month
period. This provision is similar to one currently contained in the
Great Basin order and in some of the other consolidated orders.
Although the two current orders that have been consolidated do not
contain such a provision, the Western order would provide that a single
handler be allowed to form a unit of distributing plants and Class II
manufacturing plants provided each plant is located within the
marketing area, as suggested by the Identical Provisions committee. The
unit in total would be required to meet the requirements for a pool
distributing plant and at least one of the plants in the unit would be
required to meet the pool distributing plant definition individually.
This provision would provide uniformity with other federal orders and
would not change the status of any plants currently pooled. Class II
manufacturing plants are proposed to be included for unit pooling with
distributing plants operated by the same handler because such plants
produce products that are marketed in conjunction with fluid milk
products.
Proprietary Bulk Tank Handler
The consolidated Western order final decision retains the bulk tank
handler provision that is currently in the Southwestern Idaho-Eastern
Oregon order, permitting a handler other than a cooperative association
to divert milk to nonpool plants for the handler's account based on
shipments of milk to pool plants of other handlers.
Producer-Handler
The producer-handler provisions that were proposed have been
revised in this final decision to be very similar to the provisions in
the current Great Basin and Southwestern Idaho-Eastern Oregon orders.
The revisions should assure that the status of current producers-
handlers will be unchanged.
Producer
The Western order contains a dairy farmer for other markets
definition. A producer would not qualify for pooling under the Western
order unless all of the milk from the same farm was pooled under this
or some other federal order or unless such non-pooled milk went to a
plant with only Class III or Class IV utilization. This differs
slightly from the current definition in the Great Basin order. Such a
provision is contained in the Western order to prevent dairy farmers
whose milk is regularly used for fluid disposition in other markets
from pooling the surplus portion of their production on the
consolidated order. Security Milk Producers Association supports this
provision and states that it is needed to prevent the pooling of
surplus milk from farms whose milk is regularly associated with other
markets.
Producer Milk
The percentage of a handler's pooled milk for the Western order
final decision that may be diverted to non-pool plants is 90 percent in
any month. The proposed rule recommended a limit of 80 percent, which
is identical to the percentage currently included in the Southwestern
Idaho-Eastern Oregon order and is only slightly higher than that for
the present Great Basin order (i.e., 75 percent for cooperatives and 70
percent for proprietary handlers).
Avonmore West Inc. (Avonmore), a handler in the Southwestern Idaho-
Eastern Oregon order in Twin Falls, Idaho, favors the more liberal
qualification rules proposed for the Western Order whereby only one
day's production of producer milk has to be received at a pool plant.
However, the handler opposed the 80 percent standard of a handler's
pooled milk that may be diverted to non-pool plants as recommended in
the proposed rule. Avonmore indicated that the 80 percent diversion
limitation is identical to the one currently in the Southwestern Idaho-
Eastern Oregon Federal order and stated that this standard was
suspended indefinitely in December 1989. The handler contends that the
argument that the 80 percent diversion limitation caused uneconomic
movements of milk is still valid today.
In 1997, Avonmore notes, an average of 217 million pounds of
producer milk was diverted to nonpool plants each month. Accordingly,
Avonmore argues that the reintroduction of the 80 percent diversion
limitation would allow only 80 million pounds of producer milk to be
diverted to nonpool plants. The handler contends this would preclude
many dairy producers in Idaho from having their milk associated with
the Western order, which could cause significant price disparities
between producers and create disorderly marketing conditions that
Federal orders are intended to prevent.
Utah Farm Bureau Federation filed a comment regarding the
consolidation of the Great Basin and Southwestern Idaho-Eastern Oregon
orders into the Western order. In their comments the federation states
that the pooling provisions of the current Great Basin order must be
maintained to prohibit opportunistic entry of outside milk into the
Utah Class I pool.
As adopted in this final decision, the 90 percent diversion
limitation is the same as that adopted in the consolidated Upper
Midwest order. The 90 percent limitation on movements of pooled milk to
nonpool plants should permit all milk associated with the market that
is not needed at pool plants during the month to be pooled and priced
under the order. The 90 percent standard provides handlers more
flexibility to efficiently move milk. Although unlimited diversions are
not incorporated in the consolidated order, the 90 percent standard
should not preclude most producers associated with the current
individual orders from having their milk pooled under the consolidated
Western order. The 90 percent standard is an appropriate level for the
consolidated order given the provisions contained in the current
individual orders and should not create any disorderly marketing
conditions. The recommended standard also should ensure that additional
amounts of unneeded milk would not be pooled. In addition, as contained
in other consolidated orders the market administrator will have the
authority to adjust the diversion percentage.
The order language allowing two or more cooperative associations to
jointly met the diversion limits was inadvertently excluded from the
proposed rule. Order language to allow this to occur has been included
in this final decision.
Darigold Farms opposes the touch-base requirement that was
recommended in the proposed rule. The cooperative contends that the
exclusion of this provision may present an opportunity to obtain
unified support for a provision that would prevent or reduce
opportunistic pooling.
The current Southwestern Idaho-Eastern Oregon and Great Basin
orders contain such a touch-base provision. The provision ensure that a
producer whose milk is pooled on the order is indeed servicing the
Class I needs of the market. Accordingly, the touch-base provision
recommended in the proposed rule is adopted in this final decision. The
provision provides that during the month at least one day's milk
production of a dairy farmer new to the order must be physically
received at a pool plant so that milk of such producer is eligible for
diversion.
Reports of Receipts and Utilization and Payroll Reports
The Western order requires pool handlers to file a ``report of
receipts and utilization'' on or before the seventh day
[[Page 16165]]
after the end of the month. This is identical to the current reporting
date in the Great Basin order but two days earlier than the same
provision in the Southwestern Idaho-Eastern Oregon order. Almost all
handlers currently file reports by FAX or some other form of electronic
data transfer, which eliminates delays due to mail handling. A seven-
day reporting period should allow adequate time for handlers to prepare
reports and will allow the computation and release of producer price
information to occur on or before the 12th day after the end of the
month.
The date on which the report of payments to producers is due to the
market administrator under the Western order is on or before the 21st
day after the end of the month. This is the same date as that under the
Great Basin order, but one day earlier than under the Southwestern
Idaho-Eastern Oregon order. The earlier reporting date and announcement
of producer prices should assure that an earlier payroll reporting date
would not be burdensome.
Multiple Component Pricing
Both the Great Basin order and the Southwestern Idaho-Eastern
Oregon order currently have multiple component pricing based on protein
without a somatic cell adjustment. The multiple component pricing
provisions of the consolidated Western order should be the same as
those for other proposed orders that provide for multiple component
pricing based on protein but without a somatic cell adjustment. The
Western order has a significant amount of milk used in manufactured
products, especially cheese, and component pricing will enable
producers to be paid according to the value of the components of their
milk. However, the somatic cell adjustment included in some of the
consolidated orders for which component pricing is proposed is not
warranted by marketing conditions under the Western order, and such an
adjustment is not included in the final decision.
Avonmore expressed support for the use of multiple component
pricing in the Western Order and strongly recommended the inclusion of
a somatic cell count price adjuster. Avonmore states the SCC adjuster
is necessary because the manufacture of cheese is the predominant use
of milk in the Western Order. Avonmore notes that it has been
documented that elevated levels of SCC impact cheese yield. In
addition, the handler contends that dairy products (i.e., cheese, NFDM,
butter, whey products) exported to the European Union must be made with
milk containing less than 400,000 SCC.
Darigold Farms, a cooperative that will have milk on the order has
expressed the opinion that an adjustment for somatic cells is a quality
issue that may be better dealt with between the buyer and seller. In
addition, the nearby Pacific Northwest order will not have a somatic
cell adjustment. The somatic cell count of milk produced in the western
U.S. is at an average level of 250,000. This level is significantly
lower than the 350,000 level, which provides no adjustment in the
consolidated orders that adjust for somatic cell count. For the reasons
stated above and due to the high quality of milk produced in the
consolidated Western marketing area, a quality adjustment is
unnecessary and need not be included in the order.
Payments To and From the Producer Settlement Fund
Payments to the producer settlement fund under the consolidated
order are due on or before the 14th day after the end of the month.
This is two days after the announcement of uniform producer prices,
which is an identical time period to that which exists in the two
current orders that are being consolidated.
Payments from the producer settlement fund under the consolidated
order would be due on or before the 15th day after the end of the
month. This is the same date as under the current Great Basin order and
three days earlier than under the Southwestern Idaho-Eastern Oregon
order. This payment date should be practicable, given the use of
current banking and transmission techniques.
Payments to Producers and Cooperative Associations
Under the Western order, partial payments would be due from
handlers to producers who are not members of cooperative associations
on or before the 25th day of the month in an amount not less than 1.2
times the lowest class price for the preceding month multiplied by the
hundredweight of milk received from such producers during the first 15
days of the month. Final payments would be due on or before the 17th
day after the end of the month.
Partial payments to cooperative associations would be due on or
before the 24th day of the month at the same rate as above, with final
payments due on or before the 16th day after the end of the month.
These final payment dates represent very little or no change from the
orders' present payment dates. The partial payment dates are earlier
than those required under the current orders, but are very close to
those suggested by the Identical Provisions committee, and compliance
should present no hardship to handlers who would already have had the
use of the producers' milk for 9 to 23 days.
Pacific Northwest Order
Many of the provisions of the Pacific Northwest order are explained
in the ``Identical Provisions'' portion of this final decision, and
need not be addressed here. The provisions that deviate somewhat from
those incorporated in other order areas are the provisions dealing with
standards for determining the pool status of producers and handlers,
the definition of producer-handlers, the factors upon which payments to
producers are calculated, and reporting and payment dates. Because this
order is not proposed to be consolidated with any other orders, there
is little reason for changing the substance of many of the provisions
that are not included in the General Provisions.
Pool Distributing Plant
The pool distributing plant provisions of the proposed Pacific
Northwest Order are changed from the current definition to one that
more closely resembles the definition suggested in the identical
provisions report. Rather than basing the identification of a pool
distributing plant on only 10 percent of the plant's receipts as in-
area route dispositions, the order should specify that such a plant
have at least 25 percent of its physical receipts distributed as route
disposition, and at least 25 percent of its route disposition
distributed within the marketing area.
It is expected that the modified pooling standard will not affect
the pool status of any plant that currently does or does not meet the
pooling standard of the Pacific Northwest order. In addition, it would
remedy a provision that could result in fully regulating a plant that
has minimal association with the marketing area.
The pool plant provisions of the Pacific Northwest order have been
revised in this final decision. One modification provides for the
pooling of plants that specialize in ultra-pasteurized or aseptically-
processed fluid milk products. A detailed explanation of the changes is
located at the end of the western regional discussion.
Pool Supply Plant
For the most part, the current pool supply plant definition of the
Pacific Northwest order and the performance standard of shipping 20
percent of the
[[Page 16166]]
milk is appropriate to the marketing conditions in the area. However,
the provision that currently requires a handler to include producer
milk moved directly to pool distributing plants in the shipments on
which pool plant performance is calculated is changed to allow the
handler to include such movements if the handler wants to qualify its
plant for pooling. A plant operator who receives milk at a plant only
for manufacturing use also will be able to supply producer milk
directly to distributing plants without a requirement that the
manufacturing plant be a supply plant.
In the Pacific Northwest order the current March through August
period during which supply plants do not have to ship the minimum
percentage to distributing plants if they have done so during the
previous September through February period is included in the pool
supply plant definition.
As in the other consolidated orders, the market administrator will
have the authority to increase or decrease the order's pooling
provisions as marketing conditions change for the purpose of assuring
that an adequate supply of milk will be available for fluid use, or to
assure that the order does not require handlers to undertake uneconomic
movements of milk to maintain: (1) The pool status of their plants, or
(2) the pooling of producers who have historically been associated with
the market and who help serve Class I needs.
Nonpool Plant
The current definition and exemption for milk produced and
processed by state institutions, as contained in the present order's
producer-handler definition, is expanded and moved to be included in
the ``Nonpool plant'' definition contained in the General Provisions.
Such entities, along with colleges and universities and charitable
organizations, will not be subject to the orders' pricing and pooling
provisions as long as they have no sales in commercial channels.
The present Pacific Northwest order provisions allow a state
institution to avoid any regulation on the portion of its milk that is
used only within the institution, and apply some pricing regulation to
that portion that is distributed in commercial channels. In some
respects, this arrangement is similar to the situation of partially
regulated distributing plants. However, partially regulated
distributing plant operators, to avoid obligations under Federal
orders, must show that they pay the dairy farmers who ship milk to them
at a rate at least commensurate with that paid to producers whose milk
is pooled under the order. In any case, they must procure a milk supply
in the competitive market. State institutions may have any number of
cost advantages over regulated handlers in the production and
processing of milk, such as not having to pay a minimum wage and not
having to pay property taxes. It would be unjust to allow such
institutions to compete with fully regulated handlers in regular
commercial channels as if the playing field were level. Therefore,
state and other institutions that compete with regulated handlers in
regular commercial channels, such as bids for school milk programs,
would be regulated on those sales.
Producer-Handler
The current Pacific Northwest producer-handler provisions remain
essentially untouched. Some of the ``Identical Provisions'' features of
the producer-handler definition, such as the 150,000-pound thresholds
for route dispositions, own farm production, and receipts from pool
plants are adopted in this final decision. The rest of the current
producer-handler provisions remain in effect for administrative
purposes.
Producer-handlers represent a much larger portion of the Class I
dispositions in the Pacific Northwest marketing area than in most other
Federal order areas. In many marketing areas, producer-handlers supply
one percent or less of the Class I sales. In the Pacific Northwest
area, however, they furnish almost 10 percent of the market's Class I
dispositions. The larger average size of the dairy farms in the western
United States makes more likely the existence of a producer-handler
that is a significant factor in the market.
The current order's producer-handler provisions are based on the
history of producer-handler operations in the marketing area,
reflecting difficulties encountered in order administration, attempts
to circumvent order provisions, and court challenges.
In addition to the current order provisions, the producer-handler
definition contains language clarifying that milk received by the
producer-handler at a location other than the producer-handler's
processing plant for distribution on routes will be included as a
receipt from another handler.
Reserve Supply Unit
The Pacific Northwest order will continue to provide for a
cooperative reserve supply unit. The existing provision has many
similarities to a reserve supply plant, which is not provided in this
order but which is included in several of the consolidated orders.
Under the terms of the present provision, the cooperative members
of the reserve supply unit must be located near a pool distributing
plant, as a reserve supply plant must be located in the marketing area.
Both the reserve supply unit and the reserve supply plant provisions
require that the plant or unit operator request prior approval of the
market administrator to initiate and cancel their status, both require
long-term association with the market, and both provide substantial
penalties for failing to meet all required conditions. Although the
cooperative unit does not have monthly qualification requirements, it
is subject to a call by the market administrator after the market
administrator's investigation of the need for supplemental supplies of
milk. Because of the current existence of this provision, based on the
need shown at a public hearing, and its similarities to a pooling
mechanism suggested for other orders, provision for the cooperative
reserve supply unit will continue to be included in the Pacific
Northwest order.
The order language regarding the exemption from diversion limits
for a cooperative reserve supply unit was inadvertently excluded from
the proposed rule. The order language for this exemption has been
included in this final decision.
The order language allowing two or more cooperative associations to
jointly met the diversion limits was also inadvertently excluded from
the proposed rule. Order language to allow this to occur has been
included in this final decision.
Producer and Producer Milk
The consolidated Pacific Northwest order would contain a ``dairy
farmer for other markets'' provision for each month of the year. The
large volume of milk production in California and California's quota
system give dairy farmers an incentive to pool production in a volume
equal to their quota pounds on the California order, and then attempt
to share in the Pacific Northwest Class I market with their over-quota
production, for which returns under the California order are much less.
At the same time, none of the California Class I returns would be
shared with Pacific Northwest producers. Similarly, producers subject
to other state programs should not be allowed to pool the reserve
supplies from the State-regulated markets and share in returns from the
Pacific
[[Page 16167]]
Northwest pool while enjoying the benefits of the State orders' Class I
returns.
The current provisions of the Pacific Northwest order do not
require that a producer's milk be received at pool plants for the
producer's first pooled delivery on the market or for any specified
period. If a handler meets its overall performance requirements for
supplying milk to the market, it should make no difference which
individual producer's milk is actually delivered to pool plants as long
as the milk of each producer participating in the pool is Grade A and
available to the market if and when needed. It is expensive,
inefficient, and unnecessary to move milk from areas close to nonpool
manufacturing plants to bottling plants in the city markets when that
milk is not needed for bottling. For the above reasons and furthermore
because there are often great distances and mountainous terrain between
plants and farms in the more sparsely populated West, no ``touch base''
requirements should be included. As stated previously, Darigold Farms
supports the exclusion of ``touch base'' requirements. The cooperative
states that the exclusion may present an opportunity to obtain unified
support for a provision that would prevent or reduce opportunistic
pooling.
This order and other western orders have allowed producers to pool
milk on more than one order during the same month. Because of the
locations of a number of dairy farmers, their milk may be used by pool
plants regulated under more than one order in a single month. These
producers also represent a reserve supply for more than one market.
Large, multi-market handlers should be given the flexibility to market
and transport their milk to fulfill the needs of their customers in the
most efficient way possible.
The small changes in the final decision from the current pooling
provisions of the Pacific Northwest order result in very little change
in the order's diversion limits. The limit of 80 percent of the
handler's supply of producer milk remains unchanged, with the months
during which the percentage is effective changed from September through
April to September through February. These months will correspond to
the months during which supply plants must ship 20 percent of their
receipts to pool distributing plants.
In the current order there is no limit on diversions during May
through August. In this final decision there will be a limit of 99
percent on diversions of producer milk for the months of March through
August. The current delivery standards have not been overly restrictive
nor associated unneeded supplies with the market and should be allowed
to continue basically unchanged. However, the change from without limit
to a percentage amount will allow the market administrator, as provided
for in other orders the authority to adjust the percentage of milk that
may be diverted.
Payments to Producers and Cooperative Associations
Although the current Pacific Northwest order contains a multiple
component pricing plan very like that proposed to be standard for the
consolidated orders, it does not now and would not under this reform
process contain a somatic cell adjustment provision. The level of
somatic cells in the western U.S. is generally lower than in the east,
with an overall average of approximately 250,000 instead of 350,000.
This lower somatic cell count would seem to reduce the need for such a
provision. Historically, the principal argument for a somatic cell
adjuster has been the negative effect of somatic cells on the cheese
yields. Although cheese manufacturing in the Northwest is increasing,
most cheese manufacturing is done by cooperative associations who have
expressed the opinion that an adjustment for somatic cells is a quality
issue best dealt with internally. The somatic cell adjustments in the
consolidated orders of the final decision are not incorporated in the
Pacific Northwest order.
Announcement of Producer Prices
The dates on which handler reports, market administrator's
announcement of producer prices, and payment to producers would remain
unchanged from those of the current order.
General Comment Related to Orders
Darigold Farms suggests that the new orders provide some
performance requirements attached to each individual market, but
recommends that a producer, once qualified, should be locked into the
pool for a minimum of four months. This recommendation has not been
incorporated in the final decision for any of the western orders. The
provisions adopted in each order should ensure that the Class I needs
of the markets are met.
Major Changes to Orders From the Proposed Rule
The pool plant provisions of the orders in the western region have
been revised. Paragraph (b) of section 7 will accommodate the pooling
of plants that specialize in ultra-pasteurized or aseptically-processed
fluid milk products (i.e., fluid milk products with a shelf life of at
least 60-90 days without refrigeration.) At the present time, there are
no plants processing this type of product in the Southwest, Arizona-Las
Vegas, or Pacific Northwest marketing areas. However, there is one
plant in the Western order market area.
Unlike a typical distributing plant, a plant specializing in
extended shelf-life products may have a more erratic processing
schedule, reflecting the longer shelf life of the products packaged at
the plant. Consequently, a plant's Class I utilization may vary
considerably from month to month. In certain areas of the country, such
variability has resulted in shifting pool status for this type of plant
from one order to another. Such regulatory instability is not conducive
to orderly marketing. To provide greater regulatory stability for these
plants, they should be fully regulated pool plants if they are located
in the marketing area and process at least 25 percent of their fluid
milk product receipts during the month into ultra-pasteurized or
aseptically-processed fluid milk products. This provision will not
guarantee that a plant qualifies as a fully-regulated pool plant every
month; some months a plant may fail to process 25 percent of its milk
receipts into ultra-pasteurized or aseptically-processed fluid milk
products. Nevertheless, the provision will guarantee that if a plant
meets the 25 percent standard described above, it will be qualified
under the same order all the time.
7. Miscellaneous and Administrative
(a) Consolidation of the marketing service, administrative expense,
and producer-settlement funds. To complete the consolidation of the
present 31 Federal orders effectively and equitably, the reserve
balances in the marketing service, administrative expense, and
producer-settlement funds that have resulted under the individual
orders would be combined.
The balances in these three funds should be combined on the same
basis that the marketing areas are consolidated into regional orders
herein. For instance, the Texas and New Mexico-West Texas marketing
areas are merged into a new regional Southwest order. Accordingly, the
reserve balances in the marketing service, administrative expense and
producer-settlement funds of the two individual orders likewise should
be combined into three separate funds established under the
consolidated Southwest order.
[[Page 16168]]
The marketing areas of the 11 consolidated orders essentially
represent the territory covered by the 31 individual orders plus the
territory included in the former Tennessee Valley marketing area.
Because of this, the handlers and producers servicing the milk needs of
the individual markets will continue to furnish the milk needs of the
applicable regional market for the most part.
In that regard, the reserve balances in the funds that have
resulted under the 31 individual orders should be combined on a
marketing area basis into the appropriate separate fund established for
each of the 11 regional orders. Any liabilities of such funds under the
individual orders would be paid from the appropriate newly established
fund of the applicable regional order. Similarly, obligations that are
due the separate funds under the individual orders would be paid to the
appropriate combined fund of the applicable consolidated order.
In most cases, the entire marketing area of an order or orders is
included in the consolidated marketing area of one of the 11 regional
orders. Four present marketing areas would be split between two
consolidated orders. One county of the present Louisville-Lexington-
Evansville (Order 46) marketing area would be included in the Southeast
order, and the rest of the territory in the Order 46 marketing area
would be included under the Appalachian order. Even though one Order 46
county is included in the consolidated Southeast order, all of the
present Order 46 producers and handlers are expected to be covered
under the consolidated Appalachian order. Accordingly, the balances in
the Order 46 marketing service, administrative expense, and producer
settlement funds should be consolidated into the three separate funds
established for the consolidated Appalachian market.
Different regulatory situations, however, will occur in the other
three instances where a current marketing area is divided between two
consolidated orders. The southwest Missouri and northwest Arkansas
portions of the current Southwest Plains order area are included in the
consolidated Southeast marketing area, while the remainder of the
Southwest Plains area is combined with the marketing areas of eight
other orders in the consolidated Central marketing area. Similarly, one
county of the current Great Basin (Order 139) marketing area is
included in the consolidated Arizona-Las Vegas order and the rest of
the Order 139 marketing area is included in the consolidated marketing
area for the West. In the third instance, two zones of the Michigan
Upper Peninsula (Order 44) marketing area are included in the
consolidated Upper Midwest marketing area and the other zone of the
Order 44 marketing area is included in the marketing area for the
Mideast regional order.
In each of these 3 cases, some of the producers and handlers of
each of the current order areas that are being divided will become
pooled under one consolidated order, while the other producers and
handlers of each of these areas will become pooled under another
regional order. Accordingly, any reserve balances in the marketing
service, administrative expense and producer-settlement funds of these
three individual orders should be divided equitably among the
applicable consolidated orders.
The money accumulated in the marketing service funds of the
individual orders is that which has been paid by producers for whom the
market administrators are performing such services. Since the marketing
areas of the 11 regional orders encompass the territory covered by the
individual orders, for the most part, the producers who have
contributed to the marketing service funds of the individual orders are
expected to continue supplying milk for the consolidated orders. Since
marketing service programs will be continued for these producers under
the regional orders, it would be appropriate to combine the reserve
balances in the marketing service funds of the order or orders that are
represented in the consolidation of each of the 11 regional orders.
When the consolidated marketing area includes the marketing area of
one or more individual orders, any remaining balance in the marketing
service fund of the individual order or orders should be combined in
the marketing service fund established for the applicable consolidated
order. If a current marketing area is split between two consolidated
markets and the regulatory status of producers and handlers is divided
between the two regional orders, as is the case with the Michigan Upper
Peninsula, Southwest Plains, and Great Basin orders, any balance in the
marketing service fund of the individual order should be prorated
between the two consolidated orders on the basis of the amount of milk
subject to the marketing service deduction that will be covered by each
respective regional order (using producer deliveries in the last month
the individual orders are in effect but assuming that the marketing
areas had been consolidated).
The money paid to the administrative expense fund is each handler's
proportionate share of the cost of administering the order. For the
most part, handlers currently regulated under the individual orders
will continue to be regulated under the consolidated orders. In view of
this, it would be an unnecessary administrative and financial burden to
allocate the reserve funds of the individual orders back to handlers
and then accumulate an adequate reserve for each of the consolidated
orders. It would be as equitable and more efficient to combine the
remaining administrative monies accumulated under the individual orders
in the same manner as the marketing areas are combined.
For the orders where the consolidated marketing area includes the
regulated territory of one or more of the individual orders, any
remaining balance in the administrative expense fund of the individual
order or orders would be combined into the administrative expense fund
established for the applicable consolidated order. In the situations
where the current individual marketing area is split and the regulatory
status of producers and handlers is divided (as in the case of the
Michigan Upper Peninsula, Southwest Plains, and Great Basin orders)
between two consolidated marketing areas, the remaining balance in the
administrative expense fund should be prorated between the two regional
orders on the basis of the amount of milk that would be pooled and
priced under each respective consolidated order (using producer milk
deliveries during the last month the individual orders are in effect
but assuming that the orders had been consolidated).
Likewise, the producer-settlement fund balances of the individual
orders should be combined. They should be combined on the same basis as
the marketing areas are consolidated herein. This will enable the
producer-settlement funds of the consolidated orders to continue
without interruption.
The producers currently supplying the individual markets are
expected to supply milk for the consolidated markets. Thus, monetary
balances in the producer-settlement funds of the individual orders now
would be reflected in the pay prices of the producers who will benefit
from the applicable consolidated orders. The combined fund for each
consolidated order also would serve as a contingency fund from which
money would be available to meet obligations (resulting from audit
adjustments and otherwise) occurring under the individual orders.
[[Page 16169]]
The same procedure used in combining the remaining balances in the
marketing service and administrative expense funds of the individual
orders should be followed in combining the producer-settlement fund
balances when the individual orders are consolidated. For orders where
the consolidated marketing area includes the marketing area of one or
more orders, any remaining balance in the producer-settlement fund of
the individual order or orders would be combined into the producer-
settlement fund established for the applicable consolidated order. In
the three situations (Michigan Upper Peninsula, Southwest Plains, and
Great Basin) where the marketing area of a current order is split
between two consolidated orders and some of the individual market's
producers and handlers would be regulated under one consolidated order
and others would be regulated under another consolidated order, the
balance in the producer-settlement fund should be divided equitably
between the two consolidated orders. Since the Michigan Upper Peninsula
order is an individual-handler pool market, no producer-settlement fund
is provided. In the 2 remaining instances in which current marketing
areas are divided between 2 consolidated orders, the remaining balance
in the producer-settlement funds of the Southwest Plains and Great
Basin orders should be prorated between the consolidated orders on the
basis of the amount of milk that will be pooled and priced under each
respective consolidated order (using producer milk deliveries during
the last month the individual orders are in effect but assuming that
the orders had been consolidated).
(b) Consolidation of the transportation credit balancing funds. To
complete the consolidation process, the reserve balances in the
transportation credit balancing funds that are in effect now under
three Southeast orders (Carolina, Order 5; Southeast, Order 7; and
Louisville-Lexington-Evansville, Order 46) also should be consolidated.
These funds should be combined on a marketing area basis. In that
regard, the reserve balances in the transportation credit balancing
funds of the Carolina and Louisville-Lexington-Evansville orders should
be consolidated into a newly established transportation credit
balancing fund for the consolidated Appalachian order, which also
includes the current marketing areas of these two orders with the
exception of one county. Similarly, the reserve balance in the
transportation credit balancing fund of the present Southeast order
should be transferred to the consolidated Southeast order, which
includes all of the marketing area of the present Southeast order.
These procedures will enable the transportation credits to continue
without interruption under these two consolidated orders.
(c) General findings.
The findings and determinations hereinafter set forth supplement
those that were made when the aforesaid orders were first issued and
when they were amended. The previous findings and determinations are
hereby ratified and confirmed, except where they may conflict with
those set forth herein.
(1) The tentative marketing agreements and the orders, as hereby
proposed to be amended, and all of the terms and conditions thereof,
will tend to effectuate the declared policy of the Act;
(2) The parity prices of milk as determined pursuant to section 2
of the Act are not reasonable in view of the price of feeds, available
supplies of feeds, and other economic conditions which affect market
supply and demand for milk in each of the aforesaid marketing areas,
and the minimum prices specified in the tentative marketing agreements
and the orders, as hereby proposed to be amended, are such prices as
will reflect the aforesaid factors, insure a sufficient quantity of
pure and wholesome milk, and be in the public interest;
(3) The tentative marketing agreements and the orders, as hereby
proposed to be amended, will regulate the handling of milk in the same
manner as, and will be applicable only to persons in the respective
classes of industrial and commercial activity specified in the
marketing agreements;
(4) All milk and milk products handled by handlers, as defined in
the tentative marketing agreements and the orders as hereby proposed to
be amended, are in the current of interstate commerce or directly
burden, obstruct, or affect interstate commerce in milk or its
products; and
(5) It is hereby found that the necessary expense of the market
administrator for the maintenance and functioning of such agency will
require the payment by each handler, as his pro rata share of such
expense, 5 cents per hundredweight or such lesser amount as the
Secretary may prescribe, with respect to milk specified in Sec. 1000.85
of the General Provisions.
Comments
In arriving at the findings and conclusions, and the regulatory
provisions of this decision, each of the comments received was
carefully and fully considered in conjunction with the rulemaking
record.
Marketing Agreements and Order Amending the Orders
The marketing agreements regulating the handling of milk in each of
the consolidated orders are not included in this final decision because
the regulatory provisions thereof would be the same as those contained
in the orders, as hereby amended. The following order amending the
orders regulating the handling of milk in the respective marketing
areas of these orders is proposed as the detailed and appropriate means
by which the foregoing conclusions may be carried out.
Referendum Order to Determine Producer Approval
This decision does not provide for conducting referendums of
producers to determine if they approve of the issuance of the
consolidated orders. A notice to conduct a referendum on each of the
consolidated orders will be issued at a future date.
List of Subjects in 7 CFR Parts 1000, 1001, 1002, 1004, 1005, 1006,
1007, 1012, 1013, 1030, 1032, 1033, 1036, 1040, 1044, 1046, 1049,
1050, 1064, 1065, 1068, 1076, 1079, 1106, 1124, 1126, 1131, 1134,
1135, 1137, 1138 and 1139
Milk marketing orders.
Dated: March 12, 1999.
Michael V. Dunn,
Under Secretary, Marketing and Regulatory Programs.
Order Amending the Orders Regulating the Handling of Milk in the
Northeast and Other Marketing Areas
This order shall not become effective unless and until the
requirements of Sec. 900.14 of the rules of practice and procedure
governing proceedings to formulate marketing agreements and marketing
orders have been met.
Findings and Determinations
The findings and determinations hereinafter set forth supplement
those that were made when the orders were first issued and when they
were amended. The previous findings and determinations are hereby
ratified and confirmed, except where they may conflict with those set
forth herein.
(a) The said orders as hereby amended, and all of the terms and
conditions thereof, will tend to effectuate the declared policy of the
Act;
(b) The parity prices of milk, as determined pursuant to section 2
of the Act, are not reasonable in view of the
[[Page 16170]]
price of feeds, available supplies of feeds, and other economic
conditions which affect market supply and demand for milk in the
aforesaid marketing areas. The minimum prices specified in the orders
as hereby amended are such prices as will reflect the aforesaid
factors, insure a sufficient quantity of pure and wholesome milk, and
be in the public interest; and
(c) The said orders as hereby amended regulate the handling of milk
in the same manner as, and are applicable only to persons in the
respective classes of industrial or commercial activity specified in,
the marketing agreements;
(d) All milk and milk products handled by handlers, as defined in
the orders as hereby amended, are in the current of interstate commerce
or directly burden, obstruct, or affect interstate commerce in milk or
its products; and
(e) It is hereby found that the necessary expense of the market
administrators for the maintenance and functioning of such agency will
require the payment by each handler, as his pro rata share of such
expense, 5 cents per hundredweight or such lesser amount as the
Secretary may prescribe, with respect to milk specified in Sec. 1000.85
of the General Provisions.
Order Relative to Handling
It is therefore ordered, that on and after the effective date
hereof, the handling of milk in the Northeast and other marketing areas
shall be in conformity to and in compliance with the terms and
conditions of the orders, as amended, and as hereby amended, as
follows:
The provisions of the proposed marketing agreements and order
amending the orders contained in the proposed rule issued by the
Administrator, Agricultural Marketing Service, on January 21, 1998, and
published in the Federal Register on January 31, 1998 (63 FR 4802), as
modified herein, shall be and are the terms and provisions of this
order, amending the orders, and are set forth in full herein.
For the reasons set forth in the preamble and under the authority
of Title 7, chapter X, parts 1000, 1001, 1005, 1006, 1007, 1030, 1032,
1033, 1124, 1126, 1131, and 1135 are revised and parts 1002, 1004,
1012, 1013, 1036, 1040, 1044, 1046, 1049, 1050, 1064, 1065, 1068, 1076,
1079, 1106, 1134, 1137, 1138 and 1139 are removed and reserved as
follows:
PART 1000--GENERAL PROVISIONS OF FEDERAL MILK MARKETING ORDERS
Subpart A--Scope and Purpose
Sec.
1000.1 Scope and purpose of this Part 1000.
Subpart B--Definitions
1000.2 General definitions.
1000.3 Route disposition.
1000.4 Plant.
1000.5 Distributing plant.
1000.6 Supply plant.
1000.8 Nonpool plant.
1000.9 Handler.
1000.14 Other source milk.
1000.15 Fluid milk product.
1000.16 Fluid cream product.
1000.17 [Reserved]
1000.18 Cooperative association.
1000.19 Commercial food processing establishment.
Subpart C--Rules of Practice and Procedure Governing Market
Administrators
1000.25 Market administrator.
Subpart D--Rules Governing Order Provisions
1000.26 Continuity and separability of provisions.
Subpart E--Rules of Practice and Procedure Governing Handlers
1000.27 Handler responsibility for records and facilities.
1000.28 Termination of obligations.
Subpart F--Classification of Milk
1000.40 Classes of utilization.
1000.41 [Reserved]
1000.42 Classification of transfers and diversions.
1000.43 General classification rules.
1000.44 Classification of producer milk.
1000.45 Market administrator's reports and announcements concerning
classification.
Subpart G--Class Prices
1000.50 Class prices, component prices, and advanced pricing
factors.
1000.51 [Reserved]
1000.52 Adjusted Class I differentials.
1000.53 Announcement of class prices, component prices, and
advanced pricing factors.
1000.54 Equivalent price.
Subpart H--Payments for Milk
1000.70 Producer-settlement fund.
1000.76 Payments by a handler operating a partially regulated
distributing plant.
1000.77 Adjustment of accounts.
1000.78 Charges on overdue accounts.
Subpart I--Administrative Assessment and Marketing Service Deduction
1000.85 Assessment for order administration.
1000.86 Deduction for marketing services.
Subpart J--Miscellaneous Provisions
1000.90 Dates.
1000.91 [Reserved]
1000.92 [Reserved]
1000.93 OMB control number assigned pursuant to the Paperwork
Reduction Act.
Authority: 7 U.S.C. 601--674.
Subpart A--Scope and Purpose
Sec. 1000.1 Scope and purpose of this Part 1000.
This part sets forth certain terms, definitions, and provisions
which shall be common to and part of each Federal milk marketing order
in 7 CFR, chapter X, except as specifically defined otherwise, or
modified, or otherwise provided, in an individual order in 7 CFR,
chapter X.
Subpart B--Definitions
Sec. 1000.2 General definitions.
(a) Act means Public Act No. 10, 73d Congress, as amended and as
reenacted and amended by the Agricultural Marketing Agreement Act of
1937, as amended (7 U.S.C. 601 et seq.).
(b) Order or Federal milk order means the applicable part of 7 CFR,
chapter X, issued pursuant to section 8c of the Act as a Federal milk
marketing order (as amended).
(c) Department means the U.S. Department of Agriculture.
(d) Secretary means the Secretary of Agriculture of the United
States or any officer or employee of the Department to whom authority
has heretofore been delegated, or to whom authority may hereafter be
delegated, to act in his stead.
(e) Person means any individual, partnership, corporation,
association, or other business unit.
Sec. 1000.3 Route disposition.
Route disposition means a delivery to a retail or wholesale outlet
(except a plant), either directly or through any distribution facility
(including disposition from a plant store, vendor, or vending machine)
of a fluid milk product in consumer-type packages or dispenser units
classified as Class I milk.
Sec. 1000.4 Plant.
(a) Except as provided in paragraph (b) of this section, plant
means the land, buildings, facilities, and equipment constituting a
single operating unit or establishment at which milk or milk products
are received, processed, or packaged, including a facility described in
paragraph (b)(2) of this section if the facility receives the milk of
more than one dairy farmer.
(b) Plant shall not include:
(1) A separate building without stationary storage tanks that is
used only as a reload point for transferring bulk
[[Page 16171]]
milk from one tank truck to another or a separate building used only as
a distribution point for storing packaged fluid milk products in
transit for route disposition; or
(2) An on-farm facility operated as part of a single dairy farm
entity for the separation of cream and skim or the removal of water
from milk.
Sec. 1000.5 Distributing plant.
Distributing plant means a plant that is approved by a duly
constituted regulatory agency for the handling of Grade A milk at which
fluid milk products are processed or packaged and from which there is
route disposition or transfers of packaged fluid milk products to other
plants.
Sec. 1000.6 Supply plant.
Supply plant means a plant approved by a duly constituted
regulatory agency for the handling of Grade A milk that receives milk
directly from dairy farmers and transfers or diverts fluid milk
products to other plants or manufactures dairy products on its
premises.
Sec. 1000.8 Nonpool plant.
Nonpool plant means any milk receiving, manufacturing, or
processing plant other than a pool plant. The following categories of
nonpool plants are further defined as follows:
(a) A plant fully regulated under another Federal order means a
plant that is fully subject to the pricing and pooling provisions of
another Federal order.
(b) Producer-handler plant means a plant operated by a producer-
handler as defined under any Federal order.
(c) Partially regulated distributing plant means a nonpool plant
that is not a plant fully regulated under another Federal order, a
producer-handler plant, or an exempt plant, from which there is route
disposition in the marketing area during the month.
(d) Unregulated supply plant means a supply plant that does not
qualify as a pool supply plant and is not a plant fully regulated under
another Federal order, a producer-handler plant, or an exempt plant.
(e) An exempt plant means a plant described in this paragraph that
is exempt from the pricing and pooling provisions of any order provided
that the operator of the plant files reports as prescribed by the
market administrator of any marketing area in which the plant
distributes packaged fluid milk products to enable determination of the
handler's exempt status:
(1) A plant that is operated by a governmental agency that has no
route disposition in commercial channels;
(2) A plant that is operated by a duly accredited college or
university disposing of fluid milk products only through the operation
of its own facilities with no route disposition in commercial channels;
(3) A plant from which the total route disposition is for
individuals or institutions for charitable purposes without
remuneration; or
(4) A plant that has route disposition and packaged sales of fluid
milk products to other plants of 150,000 pounds or less during the
month.
Sec. 1000.9 Handler.
Handler means:
(a) Any person who operates a pool plant or a nonpool plant.
(b) Any person who receives packaged fluid milk products from a
plant for resale and distribution to retail or wholesale outlets, any
person who as a broker negotiates a purchase or sale of fluid milk
products or fluid cream products from or to any pool or nonpool plant,
and any person who by purchase or direction causes milk of producers to
be picked up at the farm and/or moved to a plant. Persons who qualify
as handlers only under this paragraph under any Federal milk order are
not subject to the payment provisions of Secs. ____.70, ____.71,
____.72, ____ .73, ____.76, and ____.85 of that order.
(c) Any cooperative association with respect to milk that it
receives for its account from the farm of a producer and delivers to
pool plants or diverts to nonpool plants pursuant to Sec. ____.13 of
the order. The operator of a pool plant receiving milk from a
cooperative association may be the handler for such milk if both
parties notify the market administrator of this agreement prior to the
time that the milk is delivered to the pool plant and the plant
operator purchases the milk on the basis of farm bulk tank weights and
samples.
Sec. 1000.14 Other source milk.
Other source milk means all skim milk and butterfat contained in or
represented by:
(a) Receipts of fluid milk products and bulk fluid cream products
from any source other than producers, handlers described in
Sec. 1000.9(c) and Sec. 1135.11, or pool plants;
(b) Products (other than fluid milk products, fluid cream products,
and products produced at the plant during the same month) from any
source which are reprocessed, converted into, or combined with another
product in the plant during the month; and
(c) Receipts of any milk product (other than a fluid milk product
or a fluid cream product) for which the handler fails to establish a
disposition.
Sec. 1000.15 Fluid milk product.
(a) Except as provided in paragraph (b) of this section, fluid milk
product means any milk products in fluid or frozen form containing less
than 9 percent butterfat that are intended to be used as beverages.
Such products include, but are not limited to: Milk, fat-free milk,
lowfat milk, light milk, reduced fat milk, milk drinks, eggnog and
cultured buttermilk, including any such beverage products that are
flavored, cultured, modified with added nonfat milk solids, sterilized,
concentrated, or reconstituted. As used in this part, the term
concentrated milk means milk that contains not less than 25.5 percent,
and not more than 50 percent, total milk solids.
(b) The term fluid milk product shall not include:
(1) Plain or sweetened evaporated milk/skim milk, sweetened
condensed milk/skim milk, formulas especially prepared for infant
feeding or dietary use (meal replacement) that are packaged in
hermetically-sealed containers, any product that contains by weight
less than 6.5 percent nonfat milk solids, and whey; and
(2) The quantity of skim milk equivalent in any modified product
specified in paragraph (a) of this section that is greater than an
equal volume of an unmodified product of the same nature and butterfat
content.
Sec. 1000.16 Fluid cream product.
Fluid cream product means cream (other than plastic cream or frozen
cream), including sterilized cream, or a mixture of cream and milk or
skim milk containing 9 percent or more butterfat, with or without the
addition of other ingredients.
Sec. 1000.17 [Reserved]
Sec. 1000.18 Cooperative association.
Cooperative association means any cooperative marketing association
of producers which the Secretary determines is qualified under the
provisions of the Capper-Volstead Act, has full authority in the sale
of milk of its members, and is engaged in marketing milk or milk
products for its members. A federation of 2 or more cooperatives
incorporated under the laws of any state will be considered a
cooperative association under any Federal milk order if all member
cooperatives meet the requirements of this section.
[[Page 16172]]
Sec. 1000.19 Commercial food processing establishment.
Commercial food processing establishment means any facility, other
than a milk plant, to which fluid milk products and fluid cream
products are disposed of, or producer milk is diverted, that uses such
receipts as ingredients in food products and has no other disposition
of fluid milk products other than those received in consumer-type
packages (1 gallon or less). Producer milk diverted to commercial food
processing establishments shall be subject to the same provisions
relating to diversions to plants, including, but not limited to,
Secs. ____.13 and ____.52 of each Federal milk order.
Subpart C--Rules of Practice and Procedure Governing Market
Administrators
Sec. 1000.25 Market administrator.
(a) Designation. The agency for the administration of the order
shall be a market administrator selected by the Secretary and subject
to removal at the Secretary's discretion. The market administrator
shall be entitled to compensation determined by the Secretary.
(b) Powers. The market administrator shall have the following
powers with respect to each order under his/her administration:
(1) Administer the order in accordance with its terms and
provisions;
(2) Maintain and invest funds outside of the United States
Department of the Treasury for the purpose of administering the order;
(3) Make rules and regulations to effectuate the terms and
provisions of the order;
(4) Receive, investigate, and report complaints of violations to
the Secretary; and
(5) Recommend amendments to the Secretary.
(c) Duties. The market administrator shall perform all the duties
necessary to administer the terms and provisions of each order under
his/her administration, including, but not limited to, the following:
(1) Employ and fix the compensation of persons necessary to enable
him/her to exercise the powers and perform the duties of the office;
(2) Pay out of funds provided by the administrative assessment,
except expenses associated with functions for which the order provides
a separate charge, all expenses necessarily incurred in the maintenance
and functioning of the office and in the performance of the duties of
the office, including the market administrator's compensation;
(3) Keep records which will clearly reflect the transactions
provided for in the order and upon request by the Secretary, surrender
the records to a successor or such other person as the Secretary may
designate;
(4) Furnish information and reports requested by the Secretary and
submit office records for examination by the Secretary;
(5) Announce publicly at his/her discretion, unless otherwise
directed by the Secretary, by such means as he/she deems appropriate,
the name of any handler who, after the date upon which the handler is
required to perform such act, has not:
(i) Made reports required by the order;
(ii) Made payments required by the order; or
(iii) Made available records and facilities as required pursuant to
Sec. 1000.27;
(6) Prescribe reports required of each handler under the order.
Verify such reports and the payments required by the order by examining
records (including such papers as copies of income tax reports, fiscal
and product accounts, correspondence, contracts, documents or memoranda
of the handler, and the records of any other persons that are relevant
to the handler's obligation under the order), by examining such
handler's milk handling facilities, and by such other investigation as
the market administrator deems necessary for the purpose of
ascertaining the correctness of any report or any obligation under the
order. Reclassify skim milk and butterfat received by any handler if
such examination and investigation discloses that the original
classification was incorrect;
(7) Furnish each regulated handler a written statement of such
handler's accounts with the market administrator promptly each month.
Furnish a corrected statement to such handler if verification discloses
that the original statement was incorrect; and
(8) Prepare and disseminate publicly for the benefit of producers,
handlers, and consumers such statistics and other information
concerning operation of the order and facts relevant to the provisions
thereof (or proposed provisions) as do not reveal confidential
information.
Subpart D--Rules Governing Order Provisions
Sec. 1000.26 Continuity and separability of provisions.
(a) Effective time. The provisions of the order or any amendment to
the order shall become effective at such time as the Secretary may
declare and shall continue in force until suspended or terminated.
(b) Suspension or termination. The Secretary shall suspend or
terminate any or all of the provisions of the order whenever he/she
finds that such provision(s) obstructs or does not tend to effectuate
the declared policy of the Act. The order shall terminate whenever the
provisions of the Act authorizing it cease to be in effect.
(c) Continuing obligations. If upon the suspension or termination
of any or all of the provisions of the order there are any obligations
arising under the order, the final accrual or ascertainment of which
requires acts by any handler, by the market administrator or by any
other person, the power and duty to perform such further acts shall
continue notwithstanding such suspension or termination.
(d) Liquidation. (1) Upon the suspension or termination of any or
all provisions of the order the market administrator, or such other
liquidating agent designated by the Secretary, shall, if so directed by
the Secretary, liquidate the business of the market administrator's
office, dispose of all property in his/her possession or control,
including accounts receivable, and execute and deliver all assignments
or other instruments necessary or appropriate to effectuate any such
disposition; and
(2) If a liquidating agent is so designated, all assets and records
of the market administrator shall be transferred promptly to such
liquidating agent. If, upon such liquidation, the funds on hand exceed
the amounts required to pay outstanding obligations of the office of
the market administrator and to pay necessary expenses of liquidation
and distribution, such excess shall be distributed to contributing
handlers and producers in an equitable manner.
(e) Separability of provisions. If any provision of the order or
its application to any person or circumstances is held invalid, the
application of such provision and of the remaining provisions of the
order to other persons or circumstances shall not be affected thereby.
Subpart E--Rules of Practice and Procedure Governing Handlers
Sec. 1000.27 Handler responsibility for records and facilities.
Each handler shall maintain and retain records of its operations
and make such records and its facilities available to the market
administrator. If
[[Page 16173]]
adequate records of a handler, or of any other persons, that are
relevant to the obligation of such handler are not maintained and made
available, any skim milk and butterfat required to be reported by such
handler for which adequate records are not available shall be
considered as used in the highest-priced class.
(a) Records to be maintained. (1) Each handler shall maintain
records of its operations (including, but not limited to, records of
purchases, sales, processing, packaging, and disposition) as are
necessary to verify whether such handler has any obligation under the
order and if so, the amount of such obligation. Such records shall be
such as to establish for each plant or other receiving point for each
month:
(i) The quantities of skim milk and butterfat contained in, or
represented by, products received in any form, including inventories on
hand at the beginning of the month, according to form, time, and source
of each receipt;
(ii) The utilization of all skim milk and butterfat showing the
respective quantities of such skim milk and butterfat in each form
disposed of or on hand at the end of the month; and
(iii) Payments to producers, dairy farmers, and cooperative
associations, including the amount and nature of any deductions and the
disbursement of money so deducted.
(2) Each handler shall keep such other specific records as the
market administrator deems necessary to verify or establish such
handler's obligation under the order.
(b) Availability of records and facilities. Each handler shall make
available all records pertaining to such handler's operations and all
facilities the market administrator finds are necessary to verify the
information required to be reported by the order and/or to ascertain
such handler's reporting, monetary, or other obligation under the
order. Each handler shall permit the market administrator to weigh,
sample, and test milk and milk products and observe plant operations
and equipment and make available to the market administrator such
facilities as are necessary to carry out his/her duties.
(c) Retention of records. All records required under the order to
be made available to the market administrator shall be retained by the
handler for a period of 3 years to begin at the end of the month to
which such records pertain. If, within such 3-year period, the market
administrator notifies the handler in writing that the retention of
such records, or of specified records, is necessary in connection with
a proceeding under section 8c(15)(A) of the Act or a court action
specified in such notice, the handler shall retain such records, or
specified records, until further written notification from the market
administrator. The market administrator shall give further written
notification to the handler promptly upon the termination of the
litigation or when the records are no longer necessary in connection
therewith.
Sec. 1000.28 Termination of obligations.
(a) Except as provided in paragraphs (b) and (c) of this section,
the obligation of any handler to pay money required to be paid under
the terms of the order shall terminate 2 years after the last day of
the month during which the market administrator receives the handler's
report of receipts and utilization on which such obligation is based,
unless within such 2-year period, the market administrator notifies the
handler in writing that such money is due and payable. Service of such
written notice shall be complete upon mailing to the handler's last
known address and it shall contain, but need not be limited to, the
following information:
(1) The amount of the obligation;
(2) The month(s) on which such obligation is based; and
(3) If the obligation is payable to one or more producers or to a
cooperative association, the name of such producer(s) or such
cooperative association, or if the obligation is payable to the market
administrator, the account for which it is to be paid.
(b) If a handler fails or refuses, with respect to any obligation
under the order, to make available to the market administrator all
records required by the order to be made available, the market
administrator may notify the handler in writing, within the 2-year
period provided for in paragraph (a) of this section, of such failure
or refusal. If the market administrator so notifies a handler, the said
2-year period with respect to such obligation shall not begin to run
until the first day of the month following the month during which all
such records pertaining to such obligation are made available to the
market administrator.
(c) Notwithstanding the provisions of paragraphs (a) and (b) of
this section, a handler's obligation under the order to pay money shall
not be terminated with respect to any transaction involving fraud or
willful concealment of a fact, material to the obligation, on the part
of the handler against whom the obligation is sought to be imposed.
(d) Unless the handler files a petition pursuant to section
8c(15)(A) of the Act and the applicable rules and regulations (7 CFR
900.50 et seq.) within the applicable 2-year period indicated below,
the obligation of the market administrator:
(1) To pay a handler any money which such handler claims is due
under the terms of the order shall terminate 2 years after the end of
the month during which the skim milk and butterfat involved in the
claim were received; or
(2) To refund any payment made by a handler (including a deduction
or offset by the market administrator) shall terminate 2 years after
the end of the month during which payment was made by the handler.
Subpart F--Classification of Milk
Sec. 1000.40 Classes of Utilization.
Except as provided in Sec. 1000.42, all skim milk and butterfat
required to be reported pursuant to Sec. ______.30 of each Federal milk
order shall be classified as follows:
(a) Class I milk shall be all skim milk and butterfat:
(1) Disposed of in the form of fluid milk products, except as
otherwise provided in this section;
(2) In packaged fluid milk products in inventory at the end of the
month; and
(3) In shrinkage assigned pursuant to Sec. 1000.43(b).
(b) Class II milk shall be all skim milk and butterfat:
(1) In fluid milk products in containers larger than 1 gallon and
fluid cream products disposed of or diverted to a commercial food
processing establishment if the market administrator is permitted to
audit the records of the commercial food processing establishment for
the purpose of verification. Otherwise, such uses shall be Class I;
(2) Used to produce:
(i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese,
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
(ii) Milkshake and ice milk mixes (or bases), frozen desserts, and
frozen dessert mixes distributed in half-gallon containers or larger
and intended to be used in soft or semi-solid form;
(iii) Aerated cream, frozen cream, sour cream, sour half-and-half,
sour cream mixtures containing nonmilk items, yogurt, and any other
semi-solid product resembling a Class II product;
(iv) Custards, puddings, pancake mixes, coatings, batter, and
similar products;
(v) Buttermilk biscuit mixes and other buttermilk for baking that
contain food starch in excess of 2% of the total
[[Page 16174]]
solids, provided that the product is labeled to indicate the food
starch content;
(vi) Formulas especially prepared for infant feeding or dietary use
(meal replacement) that are packaged in hermetically-sealed containers;
(vii) Candy, soup, bakery products and other prepared foods which
are processed for general distribution to the public, and intermediate
products, including sweetened condensed milk, to be used in processing
such prepared food products;
(viii) A fluid cream product or any product containing artificial
fat or fat substitutes that resembles a fluid cream product, except as
otherwise provided in paragraph (c) of this section; and
(ix) Any product not otherwise specified in this section; and
(3) In shrinkage assigned pursuant to Sec. 1000.43(b).
(c) Class III milk shall be all skim milk and butterfat:
(1) Used to produce:
(i) Cream cheese and other spreadable cheeses, and hard cheese of
types that may be shredded, grated, or crumbled;
(ii) Plastic cream, anhydrous milkfat, and butteroil; and
(iii) Evaporated or sweetened condensed milk in a consumer-type
package; and
(2) In shrinkage assigned pursuant to Sec. 1000.43(b).
(d) Class IV milk shall be all skim milk and butterfat:
(1) Used to produce:
(i) Butter; and
(ii) Any milk product in dried form;
(2) In inventory at the end of the month of fluid milk products and
fluid cream products in bulk form;
(3) In the skim milk equivalent of nonfat milk solids used to
modify a fluid milk product that has not been accounted for in Class I;
and
(4) In shrinkage assigned pursuant to Sec. 1000.43(b).
(e) Other uses. Other uses include skim milk and butterfat used in
any product described in this section that is dumped, used for animal
feed, destroyed, or lost by a handler in a vehicular accident, flood,
fire, or similar occurrence beyond the handler's control. Such uses of
skim milk and butterfat shall be assigned to the lowest priced class
for the month to the extent that the quantities destroyed or lost can
be verified from records satisfactory to the market administrator.
Sec. 1000.41 [Reserved]
Sec. 1000.42 Classification of transfers and diversions.
(a) Transfers and diversions to pool plants. Skim milk or butterfat
transferred or diverted in the form of a fluid milk product or
transferred in the form of a bulk fluid cream product from a pool plant
or a handler described in Sec. 1135.11 to another pool plant shall be
classified as Class I milk unless the handlers both request the same
classification in another class. In either case, the classification
shall be subject to the following conditions:
(1) The skim milk and butterfat classified in each class shall be
limited to the amount of skim milk and butterfat, respectively,
remaining in such class at the receiving plant after the computations
pursuant to Sec. 1000.44(a)(9) and the corresponding step of
Sec. 1000.44(b);
(2) If the transferring plant received during the month other
source milk to be allocated pursuant to Sec. 1000.44(a)(3) or the
corresponding step of Sec. 1000.44(b), the skim milk or butterfat so
transferred shall be classified so as to allocate the least possible
Class I utilization to such other source milk; and
(3) If the transferring handler received during the month other
source milk to be allocated pursuant to Sec. 1000.44(a)(8) or (9) or
the corresponding steps of Sec. 1000.44(b), the skim milk or butterfat
so transferred, up to the total of the skim milk and butterfat,
respectively, in such receipts of other source milk, shall not be
classified as Class I milk to a greater extent than would be the case
if the other source milk had been received at the receiving plant.
(b) Transfers and diversions to a plant regulated under another
Federal order. Skim milk or butterfat transferred or diverted in the
form of a fluid milk product or transferred in the form of a bulk fluid
cream product from a pool plant to a plant regulated under another
Federal order shall be classified in the following manner. Such
classification shall apply only to the skim milk or butterfat that is
in excess of any receipts at the pool plant from a plant regulated
under another Federal order of skim milk and butterfat, respectively,
in fluid milk products and bulk fluid cream products, respectively,
that are in the same category as described in paragraph (b)(1) or (2)
of this section:
(1) As Class I milk, if transferred as packaged fluid milk
products;
(2) If transferred or diverted in bulk form, classification shall
be in the classes to which allocated under the other order:
(i) If the operators of both plants so request in their reports of
receipts and utilization filed with their respective market
administrators, transfers in bulk form shall be classified as other
than Class I to the extent that such utilization is available for such
classification pursuant to the allocation provisions of the other
order;
(ii) If diverted, the diverting handler must request a
classification other than Class I. If the plant receiving the diverted
milk does not have sufficient utilization available for the requested
classification and some of the diverted milk is consequently assigned
to Class I use, the diverting handler shall be given the option of
designating the entire load of diverted milk as producer milk at the
plant physically receiving the milk. Alternatively, if the diverting
handler so chooses, it may designate which dairy farmers whose milk was
diverted during the month will be designated as producers under the
order physically receiving the milk. If the diverting handler declines
to accept either of these options, the market administrator will
prorate the portion of diverted milk in excess of Class II, III, and IV
use among all the dairy farmers whose milk was received from the
diverting handler on the last day of the month, then the second-to-last
day, and continuing in that fashion until the excess diverted milk has
been assigned as producer milk under the receiving order; and
(iii) If information concerning the classes to which such transfers
or diversions were allocated under the other order is not available to
the market administrator for the purpose of establishing classification
under this paragraph, classification shall be Class I, subject to
adjustment when such information is available.
(c) Transfers and diversions to producer-handlers and to exempt
plants. Skim milk or butterfat that is transferred or diverted from a
pool plant to a producer-handler under any Federal order or to an
exempt plant shall be classified:
(1) As Class I milk if transferred or diverted to a producer-
handler;
(2) As Class I milk if transferred to an exempt plant in the form
of a packaged fluid milk product; and
(3) In accordance with the utilization assigned to it by the market
administrator if transferred or diverted in the form of a bulk fluid
milk product or transferred in the form of a bulk fluid cream product
to an exempt plant. For this purpose, the receiving handler's
utilization of skim milk and butterfat in each class, in series
beginning with Class IV, shall be assigned to the extent possible to
its receipts of skim milk and butterfat, in bulk fluid cream products,
and bulk fluid milk products, respectively, pro rata to each source.
(d) Transfers and diversions to other nonpool plants. Skim milk or
butterfat
[[Page 16175]]
transferred or diverted in the following forms from a pool plant to a
nonpool plant that is not a plant regulated under another order, an
exempt plant, or a producer-handler plant shall be classified:
(1) As Class I milk, if transferred in the form of a packaged fluid
milk product; and
(2) As Class I milk, if transferred or diverted in the form of a
bulk fluid milk product or transferred in the form of a bulk fluid
cream product, unless the following conditions apply:
(i) If the conditions described in paragraphs (d)(2)(i)(A) and (B)
of this section are met, transfers or diversions in bulk form shall be
classified on the basis of the assignment of the nonpool plant's
utilization, excluding the milk equivalent of both nonfat milk solids
and concentrated milk used in the plant during the month, to its
receipts as set forth in paragraphs (d)(2)(ii) through (viii) of this
section:
(A) The transferring handler or diverting handler claims such
classification in such handler's report of receipts and utilization
filed pursuant to Sec. ______.30 of each Federal milk order for the
month within which such transaction occurred; and
(B) The nonpool plant operator maintains books and records showing
the utilization of all skim milk and butterfat received at such plant
which are made available for verification purposes if requested by the
market administrator;
(ii) Route disposition in the marketing area of each Federal milk
order from the nonpool plant and transfers of packaged fluid milk
products from such nonpool plant to plants fully regulated thereunder
shall be assigned to the extent possible in the following sequence:
(A) Pro rata to receipts of packaged fluid milk products at such
nonpool plant from pool plants;
(B) Pro rata to any remaining unassigned receipts of packaged fluid
milk products at such nonpool plant from plants regulated under other
Federal orders;
(C) Pro rata to receipts of bulk fluid milk products at such
nonpool plant from pool plants; and
(D) Pro rata to any remaining unassigned receipts of bulk fluid
milk products at such nonpool plant from plants regulated under other
Federal orders;
(iii) Any remaining Class I disposition of packaged fluid milk
products from the nonpool plant shall be assigned to the extent
possible pro rata to any remaining unassigned receipts of packaged
fluid milk products at such nonpool plant from pool plants and plants
regulated under other Federal orders;
(iv) Transfers of bulk fluid milk products from the nonpool plant
to a plant regulated under any Federal order, to the extent that such
transfers to the regulated plant exceed receipts of fluid milk products
from such plant and are allocated to Class I at the receiving plant,
shall be assigned to the extent possible in the following sequence:
(A) Pro rata to receipts of fluid milk products at such nonpool
plant from pool plants; and
(B) Pro rata to any remaining unassigned receipts of fluid milk
products at such nonpool plant from plants regulated under other
Federal orders;
(v) Any remaining unassigned Class I disposition from the nonpool
plant shall be assigned to the extent possible in the following
sequence:
(A) To such nonpool plant's receipts from dairy farmers who the
market administrator determines constitute regular sources of Grade A
milk for such nonpool plant; and
(B) To such nonpool plant's receipts of Grade A milk from plants
not fully regulated under any Federal order which the market
administrator determines constitute regular sources of Grade A milk for
such nonpool plant;
(vi) Any remaining unassigned receipts of bulk fluid milk products
at the nonpool plant from pool plants and plants regulated under other
Federal orders shall be assigned, pro rata among such plants, to the
extent possible first to any remaining Class I utilization and then to
all other utilization, in sequence beginning with Class IV at such
nonpool plant;
(vii) Receipts of bulk fluid cream products at the nonpool plant
from pool plants and plants regulated under other Federal orders shall
be assigned, pro rata among such plants, to the extent possible to any
remaining utilization, in sequence beginning with Class IV at such
nonpool plant; and
(viii) In determining the nonpool plant's utilization for purposes
of this paragraph, any fluid milk products and bulk fluid cream
products transferred from such nonpool plant to a plant not fully
regulated under any Federal order shall be classified on the basis of
the second plant's utilization using the same assignment priorities at
the second plant that are set forth in this paragraph.
Sec. 1000.43 General classification rules.
In determining the classification of producer milk pursuant to
Sec. 1000.44, the following rules shall apply:
(a) Each month the market administrator shall correct for
mathematical and other obvious errors all reports filed pursuant to
Sec. ______.30 of each Federal milk order and shall compute separately
for each pool plant, for each handler described in Sec. 1000.9(c) and
Sec. 1135.11, the pounds of skim milk and butterfat, respectively, in
each class in accordance with Secs. 1000.40 and 1000.42, and paragraph
(b) of this section.
(b) Shrinkage and overage. For purposes of classifying all milk
reported by a handler pursuant to Sec. ______.30 of each Federal milk
order the market administrator shall determine the shrinkage or overage
of skim milk and butterfat for each pool plant and each handler
described in Sec. 1000.9(c) and Sec. 1135.11 by subtracting total
utilization from total receipts. Any positive difference shall be
shrinkage, and any negative difference shall be overage.
(1) Shrinkage incurred by pool plants qualified pursuant to Sec. --
--.7 of any Federal milk order shall be assigned to the lowest-priced
class to the extent that such shrinkage does not exceed:
(i) Two percent of the total quantity of milk physically received
at the plant directly from producers' farms on the basis of farm
weights and tests;
(ii) Plus 1.5 percent of the quantity of bulk milk physically
received on a basis other than farm weights and tests, excluding
concentrated milk received by agreement for other than Class I use;
(iii) Plus .5 percent of the quantity of milk diverted by the plant
operator to another plant on a basis other than farm weights and tests;
and
(iv) Minus 1.5 percent of the quantity of bulk milk transferred to
other plants, excluding concentrated milk transferred by agreement for
other than Class I use.
(2) A handler described in Sec. 1000.9(c) or Sec. 1135.11 that
delivers milk to plants on a basis other than farm weights and tests
shall receive a lowest-priced-class shrinkage allowance of .5 percent
of the total quantity of such milk picked up at producers' farms.
(3) Shrinkage in excess of the amounts provided in paragraphs
(b)(1) and (2) of this section shall be assigned to existing
utilization in series starting with Class I. The shrinkage assigned
pursuant to this paragraph shall be added to the handler's reported
utilization and the result shall be known as the gross utilization in
each class.
(c) If any of the water contained in the milk from which a product
is made is removed before the product is utilized or disposed of by the
handler, the pounds of skim milk in such product that are to be
considered under this part as used or disposed of by the handler
[[Page 16176]]
shall be an amount equivalent to the nonfat milk solids contained in
such product plus all of the water originally associated with such
solids.
(d) Skim milk and butterfat contained in receipts of bulk
concentrated fluid milk and nonfluid milk products that are
reconstituted for fluid use shall be assigned to Class I use, up to the
reconstituted portion of labeled reconstituted fluid milk products, on
a pro rata basis (except for any Class I use of specific concentrated
receipts that is established by the handler) prior to any assignments
under Sec. 1000.44. Any remaining skim milk and butterfat in
concentrated receipts shall be assigned to uses under Sec. 1000.44 on a
pro rata basis, unless a specific use of such receipts is established
by the handler.
Sec. 1000.44 Classification of producer milk.
For each month the market administrator shall determine for each
handler described in Sec. 1000.9(a) for each pool plant of the handler
separately and for each handler described in Sec. 1000.9(c) and
Sec. 1135.11 the classification of producer milk by allocating the
handler's receipts of skim milk and butterfat to the handler's gross
utilization of such receipts pursuant to Sec. 1000.43(b)(3) as follows:
(a) Skim milk shall be allocated in the following manner:
(1) Subtract from the pounds of skim milk in Class I the pounds of
skim milk in:
(i) Receipts of packaged fluid milk products from an unregulated
supply plant to the extent that an equivalent amount of skim milk
disposed of to such plant by handlers fully regulated under any Federal
order is classified and priced as Class I milk and is not used as an
offset for any other payment obligation under any order;
(ii) Packaged fluid milk products in inventory at the beginning of
the month. This paragraph shall apply only if the pool plant was
subject to the provisions of this paragraph or comparable provisions of
another Federal order in the immediately preceding month;
(iii) Fluid milk products received in packaged form from plants
regulated under other Federal orders; and
(iv) To the extent that the receipts described in paragraphs
(a)(1)(i) through (iii) of this section exceed the gross Class I
utilization of skim milk, the excess receipts shall be subtracted
pursuant to paragraph (a)(3)(vi) of this section.
(2) Subtract from the pounds of skim milk in Class II the pounds of
skim milk in the receipts of skim milk in bulk concentrated fluid milk
products and in other source milk (except other source milk received in
the form of an unconcentrated fluid milk product or a fluid cream
product) that is used to produce, or added to, any product in Class II
(excluding the quantity of such skim milk that was classified as Class
IV milk pursuant to Sec. 1000.40(d)(3)). To the extent that the
receipts described in this paragraph exceed the gross Class II
utilization of skim milk, the excess receipts shall be subtracted
pursuant to paragraph (a)(3)(vi) of this section.
(3) Subtract from the pounds of skim milk remaining in each class,
in series beginning with Class IV, the pounds of skim milk in:
(i) Receipts of bulk concentrated fluid milk products and other
source milk (except other source milk received in the form of an
unconcentrated fluid milk product);
(ii) Receipts of fluid milk products and bulk fluid cream products
for which appropriate health approval is not established and from
unidentified sources;
(iii) Receipts of fluid milk products and bulk fluid cream products
from an exempt plant;
(iv) Fluid milk products and bulk fluid cream products received
from a producer-handler as defined under this order or any other
Federal order;
(v) Receipts of fluid milk products from dairy farmers for other
markets; and
(vi) The excess receipts specified in paragraphs (a)(1)(iv) and
(a)(2) of this section.
(4) Subtract from the pounds of skim milk remaining in all classes
other than Class I, in sequence beginning with Class IV, the receipts
of fluid milk products from an unregulated supply plant that were not
previously subtracted in this section for which the handler requests
classification other than Class I, but not in excess of the pounds of
skim milk remaining in these other classes combined.
(5) Subtract from the pounds of skim milk remaining in all classes
other than Class I, in sequence beginning with Class IV, receipts of
fluid milk products from an unregulated supply plant that were not
subtracted in previous paragraphs, and which are in excess of the
pounds of skim milk determined pursuant to paragraphs (a)(5)(i) and
(ii) of this section;
(i) Multiply by 1.25 the pounds of skim milk remaining in Class I
at this allocation step; and
(ii) Subtract from the above result the pounds of skim milk in
receipts of producer milk and fluid milk products from other pool
plants.
(6) Subtract from the pounds of skim milk remaining in all classes
other than Class I, in sequence beginning with Class IV, the pounds of
skim milk in receipts of bulk fluid milk products from a handler
regulated under another Federal order that are in excess of bulk fluid
milk products transferred or diverted to such handler, if other than
Class I classification is requested, but not in excess of the pounds of
skim milk remaining in these classes combined.
(7) Subtract from the pounds of skim milk remaining in each class,
in series beginning with Class IV, the pounds of skim milk in fluid
milk products and bulk fluid cream products in inventory at the
beginning of the month that were not previously subtracted in this
section.
(8) Subtract from the pounds of skim milk remaining in each class
at the plant receipts of skim milk in fluid milk products from an
unregulated supply plant that were not previously subtracted in this
section and that were not offset by transfers or diversions of fluid
milk products to the unregulated supply plant from which fluid milk
products to be allocated at this step were received. Such subtraction
shall be pro rata to the pounds of skim milk in Class I and in Classes
II, III, and IV combined, with the quantity prorated to Classes II,
III, and IV combined being subtracted in sequence beginning with Class
IV.
(9) Subtract in the manner specified below from the pounds of skim
milk remaining in each class the pounds of skim milk in receipts of
bulk fluid milk products from a handler regulated under another Federal
order that are in excess of bulk fluid milk products transferred or
diverted to such handler that were not subtracted in paragraph (a)(6)
of this section. Such subtraction shall be pro rata to the pounds of
skim milk in Class I and in Classes II, III, and IV combined, with the
quantity prorated to Classes II, III, and IV combined being subtracted
in sequence beginning with Class IV, with respect to whichever of the
following quantities represents the lower proportion of Class I milk:
(i) The estimated utilization of skim milk of all handlers in each
class as announced for the month pursuant to Sec. 1000.45(a); or
(ii) The total pounds of skim milk remaining in each class at this
allocation step.
(10) Subtract from the pounds of skim milk remaining in each class
the pounds of skim milk in receipts of fluid milk products and bulk
fluid cream products from another pool plant and from a handler
described in Sec. 1135.11 according to the classification of such
products pursuant to Sec. 1000.42(a).
[[Page 16177]]
(11) If the total pounds of skim milk remaining in all classes
exceed the pounds of skim milk in producer milk, subtract such excess
from the pounds of skim milk remaining in each class in series
beginning with Class IV.
(b) Butterfat shall be allocated in accordance with the procedure
outlined for skim milk in paragraph (a) of this section.
(c) The quantity of producer milk in each class shall be the
combined pounds of skim milk and butterfat remaining in each class
after the computations pursuant to paragraphs (a) and (b) of this
section.
Sec. 1000.45 Market administrator's reports and announcements
concerning classification.
(a) Whenever required for the purpose of allocating receipts from
plants regulated under other Federal orders pursuant to
Sec. 1000.44(a)(9) and the corresponding step of Sec. 1000.44(b), the
market administrator shall estimate and publicly announce the
utilization (to the nearest whole percentage) in Class I during the
month of skim milk and butterfat, respectively, in producer milk of all
handlers. The estimate shall be based upon the most current available
data and shall be final for such purpose.
(b) The market administrator shall report to the market
administrators of other Federal orders as soon as possible after the
handlers' reports of receipts and utilization are received, the class
to which receipts from plants regulated under other Federal orders are
allocated pursuant to Secs. 1000.43(d) and 1000.44 (including any
reclassification of inventories of bulk concentrated fluid milk
products), and thereafter any change in allocation required to correct
errors disclosed on the verification of such report.
(c) The market administrator shall furnish each handler operating a
pool plant and each handler described in Sec. 1135.11 who has shipped
fluid milk products or bulk fluid cream products to a plant fully
regulated under another Federal order the class to which the shipments
were allocated by the market administrator of the other Federal order
on the basis of the report by the receiving handler and, as necessary,
any changes in the allocation arising from the verification of such
report.
(d) The market administrator shall report to each cooperative
association which so requests, the percentage of producer milk
delivered by members of the association that was used in each class by
each handler receiving the milk. For the purpose of this report, the
milk so received shall be prorated to each class in accordance with the
total utilization of producer milk by the handler.
Subpart G--Class Prices
Sec. 1000.50 Class prices, component prices, and advanced pricing
factors.
Class prices per hundredweight of milk containing 3.5 percent
butterfat, component prices, and advanced pricing factors shall be as
follows. The prices and pricing factors described in paragraphs (a),
(b), (c), (e), (f), and (q) of this section shall be based on a
weighted average of the most recent 2 weekly prices announced by the
National Agricultural Statistical Service (NASS) before the 24th day of
the month. These prices shall be announced on or before the 23rd day of
the month and shall apply to milk received during the following month.
The prices described in paragraphs (g)-(p) of this section shall be
based on a weighted average for the preceding month of weekly prices
announced by NASS on or before the 5th day of the month and shall apply
to milk received during the preceding month. The price described in
paragraph (d) of this section shall be derived from the Class II skim
milk price announced on or before the 23rd day of the month preceding
the month to which it applies and the butterfat price announced on or
before the 5th day of the month following the month to which it
applies.
(a) Class I price. The Class I price per hundredweight, rounded to
the nearest cent, shall be .965 times the Class I skim milk price plus
3.5 times the Class I butterfat price.
(b) Class I skim milk price. The Class I skim milk price per
hundredweight shall be the adjusted Class I differential specified in
Sec. 1000.52 plus the higher of the advanced pricing factors computed
in paragraph (q)(1) or (2) of this section.
(c) Class I butterfat price. The Class I butterfat price per pound
shall be the adjusted Class I differential specified in Sec. 1000.52
divided by 100, plus the advanced butterfat price computed in paragraph
(q)(3) of this section.
(d) The Class II price per hundredweight, rounded to the nearest
cent, shall be .965 times the Class II skim milk price plus 3.5 times
the Class II butterfat price.
(e) Class II skim milk price. The Class II skim milk price per
hundredweight shall be the advanced Class IV skim milk price computed
in paragraph (q)(2) of this section plus 70 cents.
(f) Class II nonfat solids price. The Class II nonfat solids price
per pound, rounded to the nearest one-hundredth cent, shall be the
Class II skim milk price divided by 9.
(g) Class II butterfat price. The Class II butterfat price per
pound shall be the butterfat price plus $.007.
(h) Class III price. The Class III price per hundredweight, rounded
to the nearest cent, shall be .965 times the Class III skim milk price
plus 3.5 times the butterfat price.
(i) Class III skim milk price. The Class III skim milk price per
hundredweight, rounded to the nearest cent, shall be the protein price
per pound times 3.1 plus the other solids price per pound times 5.9.
(j) Class IV price. The Class IV price per hundredweight, rounded
to the nearest cent, shall be .965 times the Class IV skim milk price
plus 3.5 times the butterfat price.
(k) Class IV skim milk price. The Class IV skim milk price per
hundredweight, rounded to the nearest cent, shall be the nonfat solids
price per pound times 9.
(l) Butterfat price. The butterfat price per pound, rounded to the
nearest one-hundredth cent, shall be the U.S. average NASS AA Butter
survey price reported by the Department for the month less 11.4 cents,
with the result divided by 0.82.
(m) Nonfat solids price. The nonfat solids price per pound, rounded
to the nearest one-hundredth cent, shall be the U.S. average NASS
nonfat dry milk survey price reported by the Department for the month
less 13.7 cents, with the result divided by 1.02.
(n) Protein price. The protein price per pound, rounded to the
nearest one-hundredth cent, shall be computed as follows:
(1) Compute a weighted average of the amounts described in
paragraphs (n)(1)(i) and (ii) of this section:
(i) The U.S. average NASS survey price for 40-lb. block cheese
reported by the Department for the month; and
(ii) The U.S. average NASS survey price for 500-pound barrel
cheddar cheese (39 percent moisture) reported by the Department for the
month plus 3 cents;
(2) Subtract 17.02 cents from the price computed pursuant to
paragraph (n)(1) of this section and multiply the result by 1.405;
(3) Add to the amount computed pursuant to paragraph (n)(2) of this
section an amount computed as follows:
(i) Subtract 17.02 cents from the price computed pursuant to
paragraph (n)(1) of this section and multiply the result by 1.582;
(ii) Subtract the butterfat price computed pursuant to paragraph
(l) of this section from the amount computed pursuant to paragraph
(n)(3)(i) of this section; and
[[Page 16178]]
(iii) Multiply the amount computed pursuant to paragraph (n)(3)(ii)
of this section by 1.28.
(o) Other solids price. The other solids price per pound, rounded
to the nearest one-hundredth cent, shall be the U.S. average NASS dry
whey survey price reported by the Department for the month minus 13.7
cents, with the result divided by 0.968.
(p) Somatic cell adjustment. The somatic cell adjustment per
hundredweight of milk shall be determined as follows:
(1) Multiply .0005 by the weighted average price computed pursuant
to paragraph (n)(1) of this section and round to the 5th decimal place;
(2) Subtract the somatic cell count of the milk (reported in
thousands) from 350; and
(3) Multiply the amount computed in paragraph (p)(1) of this
section by the amount computed in paragraph (p)(2) of this section and
round to the nearest full cent.
(q) Advanced pricing factors. For the purpose of computing the
Class I skim milk price, the Class II skim milk price, the Class II
nonfat solids price, and the Class I butterfat price for the following
month, the following pricing factors shall be computed using the
weighted average of the 2 most recent NASS U.S. average weekly survey
prices announced before the 24th day of the month:
(1) An advanced Class III skim milk price per hundredweight,
rounded to the nearest cent, shall be computed as follows:
(i) Following the procedure set forth in paragraphs (n) and (o) of
this section, but using the weighted average of the NASS U.S. average
weekly survey prices announced before the 24th day of the month,
compute a protein price and another solids price;
(ii) Multiply the protein price computed in paragraph (q)(1)(i) of
this section by 3.1;
(iii) Multiply the other solids price per pound computed in
paragraph (q)(1)(i) of this section by 5.9; and
(iv) Add the amounts computed in paragraphs (q)(1)(ii) and (iii) of
this section.
(2) An advanced Class IV skim milk price per hundredweight, rounded
to the nearest cent, shall be computed as follows:
(i) Following the procedure set forth in paragraph (m) of this
section, but using the weighted average of the 2 most recent NASS U.S.
average weekly survey prices announced before the 24th day of the
month, compute a nonfat solids price; and
(ii) Multiply the nonfat solids price computed in paragraph
(q)(2)(i) of this section by 9.
(3) An advanced butterfat price per pound, rounded to the nearest
one-hundredth cent, shall be calculated by computing a weighted average
of the 2 most recent U.S. average NASS AA Butter survey prices
announced before the 24th day of the month, subtracting 11.4 cents from
this average, and dividing the result by 0.82.
Sec. 1000.51 [Reserved]
Sec. 1000.52 Adjusted Class I differentials.
The Class I differential adjusted for location to be used in
Sec. 1000.50(b) and (c) shall be as follows:
----------------------------------------------------------------------------------------------------------------
Class I
differential
County/Parish/City State FIPS__Code adjusted for
location
----------------------------------------------------------------------------------------------------------------
AUTAUGA..................................... AL 01001 2.90
BALDWIN..................................... AL 01003 3.30
BARBOUR..................................... AL 01005 3.20
BIBB........................................ AL 01007 2.70
BLOUNT...................................... AL 01009 2.55
BULLOCK..................................... AL 01011 3.10
BUTLER...................................... AL 01013 3.20
CALHOUN..................................... AL 01015 2.70
CHAMBERS.................................... AL 01017 2.90
CHEROKEE.................................... AL 01019 2.55
CHILTON..................................... AL 01021 2.70
CHOCTAW..................................... AL 01023 3.10
CLARKE...................................... AL 01025 3.10
CLAY........................................ AL 01027 2.80
CLEBURNE.................................... AL 01029 2.70
COFFEE...................................... AL 01031 3.20
COLBERT..................................... AL 01033 2.25
CONECUH..................................... AL 01035 3.20
COOSA....................................... AL 01037 2.80
COVINGTON................................... AL 01039 3.20
CRENSHAW.................................... AL 01041 3.20
CULLMAN..................................... AL 01043 2.55
DALE........................................ AL 01045 3.20
DALLAS...................................... AL 01047 2.90
DE KALB..................................... AL 01049 2.25
ELMORE...................................... AL 01051 2.90
ESCAMBIA.................................... AL 01053 3.30
ETOWAH...................................... AL 01055 2.55
FAYETTE..................................... AL 01057 2.70
FRANKLIN.................................... AL 01059 2.25
GENEVA...................................... AL 01061 3.30
GREENE...................................... AL 01063 2.70
HALE........................................ AL 01065 2.70
HENRY....................................... AL 01067 3.20
HOUSTON..................................... AL 01069 3.30
JACKSON..................................... AL 01071 2.25
JEFFERSON................................... AL 01073 2.70
LAMAR....................................... AL 01075 2.70
LAUDERDALE.................................. AL 01077 2.20
[[Page 16179]]
LAWRENCE.................................... AL 01079 2.25
LEE......................................... AL 01081 2.90
LIMESTONE................................... AL 01083 2.25
LOWNDES..................................... AL 01085 3.10
MACON....................................... AL 01087 3.10
MADISON..................................... AL 01089 2.25
MARENGO..................................... AL 01091 3.10
MARION...................................... AL 01093 2.55
MARSHALL.................................... AL 01095 2.25
MOBILE...................................... AL 01097 3.30
MONROE...................................... AL 01099 3.20
MONTGOMERY.................................. AL 01101 3.10
MORGAN...................................... AL 01103 2.25
PERRY....................................... AL 01105 2.70
PICKENS..................................... AL 01107 2.70
PIKE........................................ AL 01109 3.20
RANDOLPH.................................... AL 01111 2.80
RUSSELL..................................... AL 01113 3.10
ST. CLAIR................................... AL 01115 2.70
SHELBY...................................... AL 01117 2.70
SUMTER...................................... AL 01119 2.70
TALLADEGA................................... AL 01121 2.70
TALLAPOOSA.................................. AL 01123 2.90
TUSCALOOSA.................................. AL 01125 2.70
WALKER...................................... AL 01127 2.70
WASHINGTON.................................. AL 01129 3.10
WILCOX...................................... AL 01131 3.10
WINSTON..................................... AL 01133 2.55
APACHE...................................... AZ 04001 1.90
COCHISE..................................... AZ 04003 1.60
COCONINO.................................... AZ 04005 1.90
GILA........................................ AZ 04007 1.60
GRAHAM...................................... AZ 04009 1.60
GREENLEE.................................... AZ 04011 1.60
LA PAZ...................................... AZ 04012 1.60
MARICOPA.................................... AZ 04013 1.55
MOHAVE...................................... AZ 04015 1.90
NAVAJO...................................... AZ 04017 1.90
PIMA........................................ AZ 04019 1.60
PINAL....................................... AZ 04021 1.55
SANTA CRUZ.................................. AZ 04023 1.60
YAVAPAI..................................... AZ 04025 1.60
YUMA........................................ AZ 04027 1.60
ARKANSAS.................................... AR 05001 2.65
ASHLEY...................................... AR 05003 2.75
BAXTER...................................... AR 05005 1.90
BENTON...................................... AR 05007 1.70
BOONE....................................... AR 05009 1.70
BRADLEY..................................... AR 05011 2.65
CALHOUN..................................... AR 05013 2.65
CARROLL..................................... AR 05015 1.70
CHICOT...................................... AR 05017 2.75
CLARK....................................... AR 05019 2.35
CLAY........................................ AR 05021 2.35
CLEBURNE.................................... AR 05023 2.10
CLEVELAND................................... AR 05025 2.65
COLUMBIA.................................... AR 05027 2.35
CONWAY...................................... AR 05029 2.10
CRAIGHEAD................................... AR 05031 2.65
CRAWFORD.................................... AR 05033 1.90
CRITTENDEN.................................. AR 05035 2.65
CROSS....................................... AR 05037 2.65
DALLAS...................................... AR 05039 2.35
DESHA....................................... AR 05041 2.75
DREW........................................ AR 05043 2.75
FAULKNER.................................... AR 05045 2.35
FRANKLIN.................................... AR 05047 1.90
FULTON...................................... AR 05049 2.10
GARLAND..................................... AR 05051 2.10
GRANT....................................... AR 05053 2.35
GREENE...................................... AR 05055 2.35
HEMPSTEAD................................... AR 05057 2.10
[[Page 16180]]
HOT SPRING.................................. AR 05059 2.35
HOWARD...................................... AR 05061 2.10
INDEPENDENCE................................ AR 05063 2.35
IZARD....................................... AR 05065 2.10
JACKSON..................................... AR 05067 2.35
JEFFERSON................................... AR 05069 2.65
JOHNSON..................................... AR 05071 1.90
LAFAYETTE................................... AR 05073 2.35
LAWRENCE.................................... AR 05075 2.35
LEE......................................... AR 05077 2.65
LINCOLN..................................... AR 05079 2.65
LITTLE RIVER................................ AR 05081 2.10
LOGAN....................................... AR 05083 1.90
LONOKE...................................... AR 05085 2.35
MADISON..................................... AR 05087 1.70
MARION...................................... AR 05089 1.90
MILLER...................................... AR 05091 2.10
MISSISSIPPI................................. AR 05093 2.65
MONROE...................................... AR 05095 2.65
MONTGOMERY.................................. AR 05097 2.10
NEVADA...................................... AR 05099 2.35
NEWTON...................................... AR 05101 1.90
OUACHITA.................................... AR 05103 2.35
PERRY....................................... AR 05105 2.10
PHILLIPS.................................... AR 05107 2.65
PIKE........................................ AR 05109 2.10
POINSETT.................................... AR 05111 2.65
POLK........................................ AR 05113 2.10
POPE........................................ AR 05115 1.90
PRAIRIE..................................... AR 05117 2.65
PULASKI..................................... AR 05119 2.35
RANDOLPH.................................... AR 05121 2.10
ST. FRANCIS................................. AR 05123 2.65
SALINE...................................... AR 05125 2.35
SCOTT....................................... AR 05127 1.90
SEARCY...................................... AR 05129 1.90
SEBASTIAN................................... AR 05131 1.90
SEVIER...................................... AR 05133 2.10
SHARP....................................... AR 05135 2.10
STONE....................................... AR 05137 2.10
UNION....................................... AR 05139 2.65
VAN BUREN................................... AR 05141 2.10
WASHINGTON.................................. AR 05143 1.70
WHITE....................................... AR 05145 2.35
WOODRUFF.................................... AR 05147 2.65
YELL........................................ AR 05149 2.10
ALAMEDA..................................... CA 06001 1.75
ALPINE...................................... CA 06003 1.20
AMADOR...................................... CA 06005 1.20
BUTTE....................................... CA 06007 1.65
CALAVERAS................................... CA 06009 1.20
COLUSA...................................... CA 06011 1.80
CONTRA COSTA................................ CA 06013 1.75
DEL NORTE................................... CA 06015 1.80
EL DORADO................................... CA 06017 1.20
FRESNO...................................... CA 06019 1.40
GLENN....................................... CA 06021 1.80
HUMBOLDT.................................... CA 06023 1.80
IMPERIAL.................................... CA 06025 1.60
INYO........................................ CA 06027 1.50
KERN........................................ CA 06029 1.60
KINGS....................................... CA 06031 1.40
LAKE........................................ CA 06033 1.80
LASSEN...................................... CA 06035 1.65
LOS ANGELES................................. CA 06037 1.60
MADERA...................................... CA 06039 1.40
MARIN....................................... CA 06041 1.80
MARIPOSA.................................... CA 06043 1.20
MENDOCINO................................... CA 06045 1.80
MERCED...................................... CA 06047 1.40
MODOC....................................... CA 06049 1.65
MONO........................................ CA 06051 1.20
[[Page 16181]]
MONTEREY.................................... CA 06053 2.20
NAPA........................................ CA 06055 1.80
NEVADA...................................... CA 06057 1.40
ORANGE...................................... CA 06059 1.60
PLACER...................................... CA 06061 1.40
PLUMAS...................................... CA 06063 1.65
RIVERSIDE................................... CA 06065 1.60
SACRAMENTO.................................. CA 06067 1.40
SAN BENITO.................................. CA 06069 1.75
SAN BERNARDINO.............................. CA 06071 1.60
SAN DIEGO................................... CA 06073 1.80
SAN FRANCISCO............................... CA 06075 1.75
SAN JOAQUIN................................. CA 06077 1.40
SAN LUIS OBISPO............................. CA 06079 2.20
SAN MATEO................................... CA 06081 1.75
SANTA BARBARA............................... CA 06083 2.20
SANTA CLARA................................. CA 06085 1.75
SANTA CRUZ.................................. CA 06087 1.75
SHASTA...................................... CA 06089 1.80
SIERRA...................................... CA 06091 1.40
SISKIYOU.................................... CA 06093 1.80
SOLANO...................................... CA 06095 1.65
SONOMA...................................... CA 06097 1.80
STANISLAUS.................................. CA 06099 1.40
SUTTER...................................... CA 06101 1.65
TEHAMA...................................... CA 06103 1.80
TRINITY..................................... CA 06105 1.80
TULARE...................................... CA 06107 1.40
TUOLUMNE.................................... CA 06109 1.20
VENTURA..................................... CA 06111 2.20
YOLO........................................ CA 06113 1.65
YUBA........................................ CA 06115 1.65
ADAMS....................................... CO 08001 1.55
ALAMOSA..................................... CO 08003 1.90
ARAPAHOE.................................... CO 08005 1.55
ARCHULETA................................... CO 08007 2.20
BACA........................................ CO 08009 1.90
BENT........................................ CO 08011 1.80
BOULDER..................................... CO 08013 1.55
CHAFFEE..................................... CO 08015 1.90
CHEYENNE.................................... CO 08017 1.60
CLEAR CREEK................................. CO 08019 1.55
CONEJOS..................................... CO 08021 1.90
COSTILLA.................................... CO 08023 1.90
CROWLEY..................................... CO 08025 1.80
CUSTER...................................... CO 08027 1.90
DELTA....................................... CO 08029 2.20
DENVER...................................... CO 08031 1.55
DOLORES..................................... CO 08033 2.20
DOUGLAS..................................... CO 08035 1.55
EAGLE....................................... CO 08037 1.80
ELBERT...................................... CO 08039 1.55
EL PASO..................................... CO 08041 1.80
FREMONT..................................... CO 08043 1.90
GARFIELD.................................... CO 08045 1.90
GILPIN...................................... CO 08047 1.55
GRAND....................................... CO 08049 1.55
GUNNISON.................................... CO 08051 1.90
HINSDALE.................................... CO 08053 2.20
HUERFANO.................................... CO 08055 1.90
JACKSON..................................... CO 08057 1.55
JEFFERSON................................... CO 08059 1.55
KIOWA....................................... CO 08061 1.80
KIT CARSON.................................. CO 08063 1.60
LAKE........................................ CO 08065 1.90
LA PLATA.................................... CO 08067 2.20
LARIMER..................................... CO 08069 1.55
LAS ANIMAS.................................. CO 08071 1.90
LINCOLN..................................... CO 08073 1.60
LOGAN....................................... CO 08075 1.40
MESA........................................ CO 08077 2.20
MINERAL..................................... CO 08079 2.20
[[Page 16182]]
MOFFAT...................................... CO 08081 1.80
MONTEZUMA................................... CO 08083 2.20
MONTROSE.................................... CO 08085 2.20
MORGAN...................................... CO 08087 1.40
OTERO....................................... CO 08089 1.80
OURAY....................................... CO 08091 2.20
PARK........................................ CO 08093 1.80
PHILLIPS.................................... CO 08095 1.50
PITKIN...................................... CO 08097 1.90
PROWERS..................................... CO 08099 1.80
PUEBLO...................................... CO 08101 1.80
RIO BLANCO.................................. CO 08103 1.90
RIO GRANDE.................................. CO 08105 1.90
ROUTT....................................... CO 08107 1.80
SAGUACHE.................................... CO 08109 1.90
SAN JUAN.................................... CO 08111 2.20
SAN MIGUEL.................................. CO 08113 2.20
SEDGWICK.................................... CO 08115 1.40
SUMMIT...................................... CO 08117 1.80
TELLER...................................... CO 08119 1.80
WASHINGTON.................................. CO 08121 1.50
WELD........................................ CO 08123 1.40
YUMA........................................ CO 08125 1.50
FAIRFIELD................................... CT 09001 2.50
HARTFORD.................................... CT 09003 2.50
LITCHFIELD.................................. CT 09005 2.30
MIDDLESEX................................... CT 09007 2.50
NEW HAVEN................................... CT 09009 2.30
NEW LONDON.................................. CT 09011 2.60
TOLLAND..................................... CT 09013 2.50
WINDHAM..................................... CT 09015 2.60
KENT........................................ DE 10001 2.20
NEW CASTLE.................................. DE 10003 2.20
SUSSEX...................................... DE 10005 2.20
DISTRICT OF COLUMBIA........................ DC 11001 2.05
ALACHUA..................................... FL 12001 4.00
BAKER....................................... FL 12003 3.80
BAY......................................... FL 12005 3.40
BRADFORD.................................... FL 12007 3.80
BREVARD..................................... FL 12009 4.20
BROWARD..................................... FL 12011 4.75
CALHOUN..................................... FL 12013 3.40
CHARLOTTE................................... FL 12015 4.40
CITRUS...................................... FL 12017 4.00
CLAY........................................ FL 12019 3.80
COLLIER..................................... FL 12021 4.75
COLUMBIA.................................... FL 12023 3.80
DADE........................................ FL 12025 4.75
DE SOTO..................................... FL 12027 4.40
DIXIE....................................... FL 12029 3.80
DUVAL....................................... FL 12031 3.80
ESCAMBIA.................................... FL 12033 3.30
FLAGLER..................................... FL 12035 4.00
FRANKLIN.................................... FL 12037 3.40
GADSDEN..................................... FL 12039 3.40
GILCHRIST................................... FL 12041 3.80
GLADES...................................... FL 12043 4.40
GULF........................................ FL 12045 3.40
HAMILTON.................................... FL 12047 3.60
HARDEE...................................... FL 12049 4.40
HENDRY...................................... FL 12051 4.75
HERNANDO.................................... FL 12053 4.20
HIGHLANDS................................... FL 12055 4.40
HILLSBOROUGH................................ FL 12057 4.20
HOLMES...................................... FL 12059 3.30
INDIAN RIVER................................ FL 12061 4.40
JACKSON..................................... FL 12063 3.30
JEFFERSON................................... FL 12065 3.50
LAFAYETTE................................... FL 12067 3.80
LAKE........................................ FL 12069 4.20
LEE......................................... FL 12071 4.75
LEON........................................ FL 12073 3.50
[[Page 16183]]
LEVY........................................ FL 12075 4.00
LIBERTY..................................... FL 12077 3.40
MADISON..................................... FL 12079 3.60
MANATEE..................................... FL 12081 4.40
MARION...................................... FL 12083 4.00
MARTIN...................................... FL 12085 4.40
MONROE...................................... FL 12087 4.75
NASSAU...................................... FL 12089 3.80
OKALOOSA.................................... FL 12091 3.30
OKEECHOBEE.................................. FL 12093 4.40
ORANGE...................................... FL 12095 4.20
OSCEOLA..................................... FL 12097 4.20
PALM BEACH.................................. FL 12099 4.75
PASCO....................................... FL 12101 4.20
PINELLAS.................................... FL 12103 4.20
POLK........................................ FL 12105 4.20
PUTNAM...................................... FL 12107 4.00
ST. JOHNS................................... FL 12109 3.80
ST. LUCIE................................... FL 12111 4.40
SANTA ROSA.................................. FL 12113 3.30
SARASOTA.................................... FL 12115 4.40
SEMINOLE.................................... FL 12117 4.20
SUMTER...................................... FL 12119 4.20
SUWANNEE.................................... FL 12121 3.80
TAYLOR...................................... FL 12123 3.60
UNION....................................... FL 12125 3.80
VOLUSIA..................................... FL 12127 4.20
WAKULLA..................................... FL 12129 3.50
WALTON...................................... FL 12131 3.30
WASHINGTON.................................. FL 12133 3.40
APPLING..................................... GA 13001 3.30
ATKINSON.................................... GA 13003 3.30
BACON....................................... GA 13005 3.30
BAKER....................................... GA 13007 3.30
BALDWIN..................................... GA 13009 2.80
BANKS....................................... GA 13011 2.70
BARROW...................................... GA 13013 2.90
BARTOW...................................... GA 13015 2.70
BEN HILL.................................... GA 13017 3.30
BERRIEN..................................... GA 13019 3.30
BIBB........................................ GA 13021 2.80
BLECKLEY.................................... GA 13023 3.10
BRANTLEY.................................... GA 13025 3.60
BROOKS...................................... GA 13027 3.50
BRYAN....................................... GA 13029 3.30
BULLOCH..................................... GA 13031 3.20
BURKE....................................... GA 13033 2.80
BUTTS....................................... GA 13035 2.90
CALHOUN..................................... GA 13037 3.20
CAMDEN...................................... GA 13039 3.60
CANDLER..................................... GA 13043 3.20
CARROLL..................................... GA 13045 2.90
CATOOSA..................................... GA 13047 2.55
CHARLTON.................................... GA 13049 3.60
CHATHAM..................................... GA 13051 3.30
CHATTAHOOCHEE............................... GA 13053 3.10
CHATTOOGA................................... GA 13055 2.55
CHEROKEE.................................... GA 13057 2.70
CLARKE...................................... GA 13059 2.80
CLAY........................................ GA 13061 3.20
CLAYTON..................................... GA 13063 2.90
CLINCH...................................... GA 13065 3.60
COBB........................................ GA 13067 2.90
COFFEE...................................... GA 13069 3.30
COLQUITT.................................... GA 13071 3.30
COLUMBIA.................................... GA 13073 2.80
COOK........................................ GA 13075 3.30
COWETA...................................... GA 13077 2.90
CRAWFORD.................................... GA 13079 2.90
CRISP....................................... GA 13081 3.20
DADE........................................ GA 13083 2.55
DAWSON...................................... GA 13085 2.70
[[Page 16184]]
DECATUR..................................... GA 13087 3.30
DE KALB..................................... GA 13089 2.90
DODGE....................................... GA 13091 3.20
DOOLY....................................... GA 13093 3.20
DOUGHERTY................................... GA 13095 3.20
DOUGLAS..................................... GA 13097 2.90
EARLY....................................... GA 13099 3.30
ECHOLS...................................... GA 13101 3.60
EFFINGHAM................................... GA 13103 3.20
ELBERT...................................... GA 13105 2.80
EMANUEL..................................... GA 13107 3.10
EVANS....................................... GA 13109 3.20
FANNIN...................................... GA 13111 2.55
FAYETTE..................................... GA 13113 2.90
FLOYD....................................... GA 13115 2.55
FORSYTH..................................... GA 13117 2.90
FRANKLIN.................................... GA 13119 2.70
FULTON...................................... GA 13121 2.90
GILMER...................................... GA 13123 2.55
GLASCOCK.................................... GA 13125 2.80
GLYNN....................................... GA 13127 3.60
GORDON...................................... GA 13129 2.55
GRADY....................................... GA 13131 3.30
GREENE...................................... GA 13133 2.80
GWINNETT.................................... GA 13135 2.90
HABERSHAM................................... GA 13137 2.70
HALL........................................ GA 13139 2.90
HANCOCK..................................... GA 13141 2.80
HARALSON.................................... GA 13143 2.70
HARRIS...................................... GA 13145 2.90
HART........................................ GA 13147 2.70
HEARD....................................... GA 13149 2.90
HENRY....................................... GA 13151 2.90
HOUSTON..................................... GA 13153 3.10
IRWIN....................................... GA 13155 3.30
JACKSON..................................... GA 13157 2.80
JASPER...................................... GA 13159 2.80
JEFF DAVIS.................................. GA 13161 3.30
JEFFERSON................................... GA 13163 2.80
JENKINS..................................... GA 13165 3.10
JOHNSON..................................... GA 13167 3.10
JONES....................................... GA 13169 2.80
LAMAR....................................... GA 13171 2.90
LANIER...................................... GA 13173 3.60
LAURENS..................................... GA 13175 3.10
LEE......................................... GA 13177 3.20
LIBERTY..................................... GA 13179 3.30
LINCOLN..................................... GA 13181 2.80
LONG........................................ GA 13183 3.30
LOWNDES..................................... GA 13185 3.60
LUMPKIN..................................... GA 13187 2.70
MCDUFFIE.................................... GA 13189 2.80
MCINTOSH.................................... GA 13191 3.30
MACON....................................... GA 13193 3.10
MADISON..................................... GA 13195 2.80
MARION...................................... GA 13197 3.10
MERIWETHER.................................. GA 13199 2.90
MILLER...................................... GA 13201 3.30
MITCHELL.................................... GA 13205 3.30
MONROE...................................... GA 13207 2.90
MONTGOMERY.................................. GA 13209 3.20
MORGAN...................................... GA 13211 2.80
MURRAY...................................... GA 13213 2.55
MUSCOGEE.................................... GA 13215 3.10
NEWTON...................................... GA 13217 2.80
OCONEE...................................... GA 13219 2.80
OGLETHORPE.................................. GA 13221 2.80
PAULDING.................................... GA 13223 2.90
PEACH....................................... GA 13225 2.90
PICKENS..................................... GA 13227 2.70
PIERCE...................................... GA 13229 3.30
PIKE........................................ GA 13231 2.90
[[Page 16185]]
POLK........................................ GA 13233 2.70
PULASKI..................................... GA 13235 3.20
PUTNAM...................................... GA 13237 2.80
QUITMAN..................................... GA 13239 3.20
RABUN....................................... GA 13241 2.55
RANDOLPH.................................... GA 13243 3.20
RICHMOND.................................... GA 13245 2.80
ROCKDALE.................................... GA 13247 2.90
SCHLEY...................................... GA 13249 3.10
SCREVEN..................................... GA 13251 3.10
SEMINOLE.................................... GA 13253 3.30
SPALDING.................................... GA 13255 2.90
STEPHENS.................................... GA 13257 2.70
STEWART..................................... GA 13259 3.10
SUMTER...................................... GA 13261 3.20
TALBOT...................................... GA 13263 2.90
TALIAFERRO.................................. GA 13265 2.80
TATTNALL.................................... GA 13267 3.20
TAYLOR...................................... GA 13269 2.90
TELFAIR..................................... GA 13271 3.20
TERRELL..................................... GA 13273 3.20
THOMAS...................................... GA 13275 3.50
TIFT........................................ GA 13277 3.30
TOOMBS...................................... GA 13279 3.20
TOWNS....................................... GA 13281 2.55
TREUTLEN.................................... GA 13283 3.20
TROUP....................................... GA 13285 2.90
TURNER...................................... GA 13287 3.30
TWIGGS...................................... GA 13289 2.80
UNION....................................... GA 13291 2.55
UPSON....................................... GA 13293 2.90
WALKER...................................... GA 13295 2.55
WALTON...................................... GA 13297 2.80
WARE........................................ GA 13299 3.60
WARREN...................................... GA 13301 2.80
WASHINGTON.................................. GA 13303 2.80
WAYNE....................................... GA 13305 3.30
WEBSTER..................................... GA 13307 3.20
WHEELER..................................... GA 13309 3.20
WHITE....................................... GA 13311 2.70
WHITFIELD................................... GA 13313 2.55
WILCOX...................................... GA 13315 3.20
WILKES...................................... GA 13317 2.80
WILKINSON................................... GA 13319 2.80
WORTH....................................... GA 13321 3.30
ADA......................................... ID 16001 1.35
ADAMS....................................... ID 16003 1.35
BANNOCK..................................... ID 16005 1.40
BEAR LAKE................................... ID 16007 1.40
BENEWAH..................................... ID 16009 1.35
BINGHAM..................................... ID 16011 1.35
BLAINE...................................... ID 16013 1.35
BOISE....................................... ID 16015 1.35
BONNER...................................... ID 16017 1.35
BONNEVILLE.................................. ID 16019 1.35
BOUNDARY.................................... ID 16021 1.35
BUTTE....................................... ID 16023 1.35
CAMAS....................................... ID 16025 1.35
CANYON...................................... ID 16027 1.35
CARIBOU..................................... ID 16029 1.40
CASSIA...................................... ID 16031 1.40
CLARK....................................... ID 16033 1.40
CLEARWATER.................................. ID 16035 1.40
CUSTER...................................... ID 16037 1.35
ELMORE...................................... ID 16039 1.35
FRANKLIN.................................... ID 16041 1.40
FREMONT..................................... ID 16043 1.40
GEM......................................... ID 16045 1.35
GOODING..................................... ID 16047 1.35
IDAHO....................................... ID 16049 1.40
JEFFERSON................................... ID 16051 1.35
JEROME...................................... ID 16053 1.35
[[Page 16186]]
KOOTENAI.................................... ID 16055 1.35
LATAH....................................... ID 16057 1.35
LEMHI....................................... ID 16059 1.40
LEWIS....................................... ID 16061 1.35
LINCOLN..................................... ID 16063 1.35
MADISON..................................... ID 16065 1.40
MINIDOKA.................................... ID 16067 1.35
NEZ PERCE................................... ID 16069 1.35
ONEIDA...................................... ID 16071 1.40
OWYHEE...................................... ID 16073 1.35
PAYETTE..................................... ID 16075 1.35
POWER....................................... ID 16077 1.40
SHOSHONE.................................... ID 16079 1.40
TETON....................................... ID 16081 1.40
TWIN FALLS.................................. ID 16083 1.35
VALLEY...................................... ID 16085 1.35
WASHINGTON.................................. ID 16087 1.35
ADAMS....................................... IL 17001 2.00
ALEXANDER................................... IL 17003 2.10
BOND........................................ IL 17005 2.00
BOONE....................................... IL 17007 1.95
BROWN....................................... IL 17009 2.00
BUREAU...................................... IL 17011 2.00
CALHOUN..................................... IL 17013 2.00
CARROLL..................................... IL 17015 1.95
CASS........................................ IL 17017 2.00
CHAMPAIGN................................... IL 17019 2.00
CHRISTIAN................................... IL 17021 2.00
CLARK....................................... IL 17023 2.00
CLAY........................................ IL 17025 2.00
CLINTON..................................... IL 17027 2.00
COLES....................................... IL 17029 2.00
COOK........................................ IL 17031 1.95
CRAWFORD.................................... IL 17033 2.00
CUMBERLAND.................................. IL 17035 2.00
DE KALB..................................... IL 17037 1.95
DE WITT..................................... IL 17039 2.00
DOUGLAS..................................... IL 17041 2.00
DU PAGE..................................... IL 17043 1.95
EDGAR....................................... IL 17045 2.00
EDWARDS..................................... IL 17047 2.00
EFFINGHAM................................... IL 17049 2.00
FAYETTE..................................... IL 17051 2.00
FORD........................................ IL 17053 2.00
FRANKLIN.................................... IL 17055 2.10
FULTON...................................... IL 17057 2.00
GALLATIN.................................... IL 17059 2.10
GREENE...................................... IL 17061 2.00
GRUNDY...................................... IL 17063 2.00
HAMILTON.................................... IL 17065 2.10
HANCOCK..................................... IL 17067 2.00
HARDIN...................................... IL 17069 2.10
HENDERSON................................... IL 17071 2.00
HENRY....................................... IL 17073 2.00
IROQUOIS.................................... IL 17075 2.00
JACKSON..................................... IL 17077 2.10
JASPER...................................... IL 17079 2.00
JEFFERSON................................... IL 17081 2.00
JERSEY...................................... IL 17083 2.00
JO DAVIESS.................................. IL 17085 1.95
JOHNSON..................................... IL 17087 2.10
KANE........................................ IL 17089 1.95
KANKAKEE.................................... IL 17091 2.00
KENDALL..................................... IL 17093 2.00
KNOX........................................ IL 17095 2.00
LAKE........................................ IL 17097 1.95
LA SALLE.................................... IL 17099 2.00
LAWRENCE.................................... IL 17101 2.00
LEE......................................... IL 17103 1.95
LIVINGSTON.................................. IL 17105 2.00
LOGAN....................................... IL 17107 2.00
MCDONOUGH................................... IL 17109 2.00
[[Page 16187]]
MCHENRY..................................... IL 17111 1.95
MCLEAN...................................... IL 17113 2.00
MACON....................................... IL 17115 2.00
MACOUPIN.................................... IL 17117 2.00
MADISON..................................... IL 17119 2.00
MARION...................................... IL 17121 2.00
MARSHALL.................................... IL 17123 2.00
MASON....................................... IL 17125 2.00
MASSAC...................................... IL 17127 2.10
MENARD...................................... IL 17129 2.00
MERCER...................................... IL 17131 2.00
MONROE...................................... IL 17133 2.10
MONTGOMERY.................................. IL 17135 2.00
MORGAN...................................... IL 17137 2.00
MOULTRIE.................................... IL 17139 2.00
OGLE........................................ IL 17141 1.95
PEORIA...................................... IL 17143 2.00
PERRY....................................... IL 17145 2.10
PIATT....................................... IL 17147 2.00
PIKE........................................ IL 17149 2.00
POPE........................................ IL 17151 2.10
PULASKI..................................... IL 17153 2.10
PUTNAM...................................... IL 17155 2.00
RANDOLPH.................................... IL 17157 2.10
RICHLAND.................................... IL 17159 2.00
ROCK ISLAND................................. IL 17161 2.00
ST. CLAIR................................... IL 17163 2.10
SALINE...................................... IL 17165 2.10
SANGAMON.................................... IL 17167 2.00
SCHUYLER.................................... IL 17169 2.00
SCOTT....................................... IL 17171 2.00
SHELBY...................................... IL 17173 2.00
STARK....................................... IL 17175 2.00
STEPHENSON.................................. IL 17177 1.95
TAZEWELL.................................... IL 17179 2.00
UNION....................................... IL 17181 2.10
VERMILION................................... IL 17183 2.00
WABASH...................................... IL 17185 2.00
WARREN...................................... IL 17187 2.00
WASHINGTON.................................. IL 17189 2.10
WAYNE....................................... IL 17191 2.00
WHITE....................................... IL 17193 2.00
WHITESIDE................................... IL 17195 1.95
WILL........................................ IL 17197 2.00
WILLIAMSON.................................. IL 17199 2.10
WINNEBAGO................................... IL 17201 1.95
WOODFORD.................................... IL 17203 2.00
ADAMS....................................... IN 18001 2.00
ALLEN....................................... IN 18003 1.80
BARTHOLOMEW................................. IN 18005 2.05
BENTON...................................... IN 18007 2.00
BLACKFORD................................... IN 18009 2.00
BOONE....................................... IN 18011 2.00
BROWN....................................... IN 18013 2.05
CARROLL..................................... IN 18015 2.00
CASS........................................ IN 18017 2.00
CLARK....................................... IN 18019 1.95
CLAY........................................ IN 18021 2.00
CLINTON..................................... IN 18023 2.00
CRAWFORD.................................... IN 18025 2.10
DAVIESS..................................... IN 18027 2.05
DEARBORN.................................... IN 18029 1.95
DECATUR..................................... IN 18031 1.95
DE KALB..................................... IN 18033 1.80
DELAWARE.................................... IN 18035 2.00
DUBOIS...................................... IN 18037 2.10
ELKHART..................................... IN 18039 1.80
FAYETTE..................................... IN 18041 2.00
FLOYD....................................... IN 18043 1.95
FOUNTAIN.................................... IN 18045 2.00
FRANKLIN.................................... IN 18047 1.95
FULTON...................................... IN 18049 2.00
[[Page 16188]]
GIBSON...................................... IN 18051 2.10
GRANT....................................... IN 18053 2.00
GREENE...................................... IN 18055 2.05
HAMILTON.................................... IN 18057 2.00
HANCOCK..................................... IN 18059 2.00
HARRISON.................................... IN 18061 1.95
HENDRICKS................................... IN 18063 2.00
HENRY....................................... IN 18065 2.00
HOWARD...................................... IN 18067 2.00
HUNTINGTON.................................. IN 18069 2.00
JACKSON..................................... IN 18071 2.05
JASPER...................................... IN 18073 2.00
JAY......................................... IN 18075 2.00
JEFFERSON................................... IN 18077 1.95
JENNINGS.................................... IN 18079 1.95
JOHNSON..................................... IN 18081 2.00
KNOX........................................ IN 18083 2.05
KOSCIUSKO................................... IN 18085 1.80
LAGRANGE.................................... IN 18087 1.80
LAKE........................................ IN 18089 1.95
LA PORTE.................................... IN 18091 1.80
LAWRENCE.................................... IN 18093 2.05
MADISON..................................... IN 18095 2.00
MARION...................................... IN 18097 2.00
MARSHALL.................................... IN 18099 1.80
MARTIN...................................... IN 18101 2.05
MIAMI....................................... IN 18103 2.00
MONROE...................................... IN 18105 2.05
MONTGOMERY.................................. IN 18107 2.00
MORGAN...................................... IN 18109 2.00
NEWTON...................................... IN 18111 2.00
NOBLE....................................... IN 18113 1.80
OHIO........................................ IN 18115 1.95
ORANGE...................................... IN 18117 2.05
OWEN........................................ IN 18119 2.00
PARKE....................................... IN 18121 2.00
PERRY....................................... IN 18123 2.10
PIKE........................................ IN 18125 2.10
PORTER...................................... IN 18127 1.95
POSEY....................................... IN 18129 2.10
PULASKI..................................... IN 18131 2.00
PUTNAM...................................... IN 18133 2.00
RANDOLPH.................................... IN 18135 2.00
RIPLEY...................................... IN 18137 1.95
RUSH........................................ IN 18139 2.00
ST. JOSEPH.................................. IN 18141 1.80
SCOTT....................................... IN 18143 1.95
SHELBY...................................... IN 18145 2.00
SPENCER..................................... IN 18147 2.10
STARKE...................................... IN 18149 1.80
STEUBEN..................................... IN 18151 1.80
SULLIVAN.................................... IN 18153 2.05
SWITZERLAND................................. IN 18155 1.95
TIPPECANOE.................................. IN 18157 2.00
TIPTON...................................... IN 18159 2.00
UNION....................................... IN 18161 2.00
VANDERBURGH................................. IN 18163 2.10
VERMILLION.................................. IN 18165 2.00
VIGO........................................ IN 18167 2.00
WABASH...................................... IN 18169 2.00
WARREN...................................... IN 18171 2.00
WARRICK..................................... IN 18173 2.10
WASHINGTON.................................. IN 18175 1.95
WAYNE....................................... IN 18177 2.00
WELLS....................................... IN 18179 2.00
WHITE....................................... IN 18181 2.00
WHITLEY..................................... IN 18183 1.80
ADAIR....................................... IA 19001 1.90
ADAMS....................................... IA1 19003 1.90
ALLAMAKEE................................... IA 19005 1.70
APPANOOSE................................... IA 19007 1.90
AUDUBON..................................... IA 19009 1.90
[[Page 16189]]
BENTON...................................... IA 19011 1.95
BLACK HAWK.................................. IA 19013 1.80
BOONE....................................... IA 19015 1.90
BREMER...................................... IA 19017 1.80
BUCHANAN.................................... IA 19019 1.80
BUENA VISTA................................. IA 19021 1.80
BUTLER...................................... IA 19023 1.80
CALHOUN..................................... IA 19025 1.80
CARROLL..................................... IA 19027 1.90
CASS........................................ IA 19029 1.90
CEDAR....................................... IA 19031 1.95
CERRO GORDO................................. IA 19033 1.70
CHEROKEE.................................... IA 19035 1.80
CHICKASAW................................... IA 19037 1.70
CLARKE...................................... IA 19039 1.90
CLAY........................................ IA 19041 1.70
CLAYTON..................................... IA 19043 1.70
CLINTON..................................... IA 19045 1.95
CRAWFORD.................................... IA 19047 1.90
DALLAS...................................... IA 19049 1.90
DAVIS....................................... IA 19051 1.90
DECATUR..................................... IA 19053 1.90
DELAWARE.................................... IA 19055 1.80
DES MOINES.................................. IA 19057 1.90
DICKINSON................................... IA 19059 1.70
DUBUQUE..................................... IA 19061 1.80
EMMET....................................... IA 19063 1.70
FAYETTE..................................... IA 19065 1.70
FLOYD....................................... IA 19067 1.70
FRANKLIN.................................... IA 19069 1.80
FREMONT..................................... IA 19071 1.90
GREENE...................................... IA 19073 1.90
GRUNDY...................................... IA1 9075 1.80
GUTHRIE..................................... IA 19077 1.90
HAMILTON.................................... IA 19079 1.80
HANCOCK..................................... IA 19081 1.70
HARDIN...................................... IA 19083 1.80
HARRISON.................................... IA 19085 1.90
HENRY....................................... IA 19087 1.90
HOWARD...................................... IA 19089 1.70
HUMBOLDT.................................... IA 19091 1.80
IDA......................................... IA 19093 1.80
IOWA........................................ IA 19095 1.95
JACKSON..................................... IA 19097 1.95
JASPER...................................... IA 19099 1.95
JEFFERSON................................... IA 19101 1.90
JOHNSON..................................... IA 19103 1.95
JONES....................................... IA 19105 1.95
KEOKUK...................................... IA 19107 1.90
KOSSUTH..................................... IA 19109 1.70
LEE......................................... IA 19111 1.90
LINN........................................ IA 19113 1.95
LOUISA...................................... IA 19115 1.90
LUCAS....................................... IA 19117 1.90
LYON........................................ IA 19119 1.70
MADISON..................................... IA 19121 1.90
MAHASKA..................................... IA 19123 1.90
MARION...................................... IA 19125 1.90
MARSHALL.................................... IA 19127 1.95
MILLS....................................... IA 19129 1.90
MITCHELL.................................... IA 19131 1.70
MONONA...................................... IA 19133 1.80
MONROE...................................... IA 19135 1.90
MONTGOMERY.................................. IA 19137 1.90
MUSCATINE................................... IA 19139 1.90
O'BRIEN..................................... IA 19141 1.70
OSCEOLA..................................... IA 19143 1.70
PAGE........................................ IA 19145 1.90
PALO ALTO................................... IA 19147 1.70
PLYMOUTH.................................... IA 19149 1.70
POCAHONTAS.................................. IA 19151 1.80
POLK........................................ IA 19153 1.90
[[Page 16190]]
POTTAWATTAMIE............................... IA 19155 1.90
POWESHIEK................................... IA 19157 1.95
RINGGOLD.................................... IA 19159 1.90
SAC......................................... IA 19161 1.80
SCOTT....................................... IA 19163 1.95
SHELBY...................................... IA 19165 1.90
SIOUX....................................... IA 19167 1.70
STORY....................................... IA 19169 1.95
TAMA........................................ IA 19171 1.95
TAYLOR...................................... IA 19173 1.90
UNION....................................... IA 19175 1.90
VAN BUREN................................... IA 19177 1.90
WAPELLO..................................... IA 19179 1.90
WARREN...................................... IA 19181 1.90
WASHINGTON.................................. IA 19183 1.90
WAYNE....................................... IA 19185 1.90
WEBSTER..................................... IA 19187 1.80
WINNEBAGO................................... IA 19189 1.70
WINNESHIEK.................................. IA 19191 1.70
WOODBURY.................................... IA 19193 1.80
WORTH....................................... IA 19195 1.70
WRIGHT...................................... IA 19197 1.80
ALLEN....................................... KS 20001 1.70
ANDERSON.................................... KS 20003 1.70
ATCHISON.................................... KS 20005 1.90
BARBER...................................... KS 20007 1.90
BARTON...................................... KS 20009 1.90
BOURBON..................................... KS 20011 1.70
BROWN....................................... KS 20013 1.90
BUTLER...................................... KS 20015 1.70
CHASE....................................... KS 20017 1.70
CHAUTAUQUA.................................. KS 20019 1.70
CHEROKEE.................................... KS 20021 1.70
CHEYENNE.................................... KS 20023 1.60
CLARK....................................... KS 20025 1.90
CLAY........................................ KS 20027 1.90
CLOUD....................................... KS 20029 1.80
COFFEY...................................... KS 20031 1.70
COMANCHE.................................... KS 20033 1.90
COWLEY...................................... KS 20035 1.70
CRAWFORD.................................... KS 20037 1.70
DECATUR..................................... KS 20039 1.60
DICKINSON................................... KS 20041 1.90
DONIPHAN.................................... KS 20043 1.90
DOUGLAS..................................... KS 20045 1.70
EDWARDS..................................... KS 20047 1.90
ELK......................................... KS 20049 1.70
ELLIS....................................... KS 20051 1.80
ELLSWORTH................................... KS 20053 1.90
FINNEY...................................... KS 20055 1.80
FORD........................................ KS 20057 1.90
FRANKLIN.................................... KS 20059 1.70
GEARY....................................... KS 20061 1.90
GOVE........................................ KS 20063 1.60
GRAHAM...................................... KS 20065 1.60
GRANT....................................... KS 20067 1.90
GRAY........................................ KS 20069 1.90
GREELEY..................................... KS 20071 1.80
GREENWOOD................................... KS 20073 1.70
HAMILTON.................................... KS 20075 1.80
HARPER...................................... KS 20077 1.70
HARVEY...................................... KS 20079 1.70
HASKELL..................................... KS 20081 1.90
HODGEMAN.................................... KS 20083 1.80
JACKSON..................................... KS 20085 1.90
JEFFERSON................................... KS 20087 1.90
JEWELL...................................... KS 20089 1.80
JOHNSON..................................... KS 20091 1.90
KEARNY...................................... KS 20093 1.80
KINGMAN..................................... KS 20095 1.70
KIOWA....................................... KS 20097 1.90
LABETTE..................................... KS 20099 1.70
[[Page 16191]]
LANE........................................ KS 20101 1.80
LEAVENWORTH................................. KS 20103 1.90
LINCOLN..................................... KS 20105 1.80
LINN........................................ KS 20107 1.70
LOGAN....................................... KS 20109 1.60
LYON........................................ KS 20111 1.70
MCPHERSON................................... KS 20113 1.90
MARION...................................... KS 20115 1.70
MARSHALL.................................... KS 20117 1.90
MEADE....................................... KS 20119 1.90
MIAMI....................................... KS 20121 1.70
MITCHELL.................................... KS 20123 1.80
MONTGOMERY.................................. KS 20125 1.70
MORRIS...................................... KS 20127 1.90
MORTON...................................... KS 20129 1.90
NEMAHA...................................... KS 20131 1.90
NEOSHO...................................... KS 20133 1.70
NESS........................................ KS 20135 1.80
NORTON...................................... KS 20137 1.60
OSAGE....................................... KS 20139 1.70
OSBORNE..................................... KS 20141 1.80
OTTAWA...................................... KS 20143 1.90
PAWNEE...................................... KS 20145 1.90
PHILLIPS.................................... KS 20147 1.60
POTTAWATOMIE................................ KS 20149 1.90
PRATT....................................... KS 20151 1.90
RAWLINS..................................... KS 20153 1.60
RENO........................................ KS 20155 1.70
REPUBLIC.................................... KS 20157 1.80
RICE........................................ KS 20159 1.90
RILEY....................................... KS 20161 1.90
ROOKS....................................... KS 20163 1.60
RUSH........................................ KS 20165 1.80
RUSSELL..................................... KS 20167 1.80
SALINE...................................... KS 20169 1.90
SCOTT....................................... KS 20171 1.80
SEDGWICK.................................... KS 20173 1.70
SEWARD...................................... KS 20175 1.90
SHAWNEE..................................... KS 20177 1.90
SHERIDAN.................................... KS 20179 1.60
SHERMAN..................................... KS 20181 1.60
SMITH....................................... KS 20183 1.60
STAFFORD.................................... KS 20185 1.90
STANTON..................................... KS 20187 1.90
STEVENS..................................... KS 20189 1.90
SUMNER...................................... KS 20191 1.70
THOMAS...................................... KS 20193 1.60
TREGO....................................... KS 20195 1.80
WABAUNSEE................................... KS 20197 1.90
WALLACE..................................... KS 20199 1.60
WASHINGTON.................................. KS 20201 1.90
WICHITA..................................... KS 20203 1.80
WILSON...................................... KS 20205 1.70
WOODSON..................................... KS 20207 1.70
WYANDOTTE................................... KS 20209 1.90
ADAIR....................................... KY 21001 1.95
ALLEN....................................... KY 21003 2.05
ANDERSON.................................... KY 21005 1.95
BALLARD..................................... KY 21007 2.30
BARREN...................................... KY 21009 2.05
BATH........................................ KY 21011 2.05
BELL........................................ KY 21013 2.15
BOONE....................................... KY 21015 1.95
BOURBON..................................... KY 21017 2.05
BOYD........................................ KY 21019 2.20
BOYLE....................................... KY 21021 1.95
BRACKEN..................................... KY 21023 2.05
BREATHITT................................... KY 21025 2.15
BRECKINRIDGE................................ KY 21027 2.10
BULLITT..................................... KY 21029 1.95
BUTLER...................................... KY 21031 2.20
CALDWELL.................................... KY 21033 2.30
[[Page 16192]]
CALLOWAY.................................... KY 21035 2.30
CAMPBELL.................................... KY 21037 2.05
CARLISLE.................................... KY 21039 2.30
CARROLL..................................... KY 21041 1.95
CARTER...................................... KY 21043 2.20
CASEY....................................... KY 21045 1.95
CHRISTIAN................................... KY 21047 2.20
CLARK....................................... KY 21049 2.05
CLAY........................................ KY 21051 2.15
CLINTON..................................... KY 21053 2.15
CRITTENDEN.................................. KY 21055 2.30
CUMBERLAND.................................. KY 21057 2.05
DAVIESS..................................... KY 21059 2.10
EDMONSON.................................... KY 21061 2.05
ELLIOTT..................................... KY 21063 2.05
ESTILL...................................... KY 21065 2.05
FAYETTE..................................... KY 21067 2.05
FLEMING..................................... KY 21069 2.05
FLOYD....................................... KY 21071 2.15
FRANKLIN.................................... KY 21073 1.95
FULTON...................................... KY 21075 2.30
GALLATIN.................................... KY 21077 1.95
GARRARD..................................... KY 21079 1.95
GRANT....................................... KY 21081 1.95
GRAVES...................................... KY 21083 2.30
GRAYSON..................................... KY 21085 2.10
GREEN....................................... KY 21087 1.95
GREENUP..................................... KY 21089 2.20
HANCOCK..................................... KY 21091 2.10
HARDIN...................................... KY 21093 1.95
HARLAN...................................... KY 21095 2.15
HARRISON.................................... KY 21097 2.05
HART........................................ KY 21099 1.95
HENDERSON................................... KY 21101 2.10
HENRY....................................... KY 21103 1.95
HICKMAN..................................... KY 21105 2.30
HOPKINS..................................... KY 21107 2.20
JACKSON..................................... KY 21109 1.95
JEFFERSON................................... KY 21111 1.95
JESSAMINE................................... KY 21113 1.95
JOHNSON..................................... KY 21115 2.15
KENTON...................................... KY 21117 2.05
KNOTT....................................... KY 21119 2.15
KNOX........................................ KY 21121 2.15
LARUE....................................... KY 21123 1.95
LAUREL...................................... KY 21125 2.15
LAWRENCE.................................... KY 21127 2.15
LEE......................................... KY 21129 2.05
LESLIE...................................... KY 21131 2.15
LETCHER..................................... KY 21133 2.15
LEWIS....................................... KY 21135 2.05
LINCOLN..................................... KY 21137 1.95
LIVINGSTON.................................. KY 21139 2.30
LOGAN....................................... KY 21141 2.20
LYON........................................ KY 21143 2.30
MCCRACKEN................................... KY 21145 2.30
MCCREARY.................................... KY 21147 2.15
MCLEAN...................................... KY 21149 2.10
MADISON..................................... KY 21151 2.05
MAGOFFIN.................................... KY 21153 2.15
MARION...................................... KY 21155 1.95
MARSHALL.................................... KY 21157 2.30
MARTIN...................................... KY 21159 2.15
MASON....................................... KY 21161 2.05
MEADE....................................... KY 21163 1.95
MENIFEE..................................... KY 21165 2.05
MERCER...................................... KY 21167 1.95
METCALFE.................................... KY 21169 2.05
MONROE...................................... KY 21171 2.05
MONTGOMERY.................................. KY 21173 2.05
MORGAN...................................... KY 21175 2.05
MUHLENBERG.................................. KY 21177 2.20
[[Page 16193]]
NELSON...................................... KY 21179 1.95
NICHOLAS.................................... KY 21181 2.05
OHIO........................................ KY 21183 2.10
OLDHAM...................................... KY 21185 1.95
OWEN........................................ KY 21187 1.95
OWSLEY...................................... KY 21189 2.15
PENDLETON................................... KY 21191 2.05
PERRY....................................... KY 21193 2.15
PIKE........................................ KY 21195 2.15
POWELL...................................... KY 21197 2.05
PULASKI..................................... KY 21199 2.15
ROBERTSON................................... KY 21201 2.05
ROCKCASTLE.................................. KY 21203 1.95
ROWAN....................................... KY 21205 2.05
RUSSELL..................................... KY 21207 1.95
SCOTT....................................... KY 21209 2.05
SHELBY...................................... KY 21211 1.95
SIMPSON..................................... KY 21213 2.05
SPENCER..................................... KY 21215 1.95
TAYLOR...................................... KY 21217 1.95
TODD........................................ KY 21219 2.20
TRIGG....................................... KY 21221 2.30
TRIMBLE..................................... KY 21223 1.95
UNION....................................... KY 21225 2.10
WARREN...................................... KY 21227 2.05
WASHINGTON.................................. KY 21229 1.95
WAYNE....................................... KY 21231 2.15
WEBSTER..................................... KY 21233 2.10
WHITLEY..................................... KY 21235 2.15
WOLFE....................................... KY 21237 2.05
WOODFORD.................................... KY 21239 1.95
ACADIA...................................... LA 22001 3.05
ALLEN....................................... LA 22003 2.85
ASCENSION................................... LA 22005 2.85
ASSUMPTION.................................. LA 22007 3.05
AVOYELLES................................... LA 22009 2.85
BEAUREGARD.................................. LA 22011 2.85
BIENVILLE................................... LA 22013 2.65
BOSSIER..................................... LA 22015 2.35
CADDO....................................... LA 22017 2.35
CALCASIEU................................... LA 22019 3.05
CALDWELL.................................... LA 22021 2.75
CAMERON..................................... LA 22023 3.05
CATAHOULA................................... LA 22025 2.85
CLAIBORNE................................... LA 22027 2.65
CONCORDIA................................... LA 22029 2.85
DE SOTO..................................... LA 22031 2.65
EAST BATON ROUGE............................ LA 22033 2.85
EAST CARROLL................................ LA 22035 2.75
EAST FELICIANA.............................. LA 22037 2.85
EVANGELINE.................................. LA 22039 2.85
FRANKLIN.................................... LA 22041 2.75
GRANT....................................... LA 22043 2.75
IBERIA...................................... LA 22045 3.05
IBERVILLE................................... LA 22047 2.85
JACKSON..................................... LA 22049 2.75
JEFFERSON................................... LA 22051 3.05
JEFFERSON DAVIS............................. LA 22053 3.05
LAFAYETTE................................... LA 22055 3.05
LAFOURCHE................................... LA 22057 3.05
LA SALLE.................................... LA 22059 2.75
LINCOLN..................................... LA 22061 2.65
LIVINGSTON.................................. LA 22063 2.85
MADISON..................................... LA 22065 2.75
MOREHOUSE................................... LA 22067 2.75
NATCHITOCHES................................ LA 22069 2.75
ORLEANS..................................... LA 22071 3.05
OUACHITA.................................... LA 22073 2.75
PLAQUEMINES................................. LA 22075 3.05
POINTE COUPEE............................... LA 22077 2.85
RAPIDES..................................... LA 22079 2.85
RED RIVER................................... LA 22081 2.65
[[Page 16194]]
RICHLAND.................................... LA 22083 2.75
SABINE...................................... LA 22085 2.75
ST. BERNARD................................. LA 22087 3.05
ST. CHARLES................................. LA 22089 3.05
ST. HELENA.................................. LA 22091 2.85
ST. JAMES................................... LA 22093 2.85
ST. JOHN THE BAPTIST........................ LA 22095 2.85
ST. LANDRY.................................. LA 22097 3.05
ST. MARTIN.................................. LA 22099 3.05
ST. MARY.................................... LA 22101 3.05
ST. TAMMANY................................. LA 22103 2.85
TANGIPAHOA.................................. LA 22105 2.85
TENSAS...................................... LA 22107 2.85
TERREBONNE.................................. LA 22109 3.05
UNION....................................... LA 22111 2.65
VERMILION................................... LA 22113 3.05
VERNON...................................... LA 22115 2.85
WASHINGTON.................................. LA 22117 2.85
WEBSTER..................................... LA 22119 2.35
WEST BATON ROUGE............................ LA 22121 2.85
WEST CARROLL................................ LA 22123 2.75
WEST FELICIANA.............................. LA 22125 2.85
WINN........................................ LA 22127 2.75
ANDROSCOGGIN................................ ME 23001 2.20
AROOSTOOK................................... ME 23003 2.15
CUMBERLAND.................................. ME 23005 2.30
FRANKLIN.................................... ME 23007 2.15
HANCOCK..................................... ME 23009 2.15
KENNEBEC.................................... ME 23011 2.20
KNOX........................................ ME 23013 2.20
LINCOLN..................................... ME 23015 2.20
OXFORD...................................... ME 23017 2.15
PENOBSCOT................................... ME 23019 2.15
PISCATAQUIS................................. ME 23021 2.15
SAGADAHOC................................... ME 23023 2.30
SOMERSET.................................... ME 23025 2.15
WALDO....................................... ME 23027 2.20
WASHINGTON.................................. ME 23029 2.15
YORK........................................ ME 23031 2.45
ALLEGANY.................................... MD 24001 2.05
ANNE ARUNDEL................................ MD 24003 2.05
BALTIMORE................................... MD 24005 2.05
CALVERT..................................... MD 24009 2.05
CAROLINE.................................... MD 24011 2.10
CARROLL..................................... MD 24013 2.05
CECIL....................................... MD 24015 2.10
CHARLES..................................... MD 24017 2.05
DORCHESTER.................................. MD 24019 2.10
FREDERICK................................... MD 24021 2.05
GARRETT..................................... MD 24023 2.05
HARFORD..................................... MD 24025 2.05
HOWARD...................................... MD 24027 2.05
KENT........................................ MD 24029 2.10
MONTGOMERY.................................. MD 24031 2.05
PRINCE GEORGE'S............................. MD 24033 2.05
QUEEN ANNE'S................................ MD 24035 2.10
ST. MARY'S.................................. MD 24037 2.05
SOMERSET.................................... MD 24039 2.10
TALBOT...................................... MD 24041 2.10
WASHINGTON.................................. MD 24043 2.05
WICOMICO.................................... MD 24045 2.10
WORCESTER................................... MD 24047 2.10
BALTIMORE CITY.............................. MD 24510 2.05
BARNSTABLE.................................. MA 25001 2.75
BERKSHIRE................................... MA 25003 2.30
BRISTOL..................................... MA 25005 2.75
DUKES....................................... MA 25007 2.75
ESSEX....................................... MA 25009 2.75
FRANKLIN.................................... MA 25011 2.40
HAMPDEN..................................... MA 25013 2.40
HAMPSHIRE................................... MA 25015 2.40
MIDDLESEX................................... MA 25017 2.75
[[Page 16195]]
NANTUCKET................................... MA 25019 2.75
NORFOLK..................................... MA 25021 2.75
PLYMOUTH.................................... MA 25023 2.75
SUFFOLK..................................... MA 25025 2.75
WORCESTER................................... MA 25027 2.60
ALCONA...................................... MI 26001 1.50
ALGER....................................... MI 26003 1.60
ALLEGAN..................................... MI 26005 1.80
ALPENA...................................... MI 26007 1.35
ANTRIM...................................... MI 26009 1.35
ARENAC...................................... MI 26011 1.70
BARAGA...................................... MI 26013 1.50
BARRY....................................... MI 26015 1.80
BAY......................................... MI 26017 1.70
BENZIE...................................... MI 26019 1.50
BERRIEN..................................... MI 26021 1.80
BRANCH...................................... MI 26023 1.80
CALHOUN..................................... MI 26025 1.80
CASS........................................ MI 26027 1.80
CHARLEVOIX.................................. MI 26029 1.35
CHEBOYGAN................................... MI 26031 1.35
CHIPPEWA.................................... MI 26033 1.70
CLARE....................................... MI 26035 1.70
CLINTON..................................... MI 26037 1.80
CRAWFORD.................................... MI 26039 1.50
DELTA....................................... MI 26041 1.60
DICKINSON................................... MI 26043 1.40
EATON....................................... MI 26045 1.80
EMMET....................................... MI 26047 1.35
GENESEE..................................... MI 26049 1.85
GLADWIN..................................... MI 26051 1.70
GOGEBIC..................................... MI 26053 1.40
GRAND TRAVERSE.............................. MI 26055 1.50
GRATIOT..................................... MI 26057 1.70
HILLSDALE................................... MI 26059 1.80
HOUGHTON.................................... MI 26061 1.50
HURON....................................... MI 26063 1.85
INGHAM...................................... MI 26065 1.80
IONIA....................................... MI 26067 1.80
IOSCO....................................... MI 26069 1.50
IRON........................................ MI 26071 1.40
ISABELLA.................................... MI 26073 1.70
JACKSON..................................... MI 26075 1.80
KALAMAZOO................................... MI 26077 1.80
KALKASKA.................................... MI 26079 1.50
KENT........................................ MI 26081 1.70
KEWEENAW.................................... MI 26083 1.50
LAKE........................................ MI 26085 1.70
LAPEER...................................... MI 26087 1.85
LEELANAU.................................... MI 26089 1.50
LENAWEE..................................... MI 26091 1.80
LIVINGSTON.................................. MI 26093 1.85
LUCE........................................ MI 26095 1.70
MACKINAC.................................... MI 26097 1.70
MACOMB...................................... MI 26099 1.85
MANISTEE.................................... MI 26101 1.50
MARQUETTE................................... MI 26103 1.50
MASON....................................... MI 26105 1.70
MECOSTA..................................... MI 26107 1.70
MENOMINEE................................... MI 26109 1.50
MIDLAND..................................... MI 26111 1.70
MISSAUKEE................................... MI 26113 1.50
MONROE...................................... MI 26115 1.85
MONTCALM.................................... MI 26117 1.70
MONTMORENCY................................. MI 26119 1.35
MUSKEGON.................................... MI 26121 1.70
NEWAYGO..................................... MI 26123 1.70
OAKLAND..................................... MI 26125 1.85
OCEANA...................................... MI 26127 1.70
OGEMAW...................................... MI 26129 1.50
ONTONAGON................................... MI 26131 1.40
OSCEOLA..................................... MI 26133 1.70
[[Page 16196]]
OSCODA...................................... MI 26135 1.50
OTSEGO...................................... MI 26137 1.35
OTTAWA...................................... MI 26139 1.70
PRESQUE ISLE................................ MI 26141 1.35
ROSCOMMON................................... MI 26143 1.50
SAGINAW..................................... MI 26145 1.85
ST. CLAIR................................... MI 26147 1.85
ST. JOSEPH.................................. MI 26149 1.80
SANILAC..................................... MI 26151 1.85
SCHOOLCRAFT................................. MI 26153 1.60
SHIAWASSEE.................................. MI 26155 1.85
TUSCOLA..................................... MI 26157 1.85
VAN BUREN................................... MI 26159 1.80
WASHTENAW................................... MI 26161 1.85
WAYNE....................................... MI 26163 1.85
WEXFORD..................................... MI 26165 1.50
AITKIN...................................... MN 27001 1.30
ANOKA....................................... MN 27003 1.60
BECKER...................................... MN 27005 1.40
BELTRAMI.................................... MN 27007 1.10
BENTON...................................... MN 27009 1.50
BIG STONE................................... MN 27011 1.50
BLUE EARTH.................................. MN 27013 1.60
BROWN....................................... MN 27015 1.60
CARLTON..................................... MN 27017 1.65
CARVER...................................... MN 27019 1.60
CASS........................................ MN 27021 1.30
CHIPPEWA.................................... MN 27023 1.50
CHISAGO..................................... MN 27025 1.60
CLAY........................................ MN 27027 1.40
CLEARWATER.................................. MN 27029 1.10
COOK........................................ MN 27031 1.65
COTTONWOOD.................................. MN 27033 1.60
CROW WING................................... MN 27035 1.30
DAKOTA...................................... MN 27037 1.60
DODGE....................................... MN 27039 1.60
DOUGLAS..................................... MN 27041 1.50
FARIBAULT................................... MN 27043 1.60
FILLMORE.................................... MN 27045 1.60
FREEBORN.................................... MN 27047 1.60
GOODHUE..................................... MN 27049 1.60
GRANT....................................... MN 27051 1.50
HENNEPIN.................................... MN 27053 1.60
HOUSTON..................................... MN 27055 1.60
HUBBARD..................................... MN 27057 1.30
ISANTI...................................... MN 27059 1.60
ITASCA...................................... MN 27061 1.30
JACKSON..................................... MN 27063 1.60
KANABEC..................................... MN 27065 1.50
KANDIYOHI................................... MN 27067 1.50
KITTSON..................................... MN 27069 1.10
KOOCHICHING................................. MN 27071 1.30
LAC QUI PARLE............................... MN 27073 1.50
LAKE........................................ MN 27075 1.65
LAKE OF THE WOODS........................... MN 27077 1.10
LE SUEUR.................................... MN 27079 1.60
LINCOLN..................................... MN 27081 1.50
LYON........................................ MN 27083 1.50
MCLEOD...................................... MN 27085 1.60
MAHNOMEN.................................... MN 27087 1.40
MARSHALL.................................... MN 27089 1.10
MARTIN...................................... MN 27091 1.60
MEEKER...................................... MN 27093 1.60
MILLE LACS.................................. MN 27095 1.50
MORRISON.................................... MN 27097 1.50
MOWER....................................... MN 27099 1.60
MURRAY...................................... MN 27101 1.60
NICOLLET.................................... MN 27103 1.60
NOBLES...................................... MN 27105 1.60
NORMAN...................................... MN 27107 1.40
OLMSTED..................................... MN 27109 1.60
OTTER TAIL.................................. MN 27111 1.40
[[Page 16197]]
PENNINGTON.................................. MN 27113 1.10
PINE........................................ MN 27115 1.65
PIPESTONE................................... MN 27117 1.60
POLK........................................ MN 27119 1.40
POPE........................................ MN 27121 1.50
RAMSEY...................................... MN 27123 1.60
RED LAKE.................................... MN 27125 1.10
REDWOOD..................................... MN 27127 1.60
RENVILLE.................................... MN 27129 1.60
RICE........................................ MN 27131 1.60
ROCK........................................ MN 27133 1.60
ROSEAU...................................... MN 27135 1.10
ST. LOUIS................................... MN 27137 1.65
SCOTT....................................... MN 27139 1.60
SHERBURNE................................... MN 27141 1.60
SIBLEY...................................... MN 27143 1.60
STEARNS..................................... MN 27145 1.50
STEELE...................................... MN 27147 1.60
STEVENS..................................... MN 27149 1.50
SWIFT....................................... MN 27151 1.50
TODD........................................ MN 27153 1.50
TRAVERSE.................................... MN 27155 1.50
WABASHA..................................... MN 27157 1.60
WADENA...................................... MN 27159 1.30
WASECA...................................... MN 27161 1.60
WASHINGTON.................................. MN 27163 1.60
WATONWAN.................................... MN 27165 1.60
WILKIN...................................... MN 27167 1.40
WINONA...................................... MN 27169 1.60
WRIGHT...................................... MN 27171 1.60
YELLOW MEDICINE............................. MN 27173 1.50
ADAMS....................................... MS 28001 2.85
ALCORN...................................... MS 28003 2.70
AMITE....................................... MS 28005 2.85
ATTALA...................................... MS 28007 2.85
BENTON...................................... MS 28009 2.70
BOLIVAR..................................... MS 28011 2.85
CALHOUN..................................... MS 28013 2.85
CARROLL..................................... MS 28015 2.85
CHICKASAW................................... MS 28017 2.85
CHOCTAW..................................... MS 28019 2.85
CLAIBORNE................................... MS 28021 2.85
CLARKE...................................... MS 28023 3.10
CLAY........................................ MS 28025 2.85
COAHOMA..................................... MS 28027 2.85
COPIAH...................................... MS 28029 2.85
COVINGTON................................... MS 28031 3.00
DE SOTO..................................... MS 28033 2.85
FORREST..................................... MS 28035 3.10
FRANKLIN.................................... MS 28037 2.85
GEORGE...................................... MS 28039 3.00
GREENE...................................... MS 28041 3.10
GRENADA..................................... MS 28043 2.85
HANCOCK..................................... MS 28045 3.00
HARRISON.................................... MS 28047 3.00
HINDS....................................... MS 28049 2.85
HOLMES...................................... MS 28051 2.85
HUMPHREYS................................... MS 28053 2.85
ISSAQUENA................................... MS 28055 2.85
ITAWAMBA.................................... MS 28057 2.55
JACKSON..................................... MS 28059 3.00
JASPER...................................... MS 28061 3.10
JEFFERSON................................... MS 28063 2.85
JEFFERSON DAVIS............................. MS 28065 3.00
JONES....................................... MS 28067 3.10
KEMPER...................................... MS 28069 2.70
LAFAYETTE................................... MS 28071 2.85
LAMAR....................................... MS 28073 3.00
LAUDERDALE.................................. MS 28075 2.70
LAWRENCE.................................... MS 28077 2.85
LEAKE....................................... MS 28079 2.70
LEE......................................... MS 28081 2.70
[[Page 16198]]
LEFLORE..................................... MS 28083 2.85
LINCOLN..................................... MS 28085 2.85
LOWNDES..................................... MS 28087 2.70
MADISON..................................... MS 28089 2.85
MARION...................................... MS 28091 3.00
MARSHALL.................................... MS 28093 2.85
MONROE...................................... MS 28095 2.70
MONTGOMERY.................................. MS 28097 2.85
NESHOBA..................................... MS 28099 2.70
NEWTON...................................... MS 28101 2.70
NOXUBEE..................................... MS 28103 2.70
OKTIBBEHA................................... MS 28105 2.70
PANOLA...................................... MS 28107 2.85
PEARL RIVER................................. MS 28109 3.00
PERRY....................................... MS 28111 3.10
PIKE........................................ MS 28113 2.85
PONTOTOC.................................... MS 28115 2.85
PRENTISS.................................... MS 28117 2.70
QUITMAN..................................... MS 28119 2.85
RANKIN...................................... MS 28121 2.85
SCOTT....................................... MS 28123 2.70
SHARKEY..................................... MS 28125 2.85
SIMPSON..................................... MS 28127 2.85
SMITH....................................... MS 28129 3.00
STONE....................................... MS 28131 3.00
SUNFLOWER................................... MS 28133 2.85
TALLAHATCHIE................................ MS 28135 2.85
TATE........................................ MS 28137 2.85
TIPPAH...................................... MS 28139 2.70
TISHOMINGO.................................. MS 28141 2.50
TUNICA...................................... MS 28143 2.85
UNION....................................... MS 28145 2.70
WALTHALL.................................... MS 28147 2.85
WARREN...................................... MS 28149 2.85
WASHINGTON.................................. MS 28151 2.85
WAYNE....................................... MS 28153 3.10
WEBSTER..................................... MS 28155 2.85
WILKINSON................................... MS 28157 2.85
WINSTON..................................... MS 28159 2.70
YALOBUSHA................................... MS 28161 2.85
YAZOO....................................... MS 28163 2.85
ADAIR....................................... MO 29001 1.90
ANDREW...................................... MO 29003 1.90
ATCHISON.................................... MO 29005 1.90
AUDRAIN..................................... MO 29007 2.00
BARRY....................................... MO 29009 1.70
BARTON...................................... MO 29011 1.70
BATES....................................... MO 29013 1.70
BENTON...................................... MO 29015 1.90
BOLLINGER................................... MO 29017 2.10
BOONE....................................... MO 29019 2.00
BUCHANAN.................................... MO 29021 1.90
BUTLER...................................... MO 29023 2.10
CALDWELL.................................... MO 29025 1.90
CALLAWAY.................................... MO 29027 2.00
CAMDEN...................................... MO 29029 1.90
CAPE GIRARDEAU.............................. MO 29031 2.10
CARROLL..................................... MO 29033 1.90
CARTER...................................... MO 29035 2.10
CASS........................................ MO 29037 1.90
CEDAR....................................... MO 29039 1.70
CHARITON.................................... MO 29041 1.90
CHRISTIAN................................... MO 29043 1.70
CLARK....................................... MO 29045 1.90
CLAY........................................ MO 29047 1.90
CLINTON..................................... MO 29049 1.90
COLE........................................ MO 29051 2.00
COOPER...................................... MO 29053 1.90
CRAWFORD.................................... MO 29055 1.90
DADE........................................ MO 29057 1.70
DALLAS...................................... MO 29059 1.70
DAVIESS..................................... MO 29061 1.90
[[Page 16199]]
DE KALB..................................... MO 29063 1.90
DENT........................................ MO 29065 1.90
DOUGLAS..................................... MO 29067 1.70
DUNKLIN..................................... MO 29069 2.35
FRANKLIN.................................... MO 29071 2.00
GASCONADE................................... MO 29073 2.00
GENTRY...................................... MO 29075 1.90
GREENE...................................... MO 29077 1.70
GRUNDY...................................... MO 29079 1.90
HARRISON.................................... MO 29081 1.90
HENRY....................................... MO 29083 1.70
HICKORY..................................... MO 29085 1.70
HOLT........................................ MO 29087 1.90
HOWARD...................................... MO 29089 1.90
HOWELL...................................... MO 29091 1.90
IRON........................................ MO 29093 2.10
JACKSON..................................... MO 29095 1.90
JASPER...................................... MO 29097 1.70
JEFFERSON................................... MO 29099 2.10
JOHNSON..................................... MO 29101 1.90
KNOX........................................ MO 29103 1.90
LACLEDE..................................... MO 29105 1.70
LAFAYETTE................................... MO 29107 1.90
LAWRENCE.................................... MO 29109 1.70
LEWIS....................................... MO 29111 1.90
LINCOLN..................................... MO 29113 2.00
LINN........................................ MO 29115 1.90
LIVINGSTON.................................. MO 29117 1.90
MCDONALD.................................... MO 29119 1.70
MACON....................................... MO 29121 1.90
MADISON..................................... MO 29123 2.10
MARIES...................................... MO 29125 1.90
MARION...................................... MO 29127 2.00
MERCER...................................... MO 29129 1.90
MILLER...................................... MO 29131 1.90
MISSISSIPPI................................. MO 29133 2.10
MONITEAU.................................... MO 29135 2.00
MONROE...................................... MO 29137 2.00
MONTGOMERY.................................. MO 29139 2.00
MORGAN...................................... MO 29141 1.90
NEW MADRID.................................. MO 29143 2.35
NEWTON...................................... MO 29145 1.70
NODAWAY..................................... MO 29147 1.90
OREGON...................................... MO 29149 2.10
OSAGE....................................... MO 29151 2.00
OZARK....................................... MO 29153 1.90
PEMISCOT.................................... MO 29155 2.35
PERRY....................................... MO 29157 2.10
PETTIS...................................... MO 29159 1.90
PHELPS...................................... MO 29161 1.90
PIKE........................................ MO 29163 2.00
PLATTE...................................... MO 29165 1.90
POLK........................................ MO 29167 1.70
PULASKI..................................... MO 29169 1.90
PUTNAM...................................... MO 29171 1.90
RALLS....................................... MO 29173 2.00
RANDOLPH.................................... MO 29175 1.90
RAY......................................... MO 29177 1.90
REYNOLDS.................................... MO 29179 2.10
RIPLEY...................................... MO 29181 2.10
ST. CHARLES................................. MO 29183 2.00
ST. CLAIR................................... MO 29185 1.70
STE. GENEVIEVE.............................. MO 29186 2.10
ST. FRANCOIS................................ MO 29187 2.10
ST. LOUIS................................... MO 29189 2.10
SALINE...................................... MO 29195 1.90
SCHUYLER.................................... MO 29197 1.90
SCOTLAND.................................... MO 29199 1.90
SCOTT....................................... MO 29201 2.10
SHANNON..................................... MO 29203 1.90
SHELBY...................................... MO 29205 1.90
STODDARD.................................... MO 29207 2.10
[[Page 16200]]
STONE....................................... MO 29209 1.70
SULLIVAN.................................... MO 29211 1.90
TANEY....................................... MO 29213 1.70
TEXAS....................................... MO 29215 1.90
VERNON...................................... MO 29217 1.70
WARREN...................................... MO 29219 2.00
WASHINGTON.................................. MO 29221 2.10
WAYNE....................................... MO 29223 2.10
WEBSTER..................................... MO 29225 1.70
WORTH....................................... MO 29227 1.90
WRIGHT...................................... MO 29229 1.70
ST. LOUIS CITY.............................. MO 29510 2.10
BEAVERHEAD.................................. MT 30001 1.40
BIG HORN.................................... MT 30003 1.50
BLAINE...................................... MT 30005 1.65
BROADWATER.................................. MT 30007 1.40
CARBON...................................... MT 30009 1.40
CARTER...................................... MT 30011 1.40
CASCADE..................................... MT 30013 1.75
CHOUTEAU.................................... MT 30015 1.75
CUSTER...................................... MT 30017 1.50
DANIELS..................................... MT 30019 1.50
DAWSON...................................... MT 30021 1.50
DEER LODGE.................................. MT 30023 1.40
FALLON...................................... MT 30025 1.40
FERGUS...................................... MT 30027 1.65
FLATHEAD.................................... MT 30029 1.50
GALLATIN.................................... MT 30031 1.40
GARFIELD.................................... MT 30033 1.65
GLACIER..................................... MT 30035 1.65
GOLDEN VALLEY............................... MT 30037 1.65
GRANITE..................................... MT 30039 1.65
HILL........................................ MT 30041 1.75
JEFFERSON................................... MT 30043 1.40
JUDITH BASIN................................ MT 30045 1.65
LAKE........................................ MT 30047 1.50
LEWIS AND CLARK............................. MT 30049 1.65
LIBERTY..................................... MT 30051 1.75
LINCOLN..................................... MT 30053 1.50
MCCONE...................................... MT 30055 1.50
MADISON..................................... MT 30057 1.40
MEAGHER..................................... MT 30059 1.40
MINERAL..................................... MT 30061 1.50
MISSOULA.................................... MT 30063 1.50
MUSSELSHELL................................. MT 30065 1.65
PARK........................................ MT 30067 1.40
PETROLEUM................................... MT 30069 1.65
PHILLIPS.................................... MT 30071 1.65
PONDERA..................................... MT 30073 1.65
POWDER RIVER................................ MT 30075 1.40
POWELL...................................... MT 30077 1.65
PRAIRIE..................................... MT 30079 1.50
RAVALLI..................................... MT 30081 1.65
RICHLAND.................................... MT 30083 1.50
ROOSEVELT................................... MT 30085 1.50
ROSEBUD..................................... MT 30087 1.50
SANDERS..................................... MT 30089 1.50
SHERIDAN.................................... MT 30091 1.50
SILVER BOW.................................. MT 30093 1.40
STILLWATER.................................. MT 30095 1.40
SWEET GRASS................................. MT 30097 1.40
TETON....................................... MT 30099 1.65
TOOLE....................................... MT 30101 1.65
TREASURE.................................... MT 30103 1.50
VALLEY...................................... MT 30105 1.65
WHEATLAND................................... MT 30107 1.65
WIBAUX...................................... MT 30109 1.40
YELLOWSTONE................................. MT 30111 1.65
YELLOWSTONE NATIONAL PARK................... MT 30113 1.40
ADAMS....................................... NE 31001 1.60
ANTELOPE.................................... NE 31003 1.60
ARTHUR...................................... NE 31005 1.40
[[Page 16201]]
BANNER...................................... NE 31007 1.40
BLAINE...................................... NE 31009 1.50
BOONE....................................... NE 31011 1.60
BOX BUTTE................................... NE 31013 1.40
BOYD........................................ NE 31015 1.50
BROWN....................................... NE 31017 1.50
BUFFALO..................................... NE 31019 1.60
BURT........................................ NE 31021 1.80
BUTLER...................................... NE 31023 1.80
CASS........................................ NE 31025 1.90
CEDAR....................................... NE 31027 1.60
CHASE....................................... NE 31029 1.50
CHERRY...................................... NE 31031 1.40
CHEYENNE.................................... NE 31033 1.40
CLAY........................................ NE 31035 1.80
COLFAX...................................... NE 31037 1.80
CUMING...................................... NE 31039 1.80
CUSTER...................................... NE 31041 1.50
DAKOTA...................................... NE 31043 1.80
DAWES....................................... NE 31045 1.40
DAWSON...................................... NE 31047 1.60
DEUEL....................................... NE 31049 1.40
DIXON....................................... NE 31051 1.60
DODGE....................................... NE 31053 1.80
DOUGLAS..................................... NE 31055 1.90
DUNDY....................................... NE 31057 1.60
FILLMORE.................................... NE 31059 1.80
FRANKLIN.................................... NE 31061 1.60
FRONTIER.................................... NE 31063 1.60
FURNAS...................................... NE 31065 1.60
GAGE........................................ NE 31067 1.90
GARDEN...................................... NE 31069 1.40
GARFIELD.................................... NE 31071 1.50
GOSPER...................................... NE 31073 1.60
GRANT....................................... NE 31075 1.40
GREELEY..................................... NE 31077 1.60
HALL........................................ NE 31079 1.60
HAMILTON.................................... NE 31081 1.80
HARLAN...................................... NE 31083 1.60
HAYES....................................... NE 31085 1.60
HITCHCOCK................................... NE 31087 1.60
HOLT........................................ NE 31089 1.50
HOOKER...................................... NE 31091 1.40
HOWARD...................................... NE 31093 1.60
JEFFERSON................................... NE 31095 1.80
JOHNSON..................................... NE 31097 1.90
KEARNEY..................................... NE 31099 1.60
KEITH....................................... NE 31101 1.40
KEYA PAHA................................... NE 31103 1.50
KIMBALL..................................... NE 31105 1.40
KNOX........................................ NE 31107 1.60
LANCASTER................................... NE 31109 1.80
LINCOLN..................................... NE 31111 1.50
LOGAN....................................... NE 31113 1.50
LOUP........................................ NE 31115 1.50
MCPHERSON................................... NE 31117 1.50
MADISON..................................... NE 31119 1.60
MERRICK..................................... NE 31121 1.60
MORRILL..................................... NE 31123 1.40
NANCE....................................... NE 31125 1.60
NEMAHA...................................... NE 31127 1.90
NUCKOLLS.................................... NE 31129 1.60
OTOE........................................ NE 31131 1.90
PAWNEE...................................... NE 31133 1.90
PERKINS..................................... NE 31135 1.50
PHELPS...................................... NE 31137 1.60
PIERCE...................................... NE 31139 1.60
PLATTE...................................... NE 31141 1.80
POLK........................................ NE 31143 1.80
RED WILLOW.................................. NE 31145 1.60
RICHARDSON.................................. NE 31147 1.90
ROCK........................................ NE 31149 1.50
[[Page 16202]]
SALINE...................................... NE 31151 1.80
SARPY....................................... NE 31153 1.90
SAUNDERS.................................... NE 31155 1.80
SCOTTS BLUFF................................ NE 31157 1.40
SEWARD...................................... NE 31159 1.80
SHERIDAN.................................... NE 31161 1.40
SHERMAN..................................... NE 31163 1.60
SIOUX....................................... NE 31165 1.40
STANTON..................................... NE 31167 1.60
THAYER...................................... NE 31169 1.80
THOMAS...................................... NE 31171 1.40
THURSTON.................................... NE 31173 1.80
VALLEY...................................... NE 31175 1.60
WASHINGTON.................................. NE 31177 1.90
WAYNE....................................... NE 31179 1.60
WEBSTER..................................... NE 31181 1.60
WHEELER..................................... NE 31183 1.60
YORK........................................ NE 31185 1.80
CHURCHILL................................... NV 32001 1.40
CLARK....................................... NV 32003 2.25
DOUGLAS..................................... NV 32005 1.20
ELKO........................................ NV 32007 1.40
ESMERALDA................................... NV 32009 1.50
EUREKA...................................... NV 32011 1.40
HUMBOLDT.................................... NV 32013 1.40
LANDER...................................... NV 32015 1.40
LINCOLN..................................... NV 32017 1.80
LYON........................................ NV 32019 1.20
MINERAL..................................... NV 32021 1.20
NYE......................................... NV 32023 1.50
PERSHING.................................... NV 32027 1.40
STOREY...................................... NV 32029 1.20
WASHOE...................................... NV 32031 1.40
WHITE PINE.................................. NV 32033 1.50
CARSON CITY................................. NV 32510 1.20
BELKNAP..................................... NH 33001 2.30
CARROLL..................................... NH 33003 2.15
CHESHIRE.................................... NH 33005 2.50
COOS........................................ NH 33007 1.95
GRAFTON..................................... NH 33009 2.15
HILLSBOROUGH................................ NH 33011 2.60
MERRIMACK................................... NH 33013 2.45
ROCKINGHAM.................................. NH 33015 2.60
STRAFFORD................................... NH 33017 2.45
SULLIVAN.................................... NH 33019 2.30
ATLANTIC.................................... NJ 34001 2.20
BERGEN...................................... NJ 34003 2.50
BURLINGTON.................................. NJ 34005 2.20
CAMDEN...................................... NJ 34007 2.20
CAPE MAY.................................... NJ 34009 2.20
CUMBERLAND.................................. NJ 34011 2.20
ESSEX....................................... NJ 34013 2.50
GLOUCESTER.................................. NJ 34015 2.20
HUDSON...................................... NJ 34017 2.50
HUNTERDON................................... NJ 34019 2.30
MERCER...................................... NJ 34021 2.30
MIDDLESEX................................... NJ 34023 2.30
MONMOUTH.................................... NJ 34025 2.30
MORRIS...................................... NJ 34027 2.30
OCEAN....................................... NJ 34029 2.30
PASSAIC..................................... NJ 34031 2.50
SALEM....................................... NJ 34033 2.20
SOMERSET.................................... NJ 34035 2.30
SUSSEX...................................... NJ 34037 2.30
UNION....................................... NJ 34039 2.50
WARREN...................................... NJ 34041 2.30
BERNALILLO.................................. NM 35001 2.30
CATRON...................................... NM 35003 1.90
CHAVES...................................... NM 35005 1.60
CIBOLA...................................... NM 35006 1.90
COLFAX...................................... NM 35007 1.90
CURRY....................................... NM 35009 1.60
[[Page 16203]]
DE BACA..................................... NM 35011 1.60
DONA ANA.................................... NM 35013 1.60
EDDY........................................ NM 35015 1.60
GRANT....................................... NM 35017 1.60
GUADALUPE................................... NM 35019 1.90
HARDING..................................... NM 35021 1.90
HIDALGO..................................... NM 35023 1.60
LEA......................................... NM 35025 1.60
LINCOLN..................................... NM 35027 1.90
LOS ALAMOS.................................. NM 35028 2.30
LUNA........................................ NM 35029 1.60
MCKINLEY.................................... NM 35031 1.90
MORA........................................ NM 35033 1.90
OTERO....................................... NM 35035 1.60
QUAY........................................ NM 35037 1.60
RIO ARRIBA.................................. NM 35039 2.20
ROOSEVELT................................... NM 35041 1.60
SANDOVAL.................................... NM 35043 2.30
SAN JUAN.................................... NM 35045 2.20
SAN MIGUEL.................................. NM 35047 1.90
SANTA FE.................................... NM 35049 2.30
SIERRA...................................... NM 35051 1.90
SOCORRO..................................... NM 35053 1.90
TAOS........................................ NM 35055 1.90
TORRANCE.................................... NM 35057 1.90
UNION....................................... NM 35059 1.90
VALENCIA.................................... NM 35061 1.90
ALBANY...................................... NY 36001 2.15
ALLEGANY.................................... NY 36003 1.85
BRONX....................................... NY 36005 2.50
BROOME...................................... NY 36007 1.90
CATTARAUGUS................................. NY 36009 1.60
CAYUGA...................................... NY 36011 1.85
CHAUTAUQUA.................................. NY 36013 1.60
CHEMUNG..................................... NY 36015 1.85
CHENANGO.................................... NY 36017 1.85
CLINTON..................................... NY 36019 1.95
COLUMBIA.................................... NY 36021 2.15
CORTLAND.................................... NY 36023 1.85
DELAWARE.................................... NY 36025 2.15
DUTCHESS.................................... NY 36027 2.30
ERIE........................................ NY 36029 1.85
ESSEX....................................... NY 36031 2.05
FRANKLIN.................................... NY 36033 1.85
FULTON...................................... NY 36035 2.05
GENESEE..................................... NY 36037 1.85
GREENE...................................... NY 36039 2.15
HAMILTON.................................... NY 36041 1.95
HERKIMER.................................... NY 36043 1.95
JEFFERSON................................... NY 36045 1.85
KINGS....................................... NY 36047 2.50
LEWIS....................................... NY 36049 1.85
LIVINGSTON.................................. NY 36051 1.85
MADISON..................................... NY 36053 1.85
MONROE...................................... NY 36055 1.85
MONTGOMERY.................................. NY 36057 2.05
NASSAU...................................... NY 36059 2.50
NEW YORK.................................... NY 36061 2.50
NIAGARA..................................... NY 36063 1.85
ONEIDA...................................... NY 36065 1.85
ONONDAGA.................................... NY 36067 1.85
ONTARIO..................................... NY 36069 1.85
ORANGE...................................... NY 36071 2.30
ORLEANS..................................... NY 36073 1.85
OSWEGO...................................... NY 36075 1.85
OTSEGO...................................... NY 36077 1.95
PUTNAM...................................... NY 36079 2.30
QUEENS...................................... NY 36081 2.50
RENSSELAER.................................. NY 36083 2.15
RICHMOND.................................... NY 36085 2.50
ROCKLAND.................................... NY 36087 2.50
ST. LAWRENCE................................ NY 36089 1.85
[[Page 16204]]
SARATOGA.................................... NY 36091 2.05
SCHENECTADY................................. NY 36093 2.15
SCHOHARIE................................... NY 36095 2.05
SCHUYLER.................................... NY 36097 1.85
SENECA...................................... NY 36099 1.85
STEUBEN..................................... NY 36101 1.85
SUFFOLK..................................... NY 36103 2.50
SULLIVAN.................................... NY 36105 2.15
TIOGA....................................... NY 36107 1.90
TOMPKINS.................................... NY 36109 1.85
ULSTER...................................... NY 36111 2.15
WARREN...................................... NY 36113 1.95
WASHINGTON.................................. NY 36115 2.05
WAYNE....................................... NY 36117 1.85
WESTCHESTER................................. NY 36119 2.50
WYOMING..................................... NY 36121 1.85
YATES....................................... NY 36123 1.85
ALAMANCE.................................... NC 37001 2.35
ALEXANDER................................... NC 37003 2.35
ALLEGHANY................................... NC 37005 2.35
ANSON....................................... NC 37007 2.55
ASHE........................................ NC 37009 2.25
AVERY....................................... NC 37011 2.25
BEAUFORT.................................... NC 37013 2.65
BERTIE...................................... NC 37015 2.65
BLADEN...................................... NC 37017 2.80
BRUNSWICK................................... NC 37019 2.85
BUNCOMBE.................................... NC 37021 2.55
BURKE....................................... NC 37023 2.35
CABARRUS.................................... NC 37025 2.55
CALDWELL.................................... NC 37027 2.35
CAMDEN...................................... NC 37029 2.55
CARTERET.................................... NC 37031 2.85
CASWELL..................................... NC 37033 2.35
CATAWBA..................................... NC 37035 2.35
CHATHAM..................................... NC 37037 2.35
CHEROKEE.................................... NC 37039 2.55
CHOWAN...................................... NC 37041 2.55
CLAY........................................ NC 37043 2.55
CLEVELAND................................... NC 37045 2.55
COLUMBUS.................................... NC 37047 3.00
CRAVEN...................................... NC 37049 2.85
CUMBERLAND.................................. NC 37051 2.80
CURRITUCK................................... NC 37053 2.55
DARE........................................ NC 37055 2.65
DAVIDSON.................................... NC 37057 2.35
DAVIE....................................... NC 37059 2.35
DUPLIN...................................... NC 37061 2.85
DURHAM...................................... NC 37063 2.35
EDGECOMBE................................... NC 37065 2.65
FORSYTH..................................... NC 37067 2.35
FRANKLIN.................................... NC 37069 2.55
GASTON...................................... NC 37071 2.55
GATES....................................... NC 37073 2.55
GRAHAM...................................... NC 37075 2.55
GRANVILLE................................... NC 37077 2.55
GREENE...................................... NC 37079 2.65
GUILFORD.................................... NC 37081 2.35
HALIFAX..................................... NC 37083 2.55
HARNETT..................................... NC 37085 2.55
HAYWOOD..................................... NC 37087 2.55
HENDERSON................................... NC 37089 2.55
HERTFORD.................................... NC 37091 2.55
HOKE........................................ NC 37093 2.80
HYDE........................................ NC 37095 2.65
IREDELL..................................... NC 37097 2.35
JACKSON..................................... NC 37099 2.55
JOHNSTON.................................... NC 37101 2.65
JONES....................................... NC 37103 2.85
LEE......................................... NC 37105 2.55
LENOIR...................................... NC 37107 2.85
LINCOLN..................................... NC 37109 2.35
[[Page 16205]]
MCDOWELL.................................... NC 37111 2.35
MACON....................................... NC 37113 2.55
MADISON..................................... NC 37115 2.25
MARTIN...................................... NC 37117 2.65
MECKLENBURG................................. NC 37119 2.55
MITCHELL.................................... NC 37121 2.25
MONTGOMERY.................................. NC 37123 2.55
MOORE....................................... NC 37125 2.55
NASH........................................ NC 37127 2.65
NEW HANOVER................................. NC 37129 2.85
NORTHAMPTON................................. NC 37131 2.55
ONSLOW...................................... NC 37133 2.85
ORANGE...................................... NC 37135 2.35
PAMLICO..................................... NC 37137 2.85
PASQUOTANK.................................. NC 37139 2.55
PENDER...................................... NC 37141 2.85
PERQUIMANS.................................. NC 37143 2.55
PERSON...................................... NC 37145 2.35
PITT........................................ NC 37147 2.65
POLK........................................ NC 37149 2.55
RANDOLPH.................................... NC 37151 2.35
RICHMOND.................................... NC 37153 2.55
ROBESON..................................... NC 37155 3.00
ROCKINGHAM.................................. NC 37157 2.35
ROWAN....................................... NC 37159 2.35
RUTHERFORD.................................. NC 37161 2.55
SAMPSON..................................... NC 37163 2.80
SCOTLAND.................................... NC 37165 2.80
STANLY...................................... NC 37167 2.55
STOKES...................................... NC 37169 2.35
SURRY....................................... NC 37171 2.35
SWAIN....................................... NC 37173 2.25
TRANSYLVANIA................................ NC 37175 2.55
TYRRELL..................................... NC 37177 2.65
UNION....................................... NC 37179 2.55
VANCE....................................... NC 37181 2.55
WAKE........................................ NC 37183 2.55
WARREN...................................... NC 37185 2.55
WASHINGTON.................................. NC 37187 2.65
WATAUGA..................................... NC 37189 2.25
WAYNE....................................... NC 37191 2.65
WILKES...................................... NC 37193 2.35
WILSON...................................... NC 37195 2.65
YADKIN...................................... NC 37197 2.35
YANCEY...................................... NC 37199 2.25
ADAMS....................................... ND 38001 1.40
BARNES...................................... ND 38003 1.40
BENSON...................................... ND 38005 1.40
BILLINGS.................................... ND 38007 1.40
BOTTINEAU................................... ND 38009 1.40
BOWMAN...................................... ND 38011 1.40
BURKE....................................... ND 38013 1.40
BURLEIGH.................................... ND 38015 1.40
CASS........................................ ND 38017 1.40
CAVALIER.................................... ND 38019 1.40
DICKEY...................................... ND 38021 1.40
DIVIDE...................................... ND 38023 1.40
DUNN........................................ ND 38025 1.40
EDDY........................................ ND 38027 1.40
EMMONS...................................... ND 38029 1.40
FOSTER...................................... ND 38031 1.40
GOLDEN VALLEY............................... ND 38033 1.40
GRAND FORKS................................. ND 38035 1.40
GRANT....................................... ND 38037 1.40
GRIGGS...................................... ND 38039 1.40
HETTINGER................................... ND 38041 1.40
KIDDER...................................... ND 38043 1.40
LA MOURE.................................... ND 38045 1.40
LOGAN....................................... ND 38047 1.40
MCHENRY..................................... ND 38049 1.40
MCINTOSH.................................... ND 38051 1.40
MCKENZIE.................................... ND 38053 1.40
[[Page 16206]]
MCLEAN...................................... ND 38055 1.40
MERCER...................................... ND 38057 1.40
MORTON...................................... ND 38059 1.40
MOUNTRAIL................................... ND 38061 1.40
NELSON...................................... ND 38063 1.40
OLIVER...................................... ND 38065 1.40
PEMBINA..................................... ND 38067 1.40
PIERCE...................................... ND 38069 1.40
RAMSEY...................................... ND 38071 1.40
RANSOM...................................... ND 38073 1.40
RENVILLE.................................... ND 38075 1.40
RICHLAND.................................... ND 38077 1.40
ROLETTE..................................... ND 38079 1.40
SARGENT..................................... ND 38081 1.40
SHERIDAN.................................... ND 38083 1.40
SIOUX....................................... ND 38085 1.40
SLOPE....................................... ND 38087 1.40
STARK....................................... ND 38089 1.40
STEELE...................................... ND 38091 1.40
STUTSMAN.................................... ND 38093 1.40
TOWNER...................................... ND 38095 1.40
TRAILL...................................... ND 38097 1.40
WALSH....................................... ND 38099 1.40
WARD........................................ ND 38101 1.40
WELLS....................................... ND 38103 1.40
WILLIAMS.................................... ND 38105 1.40
ADAMS....................................... OH 39001 2.05
ALLEN....................................... OH 39003 2.00
ASHLAND..................................... OH 39005 2.00
ASHTABULA................................... OH 39007 2.00
ATHENS...................................... OH 39009 2.00
AUGLAIZE.................................... OH 39011 2.00
BELMONT..................................... OH 39013 2.00
BROWN....................................... OH 39015 2.05
BUTLER...................................... OH 39017 2.05
CARROLL..................................... OH 39019 1.95
CHAMPAIGN................................... OH 39021 2.00
CLARK....................................... OH 39023 2.00
CLERMONT.................................... OH 39025 2.05
CLINTON..................................... OH 39027 2.05
COLUMBIANA.................................. OH 39029 1.95
COSHOCTON................................... OH 39031 1.95
CRAWFORD.................................... OH 39033 2.00
CUYAHOGA.................................... OH 39035 2.00
DARKE....................................... OH 39037 2.00
DEFIANCE.................................... OH 39039 1.80
DELAWARE.................................... OH 39041 2.00
ERIE........................................ OH 39043 2.00
FAIRFIELD................................... OH 39045 2.00
FAYETTE..................................... OH 39047 2.00
FRANKLIN.................................... OH 39049 2.00
FULTON...................................... OH 39051 1.85
GALLIA...................................... OH 39053 2.20
GEAUGA...................................... OH 39055 2.00
GREENE...................................... OH 39057 2.00
GUERNSEY.................................... OH 39059 2.00
HAMILTON.................................... OH 39061 2.05
HANCOCK..................................... OH 39063 2.00
HARDIN...................................... OH 39065 2.00
HARRISON.................................... OH 39067 1.95
HENRY....................................... OH 39069 1.85
HIGHLAND.................................... OH 39071 2.05
HOCKING..................................... OH 39073 2.00
HOLMES...................................... OH 39075 1.95
HURON....................................... OH 39077 2.00
JACKSON..................................... OH 39079 2.05
JEFFERSON................................... OH 39081 1.95
KNOX........................................ OH 39083 2.00
LAKE........................................ OH 39085 2.00
LAWRENCE.................................... OH 39087 2.20
LICKING..................................... OH 39089 2.00
LOGAN....................................... OH 39091 2.00
[[Page 16207]]
LORAIN...................................... OH 39093 2.00
LUCAS....................................... OH 39095 1.85
MADISON..................................... OH 39097 2.00
MAHONING.................................... OH 39099 1.95
MARION...................................... OH 39101 2.00
MEDINA...................................... OH 39103 2.00
MEIGS....................................... OH 39105 2.05
MERCER...................................... OH 39107 2.00
MIAMI....................................... OH 39109 2.00
MONROE...................................... OH 39111 2.00
MONTGOMERY.................................. OH 39113 2.00
MORGAN...................................... OH 39115 2.00
MORROW...................................... OH 39117 2.00
MUSKINGUM................................... OH 39119 2.00
NOBLE....................................... OH 39121 2.00
OTTAWA...................................... OH 39123 1.85
PAULDING.................................... OH 39125 1.80
PERRY....................................... OH 39127 2.00
PICKAWAY.................................... OH 39129 2.00
PIKE........................................ OH 39131 2.05
PORTAGE..................................... OH 39133 2.00
PREBLE...................................... OH 39135 2.00
PUTNAM...................................... OH 39137 2.00
RICHLAND.................................... OH 39139 2.00
ROSS........................................ OH 39141 2.05
SANDUSKY.................................... OH 39143 2.00
SCIOTO...................................... OH 39145 2.05
SENECA...................................... OH 39147 2.00
SHELBY...................................... OH 39149 2.00
STARK....................................... OH 39151 1.95
SUMMIT...................................... OH 39153 2.00
TRUMBULL.................................... OH 39155 2.00
TUSCARAWAS.................................. OH 39157 1.95
UNION....................................... OH 39159 2.00
VAN WERT.................................... OH 39161 2.00
VINTON...................................... OH 39163 2.05
WARREN...................................... OH 39165 2.05
WASHINGTON.................................. OH 39167 2.00
WAYNE....................................... OH 39169 1.95
WILLIAMS.................................... OH 39171 1.80
WOOD........................................ OH 39173 1.85
WYANDOT..................................... OH 39175 2.00
ADAIR....................................... OK 40001 1.90
ALFALFA..................................... OK 40003 1.90
ATOKA....................................... OK 40005 1.95
BEAVER...................................... OK 40007 1.90
BECKHAM..................................... OK 40009 1.90
BLAINE...................................... OK 40011 1.90
BRYAN....................................... OK 40013 1.95
CADDO....................................... OK 40015 1.90
CANADIAN.................................... OK 40017 1.90
CARTER...................................... OK 40019 1.95
CHEROKEE.................................... OK 40021 1.90
CHOCTAW..................................... OK 40023 1.95
CIMARRON.................................... OK 40025 1.90
CLEVELAND................................... OK 40027 1.90
COAL........................................ OK 40029 1.95
COMANCHE.................................... OK 40031 1.95
COTTON...................................... OK 40033 1.95
CRAIG....................................... OK 40035 1.70
CREEK....................................... OK 40037 1.90
CUSTER...................................... OK 40039 1.90
DELAWARE.................................... OK 40041 1.70
DEWEY....................................... OK 40043 1.90
ELLIS....................................... OK 40045 1.90
GARFIELD.................................... OK 40047 1.90
GARVIN...................................... OK 40049 1.95
GRADY....................................... OK 40051 1.90
GRANT....................................... OK 40053 1.90
GREER....................................... OK 40055 1.95
HARMON...................................... OK 40057 1.95
HARPER...................................... OK 40059 1.90
[[Page 16208]]
HASKELL..................................... OK 40061 1.90
HUGHES...................................... OK 40063 1.90
JACKSON..................................... OK 40065 1.95
JEFFERSON................................... OK 40067 1.95
JOHNSTON.................................... OK 40069 1.95
KAY......................................... OK 40071 1.90
KINGFISHER.................................. OK 40073 1.90
KIOWA....................................... OK 40075 1.95
LATIMER..................................... OK 40077 1.90
LE FLORE.................................... OK 40079 1.90
LINCOLN..................................... OK 40081 1.90
LOGAN....................................... OK 40083 1.90
LOVE........................................ OK 40085 1.95
MCCLAIN..................................... OK 40087 1.90
MCCURTAIN................................... OK 40089 1.95
MCINTOSH.................................... OK 40091 1.90
MAJOR....................................... OK 40093 1.90
MARSHALL.................................... OK 40095 1.95
MAYES....................................... OK 40097 1.70
MURRAY...................................... OK 40099 1.95
MUSKOGEE.................................... OK 40101 1.90
NOBLE....................................... OK 40103 1.90
NOWATA...................................... OK 40105 1.70
OKFUSKEE.................................... OK 40107 1.90
OKLAHOMA.................................... OK 40109 1.90
OKMULGEE.................................... OK 40111 1.90
OSAGE....................................... OK 40113 1.90
OTTAWA...................................... OK 40115 1.70
PAWNEE...................................... OK 40117 1.90
PAYNE....................................... OK 40119 1.90
PITTSBURG................................... OK 40121 1.90
PONTOTOC.................................... OK 40123 1.95
POTTAWATOMIE................................ OK 40125 1.90
PUSHMATAHA.................................. OK 40127 1.95
ROGER MILLS................................. OK 40129 1.90
ROGERS...................................... OK 40131 1.70
SEMINOLE.................................... OK 40133 1.90
SEQUOYAH.................................... OK 40135 1.90
STEPHENS.................................... OK 40137 1.95
TEXAS....................................... OK 40139 1.90
TILLMAN..................................... OK 40141 1.95
TULSA....................................... OK 40143 1.90
WAGONER..................................... OK 40145 1.90
WASHINGTON.................................. OK 40147 1.70
WASHITA..................................... OK 40149 1.90
WOODS....................................... OK 40151 1.90
WOODWARD.................................... OK 40153 1.90
BAKER....................................... OR 41001 1.35
BENTON...................................... OR 41003 1.55
CLACKAMAS................................... OR 41005 1.45
CLATSOP..................................... OR 41007 1.45
COLUMBIA.................................... OR 41009 1.45
COOS........................................ OR 41011 1.70
CROOK....................................... OR 41013 1.30
CURRY....................................... OR 41015 1.85
DESCHUTES................................... OR 41017 1.55
DOUGLAS..................................... OR 41019 1.70
GILLIAM..................................... OR 41021 1.30
GRANT....................................... OR 41023 1.35
HARNEY...................................... OR 41025 1.35
HOOD RIVER.................................. OR 41027 1.45
JACKSON..................................... OR 41029 1.85
JEFFERSON................................... OR 41031 1.30
JOSEPHINE................................... OR 41033 1.85
KLAMATH..................................... OR 41035 1.70
LAKE........................................ OR 41037 1.55
LANE........................................ OR 41039 1.55
LINCOLN..................................... OR 41041 1.55
LINN........................................ OR 41043 1.55
MALHEUR..................................... OR 41045 1.35
MARION...................................... OR 41047 1.45
MORROW...................................... OR 41049 1.30
[[Page 16209]]
MULTNOMAH................................... OR 41051 1.45
POLK........................................ OR 41053 1.45
SHERMAN..................................... OR 41055 1.30
TILLAMOOK................................... OR 41057 1.45
UMATILLA.................................... OR 41059 1.35
UNION....................................... OR 41061 1.35
WALLOWA..................................... OR 41063 1.35
WASCO....................................... OR 41065 1.30
WASHINGTON.................................. OR 41067 1.45
WHEELER..................................... OR 41069 1.30
YAMHILL..................................... OR 41071 1.45
ADAMS....................................... PA 42001 2.05
ALLEGHENY................................... PA 42003 1.95
ARMSTRONG................................... PA 42005 1.95
BEAVER...................................... PA 42007 1.95
BEDFORD..................................... PA 42009 2.05
BERKS....................................... PA 42011 2.05
BLAIR....................................... PA 42013 2.05
BRADFORD.................................... PA 42015 1.90
BUCKS....................................... PA 42017 2.10
BUTLER...................................... PA 42019 1.95
CAMBRIA..................................... PA 42021 2.05
CAMERON..................................... PA 42023 1.95
CARBON...................................... PA 42025 2.10
CENTRE...................................... PA 42027 2.00
CHESTER..................................... PA 42029 2.10
CLARION..................................... PA 42031 1.95
CLEARFIELD.................................. PA 42033 1.95
CLINTON..................................... PA 42035 2.00
COLUMBIA.................................... PA 42037 2.00
CRAWFORD.................................... PA 42039 1.75
CUMBERLAND.................................. PA 42041 2.05
DAUPHIN..................................... PA 42043 2.05
DELAWARE.................................... PA 42045 2.20
ELK......................................... PA 42047 1.95
ERIE........................................ PA 42049 1.75
FAYETTE..................................... PA 42051 1.95
FOREST...................................... PA 42053 1.75
FRANKLIN.................................... PA 42055 2.05
FULTON...................................... PA 42057 2.05
GREENE...................................... PA 42059 1.95
HUNTINGDON.................................. PA 42061 2.05
INDIANA..................................... PA 42063 1.95
JEFFERSON................................... PA 42065 1.95
JUNIATA..................................... PA 42067 2.00
LACKAWANNA.................................. PA 42069 2.00
LANCASTER................................... PA 42071 2.05
LAWRENCE.................................... PA 42073 1.95
LEBANON..................................... PA 42075 2.05
LEHIGH...................................... PA 42077 2.10
LUZERNE..................................... PA 42079 2.00
LYCOMING.................................... PA 42081 2.00
MCKEAN...................................... PA 42083 1.85
MERCER...................................... PA 42085 1.75
MIFFLIN..................................... PA 42087 2.00
MONROE...................................... PA 42089 2.10
MONTGOMERY.................................. PA 42091 2.10
MONTOUR..................................... PA 42093 2.00
NORTHAMPTON................................. PA 42095 2.10
NORTHUMBERLAND.............................. PA 42097 2.00
PERRY....................................... PA 42099 2.05
PHILADELPHIA................................ PA 42101 2.20
PIKE........................................ PA 42103 2.15
POTTER...................................... PA 42105 1.90
SCHUYLKILL.................................. PA 42107 2.05
SNYDER...................................... PA 42109 2.00
SOMERSET.................................... PA 42111 2.05
SULLIVAN.................................... PA 42113 2.00
SUSQUEHANNA................................. PA 42115 1.90
TIOGA....................................... PA 42117 1.90
UNION....................................... PA 42119 2.00
VENANGO..................................... PA 42121 1.75
[[Page 16210]]
WARREN...................................... PA 42123 1.60
WASHINGTON.................................. PA 42125 1.95
WAYNE....................................... PA 42127 2.15
WESTMORELAND................................ PA 42129 1.95
WYOMING..................................... PA 42131 2.00
YORK........................................ PA 42133 2.05
BRISTOL..................................... RI 44001 2.75
KENT........................................ RI 44003 2.75
NEWPORT..................................... RI 44005 2.75
PROVIDENCE.................................. RI 44007 2.75
WASHINGTON.................................. RI 44009 2.75
ABBEVILLE................................... SC 45001 2.70
AIKEN....................................... SC 45003 2.80
ALLENDALE................................... SC 45005 3.10
ANDERSON.................................... SC 45007 2.55
BAMBERG..................................... SC 45009 3.10
BARNWELL.................................... SC 45011 2.80
BEAUFORT.................................... SC 45013 3.10
BERKELEY.................................... SC 45015 3.00
CALHOUN..................................... SC 45017 2.80
CHARLESTON.................................. SC 45019 3.10
CHEROKEE.................................... SC 45021 2.55
CHESTER..................................... SC 45023 2.70
CHESTERFIELD................................ SC 45025 2.70
CLARENDON................................... SC 45027 2.80
COLLETON.................................... SC 45029 3.10
DARLINGTON.................................. SC 45031 2.80
DILLON...................................... SC 45033 3.00
DORCHESTER.................................. SC 45035 3.10
EDGEFIELD................................... SC 45037 2.80
FAIRFIELD................................... SC 45039 2.70
FLORENCE.................................... SC 45041 3.00
GEORGETOWN.................................. SC 45043 3.00
GREENVILLE.................................. SC 45045 2.55
GREENWOOD................................... SC 45047 2.70
HAMPTON..................................... SC 45049 3.20
HORRY....................................... SC 45051 3.00
JASPER...................................... SC 45053 3.20
KERSHAW..................................... SC 45055 2.70
LANCASTER................................... SC 45057 2.70
LAURENS..................................... SC 45059 2.55
LEE......................................... SC 45061 2.80
LEXINGTON................................... SC 45063 2.80
MCCORMICK................................... SC 45065 2.80
MARION...................................... SC 45067 3.00
MARLBORO.................................... SC 45069 2.80
NEWBERRY.................................... SC 45071 2.70
OCONEE...................................... SC 45073 2.55
ORANGEBURG.................................. SC 45075 2.80
PICKENS..................................... SC 45077 2.55
RICHLAND.................................... SC 45079 2.80
SALUDA...................................... SC 45081 2.80
SPARTANBURG................................. SC 45083 2.55
SUMTER...................................... SC 45085 2.80
UNION....................................... SC 45087 2.55
WILLIAMSBURG................................ SC 45089 3.00
YORK........................................ SC 45091 2.55
AURORA...................................... SD 46003 1.50
BEADLE...................................... SD 46005 1.50
BENNETT..................................... SD 46007 1.40
BON HOMME................................... SD 46009 1.50
BROOKINGS................................... SD 46011 1.50
BROWN....................................... SD 46013 1.40
BRULE....................................... SD 46015 1.50
BUFFALO..................................... SD 46017 1.40
BUTTE....................................... SD 46019 1.40
CAMPBELL.................................... SD 46021 1.40
CHARLES MIX................................. SD 46023 1.50
CLARK....................................... SD 46025 1.50
CLAY........................................ SD 46027 1.70
CODINGTON................................... SD 46029 1.50
CORSON...................................... SD 46031 1.40
[[Page 16211]]
CUSTER...................................... SD 46033 1.40
DAVISON..................................... SD 46035 1.50
DAY......................................... SD 46037 1.40
DEUEL....................................... SD 46039 1.50
DEWEY....................................... SD 46041 1.40
DOUGLAS..................................... SD 46043 1.50
EDMUNDS..................................... SD 46045 1.40
FALL RIVER.................................. SD 46047 1.40
FAULK....................................... SD 46049 1.40
GRANT....................................... SD 46051 1.50
GREGORY..................................... SD 46053 1.50
HAAKON...................................... SD 46055 1.40
HAMLIN...................................... SD 46057 1.50
HAND........................................ SD 46059 1.40
HANSON...................................... SD 46061 1.50
HARDING..................................... SD 46063 1.40
HUGHES...................................... SD 46065 1.40
HUTCHINSON.................................. SD 46067 1.50
HYDE........................................ SD 46069 1.40
JACKSON..................................... SD 46071 1.40
JERAULD..................................... SD 46073 1.50
JONES....................................... SD 46075 1.40
KINGSBURY................................... SD 46077 1.50
LAKE........................................ SD 46079 1.50
LAWRENCE.................................... SD 46081 1.40
LINCOLN..................................... SD 46083 1.60
LYMAN....................................... SD 46085 1.40
MCCOOK...................................... SD 46087 1.50
MCPHERSON................................... SD 46089 1.40
MARSHALL.................................... SD 46091 1.40
MEADE....................................... SD 46093 1.40
MELLETTE.................................... SD 46095 1.40
MINER....................................... SD 46097 1.50
MINNEHAHA................................... SD 46099 1.60
MOODY....................................... SD 46101 1.50
PENNINGTON.................................. SD 46103 1.40
PERKINS..................................... SD 46105 1.40
POTTER...................................... SD 46107 1.40
ROBERTS..................................... SD 46109 1.50
SANBORN..................................... SD 46111 1.50
SHANNON..................................... SD 46113 1.40
SPINK....................................... SD 46115 1.40
STANLEY..................................... SD 46117 1.40
SULLY....................................... SD 46119 1.40
TODD........................................ SD 46121 1.40
TRIPP....................................... SD 46123 1.40
TURNER...................................... SD 46125 1.60
UNION....................................... SD 46127 1.70
WALWORTH.................................... SD 46129 1.40
YANKTON..................................... SD 46135 1.60
ZIEBACH..................................... SD 46137 1.40
ANDERSON.................................... TN 47001 2.15
BEDFORD..................................... TN 47003 2.05
BENTON...................................... TN 47005 2.20
BLEDSOE..................................... TN 47007 2.25
BLOUNT...................................... TN 47009 2.25
BRADLEY..................................... TN 47011 2.55
CAMPBELL.................................... TN 47013 2.15
CANNON...................................... TN 47015 2.05
CARROLL..................................... TN 47017 2.50
CARTER...................................... TN 47019 2.25
CHEATHAM.................................... TN 47021 2.05
CHESTER..................................... TN 47023 2.70
CLAIBORNE................................... TN 47025 2.15
CLAY........................................ TN 47027 2.05
COCKE....................................... TN 47029 2.25
COFFEE...................................... TN 47031 2.05
CROCKETT.................................... TN 47033 2.70
CUMBERLAND.................................. TN 47035 2.15
DAVIDSON.................................... TN 47037 2.05
DECATUR..................................... TN 47039 2.20
DE KALB..................................... TN 47041 2.05
[[Page 16212]]
DICKSON..................................... TN 47043 2.20
DYER........................................ TN 47045 2.50
FAYETTE..................................... TN 47047 2.85
FENTRESS.................................... TN 47049 2.15
FRANKLIN.................................... TN 47051 2.25
GIBSON...................................... TN 47053 2.50
GILES....................................... TN 47055 2.20
GRAINGER.................................... TN 47057 2.25
GREENE...................................... TN 47059 2.25
GRUNDY...................................... TN 47061 2.25
HAMBLEN..................................... TN 47063 2.25
HAMILTON.................................... TN 47065 2.55
HANCOCK..................................... TN 47067 2.25
HARDEMAN.................................... TN 47069 2.70
HARDIN...................................... TN 47071 2.50
HAWKINS..................................... TN 47073 2.25
HAYWOOD..................................... TN 47075 2.70
HENDERSON................................... TN 47077 2.50
HENRY....................................... TN 47079 2.30
HICKMAN..................................... TN 47081 2.20
HOUSTON..................................... TN 47083 2.20
HUMPHREYS................................... TN 47085 2.20
JACKSON..................................... TN 47087 2.05
JEFFERSON................................... TN 47089 2.25
JOHNSON..................................... TN 47091 2.25
KNOX........................................ TN 47093 2.25
LAKE........................................ TN 47095 2.30
LAUDERDALE.................................. TN 47097 2.70
LAWRENCE.................................... TN 47099 2.20
LEWIS....................................... TN 47101 2.20
LINCOLN..................................... TN 47103 2.25
LOUDON...................................... TN 47105 2.25
MCMINN...................................... TN 47107 2.55
MCNAIRY..................................... TN 47109 2.70
MACON....................................... TN 47111 2.05
MADISON..................................... TN 47113 2.70
MARION...................................... TN 47115 2.25
MARSHALL.................................... TN 47117 2.05
MAURY....................................... TN 47119 2.05
MEIGS....................................... TN 47121 2.55
MONROE...................................... TN 47123 2.55
MONTGOMERY.................................. TN 47125 2.20
MOORE....................................... TN 47127 2.25
MORGAN...................................... TN 47129 2.15
OBION....................................... TN 47131 2.30
OVERTON..................................... TN 47133 2.15
PERRY....................................... TN 47135 2.20
PICKETT..................................... TN 47137 2.15
POLK........................................ TN 47139 2.55
PUTNAM...................................... TN 47141 2.15
RHEA........................................ TN 47143 2.25
ROANE....................................... TN 47145 2.25
ROBERTSON................................... TN 47147 2.05
RUTHERFORD.................................. TN 47149 2.05
SCOTT....................................... TN 47151 2.15
SEQUATCHIE.................................. TN 47153 2.25
SEVIER...................................... TN 47155 2.25
SHELBY...................................... TN 47157 2.85
SMITH....................................... TN 47159 2.05
STEWART..................................... TN 47161 2.20
SULLIVAN.................................... TN 47163 2.25
SUMNER...................................... TN 47165 2.05
TIPTON...................................... TN 47167 2.85
TROUSDALE................................... TN 47169 2.05
UNICOI...................................... TN 47171 2.25
UNION....................................... TN 47173 2.15
VAN BUREN................................... TN 47175 2.15
WARREN...................................... TN 47177 2.05
WASHINGTON.................................. TN 47179 2.25
WAYNE....................................... TN 47181 2.20
WEAKLEY..................................... TN 47183 2.30
WHITE....................................... TN 47185 2.15
[[Page 16213]]
WILLIAMSON.................................. TN 47187 2.05
WILSON...................................... TN 47189 2.05
ANDERSON.................................... TX 48001 2.35
ANDREWS..................................... TX 48003 1.95
ANGELINA.................................... TX 48005 2.65
ARANSAS..................................... TX 48007 2.95
ARCHER...................................... TX 48009 1.95
ARMSTRONG................................... TX 48011 1.95
ATASCOSA.................................... TX 48013 2.75
AUSTIN...................................... TX 48015 2.75
BAILEY...................................... TX 48017 1.60
BANDERA..................................... TX 48019 2.55
BASTROP..................................... TX 48021 2.65
BAYLOR...................................... TX 48023 1.95
BEE......................................... TX 48025 2.95
BELL........................................ TX 48027 2.35
BEXAR....................................... TX 48029 2.65
BLANCO...................................... TX 48031 2.55
BORDEN...................................... TX 48033 2.10
BOSQUE...................................... TX 48035 2.35
BOWIE....................................... TX 48037 2.10
BRAZORIA.................................... TX 48039 2.95
BRAZOS...................................... TX 48041 2.65
BREWSTER.................................... TX 48043 2.35
BRISCOE..................................... TX 48045 1.95
BROOKS...................................... TX 48047 3.15
BROWN....................................... TX 48049 2.10
BURLESON.................................... TX 48051 2.65
BURNET...................................... TX 48053 2.35
CALDWELL.................................... TX 48055 2.65
CALHOUN..................................... TX 48057 2.95
CALLAHAN.................................... TX 48059 2.10
CAMERON..................................... TX 48061 3.15
CAMP........................................ TX 48063 1.95
CARSON...................................... TX 48065 1.95
CASS........................................ TX 48067 2.10
CASTRO...................................... TX 48069 1.60
CHAMBERS.................................... TX 48071 2.95
CHEROKEE.................................... TX 48073 2.35
CHILDRESS................................... TX 48075 1.95
CLAY........................................ TX 48077 1.95
COCHRAN..................................... TX 48079 1.60
COKE........................................ TX 48081 2.10
COLEMAN..................................... TX 48083 2.10
COLLIN...................................... TX 48085 1.95
COLLINGSWORTH............................... TX 48087 1.95
COLORADO.................................... TX 48089 2.75
COMAL....................................... TX 48091 2.55
COMANCHE.................................... TX 48093 2.10
CONCHO...................................... TX 48095 2.10
COOKE....................................... TX 48097 1.95
CORYELL..................................... TX 48099 2.35
COTTLE...................................... TX 48101 1.95
CRANE....................................... TX 48103 2.10
CROCKETT.................................... TX 48105 2.35
CROSBY...................................... TX 48107 1.95
CULBERSON................................... TX 48109 1.95
DALLAM...................................... TX 48111 1.90
DALLAS...................................... TX 48113 2.10
DAWSON...................................... TX 48115 1.95
DEAF SMITH.................................. TX 48117 1.60
DELTA....................................... TX 48119 1.95
DENTON...................................... TX 48121 1.95
DE WITT..................................... TX 48123 2.75
DICKENS..................................... TX 48125 1.95
DIMMIT...................................... TX 48127 2.75
DONLEY...................................... TX 48129 1.95
DUVAL....................................... TX 48131 2.95
EASTLAND.................................... TX 48133 2.10
ECTOR....................................... TX 48135 2.10
EDWARDS..................................... TX 48137 2.35
ELLIS....................................... TX 48139 2.10
[[Page 16214]]
EL PASO..................................... TX 48141 1.75
ERATH....................................... TX 48143 2.10
FALLS....................................... TX 48145 2.35
FANNIN...................................... TX 48147 1.95
FAYETTE..................................... TX 48149 2.75
FISHER...................................... TX 48151 2.10
FLOYD....................................... TX 48153 1.95
FOARD....................................... TX 48155 1.95
FORT BEND................................... TX 48157 2.95
FRANKLIN.................................... TX 48159 1.95
FREESTONE................................... TX 48161 2.35
FRIO........................................ TX 48163 2.75
GAINES...................................... TX 48165 1.95
GALVESTON................................... TX 48167 2.95
GARZA....................................... TX 48169 1.95
GILLESPIE................................... TX 48171 2.35
GLASSCOCK................................... TX 48173 2.10
GOLIAD...................................... TX 48175 2.95
GONZALES.................................... TX 48177 2.75
GRAY........................................ TX 48179 1.95
GRAYSON..................................... TX 48181 1.95
GREGG....................................... TX 48183 2.10
GRIMES...................................... TX 48185 2.75
GUADALUPE................................... TX 48187 2.65
HALE........................................ TX 48189 1.95
HALL........................................ TX 48191 1.95
HAMILTON.................................... TX 48193 2.10
HANSFORD.................................... TX 48195 1.90
HARDEMAN.................................... TX 48197 1.95
HARDIN...................................... TX 48199 2.95
HARRIS...................................... TX 48201 2.95
HARRISON.................................... TX 48203 2.10
HARTLEY..................................... TX 48205 1.90
HASKELL..................................... TX 48207 1.95
HAYS........................................ TX 48209 2.55
HEMPHILL.................................... TX 48211 1.90
HENDERSON................................... TX 48213 2.35
HIDALGO..................................... TX 48215 3.15
HILL........................................ TX 48217 2.35
HOCKLEY..................................... TX 48219 1.95
HOOD........................................ TX 48221 2.10
HOPKINS..................................... TX 48223 1.95
HOUSTON..................................... TX 48225 2.55
HOWARD...................................... TX 48227 2.10
HUDSPETH.................................... TX 48229 1.75
HUNT........................................ TX 48231 1.95
HUTCHINSON.................................. TX 48233 1.90
IRION....................................... TX 48235 2.35
JACK........................................ TX 48237 1.95
JACKSON..................................... TX 48239 2.95
JASPER...................................... TX 48241 2.75
JEFF DAVIS.................................. TX 48243 2.10
JEFFERSON................................... TX 48245 2.95
JIM HOGG.................................... TX 48247 2.95
JIM WELLS................................... TX 48249 2.95
JOHNSON..................................... TX 48251 2.10
JONES....................................... TX 48253 2.10
KARNES...................................... TX 48255 2.75
KAUFMAN..................................... TX 48257 2.10
KENDALL..................................... TX 48259 2.55
KENEDY...................................... TX 48261 3.15
KENT........................................ TX 48263 2.10
KERR........................................ TX 48265 2.55
KIMBLE...................................... TX 48267 2.35
KING........................................ TX 48269 1.95
KINNEY...................................... TX 48271 2.65
KLEBERG..................................... TX 48273 3.15
KNOX........................................ TX 48275 1.95
LAMAR....................................... TX 48277 1.95
LAMB........................................ TX 48279 1.60
LAMPASAS.................................... TX 48281 2.35
LA SALLE.................................... TX 48283 2.75
[[Page 16215]]
LAVACA...................................... TX 48285 2.75
LEE......................................... TX 48287 2.65
LEON........................................ TX 48289 2.55
LIBERTY..................................... TX 48291 2.95
LIMESTONE................................... TX 48293 2.35
LIPSCOMB.................................... TX 48295 1.90
LIVE OAK.................................... TX 48297 2.95
LLANO....................................... TX 48299 2.35
LOVING...................................... TX 48301 1.95
LUBBOCK..................................... TX 48303 1.95
LYNN........................................ TX 48305 1.95
MCCULLOCH................................... TX 48307 2.10
MCLENNAN.................................... TX 48309 2.35
MCMULLEN.................................... TX 48311 2.75
MADISON..................................... TX 48313 2.65
MARION...................................... TX 48315 2.10
MARTIN...................................... TX 48317 2.10
MASON....................................... TX 48319 2.35
MATAGORDA................................... TX 48321 2.95
MAVERICK.................................... TX 48323 2.65
MEDINA...................................... TX 48325 2.65
MENARD...................................... TX 48327 2.35
MIDLAND..................................... TX 48329 2.10
MILAM....................................... TX 48331 2.55
MILLS....................................... TX 48333 2.10
MITCHELL.................................... TX 48335 2.10
MONTAGUE.................................... TX 48337 1.95
MONTGOMERY.................................. TX 48339 2.95
MOORE....................................... TX 48341 1.90
MORRIS...................................... TX 48343 1.95
MOTLEY...................................... TX 48345 1.95
NACOGDOCHES................................. TX 48347 2.55
NAVARRO..................................... TX 48349 2.35
NEWTON...................................... TX 48351 2.75
NOLAN....................................... TX 48353 2.10
NUECES...................................... TX 48355 3.15
OCHILTREE................................... TX 48357 1.90
OLDHAM...................................... TX 48359 1.90
ORANGE...................................... TX 48361 2.95
PALO PINTO.................................. TX 48363 2.10
PANOLA...................................... TX 48365 2.35
PARKER...................................... TX 48367 2.10
PARMER...................................... TX 48369 1.60
PECOS....................................... TX 48371 2.35
POLK........................................ TX 48373 2.75
POTTER...................................... TX 48375 1.95
PRESIDIO.................................... TX 48377 2.10
RAINS....................................... TX 48379 1.95
RANDALL..................................... TX 48381 1.95
REAGAN...................................... TX 48383 2.35
REAL........................................ TX 48385 2.55
RED RIVER................................... TX 48387 1.95
REEVES...................................... TX 48389 2.10
REFUGIO..................................... TX 48391 2.95
ROBERTS..................................... TX 48393 1.90
ROBERTSON................................... TX 48395 2.55
ROCKWALL.................................... TX 48397 1.95
RUNNELS..................................... TX 48399 2.10
RUSK........................................ TX 48401 2.35
SABINE...................................... TX 48403 2.65
SAN AUGUSTINE............................... TX 48405 2.65
SAN JACINTO................................. TX 48407 2.75
SAN PATRICIO................................ TX 48409 2.95
SAN SABA.................................... TX 48411 2.10
SCHLEICHER.................................. TX 48413 2.35
SCURRY...................................... TX 48415 2.10
SHACKELFORD................................. TX 48417 2.10
SHELBY...................................... TX 48419 2.55
SHERMAN..................................... TX 48421 1.90
SMITH....................................... TX 48423 2.35
SOMERVELL................................... TX 48425 2.10
STARR....................................... TX 48427 2.95
[[Page 16216]]
STEPHENS.................................... TX 48429 2.10
STERLING.................................... TX 48431 2.10
STONEWALL................................... TX 48433 2.10
SUTTON...................................... TX 48435 2.35
SWISHER..................................... TX 48437 1.95
TARRANT..................................... TX 48439 2.10
TAYLOR...................................... TX 48441 2.10
TERRELL..................................... TX 48443 2.35
TERRY....................................... TX 48445 1.95
THROCKMORTON................................ TX 48447 1.95
TITUS....................................... TX 48449 1.95
TOM GREEN................................... TX 48451 2.10
TRAVIS...................................... TX 48453 2.55
TRINITY..................................... TX 48455 2.65
TYLER....................................... TX 48457 2.75
UPSHUR...................................... TX 48459 2.10
UPTON....................................... TX 48461 2.35
UVALDE...................................... TX 48463 2.65
VAL VERDE................................... TX 48465 2.35
VAN ZANDT................................... TX 48467 2.10
VICTORIA.................................... TX 48469 2.95
WALKER...................................... TX 48471 2.75
WALLER...................................... TX 48473 2.75
WARD........................................ TX 48475 2.10
WASHINGTON.................................. TX 48477 2.75
WEBB........................................ TX 48479 2.75
WHARTON..................................... TX 48481 2.95
WHEELER..................................... TX 48483 1.90
WICHITA..................................... TX 48485 1.95
WILBARGER................................... TX 48487 1.95
WILLACY..................................... TX 48489 3.15
WILLIAMSON.................................. TX 48491 2.55
WILSON...................................... TX 48493 2.75
WINKLER..................................... TX 48495 1.95
WISE........................................ TX 48497 1.95
WOOD........................................ TX 48499 1.95
YOAKUM...................................... TX 48501 1.95
YOUNG....................................... TX 48503 1.95
ZAPATA...................................... TX 48505 2.95
ZAVALA...................................... TX 48507 2.65
BEAVER...................................... UT 49001 1.50
BOX ELDER................................... UT 49003 1.50
CACHE....................................... UT 49005 1.50
CARBON...................................... UT 49007 1.80
DAGGETT..................................... UT 49009 1.50
DAVIS....................................... UT 49011 1.50
DUCHESNE.................................... UT 49013 1.50
EMERY....................................... UT 49015 1.80
GARFIELD.................................... UT 49017 1.80
GRAND....................................... UT 49019 1.90
IRON........................................ UT 49021 1.80
JUAB........................................ UT 49023 1.50
KANE........................................ UT 49025 1.90
MILLARD..................................... UT 49027 1.50
MORGAN...................................... UT 49029 1.50
PIUTE....................................... UT 49031 1.50
RICH........................................ UT 49033 1.50
SALT LAKE................................... UT 49035 1.50
SAN JUAN.................................... UT 49037 1.90
SANPETE..................................... UT 49039 1.50
SEVIER...................................... UT 49041 1.50
SUMMIT...................................... UT 49043 1.50
TOOELE...................................... UT 49045 1.50
UINTAH...................................... UT 49047 1.80
UTAH........................................ UT 49049 1.50
WASATCH..................................... UT 49051 1.50
WASHINGTON.................................. UT 49053 1.90
WAYNE....................................... UT 49055 1.80
WEBER....................................... UT 49057 1.50
ADDISON..................................... VT 50001 2.05
BENNINGTON.................................. VT 50003 2.15
CALEDONIA................................... VT 50005 1.95
[[Page 16217]]
CHITTENDEN.................................. VT 50007 2.05
ESSEX....................................... VT 50009 1.95
FRANKLIN.................................... VT 50011 1.95
GRAND ISLE.................................. VT 50013 1.95
LAMOILLE.................................... VT 50015 1.95
ORANGE...................................... VT 50017 2.05
ORLEANS..................................... VT 50019 1.95
RUTLAND..................................... VT 50021 2.05
WASHINGTON.................................. VT 50023 2.05
WINDHAM..................................... VT 50025 2.30
WINDSOR..................................... VT 50027 2.15
ACCOMACK.................................... VA 51001 2.10
ALBEMARLE................................... VA 51003 2.15
ALLEGHANY................................... VA 51005 2.15
AMELIA...................................... VA 51007 2.20
AMHERST..................................... VA 51009 2.15
APPOMATTOX.................................. VA 51011 2.15
ARLINGTON................................... VA 51013 2.05
AUGUSTA..................................... VA 51015 2.15
BATH........................................ VA 51017 2.15
BEDFORD..................................... VA 51019 2.15
BLAND....................................... VA 51021 2.25
BOTETOURT................................... VA 51023 2.15
BRUNSWICK................................... VA 51025 2.35
BUCHANAN.................................... VA 51027 2.25
BUCKINGHAM.................................. VA 51029 2.15
CAMPBELL.................................... VA 51031 2.15
CAROLINE.................................... VA 51033 2.20
CARROLL..................................... VA 51035 2.25
CHARLES CITY................................ VA 51036 2.20
CHARLOTTE................................... VA 51037 2.15
CHESTERFIELD................................ VA 51041 2.20
CLARKE...................................... VA 51043 2.05
CRAIG....................................... VA 51045 2.15
CULPEPER.................................... VA 51047 2.05
CUMBERLAND.................................. VA 51049 2.15
DICKENSON................................... VA 51051 2.25
DINWIDDIE................................... VA 51053 2.35
ESSEX....................................... VA 51057 2.20
FAIRFAX..................................... VA 51059 2.05
FAUQUIER.................................... VA 51061 2.05
FLOYD....................................... VA 51063 2.15
FLUVANNA.................................... VA 51065 2.15
FRANKLIN.................................... VA 51067 2.15
FREDERICK................................... VA 51069 2.05
GILES....................................... VA 51071 2.15
GLOUCESTER.................................. VA 51073 2.20
GOOCHLAND................................... VA 51075 2.20
GRAYSON..................................... VA 51077 2.25
GREENE...................................... VA 51079 2.15
GREENSVILLE................................. VA 51081 2.35
HALIFAX..................................... VA 51083 2.35
HANOVER..................................... VA 51085 2.20
HENRICO..................................... VA 51087 2.20
HENRY....................................... VA 51089 2.35
HIGHLAND.................................... VA 51091 2.15
ISLE OF WIGHT............................... VA 51093 2.55
JAMES CITY.................................. VA 51095 2.55
KING AND QUEEN.............................. VA 51097 2.20
KING GEORGE................................. VA 51099 2.05
KING WILLIAM................................ VA 51101 2.20
LANCASTER................................... VA 51103 2.20
LEE......................................... VA 51105 2.25
LOUDOUN..................................... VA 51107 2.05
LOUISA...................................... VA 51109 2.15
LUNENBURG................................... VA 51111 2.35
MADISON..................................... VA 51113 2.15
MATHEWS..................................... VA 51115 2.20
MECKLENBURG................................. VA 51117 2.35
MIDDLESEX................................... VA 51119 2.20
MONTGOMERY.................................. VA 51121 2.15
NELSON...................................... VA 51125 2.15
[[Page 16218]]
NEW KENT.................................... VA 51127 2.20
NORTHAMPTON................................. VA 51131 2.10
NORTHUMBERLAND.............................. VA 51133 2.20
NOTTOWAY.................................... VA 51135 2.35
ORANGE...................................... VA 51137 2.15
PAGE........................................ VA 51139 2.05
PATRICK..................................... VA 51141 2.35
PITTSYLVANIA................................ VA 51143 2.35
POWHATAN.................................... VA 51145 2.20
PRINCE EDWARD............................... VA 51147 2.15
PRINCE GEORGE............................... VA 51149 2.35
PRINCE WILLIAM.............................. VA 51153 2.05
PULASKI..................................... VA 51155 2.15
RAPPAHANNOCK................................ VA 51157 2.05
RICHMOND.................................... VA 51159 2.20
ROANOKE..................................... VA 51161 2.15
ROCKBRIDGE.................................. VA 51163 2.15
ROCKINGHAM.................................. VA 51165 2.15
RUSSELL..................................... VA 51167 2.25
SCOTT....................................... VA 51169 2.25
SHENANDOAH.................................. VA 51171 2.05
SMYTH....................................... VA 51173 2.25
SOUTHAMPTON................................. VA 51175 2.55
SPOTSYLVANIA................................ VA 51177 2.15
STAFFORD.................................... VA 51179 2.05
SURRY....................................... VA 51181 2.55
SUSSEX...................................... VA 51183 2.35
TAZEWELL.................................... VA 51185 2.25
WARREN...................................... VA 51187 2.05
WASHINGTON.................................. VA 51191 2.25
WESTMORELAND................................ VA 51193 2.05
WISE........................................ VA 51195 2.25
WYTHE....................................... VA 51197 2.25
YORK........................................ VA 51199 2.55
ALEXANDRIA CITY............................. VA 51510 2.05
BEDFORD CITY................................ VA 51515 2.15
BRISTOL CITY................................ VA 51520 2.25
BUENA VISTA CITY............................ VA 51530 2.15
CHARLOTTESVILLE CITY........................ VA 51540 2.15
CHESAPEAKE CITY............................. VA 51550 2.55
CLIFTON FORGE CITY.......................... VA 51560 2.15
COLONIAL HEIGHTS CITY....................... VA 51570 2.30
COVINGTON CITY.............................. VA 51580 2.15
DANVILLE CITY............................... VA 51590 2.35
EMPORIA CITY................................ VA 51595 2.35
FAIRFAX CITY................................ VA 51600 2.05
FALLS CHURCH CITY........................... VA 51610 2.05
FRANKLIN CITY............................... VA 51620 2.55
FREDERICKSBURG CITY......................... VA 51630 2.15
GALAX CITY.................................. VA 51640 2.25
HAMPTON CITY................................ VA 51650 2.55
HARRISONBURG CITY........................... VA 51660 2.15
HOPEWELL CITY............................... VA 51670 2.35
LEXINGTON CITY.............................. VA 51678 2.15
LYNCHBURG CITY.............................. VA 51680 2.15
MANASSAS CITY............................... VA 51683 2.05
MANASSAS PARK CITY.......................... VA 51685 2.05
MARTINSVILLE CITY........................... VA 51690 2.35
NEWPORT NEWS CITY........................... VA 51700 2.55
NORFOLK CITY................................ VA 51710 2.55
NORTON CITY................................. VA 51720 2.25
PETERSBURG CITY............................. VA 51730 2.35
POQUOSON CITY............................... VA 51735 2.55
PORTSMOUTH CITY............................. VA 51740 2.55
RADFORD CITY................................ VA 51750 2.15
RICHMOND CITY............................... VA 51760 2.20
ROANOKE CITY................................ VA 51770 2.15
SALEM CITY.................................. VA 51775 2.15
STAUNTON CITY............................... VA 51790 2.15
SUFFOLK CITY................................ VA 51800 2.55
VIRGINIA BEACH CITY......................... VA 51810 2.55
WAYNESBORO CITY............................. VA 51820 2.15
[[Page 16219]]
WILLIAMSBURG CITY........................... VA 51830 2.55
WINCHESTER CITY............................. VA 51840 2.05
ADAMS....................................... WA 53001 1.35
ASOTIN...................................... WA 53003 1.35
BENTON...................................... WA 53005 1.30
CHELAN...................................... WA 53007 1.30
CLALLAM..................................... WA 53009 1.45
CLARK....................................... WA 53011 1.45
COLUMBIA.................................... WA 53013 1.35
COWLITZ..................................... WA 53015 1.45
DOUGLAS..................................... WA 53017 1.30
FERRY....................................... WA 53019 1.35
FRANKLIN.................................... WA 53021 1.35
GARFIELD.................................... WA 53023 1.35
GRANT....................................... WA 53025 1.30
GRAYS HARBOR................................ WA 53027 1.45
ISLAND...................................... WA 53029 1.45
JEFFERSON................................... WA 53031 1.45
KING........................................ WA 53033 1.45
KITSAP...................................... WA 53035 1.45
KITTITAS.................................... WA 53037 1.30
KLICKITAT................................... WA 53039 1.30
LEWIS....................................... WA 53041 1.45
LINCOLN..................................... WA 53043 1.35
MASON....................................... WA 53045 1.45
OKANOGAN.................................... WA 53047 1.30
PACIFIC..................................... WA 53049 1.45
PEND OREILLE................................ WA 53051 1.35
PIERCE...................................... WA 53053 1.45
SAN JUAN.................................... WA 53055 1.45
SKAGIT...................................... WA 53057 1.20
SKAMANIA.................................... WA 53059 1.45
SNOHOMISH................................... WA 53061 1.45
SPOKANE..................................... WA 53063 1.35
STEVENS..................................... WA 53065 1.35
THURSTON.................................... WA 53067 1.45
WAHKIAKUM................................... WA 53069 1.45
WALLA WALLA................................. WA 53071 1.35
WHATCOM..................................... WA 53073 1.20
WHITMAN..................................... WA 53075 1.35
YAKIMA...................................... WA 53077 1.30
BARBOUR..................................... WV 54001 2.05
BERKELEY.................................... WV 54003 2.05
BOONE....................................... WV 54005 2.20
BRAXTON..................................... WV 54007 2.20
BROOKE...................................... WV 54009 1.95
CABELL...................................... WV 54011 2.20
CALHOUN..................................... WV 54013 2.05
CLAY........................................ WV 54015 2.20
DODDRIDGE................................... WV 54017 2.05
FAYETTE..................................... WV 54019 2.20
GILMER...................................... WV 54021 2.05
GRANT....................................... WV 54023 2.05
GREENBRIER.................................. WV 54025 2.15
HAMPSHIRE................................... WV 54027 2.05
HANCOCK..................................... WV 54029 1.95
HARDY....................................... WV 54031 2.05
HARRISON.................................... WV 54033 2.05
JACKSON..................................... WV 54035 2.05
JEFFERSON................................... WV 54037 2.05
KANAWHA..................................... WV 54039 2.20
LEWIS....................................... WV 54041 2.05
LINCOLN..................................... WV 54043 2.20
LOGAN....................................... WV 54045 2.20
MCDOWELL.................................... WV 54047 2.20
MARION...................................... WV 54049 1.95
MARSHALL.................................... WV 54051 1.95
MASON....................................... WV 54053 2.05
MERCER...................................... WV 54055 2.15
MINERAL..................................... WV 54057 2.05
MINGO....................................... WV 54059 2.20
MONONGALIA.................................. WV 54061 1.95
[[Page 16220]]
MONROE...................................... WV 54063 2.15
MORGAN...................................... WV 54065 2.05
NICHOLAS.................................... WV 54067 2.20
OHIO........................................ WV 54069 1.95
PENDLETON................................... WV 54071 2.15
PLEASANTS................................... WV 54073 2.05
POCAHONTAS.................................. WV 54075 2.15
PRESTON..................................... WV 54077 1.95
PUTNAM...................................... WV 54079 2.20
RALEIGH..................................... WV 54081 2.20
RANDOLPH.................................... WV 54083 2.05
RITCHIE..................................... WV 54085 2.05
ROANE....................................... WV 54087 2.20
SUMMERS..................................... WV 54089 2.15
TAYLOR...................................... WV 54091 1.95
TUCKER...................................... WV 54093 2.05
TYLER....................................... WV 54095 2.05
UPSHUR...................................... WV 54097 2.05
WAYNE....................................... WV 54099 2.20
WEBSTER..................................... WV 54101 2.05
WETZEL...................................... WV 54103 1.95
WIRT........................................ WV 54105 2.05
WOOD........................................ WV 54107 2.05
WYOMING..................................... WV 54109 2.20
ADAMS....................................... WI 55001 1.70
ASHLAND..................................... WI 55003 1.60
BARRON...................................... WI 55005 1.60
BAYFIELD.................................... WI 55007 1.65
BROWN....................................... WI 55009 1.80
BUFFALO..................................... WI 55011 1.60
BURNETT..................................... WI 55013 1.60
CALUMET..................................... WI 55015 1.80
CHIPPEWA.................................... WI 55017 1.60
CLARK....................................... WI 55019 1.60
COLUMBIA.................................... WI 55021 1.70
CRAWFORD.................................... WI 55023 1.70
DANE........................................ WI 55025 1.80
DODGE....................................... WI 55027 1.80
DOOR........................................ WI 55029 1.80
DOUGLAS..................................... WI 55031 1.65
DUNN........................................ WI 55033 1.60
EAU CLAIRE.................................. WI 55035 1.60
FLORENCE.................................... WI 55037 1.60
FOND DU LAC................................. WI 55039 1.80
FOREST...................................... WI 55041 1.60
GRANT....................................... WI 55043 1.80
GREEN....................................... WI 55045 1.80
GREEN LAKE.................................. WI 55047 1.70
IOWA........................................ WI 55049 1.80
IRON........................................ WI 55051 1.60
JACKSON..................................... WI 55053 1.60
JEFFERSON................................... WI 55055 1.80
JUNEAU...................................... WI 55057 1.70
KENOSHA..................................... WI 55059 1.95
KEWAUNEE.................................... WI 55061 1.80
LA CROSSE................................... WI 55063 1.60
LAFAYETTE................................... WI 55065 1.80
LANGLADE.................................... WI 55067 1.60
LINCOLN..................................... WI 55069 1.60
MANITOWOC................................... WI 55071 1.80
MARATHON.................................... WI 55073 1.60
MARINETTE................................... WI 55075 1.60
MARQUETTE................................... WI 55077 1.70
MENOMINEE................................... WI 55078 1.70
MILWAUKEE................................... WI 55079 1.95
MONROE...................................... WI 55081 1.60
OCONTO...................................... WI 55083 1.70
ONEIDA...................................... WI 55085 1.60
OUTAGAMIE................................... WI 55087 1.70
OZAUKEE..................................... WI 55089 1.95
PEPIN....................................... WI 55091 1.60
PIERCE...................................... WI 55093 1.60
[[Page 16221]]
POLK........................................ WI 55095 1.60
PORTAGE..................................... WI 55097 1.60
PRICE....................................... WI 55099 1.60
RACINE...................................... WI 55101 1.95
RICHLAND.................................... WI 55103 1.70
ROCK........................................ WI 55105 1.80
RUSK........................................ WI 55107 1.60
ST. CROIX................................... WI 55109 1.60
SAUK........................................ WI 55111 1.70
SAWYER...................................... WI 55113 1.60
SHAWANO..................................... WI 55115 1.70
SHEBOYGAN................................... WI 55117 1.95
TAYLOR...................................... WI 55119 1.60
TREMPEALEAU................................. WI 55121 1.60
VERNON...................................... WI 55123 1.70
VILAS....................................... WI 55125 1.60
WALWORTH.................................... WI 55127 1.80
WASHBURN.................................... WI 55129 1.60
WASHINGTON.................................. WI 55131 1.80
WAUKESHA.................................... WI 55133 1.80
WAUPACA..................................... WI 55135 1.70
WAUSHARA.................................... WI 55137 1.70
WINNEBAGO................................... WI 55139 1.70
WOOD........................................ WI 55141 1.60
ALBANY...................................... WY 56001 1.55
BIG HORN.................................... WY 56003 1.40
CAMPBELL.................................... WY 56005 1.40
CARBON...................................... WY 56007 1.55
CONVERSE.................................... WY 56009 1.40
CROOK....................................... WY 56011 1.40
FREMONT..................................... WY 56013 1.40
GOSHEN...................................... WY 56015 1.40
HOT SPRINGS................................. WY 56017 1.40
JOHNSON..................................... WY 56019 1.40
LARAMIE..................................... WY 56021 1.55
LINCOLN..................................... WY 56023 1.40
NATRONA..................................... WY 56025 1.40
NIOBRARA.................................... WY 56027 1.40
PARK........................................ WY 56029 1.40
PLATTE...................................... WY 56031 1.55
SHERIDAN.................................... WY 56033 1.50
SUBLETTE.................................... WY 56035 1.40
SWEETWATER.................................. WY 56037 1.50
TETON....................................... WY 56039 1.40
UINTA....................................... WY 56041 1.50
WASHAKIE.................................... WY 56043 1.40
WESTON...................................... WY 56045 1.40
----------------------------------------------------------------------------------------------------------------
Sec. 1000.53 Announcement of class prices, component prices, and
advanced pricing factors.
(a) On or before the 5th day of the month, the market administrator
for each Federal milk marketing order shall announce the following
prices (as applicable to that order) for the preceding month:
(1) The Class II price;
(2) The Class II butterfat price;
(3) The Class III price;
(4) The Class III skim milk price;
(5) The Class IV price;
(6) The Class IV skim milk price;
(7) The butterfat price;
(8) The nonfat solids price;
(9) The protein price;
(10) The other solids price; and
(11) The somatic cell adjustment rate.
(b) On or before the 23rd day of the month, the market
administrator for each Federal milk marketing order shall announce the
following prices and pricing factors for the following month:
(1) The Class I price;
(2) The Class I skim milk price;
(3) The Class I butterfat price;
(4) The Class II skim milk price;
(5) The Class II nonfat solids price; and
(6) The advanced pricing factors described in Sec. 1000.50(q).
Sec. 1000.54 Equivalent price.
If for any reason a price or pricing constituent required for
computing the prices described in Sec. 1000.50 is not available, the
market administrator shall use a price or pricing constituent
determined by the Deputy Administrator, Dairy Programs, Agricultural
Marketing Service, to be equivalent to the price or pricing constituent
that is required.
Subpart H--Payments for Milk
Sec. 1000.70 Producer-settlement fund.
The market administrator shall establish and maintain a separate
fund known as the producer-settlement fund into which the market
administrator shall deposit all payments made by handlers pursuant to
Secs. ________.71, ________.76, and ________.77 of each Federal milk
order and out of which the market administrator shall make all payments
pursuant to Secs. ________.72 and ________.77 of each Federal milk
order. Payments due any handler shall
[[Page 16222]]
be offset by any payments due from that handler.
Sec. 1000.76 Payments by a handler operating a partially regulated
distributing plant.
On or before the 25th day after the end of the month (except as
provided in Sec. 1000.90), the operator of a partially regulated
distributing plant, other than a plant that is subject to marketwide
pooling of producer returns under a State government's milk
classification and pricing program, shall pay to the market
administrator for the producer-settlement fund the amount computed
pursuant to paragraph (a) of this section or, if the handler submits
the information specified in Secs. ________.30(b) and ________.31(b) of
the order, the handler may elect to pay the amount computed pursuant to
paragraph (b) of this section. A partially regulated distributing plant
that is subject to marketwide pooling of producer returns under a State
government's milk classification and pricing program shall pay the
amount computed pursuant to paragraph (c) of this section.
(a) The payment under this paragraph shall be an amount resulting
from the following computations:
(1) From the plant's route disposition in the marketing area:
(i) Subtract receipts of fluid milk products classified as Class I
milk from pool plants, plants fully regulated under other Federal
orders, and handlers described in Sec. 1000.9(c) and Sec. 1135.11,
except those receipts subtracted under a similar provision of another
Federal milk order;
(ii) Subtract receipts of fluid milk products from another nonpool
plant that is not a plant fully regulated under another Federal order
to the extent that an equivalent amount of fluid milk products disposed
of to the nonpool plant by handlers fully regulated under any Federal
order is classified and priced as Class I milk and is not used as an
offset for any payment obligation under any order; and
(iii) Subtract the pounds of reconstituted milk made from nonfluid
milk products which are disposed of as route disposition in the
marketing area;
(2) For orders with multiple component pricing, compute a Class I
differential price by subtracting Class III price from the current
month's Class I price. Multiply the pounds remaining after the
computation in paragraph (a)(1)(iii) of this section by the amount by
which the Class I differential price exceeds the producer price
differential, both prices to be applicable at the location of the
partially regulated distributing plant except that neither the adjusted
Class I differential price nor the adjusted producer price differential
shall be less than zero;
(3) For orders with skim milk and butterfat pricing, multiply the
remaining pounds by the amount by which the Class I price exceeds the
uniform price, both prices to be applicable at the location of the
partially regulated distributing plant except that neither the adjusted
Class I price nor the adjusted uniform price differential shall be less
than the lowest announced class price; and
(4) Unless the payment option described in paragraph (d) is
selected, add the amount obtained from multiplying the pounds of
labeled reconstituted milk included in paragraph (a)(1)(iii) of this
section by any positive difference between the Class I price applicable
at the location of the partially regulated distributing plant (less
$1.00 if the reconstituted milk is labeled as such) and the Class IV
price.
(b) The payment under this paragraph shall be the amount resulting
from the following computations:
(1) Determine the value that would have been computed pursuant to
Sec. ________.60 of the order for the partially regulated distributing
plant if the plant had been a pool plant, subject to the following
modifications:
(i) Fluid milk products and bulk fluid cream products received at
the plant from a pool plant, a plant fully regulated under another
Federal order, and handlers described in Sec. 1000.9(c) and
Sec. 1135.11 shall be allocated at the partially regulated distributing
plant to the same class in which such products were classified at the
fully regulated plant;
(ii) Fluid milk products and bulk fluid cream products transferred
from the partially regulated distributing plant to a pool plant or a
plant fully regulated under another Federal order shall be classified
at the partially regulated distributing plant in the class to which
allocated at the fully regulated plant. Such transfers shall be
allocated to the extent possible to those receipts at the partially
regulated distributing plant from the pool plant and plants fully
regulated under other Federal orders that are classified in the
corresponding class pursuant to paragraph (b)(1)(i) of this section.
Any such transfers remaining after the above allocation which are in
Class I and for which a value is computed pursuant to Sec. ________.60
of the order for the partially regulated distributing plant shall be
priced at the statistical uniform price or uniform price, whichever is
applicable, of the respective order regulating the handling of milk at
the receiving plant, with such statistical uniform price or uniform
price adjusted to the location of the nonpool plant (but not to be less
than the lowest announced class price of the respective order); and
(iii) If the operator of the partially regulated distributing plant
so requests, the handler's value of milk determined pursuant to
Sec. ________.60 of the order shall include a value of milk determined
for each nonpool plant that is not a plant fully regulated under
another Federal order which serves as a supply plant for the partially
regulated distributing plant by making shipments to the partially
regulated distributing plant during the month equivalent to the
requirements of section 7(c) of the order subject to the following
conditions:
(A) The operator of the partially regulated distributing plant
submits with its reports filed pursuant to Secs. ________.30(b) and
________.31(b) of the order similar reports for each such nonpool
supply plant;
(B) The operator of the nonpool plant maintains books and records
showing the utilization of all skim milk and butterfat received at the
plant which are made available if requested by the market administrator
for verification purposes; and
(C) The value of milk determined pursuant to Sec. ________.60 for
the unregulated supply plant shall be determined in the same manner
prescribed for computing the obligation of the partially regulated
distributing plant; and
(2) From the partially regulated distributing plant's value of milk
computed pursuant to paragraph (b)(1) of this section, subtract:
(i) The gross payments that were made for milk that would have been
producer milk had the plant been fully regulated;
(ii) If paragraph (b)(1)(iii) of this section applies, the gross
payments by the operator of the nonpool supply plant for milk received
at the plant during the month that would have been producer milk if the
plant had been fully regulated; and
(iii) The payments by the operator of the partially regulated
distributing plant to the producer-settlement fund of another Federal
order under which the plant is also a partially regulated distributing
plant and, if paragraph (b)(1)(iii) of this section applies, payments
made by the operator of the nonpool supply plant to the producer-
settlement fund of any order.
[[Page 16223]]
(c) The operator of a partially regulated distributing plant that
is subject to marketwide pooling of returns under a milk classification
and pricing program that is imposed under the authority of a State
government shall pay on or before the 25th day after the end of the
month (except as provided in Sec. 1000.90) to the market administrator
for the producer-settlement fund an amount computed as follows:
After completing the computations described in paragraphs (a)(1)(i)
and (ii) of this section, determine the value of the remaining pounds
of fluid milk products disposed of as route disposition in the
marketing area by multiplying the hundredweight of such pounds by the
amount, if greater than zero, that remains after subtracting the State
program's class prices applicable to such products at the plant's
location from the Federal order Class I price applicable at the
location of the plant.
(d) Any handler may elect partially regulated distributing plant
status for any plant with respect to receipts of nonfluid milk
ingredients that are reconstituted for fluid use. Payments may be made
to the producer-settlement fund of the order regulating the producer
milk used to produce the nonfluid milk ingredients at the positive
difference between the Class I price applicable under the other order
at the location of the plant where the nonfluid milk ingredients were
processed and the Class IV price. This payment option shall apply only
if a majority of the total milk received at the plant that processed
the nonfluid milk ingredients is regulated under one or more Federal
orders and payment may only be made to the producer-settlement fund of
the order pricing a plurality of the milk used to produce the nonfluid
milk ingredients. This payment option shall not apply if the source of
the nonfluid ingredients used in reconstituted fluid milk products
cannot be determined by the market administrator.
Sec. 1000.77 Adjustment of accounts.
Whenever audit by the market administrator of any handler's
reports, books, records, or accounts, or other verification discloses
errors resulting in money due the market administrator from a handler,
or due a handler from the market administrator, or due a producer or
cooperative association from a handler, the market administrator shall
promptly notify such handler of any amount so due and payment thereof
shall be made on or before the next date for making payments as set
forth in the provisions under which the error(s) occurred.
Sec. 1000.78 Charges on overdue accounts.
Any unpaid obligation due the market administrator, producers, or
cooperative associations from a handler pursuant to the provisions of
the order shall be increased 1.0 percent each month beginning with the
day following the date such obligation was due under the order. Any
remaining amount due shall be increased at the same rate on the
corresponding day of each succeeding month until paid. The amounts
payable pursuant to this section shall be computed monthly on each
unpaid obligation and shall include any unpaid charges previously
computed pursuant to this section. The late charges shall accrue to the
administrative assessment fund. For the purpose of this section, any
obligation that was determined at a date later than prescribed by the
order because of a handler's failure to submit a report to the market
administrator when due shall be considered to have been payable by the
date it would have been due if the report had been filed when due.
Subpart I--Administrative Assessment and Marketing Service
Deduction
Sec. 1000.85 Assessment for order administration.
On or before the payment receipt date specified under
Sec. ________.71 of each Federal milk order each handler shall pay to
the market administrator its pro rata share of the expense of
administration of the order at a rate specified by the market
administrator that is no more than 5 cents per hundredweight with
respect to:
(a) Receipts of producer milk (including the handler's own
production) other than such receipts by a handler described in
Sec. 1000.9(c) that were delivered to pool plants of other handlers;
(b) Receipts from a handler described in Sec. 1000.9(c);
(c) Receipts of concentrated fluid milk products from unregulated
supply plants and receipts of nonfluid milk products assigned to Class
I use pursuant to Sec. 1000.43(d) and other source milk allocated to
Class I pursuant to Sec. 1000.44(a)(3) and (8) and the corresponding
steps of Sec. 1000.44(b), except other source milk that is excluded
from the computations pursuant to Sec. ________.60(d) and (e) of parts
1005, 1006, and 1007 or Sec. ________.60(h) and (i) of parts 1001,
1030, 1032, 1033, 1124, 1126, 1131, and 1135; and
(d) Route disposition in the marketing area from a partially
regulated distributing plant that exceeds the skim milk and butterfat
subtracted pursuant to Sec. 1000.76(a)(1)(i)and (ii).
Sec. 1000.86 Deduction for marketing services.
(a) Except as provided in paragraph (b) of this section, each
handler in making payments to producers for milk (other than milk of
such handler's own production) pursuant to Sec. ________.73 of each
Federal milk order shall deduct an amount specified by the market
administrator that is no more than 7 cents per hundredweight and shall
pay the amount deducted to the market administrator not later than the
payment receipt date specified under Sec. ________.71 of each Federal
milk order. The money shall be used by the market administrator to
verify or establish weights, samples and tests of producer milk and
provide market information for producers who are not receiving such
services from a cooperative association. The services shall be
performed in whole or in part by the market administrator or an agent
engaged by and responsible to the market administrator.
(b) In the case of producers for whom the market administrator has
determined that a cooperative association is actually performing the
services set forth in paragraph (a) of this section, each handler shall
make deductions from the payments to be made to producers as may be
authorized by the membership agreement or marketing contract between
the cooperative association and the producers. On or before the 15th
day after the end of the month (except as provided in Sec. 1000.90),
such deductions shall be paid to the cooperative association rendering
the services accompanied by a statement showing the amount of any
deductions and the amount of milk for which the deduction was computed
for each producer. These deductions shall be made in lieu of the
deduction specified in paragraph (a) of this section.
Subpart J--Miscellaneous Provisions
Sec. 1000.90 Dates.
If a date required for a payment contained in a Federal milk order
falls on a Saturday, Sunday, or national holiday, such payment or
announcement will be due on the next day that the market
administrator's office is open for public business.
[[Page 16224]]
Sec. 1000.91 [Reserved]
Sec. 1000.92 [Reserved]
Sec. 1000.93 OMB control number assigned pursuant to the Paperwork
Reduction Act.
The information collection requirements contained in this
regulation have been approved by the Office of Management and Budget
(OMB) under the provisions of Title 44 U.S.C. chapter 35 and have been
assigned OMB control number 0581-0032.
PART 1001--MILK IN THE NORTHEAST MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1001.1 General provisions.
Definitions
1001.2 Northeast marketing area.
1001.3 Route disposition.
1001.4 Plant.
1001.5 Distributing plant.
1001.6 Supply plant.
1001.7 Pool plant.
1001.8 Nonpool plant.
1001.9 Handler.
1001.10 Producer-handler.
1001.11 [Reserved]
1001.12 Producer.
1001.13 Producer milk.
1001.14 Other source milk.
1001.15 Fluid milk product.
1001.16 Fluid cream product.
1001.17 [Reserved]
1001.18 Cooperative association.
1001.19 Commercial food processing establishment.
Handler Reports
1001.30 Reports of receipts and utilization.
1001.31 Payroll reports.
1001.32 Other reports.
Classification of Milk
1001.40 Classes of utilization.
1001.41 [Reserved]
1001.42 Classification of transfers and diversions.
1001.43 General classification rules.
1001.44 Classification of producer milk.
1001.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1001.50 Class prices, component prices, and advanced pricing
factors.
1001.51 Class I differential and price.
1001.52 Adjusted Class I differentials.
1001.53 Announcement of class prices, component prices, and
advanced pricing factors.
1001.54 Equivalent price.
Producer Price Differential
1001.60 Handler's value of milk.
1001.61 Computation of producer price differential.
1001.62 Announcement of producer prices.
Payments for Milk
1001.70 Producer-settlement fund.
1001.71 Payments to the producer-settlement fund.
1001.72 Payments from the producer-settlement fund.
1001.73 Payments to producers and to cooperative associations.
1001.74 [Reserved]
1001.75 Plant location adjustments for producer milk and nonpool
milk.
1001.76 Payments by a handler operating a partially regulated
distributing plant.
1001.77 Adjustment of accounts.
1001.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1001.85 Assessment for order administration.
1001.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1001.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1001,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1001.2 Northeast marketing area.
The marketing area means all the territory within the bounds of the
following states and political subdivisions, including all piers, docks
and wharves connected therewith and all craft moored thereat, and all
territory occupied by government (municipal, State or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, Rhode
Island, Vermont and District of Columbia
All of the States of Connecticut, Delaware, Massachusetts, New
Hampshire, New Jersey, Rhode Island, Vermont and the District of
Columbia.
Maryland Counties
All of the State of Maryland except the counties of Allegany and
Garrett.
New York Counties, Cities, and Townships
All counties within the State of New York except Allegany,
Cattaraugus, Chatauqua, Erie, Genessee, Livingston, Monroe, Niagara,
Ontario, Orleans, Seneca, Wayne, and Wyoming; the townships of
Conquest, Montezuma, Sterling and Victory in Cayuga County; the city of
Hornell, and the townships of Avoca, Bath, Bradford, Canisteo,
Cohocton, Dansville, Fremont, Pulteney, Hartsville, Hornellsville,
Howard, Prattsburg, Urbana, Wayland, Wayne and Wheeler in Steuben
County; and the townships of Italy, Middlesex, and Potter in Yates
County.
Pennsylvania Counties
Adams, Bucks, Chester, Cumberland, Dauphin, Delaware, Franklin,
Fulton, Juniata, Lancaster, Lebanon, Montgomery, Perry, Philadelphia,
and York.
Virginia Counties and Cities
Arlington, Fairfax, Loudoun, and Prince William, and the cities of
Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park.
Sec. 1001.3 Route disposition.
See Sec. 1000.3.
Sec. 1001.4 Plant.
(a) Except as provided in paragraph (b) of this section, plant
means the land, buildings, facilities, and equipment constituting a
single operating unit or establishment at which milk or milk products
are received, processed, or packaged, including a facility described in
paragraph (b)(2) of this section if the facility receives the milk of
more than one dairy farmer.
(b) Plant shall not include:
(1) A separate building without stationary storage tanks that is
used only as a reload point for transferring bulk milk from one tank
truck to another or a separate building used only as a distribution
point for storing packaged fluid milk products in transit for route
disposition;
(2) An on-farm facility operated as part of a single dairy farm
entity for the separation of cream and skim milk; or
(3) Bulk reload points where milk is transferred from one tank
truck to another while en route from dairy farmers' farms to a plant.
If stationary storage tanks are used for transferring milk at the
premises, the operator of the facility shall make an advance written
request to the market administrator that the facility shall be treated
as a reload point. The cooling of milk, collection of samples, and
washing and sanitizing of tank trucks at the premises shall not
disqualify it as a bulk reload point.
Sec. 1001.5 Distributing plant.
See Sec. 1000.5.
Sec. 1001.6 Supply plant.
See Sec. 1000.6.
[[Page 16225]]
Sec. 1001.7 Pool plant.
Pool plant means a plant, unit of plants, or system of plants as
specified in paragraphs (a) through (f) of this section, but excluding
a plant described in paragraph (h) of this section. The pooling
standards described in paragraphs (c) and (f) of this section are
subject to modification pursuant to paragraph (g) of this section.
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 25 percent or
more of the total quantity of fluid milk products physically received
at the plant (excluding concentrated milk received from another plant
by agreement for other than Class I use) are disposed of as route
disposition or are transferred in the form of packaged fluid milk
products to other distributing plants. At least 25 percent of such
route disposition and transfers must be to outlets in the marketing
area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 25 percent of the total quantity of
fluid milk products physically received at the plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) into ultra-pasteurized or aseptically-processed fluid
milk products.
(c) A supply plant from which fluid milk products are transferred
or diverted to plants described in paragraph (a) or (b) of this section
subject to the additional conditions described in this paragraph. In
the case of a supply plant operated by a cooperative association
handler described in Sec. 1000.9(c), fluid milk products that the
cooperative delivers to pool plants directly from producers' farms
shall be treated as if transferred from the cooperative association's
plant for the purpose of meeting the shipping requirements of this
paragraph.
(1) During the months of August and December, such shipments must
equal not less than 10 percent of the total quantity of milk that is
received at the plant or diverted from it pursuant to Sec. 1001.13
during the month;
(2) During the months of September through November, such shipments
must equal not less than 20 percent of the total quantity of milk that
is received at the plant or diverted from it pursuant to Sec. 1001.13
during the month;
(3) A plant which meets the shipping requirements of this paragraph
during each of the months of August through December shall be a pool
plant during the following months of January through July unless the
milk received at the plant fails to meet the requirements of a duly
constituted regulatory agency, the plant fails to meet a shipping
requirement instituted pursuant to paragraph (f) of this section, or
the plant operator requests nonpool status for the plant. The shipping
requirement for any plant which has not met the requirements of
paragraphs (c)(1) and (c)(2) of this section must equal not less than
10 percent of the total quantity of milk that is received at the plant
or diverted from it pursuant to Sec. 1001.13 during each of the months
of January through July in order for the plant to be a pool plant in
each of those months;
(4) If milk is delivered directly from producers' farms that are
located outside of the states included in the marketing area or outside
Maine or West Virginia, such producers must be grouped by state into
reporting units and each reporting unit must independently meet the
shipping requirements of this paragraph; and
(5) Concentrated milk transferred from the supply plant to a
distributing plant for an agreed-upon use other than Class I shall be
excluded from the supply plant's shipments in computing the percentages
in paragraphs (c)(1) and (2) of this section.
(d) [Reserved]
(e) Two or more plants that are located in the marketing area and
operated by the same handler may qualify as a unit by meeting the total
and in-area route distribution requirements specified in paragraph (a)
of this section subject to the following additional requirements:
(1) At least one of the plants in the unit qualifies as a pool
plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process only Class I or Class II
products and must be located in a pricing zone providing the same or a
lower Class I price than the price applicable at the distributing plant
included in the unit; and
(3) A written request to form a unit, or to add or remove plants
from a unit, or to cancel a unit, must be filed with the market
administrator prior to the first day of the month for which unit
formation is to be effective.
(f) Two or more supply plants operated by the same handler, or by
one or more cooperative associations, may qualify for pooling as a
system of plants by meeting the applicable percentage requirements of
paragraph (c) of this section in the same manner as a single plant
subject to the following additional requirements:
(1) A supply plant system will be effective for the period of
August 1 through July 31 of the following year. Written notification
must be given to the market administrator listing the plants to be
included in the system prior to the first day of July preceding the
effective date of the system. The plants included in the system shall
be listed in the sequence in which they shall qualify for pool plant
status based on the minimum deliveries required. If the deliveries made
are insufficient to qualify the entire system for pooling, the last
listed plant shall be excluded from the system, followed by the plant
next-to-last on the list, and continuing in this sequence until
remaining listed plants have met the minimum shipping requirements; and
(2) Each plant that qualifies as a pool plant within a system shall
continue each month as a plant in the system through the following July
unless the plant subsequently fails to qualify for pooling, the handler
submits a written notification to the market administrator prior to the
first day of the month that the plant be deleted from the system, or
that the system be discontinued. Any plant that has been so deleted
from the system, or that has failed to qualify as a pool plant in any
month, will not be part of the system for the remaining months through
July. For any system that qualifies in August, no plant may be added in
any subsequent month through the following July unless the plant
replaces another plant in the system that has ceased operations and the
market administrator is notified of such replacement prior to the first
day of the month for which it is to be effective.
(g) The applicable shipping percentages of paragraphs (c) and (f)
of this section may be increased or decreased by the market
administrator if the market administrator finds that such adjustment is
necessary to encourage needed shipments or to prevent uneconomic
shipments. Before making such a finding, the market administrator shall
investigate the need for adjustment either on the market
administrator's own initiative or at the request of interested parties
if the request is made in writing at least 15 days prior to the month
for which the requested revision is desired effective. If the
investigation shows that an adjustment of the shipping percentages
might be appropriate, the market administrator shall issue a notice
stating that an adjustment is being considered and invite data, views
and arguments. Any decision to revise an applicable shipping percentage
must be issued in writing at least one day before the effective date.
(h) The term pool plant shall not apply to the following plants:
[[Page 16226]]
(1) A producer-handler plant;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant qualified pursuant to paragraph (a) of this section
that is located within the marketing area if the plant also meets the
pooling requirements of another Federal order and more than 50 percent
of its route distribution has been in such other Federal order
marketing area for 3 consecutive months;
(4) A plant qualified pursuant to paragraph (a) of this section
which is not located within any Federal order marketing area that meets
the pooling requirements of another Federal order and has had greater
route disposition in such other Federal order's marketing area for 3
consecutive months;
(5) A plant qualified pursuant to paragraph (a) of this section
that is located in another Federal order marketing area if the plant
meets the pooling requirements of such other Federal order and does not
have a majority of its route distribution in this marketing area for 3
consecutive months or if the plant is required to be regulated under
such other Federal order without regard to its route disposition in any
other Federal order marketing area;
(6) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under the other Federal order than are made to plants regulated under
this order, or the plant has automatic pooling status under the other
Federal order; and
(7) That portion of a pool plant designated as a ``nonpool plant''
that is physically separate and operated separately from the pool
portion of such plant. The designation of a portion of a regulated
plant as a nonpool plant must be requested in writing by the handler
and must be approved by the market administrator.
Sec. 1001.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1001.9 Handler.
See Sec. 1000.9.
Sec. 1001.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is monthly route disposition in the marketing area during the month;
(b) Receives milk solely from own farm production or receives milk
that is fully subject to the pricing and pooling provisions of this or
any other Federal order;
(c) Receives at its plant or acquires for route disposition no more
than 150,000 pounds of fluid milk products from handlers fully
regulated under any Federal order. This limitation shall not apply if
the producer-handler's own farm production is less than 150,000 pounds
during the month;
(d) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products;
and
(e) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled (excluding receipts from
handlers fully regulated under any Federal order) and the processing
and packaging operations are the producer-handler's own enterprise and
at its own risk.
Sec. 1001.11 [Reserved]
Sec. 1001.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1001.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include a dairy farmer described in
paragraphs (b)(1) through (6) of this section. A dairy farmer described
in paragraphs (b)(5) or (6) of this section shall be known as a dairy
farmer for other markets.
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1001.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I;
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order;
(5) For any month of December through June, any dairy farmer whose
milk is received at a pool plant or by a cooperative association
handler described in Sec. 1000.9(c) if the pool plant operator or the
cooperative association caused milk from the same farm to be delivered
to any plant as other than producer milk, as defined under this order
or any other Federal milk order, during the same month, either of the 2
preceding months, or during any of the preceding months of July through
November; and
(6) For any month of July through November, any dairy farmer whose
milk is received at a pool plant or by a cooperative association
handler described in Sec. 1000.9(c) if the pool plant operator or the
cooperative association caused milk from the same farm to be delivered
to any plant as other than producer milk, as defined under this order
or any other Federal milk order, during the same month.
Sec. 1001.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk) and butterfat contained in milk of a producer
that is:
(a) Received by the operator of a pool plant directly from a
producer or from a handler described in Sec. 1000.9(c). Any milk which
is picked up from the producer's farm in a tank truck under the control
of the operator of a pool plant or a handler described in
Sec. 1000.9(c) but which is not received at a plant until the following
month shall be considered as having been received by the handler during
the month in which it is picked up at the farm. All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by the operator of a pool plant or a handler described
in Sec. 1000.9(c) in excess of the quantity delivered to pool plants
subject to the following conditions:
(1) The producers whose farms are outside of the states included in
the marketing area and outside the states of Maine or West Virginia
shall be organized into state units and each such unit shall be
reported separately; and
(2) For pooling purposes, each reporting unit must satisfy the
shipping standards specified for a supply plant pursuant to
Sec. 1001.7(c);
(c) Diverted by a proprietary pool plant operator to another pool
plant. Milk so diverted shall be priced at the location of the plant to
which diverted; or
(d) Diverted by the operator of a pool plant or by a handler
described in Sec. 1000.9(c) to a nonpool plant, subject to the
following conditions:
(1) Milk of a dairy farmer shall not be eligible for diversion
unless milk of
[[Page 16227]]
such dairy farmer was physically received as producer milk at a pool
plant and the dairy farmer has continuously retained producer status
since that time. If a dairy farmer loses producer status under this
order (except as a result of a temporary loss of Grade A approval), the
dairy farmer's milk shall not be eligible for diversion until milk of
the dairy farmer has been physically received as producer milk at a
pool plant; and
(2) Diverted milk shall be priced at the location of the plant to
which diverted.
Sec. 1001.14 Other source milk.
See Sec. 1000.14.
Sec. 1001.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1001.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1001.17 [Reserved]
Sec. 1001.18 Cooperative association.
See Sec. 1000.18.
Sec. 1001.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1001.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 9th day
after the end of the month, in the detail and on prescribed forms, as
follows:
(a) Each pool plant operator shall report for each of its
operations the following information:
(1) Product pounds, pounds of butterfat, pounds of protein, and
pounds of nonfat solids other than protein (other solids) contained in
or represented by:
(i) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c); and
(ii) Receipts of milk from handlers described in Sec. 1000.9(c);
(2) Product pounds and pounds of butterfat contained in:
(i) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(ii) Receipts of other source milk; and
(iii) Inventories at the beginning and end of the month of fluid
milk products and bulk fluid cream products;
(3) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph; and
(4) Such other information with respect to the receipts and
utilization of skim milk, butterfat, milk protein, and other nonfat
solids as the market administrator may prescribe.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The product pounds, pounds of butterfat, pounds of protein, and
the pounds of solids-not-fat other than protein (other solids)
contained in receipts of milk from producers; and
(2) The utilization or disposition of such receipts.
(d) Each handler not specified in paragraph (a) or (b) of this
section shall report with respect to its receipts and utilization of
milk and milk products in such manner as the market administrator may
prescribe.
Sec. 1001.31 Payroll reports.
(a) On or before the 22nd day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1001.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for the month, in detail prescribed
by the market administrator, showing for each producer the information
specified in Sec. 1001.73(e).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1001.32 Other reports.
In addition to the reports required pursuant to Secs. 1001.30 and
1001.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1001.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1001.41 [Reserved]
Sec. 1001.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1001.43 General classification rules.
See Sec. 1000.43.
Sec. 1001.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1001.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1001.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1001.51 Class I differential and price.
The Class I differential shall be the differential established for
Suffolk County, Massachusetts, which is reported in Sec. 1000.52. The
Class I price shall be the price computed pursuant to Sec. 1000.50(a)
for Suffolk County, Massachusetts.
Sec. 1001.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1001.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1001.54 Equivalent price.
See Sec. 1000.54.
Producer Price Differential
Sec. 1001.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c) with respect to
milk that was not received at a pool plant by adding the amounts
computed in paragraphs (a) through (h) of this section and subtracting
from that total amount the value computed in paragraph (i) of this
section. Unless otherwise specified, the skim milk, butterfat, and the
combined pounds of skim milk and butterfat referred to in this section
shall result from the steps set forth in Sec. 1000.44(a), (b), and (c),
respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim
milk. Receipts of nonfluid milk products that are distributed as
labeled reconstituted milk for which payments are made to the producer-
settlement
[[Page 16228]]
fund of another Federal order under Sec. 1000.76(a)(4) or (d) shall be
excluded from pricing under this section.
(a) Class I value.
(1) Multiply the pounds of skim milk in Class I by the Class I skim
milk price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class I by the Class I butterfat price.
(b) Class II value.
(1) Multiply the pounds of nonfat solids in Class II skim milk by
the Class II nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class II times the Class II butterfat price.
(c) Class III value.
(1) Multiply the pounds of protein in Class III skim milk by the
protein price;
(2) Add an amount obtained by multiplying the pounds of other
solids in Class III skim milk by the other solids price; and
(3) Add an amount obtained by multiplying the pounds of butterfat
in Class III by the butterfat price.
(d) Class IV value.
(1) Multiply the pounds of nonfat solids in Class IV skim milk by
the nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class IV by the butterfat price.
(e) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) and the corresponding
step of Sec. 1000.44(b) by the skim milk prices and butterfat prices
applicable to each class.
(f) Multiply the difference between the current month's Class I,
II, or III price, as the case may be, and the Class IV price for the
preceding month by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(g) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from a plant regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants.
(h) Multiply the difference between the Class I price applicable at
the location of the nearest unregulated supply plants from which an
equivalent volume was received and the Class III price by the pounds of
skim milk and butterfat in receipts of concentrated fluid milk products
assigned to Class I pursuant to Sec. 1000.43(d) and
Sec. 1000.44(a)(3)(i) and the corresponding step of Sec. 1000.44(b) and
the pounds of skim milk and butterfat subtracted from Class I pursuant
to Sec. 1000.44(a)(8) and the corresponding step of Sec. 1000.44(b),
excluding such skim milk and butterfat in receipts of fluid milk
products from an unregulated supply plant to the extent that an
equivalent amount of skim milk or butterfat disposed of to such plant
by handlers fully regulated under any Federal milk order is classified
and priced as Class I milk and is not used as an offset for any other
payment obligation under any order.
(i) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
Sec. 1001.61 Computation of producer price differential.
For each month, the market administrator shall compute a producer
price differential per hundredweight. The report of any handler who has
not made payments required pursuant to Sec. 1001.71 for the preceding
month shall not be included in the computation of the producer price
differential, and such handler's report shall not be included in the
computation for succeeding months until the handler has made full
payment of outstanding monthly obligations. Subject to the
aforementioned conditions, the market administrator shall compute the
producer price differential in the following manner:
(a) Combine into one total the values computed pursuant to
Sec. 1001.60 for all handlers required to file reports prescribed in
Sec. 1001.30;
(b) Subtract the total of the values obtained by multiplying each
handler's total pounds of protein, other solids, and butterfat
contained in the milk for which an obligation was computed pursuant to
Sec. 1001.60 by the protein price, other solids price, and the
butterfat price, respectively;
(c) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1001.75;
(d) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(e) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(1) The total hundredweight of producer milk; and
(2) The total hundredweight for which a value is computed pursuant
to Sec. 1001.60(h); and
(f) Subtract not less than 4 cents nor more than 5 cents from the
price computed pursuant to paragraph (e) of this section. The result,
rounded to the nearest cent, shall be known as the producer price
differential for the month.
Sec. 1001.62 Announcement of producer prices.
On or before the 13th day after the end of the month, the market
administrator shall announce the following prices and information:
(a) The producer price differential;
(b) The protein price;
(c) The nonfat solids price;
(d) The other solids price;
(e) The butterfat price;
(f) The average butterfat, protein, nonfat solids, and other solids
content of producer milk; and
(g) The statistical uniform price for milk containing 3.5 percent
butterfat computed by combining the Class III price and the producer
price differential.
Payments for Milk
Sec. 1001.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1001.71 Payments to the producer-settlement fund.
Each handler shall make payment to the producer-settlement fund in
a manner that provides receipt of the funds by the market administrator
no later than the 15th day after the end of the month (except as
provided in Sec. 1000.90). Payment shall be the amount, if any, by
which the amount specified in paragraph (a) of this section exceeds the
amount specified in paragraph (b) of this section:
(a) The total value of milk to the handler for the month as
determined pursuant to Sec. 1001.60.
(b) The sum of:
(1) An amount obtained by multiplying the total hundredweight of
producer milk as determined pursuant to Sec. 1000.44(c) by the producer
price differential as adjusted pursuant to Sec. 1001.75;
(2) An amount obtained by multiplying the total pounds of protein,
other solids, and butterfat contained in producer milk by the protein,
other solids, and butterfat prices respectively; and
[[Page 16229]]
(3) An amount obtained by multiplying the pounds of skim milk and
butterfat for which a value was computed pursuant to Sec. 1001.60(h) by
the producer price differential as adjusted pursuant to Sec. 1001.75
for the location of the plant from which received.
Sec. 1001.72 Payments from the producer-settlement fund.
No later than the 16th day after the end of each month (except as
provided in Sec. 1000.90), the market administrator shall pay to each
handler the amount, if any, by which the amount computed pursuant to
Sec. 1001.71(b) exceeds the amount computed pursuant to
Sec. 1001.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1001.73 Payments to producers and to cooperative associations.
(a) Each pool plant operator that is not paying a cooperative
association for producer milk shall pay each producer as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the 23rd day of the month, payment shall be made so
that it is received by the producer on or before the 26th day of the
month (except as provided in Sec. 1000.90) for milk received during the
first 15 days of the month at not less than the lowest announced class
price for the preceding month, less proper deductions authorized in
writing by the producer.
(2) Final payment. For milk received during the month, payment
shall be made so that it is received by each producer no later than the
day after the payment date required in Sec. 1001.72 in an amount
computed as follows:
(i) Multiply the hundredweight of producer milk received by the
producer price differential for the month as adjusted pursuant to
Sec. 1001.75;
(ii) Multiply the pounds of butterfat received by the butterfat
price for the month;
(iii) Multiply the pounds of protein received by the protein price
for the month;
(iv) Multiply the pounds of other solids received by the other
solids price for the month; and
(v) Add the amounts computed in paragraphs (a)(2)(i) through (iv)
of this section, and from that sum:
(A) Subtract the partial payment made pursuant to paragraph (a)(1)
of this section;
(B) Subtract the deduction for marketing services pursuant to
Sec. 1000.86;
(C) Add or subtract for errors made in previous payments to the
producer; and
(D) Subtract proper deductions authorized in writing by the
producer.
(b) One day before partial and final payments are due pursuant to
paragraph (a) of this section, each pool plant operator shall pay a
cooperative association for milk received as follows:
(1) Partial payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk (including the
milk of producers who are not members of such association and who the
market administrator determines have authorized the cooperative
association to collect payment for their milk) received during the
first 15 days of the month from a cooperative association in any
capacity, except as the operator of a pool plant, the payment shall be
equal to the hundredweight of milk received multiplied by the lowest
announced class price for the preceding month.
(2) Partial payment to a cooperative association for milk
transferred from its pool plant. For bulk milk/skimmed milk products
received during the first 15 days of the month from a cooperative
association in its capacity as the operator of a pool plant, the
partial payment shall be at the pool plant operator's estimated use
value of the milk using the most recent class prices available at the
receiving plant's location.
(3) Final payment to a cooperative association for milk transferred
from its pool plant. Following the classification of bulk fluid milk
products and bulk fluid cream products received during the month from a
cooperative association in its capacity as the operator of a pool
plant, the final payment for such receipts shall be determined as
follows:
(i) Multiply the hundredweight of Class I skim milk by the Class I
skim milk price for the month at the receiving plant;
(ii) Multiply the pounds of Class I butterfat by the Class I
butterfat price for the month at the receiving plant;
(iii) Multiply the pounds of nonfat solids in Class II skim milk by
the Class II nonfat solids price;
(iv) Multiply the pounds of butterfat in Class II times the Class
II butterfat price;
(v) Multiply the pounds of nonfat solids in Class IV milk by the
nonfat solids price for the month;
(vi) Multiply the pounds of butterfat in Class III and IV milk by
the butterfat price for the month;
(vii) Multiply the pounds of protein in Class III milk by the
protein price for the month;
(viii) Multiply the pounds of other solids in Class III milk by the
other solids price for the month; and
(ix) Add together the amounts computed in paragraphs (b)(3)(i)
through (viii) of this section and from that sum deduct any payment
made pursuant to paragraph (b)(2) of this section.
(4) Final payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk received from a
cooperative association during the month, including the milk of
producers who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, the final payment for such milk shall
be an amount equal to the sum of the individual payments otherwise
payable for such milk pursuant to paragraph (a)(2) of this section.
(c) If a handler has not received full payment from the market
administrator pursuant to Sec. 1001.72 by the payment date specified in
paragraph (a) or (b) of this section, the handler may reduce payments
pursuant to paragraphs (a) and (b) of this section, but by not more
than the amount of the underpayment. The payments shall be completed on
the next scheduled payment date after receipt of the balance due from
the market administrator.
(d) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant as the case may be.
(e) In making payments to producers pursuant to this section, each
pool plant operator shall furnish each producer, except a producer
whose milk was received from a cooperative association handler
described in Sec. 1000.9(a) or (c), a supporting statement in such form
that it may be retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and the payroll number of the producer;
[[Page 16230]]
(2) The month and dates that milk was received from the producer,
including the daily and total pounds of milk received;
(3) The total pounds of butterfat, protein, and other solids
contained in the producer's milk;
(4) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(5) The rate used in making payment if the rate is other than the
applicable minimum rate;
(6) The amount, or rate per hundredweight, or rate per pound of
component, and the nature of each deduction claimed by the handler; and
(7) The net amount of payment to the producer or cooperative
association.
Sec. 1001.74 [Reserved]
Sec. 1001.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1001.51 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1001.73
and 1000.76.
Sec. 1001.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1001.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1001.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1001.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1001.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1005--MILK IN THE APPALACHIAN MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1005.1 General provisions.
Definitions
1005.2 Appalachian marketing area.
1005.3 Route disposition.
1005.4 Plant.
1005.5 Distributing plant.
1005.6 Supply plant.
1005.7 Pool plant.
1005.8 Nonpool plant.
1005.9 Handler.
1005.10 Producer-handler.
1005.11 [Reserved]
1005.12 Producer.
1005.13 Producer milk.
1005.14 Other source milk.
1005.15 Fluid milk product.
1005.16 Fluid cream product.
1005.17 [Reserved]
1005.18 Cooperative association.
1005.19 Commercial food processing establishment.
Handler Reports
1005.30 Reports of receipts and utilization.
1005.31 Payroll reports.
1005.32 Other reports.
Classification of Milk
1005.40 Classes of utilization.
1005.41 [Reserved]
1005.42 Classification of transfers and diversions.
1005.43 General classification rules.
1005.44 Classification of producer milk.
1005.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1005.50 Class prices, component prices, and advanced pricing
factors.
1005.51 Class I differential and price.
1005.52 Adjusted Class I differentials.
1005.53 Announcement of class prices, component prices, and
advanced pricing factors.
1005.54 Equivalent price.
Uniform Prices
1005.60 Handler's value of milk.
1005.61 Computation of uniform prices.
1005.62 Announcement of uniform prices.
Payments for Milk
1005.70 Producer-settlement fund.
1005.71 Payments to the producer-settlement fund.
1005.72 Payments from the producer-settlement fund.
1005.73 Payments to producers and to cooperative associations.
1005.74 [Reserved]
1005.75 Plant location adjustments for producer milk and nonpool
milk.
1005.76 Payments by a handler operating a partially regulated
distributing plant.
1005.77 Adjustment of accounts.
1005.78 Charges on overdue accounts.
Marketwide Service Payments
1005.80 Transportation credit balancing fund.
1005.81 Payments to the transportation credit balancing fund.
1005.82 Payments from the transportation credit balancing fund.
Administrative Assessment and Marketing Service Deduction
1005.85 Assessment for order administration.
1005.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1005.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1005,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1005.2 Appalachian marketing area.
The marketing area means all the territory within the bounds of the
following states and political subdivisions, including all piers, docks
and wharves connected therewith and all craft moored thereat, and all
territory occupied by government (municipal, State or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Georgia Counties
Catoosa, Chattooga, Dade, Fannin, Murray, Walker, and Whitfield.
Indiana Counties
Clark, Crawford, Daviess, Dubois, Floyd, Gibson, Greene,
Harrison, Knox, Martin, Orange, Perry, Pike, Posey, Scott, Spencer,
Sullivan, Vanderburgh, Warrick, and Washington.
Kentucky Counties
Adair, Anderson, Bath, Bell, Bourbon, Boyle, Breathitt,
Breckinridge, Bullitt, Butler, Carroll, Carter, Casey, Clark, Clay,
Clinton, Cumberland, Daviess, Edmonson, Elliott, Estill, Fayette,
Fleming, Franklin, Gallatin, Garrard, Grayson, Green, Hancock,
Hardin, Harlan, Hart, Henderson, Henry, Hopkins, Jackson, Jefferson,
Jessamine, Knott, Knox, Larue, Laurel, Lee, Leslie, Letcher,
Lincoln, Madison, Marion, McCreary, McLean, Meade, Menifee, Mercer,
Montgomery, Morgan, Muhlenberg, Nelson, Nicholas, Ohio, Oldham,
Owen, Owsley, Perry, Powell, Pulaski, Rockcastle, Rowan, Russell,
Scott, Shelby, Spencer, Taylor, Trimble, Union, Washington, Wayne,
Webster, Whitley, Wolfe, and Woodford.
North Carolina and South Carolina
All of the States of North Carolina and South Carolina.
Tennessee Counties
Anderson, Blount, Bradley, Campbell, Carter, Claiborne, Cocke,
Cumberland, Grainger, Greene, Hamblen, Hamilton, Hancock, Hawkins,
Jefferson, Johnson, Knox, Loudon, Marion, McMinn, Meigs, Monroe,
Morgan, Polk, Rhea, Roane, Scott, Sequatchie, Sevier, Sullivan,
Unicoi, Union, and Washington.
Virginia Counties and Cities
Buchanan, Dickenson, Lee, Russell, Scott, Tazewell, Washington,
and Wise; and the cities of Bristol and Norton.
[[Page 16231]]
West Virginia Counties
McDowell and Mercer.
Sec. 1005.3 Route disposition.
See Sec. 1000.3.
Sec. 1005.4 Plant.
See Sec. 1000.4.
Sec. 1005.5 Distributing plant.
See Sec. 1000.5.
Sec. 1005.6 Supply plant.
See Sec. 1000.6.
Sec. 1005.7 Pool plant.
Pool plant means a plant specified in paragraphs (a) through (d) of
this section, or a unit of plants as specified in paragraph (e) of this
section, but excluding a plant specified in paragraph (g) of this
section. The pooling standards described in paragraphs (c) and (d) of
this section are subject to modification pursuant to paragraph (f) of
this section:
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 50 percent or
more of the fluid milk products received at such plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) are disposed of as route disposition or are
transferred in the form of packaged fluid milk products to other
distributing plants. At least 25 percent of such route disposition and
transfers must be to outlets in the marketing area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 50 percent of the total quantity of
fluid milk products received at the plant (excluding concentrated milk
received from another plant by agreement for other than Class I use)
into ultra-pasteurized or aseptically-processed fluid milk products.
(c) A supply plant from which 50 percent or more of the total
quantity of milk that is received during the month from dairy farmers
and handlers described in Sec. 1000.9(c), including milk that is
diverted from the plant, is transferred to pool distributing plants.
Concentrated milk transferred from the supply plant to a distributing
plant for an agreed-upon use other than Class I shall be excluded from
the supply plant's shipments in computing the plant's shipping
percentage.
(d) A plant located within the marketing area or in the State of
Virginia that is operated by a cooperative association if pool plant
status under this paragraph is requested for such plant by the
cooperative association and during the month at least 60 percent of the
producer milk of members of such cooperative association is delivered
directly from farms to pool distributing plants or is transferred to
such plants as a fluid milk product (excluding concentrated milk
transferred to a distributing plant for an agreed-upon use other than
Class I) from the cooperative's plant.
(e) Two or more plants operated by the same handler and that are
located within the marketing area may qualify for pool status as a unit
by meeting the total and in-area route disposition requirements
specified in paragraph (a) of this section and the following additional
requirements:
(1) At least one of the plants in the unit must qualify as a pool
plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process only Class I or Class II
products and must be located in a pricing zone providing the same or a
lower Class I price than the price applicable at the distributing plant
included in the unit pursuant to paragraph (e)(1) of this section; and
(3) A written request to form a unit, or to add or remove plants
from a unit, must be filed with the market administrator prior to the
first day of the month for which it is to be effective.
(f) The applicable shipping percentages of paragraphs (c) and (d)
of this section may be increased or decreased by the market
administrator if the market administrator finds that such adjustment is
necessary to encourage needed shipments or to prevent uneconomic
shipments. Before making such a finding, the market administrator shall
investigate the need for adjustment either on the market
administrator's own initiative or at the request of interested parties
if the request is made in writing at least 15 days prior to the date
for which the requested revision is desired effective. If the
investigation shows that an adjustment of the shipping percentages
might be appropriate, the market administrator shall issue a notice
stating that an adjustment is being considered and invite data, views
and arguments. Any decision to revise an applicable shipping percentage
must be issued in writing at least one day before the effective date.
(g) The term pool plant shall not apply to the following plants:
(1) A producer-handler plant;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant qualified pursuant to paragraph (a) of this section
which is not located within any Federal order marketing area, meets the
pooling requirements of another Federal order, and has had greater
route disposition in such other Federal order marketing area for 3
consecutive months;
(4) A plant qualified pursuant to paragraph (a) of this section
which is located in another Federal order marketing area, meets the
pooling standards of the other Federal order, and has not had a
majority of its route disposition in this marketing area for 3
consecutive months or is locked into pool status under such other
Federal order without regard to its route disposition in any other
Federal order marketing area;
(5) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under such other order than are made to plants regulated under this
order, or such plant has automatic pooling status under such other
order; and
(6) That portion of a pool plant designated as a ``nonpool plant''
that is physically separate and operated separately from the pool
portion of such plant. The designation of a portion of a regulated
plant as a nonpool plant must be requested in writing by the handler
and must be approved by the market administrator.
Sec. 1005.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1005.9 Handler.
See Sec. 1000.9.
Sec. 1005.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is monthly route disposition in the marketing area;
(b) Receives no fluid milk products, and acquires no fluid milk
products for route disposition, from sources other than own farm
production;
(c) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products
received from own farm production; and
(d) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled, and the processing and
packaging operations are the producer-handler's own enterprise and are
operated at the producer-handler's own risk.
[[Page 16232]]
Sec. 1005.11 [Reserved]
Sec. 1005.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1005.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1005.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I; and
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another order with respect to that portion of the
milk so diverted that is assigned to Class I under the provisions of
such other order.
Sec. 1005.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk) and butterfat contained in milk of a producer
that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(c) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(d) Diverted by the operator of a pool plant or a handler described
in Sec. 1000.9(c) to a nonpool plant, subject to the following
conditions:
(1) In any month of July through December, not less than 6 days'
production of the producer whose milk is diverted is physically
received at a pool plant during the month;
(2) In any month of January through June, not less than 2 days'
production of the producer whose milk is diverted is physically
received at a pool plant during the month;
(3) The total quantity of milk so diverted during the month by a
cooperative association shall not exceed 25 percent during the months
of July through November, January, and February, and 40 percent during
the months of December and March through June, of the producer milk
that the cooperative association caused to be delivered to, and
physically received at, pool plants during the month;
(4) The operator of a pool plant that is not a cooperative
association may divert any milk that is not under the control of a
cooperative association that diverts milk during the month pursuant to
paragraph (d) of this section. The total quantity of milk so diverted
during the month shall not exceed 25 percent during the months of July
through November, January, and February, and 40 percent during the
months of December and March through June, of the producer milk
physically received at such plant (or such unit of plants in the case
of plants that pool as a unit pursuant to Sec. 1005.7(d)) during the
month, excluding the quantity of producer milk received from a handler
described in Sec. 1000.9(c);
(5) Any milk diverted in excess of the limits prescribed in
paragraphs (d)(3) and (4) of this section shall not be producer milk.
If the diverting handler or cooperative association fails to designate
the dairy farmers' deliveries that will not be producer milk, no milk
diverted by the handler or cooperative association shall be producer
milk;
(6) Diverted milk shall be priced at the location of the plant to
which diverted; and
(7) The delivery day requirements and the diversion percentages in
paragraphs (d)(1) through (4) of this section may be increased or
decreased by the market administrator if the market administrator finds
that such revision is necessary to assure orderly marketing and
efficient handling of milk in the marketing area. Before making such a
finding, the market administrator shall investigate the need for the
revision either on the market administrator's own initiative or at the
request of interested persons. If the investigation shows that a
revision might be appropriate, the market administrator shall issue a
notice stating that the revision is being considered and inviting
written data, views, and arguments. Any decision to revise an
applicable percentage must be issued in writing at least one day before
the effective date.
Sec. 1005.14 Other source milk.
See Sec. 1000.14.
Sec. 1005.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1005.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1005.17 [Reserved]
Sec. 1005.18 Cooperative association.
See Sec. 1000.18.
Sec. 1005.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1005.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 7th day
after the end of the month, in the detail and on prescribed forms, as
follows:
(a) With respect to each of its pool plants, the quantities of skim
milk and butterfat contained in or represented by:
(1) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c);
(2) Receipts of milk from handlers described in Sec. 1000.9(c);
(3) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(4) Receipts of other source milk;
(5) Receipts of bulk milk from a plant regulated under another
Federal order, except Federal Order 1007, for which a transportation
credit is requested pursuant to Sec. 1005.82;
(6) Receipts of producer milk described in Sec. 1005.82(c)(2),
including the identity of the individual producers whose milk is
eligible for the transportation credit pursuant to that paragraph and
the date that such milk was received;
(7) For handlers submitting transportation credit requests,
transfers of bulk milk to nonpool plants, including the dates that such
milk was transferred;
(8) Inventories at the beginning and end of the month of fluid milk
products and bulk fluid cream products; and
(9) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show
[[Page 16233]]
also the quantity of any reconstituted skim milk in route disposition
in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The quantities of all skim milk and butterfat contained in
receipts of milk from producers;
(2) The utilization or disposition of all such receipts; and
(3) With respect to milk for which a cooperative association is
requesting a transportation credit pursuant to Sec. 1005.82, all of the
information required in paragraphs (a)(5), (a)(6), and (a)(7) of this
section.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1005.31 Payroll reports.
(a) On or before the 20th day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1005.7 and each
handler described in Sec. 1000.9 (c) shall report to the market
administrator its producer payroll for the month, in detail prescribed
by the market administrator, showing for each producer the information
specified in Sec. 1005.73(e).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1005.32 Other reports.
(a) On or before the 20th day after the end of each month, each
handler described in Sec. 1000.9(a) and (c) shall report to the market
administrator any adjustments to transportation credit requests as
reported pursuant to Sec. 1005.30(a)(5), (6), and (7).
(b) In addition to the reports required pursuant to Secs. 1005.30,
1005.31, and 1005.32(a), each handler shall report any information the
market administrator deems necessary to verify or establish each
handler's obligation under the order.
Classification of Milk
Sec. 1005.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1005.41 [Reserved]
Sec. 1005.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1005.43 General classification rules.
See Sec. 1000.43.
Sec. 1005.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1005.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1005.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1005.51 Class I differential and price.
The Class I differential shall be the differential established for
Mecklenburg County, North Carolina, which is reported in Sec. 1000.52.
The Class I price shall be the price computed pursuant to
Sec. 1000.50(a) for Mecklenburg County, North Carolina.
Sec. 1005.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1005.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1005.54 Equivalent price.
See Sec. 1000.54.
Uniform Prices
Sec. 1005.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c) with respect to
milk that was not received at a pool plant by adding the amounts
computed in paragraphs (a) through (e) of this section and subtracting
from that total amount the value computed in paragraph (f) of this
section. Receipts of nonfluid milk products that are distributed as
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec. 1000.76(a)(4) or
(d) shall be excluded from pricing under this section.
(a) Multiply the pounds of skim milk and butterfat in producer milk
that were classified in each class pursuant to Sec. 1000.44(c) by the
applicable skim milk and butterfat prices, and add the resulting
amounts;
(b) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) by the respective skim
milk and butterfat prices applicable at the location of the pool plant;
(c) Multiply the difference between the Class IV price for the
preceding month and the current month's Class I, II, or III price, as
the case may be, by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(d) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from a plant regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants;
(e) Multiply the Class I price applicable at the location of the
nearest unregulated supply plants from which an equivalent volume was
received by the pounds of skim milk and butterfat in receipts of
concentrated fluid milk products assigned to Class I pursuant to
Sec. 1000.43(d) and Sec. 1000.44(a)(3)(i) and the pounds of skim milk
and butterfat subtracted from Class I pursuant to Sec. 1000.44(a)(8)
and the corresponding step of Sec. 1000.44(b), excluding such skim milk
and butterfat in receipts of fluid milk products from an unregulated
supply plant to the extent that an equivalent amount of skim milk or
butterfat disposed of to such plant by handlers fully regulated under
any Federal milk order is classified and priced as Class I milk and is
not used as an offset for any other payment obligation under any order;
and
(f) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
Sec. 1005.61 Computation of uniform prices.
On or before the 11th day of each month, the market administrator
shall compute a uniform butterfat price, a uniform skim milk price, and
a uniform price for producer milk receipts reported for the prior
month. The report of any handler who has not made payments required
pursuant to
[[Page 16234]]
Sec. 1005.71 for the preceding month shall not be included in the
computation of these prices, and such handler's report shall not be
included in the computation for succeeding months until the handler has
made full payment of outstanding monthly obligations.
(a) Uniform butterfat price. The uniform butterfat price per pound,
rounded to the nearest one-hundredth cent, shall be computed by
multiplying the pounds of butterfat in producer milk allocated to each
class pursuant to Sec. 1000.44(b) by the respective class butterfat
prices and dividing the sum of such values by the total pounds of such
butterfat.
(b) Uniform skim milk price. The uniform skim milk price per
hundredweight, rounded to the nearest cent, shall be computed as
follows:
(1) Combine into one total the values computed pursuant to
Sec. 1005.60 for all handlers;
(2) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1005.75;
(3) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(4) Subtract the value of the total pounds of butterfat for all
handlers. The butterfat value shall be computed by multiplying the
pounds of butterfat by the butterfat price computed in paragraph (a) of
this section;
(5) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(i) The total skim pounds of producer milk; and
(ii) The total skim pounds for which a value is computed pursuant
to Sec. 1005.60(e); and
(6) Subtract not less than 4 cents and not more than 5 cents.
(c) Uniform price. The uniform price per hundredweight, rounded to
the nearest cent, shall be the sum of the following:
(1) Multiply the uniform butterfat price for the month pursuant to
paragraph (a) of this section times 3.5 pounds of butterfat; and
(2) Multiply the uniform skim milk price for the month pursuant to
paragraph (b) of this section times 96.5 pounds of skim milk.
Sec. 1005.62 Announcement of uniform prices.
On or before the 11th day after the end of the month, the market
administrator shall announce the uniform prices for the month computed
pursuant to Sec. 1005.61.
Sec. 1005.62 Announcement of uniform price, uniform butterfat price
and uniform skim milk price.
On or before the 11th day after the end of the month, the market
administrator shall announce the following prices and information:
(a) The uniform price pursuant to Sec. 1005.61 for such month;
(b) The uniform butterfat price pursuant to Sec. 1005.61(b) for
such month; and
(c) The uniform skim milk price pursuant to Sec. 1005.61(c) for
such month.
Payments for Milk
Sec. 1005.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1005.71 Payments to the producer-settlement fund.
Each handler shall make a payment to the producer-settlement fund
in a manner that provides receipt of the funds by the market
administrator no later than the 12th day after the end of the month
(except as provided in Sec. 1000.90). Payment shall be the amount, if
any, by which the amount specified in paragraph (a) of this section
exceeds the amount specified in paragraph (b) of this section:
(a) The total value of milk of the handler for the month as
determined pursuant to Sec. 1005.60; and
(b) The sum of the value at the uniform prices for skim milk and
butterfat, adjusted for plant location, of the handler's receipts of
producer milk; and the value at the uniform price, as adjusted pursuant
to Sec. 1005.75, applicable at the location of the plant from which
received of other source milk for which a value is computed pursuant to
Sec. 1005.60(e).
Sec. 1005.72 Payments from the producer-settlement fund.
No later than one day after the date of payment receipt required
under Sec. 1005.71, the market administrator shall pay to each handler
the amount, if any, by which the amount computed pursuant to
Sec. 1005.71(b) exceeds the amount computed pursuant to
Sec. 1005.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1005.73 Payments to producers and to cooperative associations.
(a) Each pool plant operator that is not paying a cooperative
association for producer milk shall pay each producer as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the 23rd day of the month, payment shall be made so
that it is received by the producer on or before the 26th day of the
month (except as provided in Sec. 1000.90) for milk received during the
first 15 days of the month at not less than 90 percent of the preceding
month's uniform price, adjusted for plant location pursuant to
Sec. 1005.75 and proper deductions authorized in writing by the
producer.
(2) Final payment. For milk received during the month, a payment
computed as follows shall be made so that it is received by each
producer one day after the payment date required in Sec. 1005.72:
(i) Multiply the hundredweight of producer skim milk received times
the uniform skim milk price for the month;
(ii) Multiply the pounds of butterfat received times the uniform
butterfat price for the month;
(iii) Multiply the hundredweight of producer milk received times
the plant location adjustment pursuant to Sec. 1005.75; and
(iv) Add the amounts computed in paragraph (a)(2)(i), (ii), and
(iii) of this section, and from that sum:
(A) Subtract the partial payment made pursuant to paragraph (a)(1)
of this section;
(B) Subtract the deduction for marketing services pursuant to
Sec. 1000.86;
(C) Add or subtract for errors made in previous payments to the
producer; and
(D) Subtract proper deductions authorized in writing by the
producer.
(b) One day before partial and final payments are due pursuant to
paragraph (a) of this section, each pool plant operator shall pay a
cooperative association for milk received as follows:
(1) Partial payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk (including the
milk of producers who are not members of such association and who the
market administrator determines have authorized the cooperative
association to collect payment for their milk) received during the
first 15 days of the month from a cooperative association in any
capacity, except as the operator of a pool plant, the payment shall be
equal to the hundredweight of milk received multiplied by 90 percent of
the preceding month's uniform price, adjusted for plant location
pursuant to Sec. 1005.75.
(2) Partial payment to a cooperative association for milk
transferred from its pool plant. For bulk fluid milk products and bulk
fluid cream products received during the first 15 days of the month
[[Page 16235]]
from a cooperative association in its capacity as the operator of a
pool plant, the partial payment shall be at the pool plant operator's
estimated use value of the milk using the most recent class prices
available for skim milk and butterfat at the receiving plant's
location.
(3) Final payment to a cooperative association for milk transferred
from its pool plant. For bulk fluid milk products and bulk fluid cream
products received during the month from a cooperative association in
its capacity as the operator of a pool plant, the final payment shall
be the classified value of such milk as determined by multiplying the
pounds of skim milk and butterfat assigned to each class pursuant to
Sec. 1000.44 by the class prices for the month at the receiving plant's
location, and subtracting from this sum the partial payment made
pursuant to paragraph (b)(2) of this section.
(4) Final payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk received from a
cooperative association during the month, including the milk of
producers who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, the final payment for such milk shall
be an amount equal to the sum of the individual payments otherwise
payable for such milk pursuant to paragraph (a)(2) of this section.
(c) If a handler has not received full payment from the market
administrator pursuant to Sec. 1005.72 by the payment date specified in
paragraph (a) or (b) of this section, the handler may reduce payments
pursuant to paragraphs (a) and (b) of this section, but by not more
than the amount of the underpayment. The payments shall be completed on
the next scheduled payment date after receipt of the balance due from
the market administrator.
(d) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant as the case may be.
(e) In making payments to producers pursuant to this section, each
pool plant operator shall furnish each producer, except a producer
whose milk was received from a cooperative association described in
Sec. 1000.9(a) or (c), a supporting statement in such form that it may
be retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and the payroll number of the producer;
(2) The month and dates that milk was received from the producer,
including the daily and total pounds of milk received;
(3) The total pounds of butterfat in the producer's milk;
(4) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(5) The rate used in making payment if the rate is other than the
applicable minimum rate;
(6) The amount, or rate per hundredweight, and nature of each
deduction claimed by the handler; and
(7) The net amount of payment to the producer or cooperative
association.
Sec. 1005.74 [Reserved]
Sec. 1005.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1005.50 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1005.73
and 1000.76.
Sec. 1005.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1005.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1005.78 Charges on overdue accounts.
See Sec. 1000.78.
Marketwide Service Payments
Sec. 1005.80 Transportation credit balancing fund.
The market administrator shall maintain a separate fund known as
the Transportation Credit Balancing Fund into which shall be deposited
the payments made by handlers pursuant to Sec. 1005.81 and out of which
shall be made the payments due handlers pursuant to Sec. 1005.82.
Payments due a handler shall be offset against payments due from the
handler.
Sec. 1005.81 Payments to the transportation credit balancing fund.
(a) On or before the 12th day after the end of the month (except as
provided in Sec. 1000.90), each handler operating a pool plant and each
handler specified in Sec. 1000.9(c) shall pay to the market
administrator a transportation credit balancing fund assessment
determined by multiplying the pounds of Class I producer milk assigned
pursuant to Sec. 1005.44 by $0.065 per hundredweight or such lesser
amount as the market administrator deems necessary to maintain a
balance in the fund equal to the total transportation credits disbursed
during the prior June-January period. In the event that during any
month of the June-January period the fund balance is insufficient to
cover the amount of credits that are due, the assessment should be
based upon the amount of credits that would have been disbursed had the
fund balance been sufficient.
(b) The market administrator shall announce publicly on or before
the 5th day of the month (except as provided in Sec. 1000.90) the
assessment pursuant to paragraph (a) of this section for the following
month.
Sec. 1005.82 Payments from the transportation credit balancing fund.
(a) Payments from the transportation credit balancing fund to
handlers and cooperative associations requesting transportation credits
shall be made as follows:
(1) On or before the 13th day (except as provided in Sec. 1000.90)
after the end of each of the months of July through December and any
other month in which transportation credits are in effect pursuant to
paragraph (b) of this section, the market administrator shall pay to
each handler that received, and reported pursuant to
Sec. 1005.30(a)(5), bulk milk transferred from a plant fully regulated
under another Federal order as described in paragraph (c)(1) of this
section or that received, and reported pursuant to Sec. 1005.30(a)(6),
milk directly from producers' farms as specified in paragraph (c)(2) of
this section, a preliminary amount determined pursuant to paragraph (d)
of this section to the extent that funds are available in the
transportation credit balancing fund. If an insufficient balance exists
to pay all of the credits computed pursuant to this section, the market
administrator shall distribute the balance available in the
transportation credit balancing fund by reducing payments pro rata
using the percentage derived by dividing the balance in the fund by the
total credits that are due for the month. The amount of credits
[[Page 16236]]
resulting from this initial proration shall be subject to audit
adjustment pursuant to paragraph (a)(2) of this section.
(2) The market administrator shall accept adjusted requests for
transportation credits on or before the 20th day of the month following
the month for which such credits were requested pursuant to
Sec. 1005.32(a). After such date, a preliminary audit will be conducted
by the market administrator, who will recalculate any necessary
proration of transportation credit payments for the preceding month
pursuant to paragraph (a) of this section. Handlers will be promptly
notified of an overpayment of credits based upon this final computation
and remedial payments to or from the transportation credit balancing
fund will be made on or before the next payment date for the following
month.
(3) Transportation credits paid pursuant to paragraphs (a)(1) and
(2) of this section shall be subject to final verification by the
market administrator pursuant to Sec. 1000.77. Adjusted payments to or
from the transportation credit balancing fund will remain subject to
the final proration established pursuant to paragraph (a)(2) of this
section.
(4) In the event that a qualified cooperative association is the
responsible party for whose account such milk is received and written
documentation of this fact is provided to the market administrator
pursuant to Sec. 1005.30(c)(3) prior to the date payment is due, the
transportation credits for such milk computed pursuant to this section
shall be made to such cooperative association rather than to the
operator of the pool plant at which the milk was received.
(b) The market administrator may extend the period during which
transportation credits are in effect (i.e., the transportation credit
period) to the months of January and June if a written request to do so
is received 15 days prior to the beginning of the month for which the
request is made and, after conducting an independent investigation,
finds that such extension is necessary to assure the market of an
adequate supply of milk for fluid use. Before making such a finding,
the market administrator shall notify the Director of the Dairy
Division and all handlers in the market that an extension is being
considered and invite written data, views, and arguments. Any decision
to extend the transportation credit period must be issued in writing
prior to the first day of the month for which the extension is to be
effective.
(c) Transportation credits shall apply to the following milk:
(1) Bulk milk received from a plant regulated under another Federal
order, except Federal Order 1007, and allocated to Class I milk
pursuant to Sec. 1000.44(a)(9); and
(2) Bulk milk received directly from the farms of dairy farmers at
pool distributing plants subject to the following conditions:
(i) The quantity of such milk that shall be eligible for the
transportation credit shall be determined by multiplying the total
pounds of milk received from producers meeting the conditions of this
paragraph by the lower of:
(A) The marketwide estimated Class I utilization of all handlers
for the month pursuant to Sec. 1000.45(a); or
(B) The Class I utilization of all producer milk of the pool plant
operator receiving the milk after the computations described in
Sec. 1000.44;
(ii) The dairy farmer was not a ``producer'' under this order
during more than 2 of the immediately preceding months of February
through May and not more than 50 percent of the production of the dairy
farmer during those 2 months, in aggregate, was received as producer
milk under this order during those 2 months; and
(iii) The farm on which the milk was produced is not located within
the specified marketing area of this order or the marketing area of
Federal Order 1007.
(d) Transportation credits shall be computed as follows:
(1) The market administrator shall subtract from the pounds of milk
described in paragraphs (c)(1) and (2) of this section the pounds of
bulk milk transferred from the pool plant receiving the supplemental
milk if milk was transferred to a nonpool plant on the same calendar
day that the supplemental milk was received. For this purpose, the
transferred milk shall be subtracted from the most distant load of
supplemental milk received, and then in sequence with the next most
distant load until all of the transfers have been offset.
(2) With respect to the pounds of milk described in paragraph
(c)(1) of this section that remain after the computations described in
paragraph (d)(1) of this section, the market administrator shall:
(i) Determine the shortest hard-surface highway distance between
the shipping plant and the receiving plant;
(ii) Multiply the number of miles so determined by 0.35 cent;
(iii) Subtract the applicable Class I differential in Sec. 1000.52
for the county in which the shipping plant is located from the Class I
differential applicable for the county in which the receiving plant is
located;
(iv) Subtract any positive difference computed in paragraph
(d)(2)(iii) of this section from the amount computed in paragraph
(d)(2)(ii) of this section; and
(v) Multiply the remainder computed in paragraph (d)(2)(iv) of this
section by the hundredweight of milk described in paragraph (d)(2) of
this section.
(3) For the remaining milk described in paragraph (c)(2) of this
section after computations described in paragraph (d)(1) of this
section, the market administrator shall:
(i) Determine an origination point for each load of milk by
locating the nearest city to the last producer's farm from which milk
was picked up for delivery to the receiving pool plant;
(ii) Determine the shortest hard-surface highway distance between
the receiving pool plant and the origination point;
(iii) Subtract 85 miles from the mileage so determined;
(iv) Multiply the remaining miles so computed by 0.35 cent;
(v) Subtract the Class I differential specified in Sec. 1000.52
applicable for the county in which the origination point is located
from the Class I differential applicable at the receiving pool plant's
location;
(vi) Subtract any positive difference computed in paragraph
(d)(3)(v) of this section from the amount computed in paragraph
(d)(3)(iv) of this section; and
(vii) Multiply the remainder computed in paragraph (d)(3)(vi) of
this section by the hundredweight of milk described in paragraph (d)(3)
of this section.
Administrative Assessment and Marketing Service Deduction
Sec. 1005.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1005.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1006--MILK IN THE FLORIDA MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1006.1 General provisions.
Definitions
1006.2 Florida marketing area.
1006.3 Route disposition.
1006.4 Plant.
1006.5 Distributing plant.
1006.6 Supply plant.
1006.7 Pool plant.
1006.8 Nonpool plant.
[[Page 16237]]
1006.9 Handler.
1006.10 Producer-handler.
1006.11 [Reserved]
1006.12 Producer.
1006.13 Producer milk.
1006.14 Other source milk.
1006.15 Fluid milk product.
1006.16 Fluid cream product.
1006.17 [Reserved]
1006.18 Cooperative association.
1006.19 Commercial food processing establishment.
Handler Reports
1006.30 Reports of receipts and utilization.
1006.31 Payroll reports.
1006.32 Other reports.
Classification of Milk
1006.40 Classes of utilization.
1006.41 [Reserved]
1006.42 Classification of transfers and diversions.
1006.43 General classification rules.
1006.44 Classification of producer milk.
1006.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1006.50 Class prices, component prices, and advanced pricing
factors.
1006.51 Class I differential and price.
1006.52 Adjusted Class I differentials.
1006.53 Announcement of class prices, component prices, and
advanced pricing factors.
1006.54 Equivalent price.
Uniform Prices
1006.60 Handler's value of milk.
1006.61 Computation of uniform prices.
1006.62 Announcement of uniform prices.
Payments for Milk
1006.70 Producer-settlement fund.
1006.71 Payments to the producer-settlement fund.
1006.72 Payments from the producer-settlement fund.
1006.73 Payments to producers and to cooperative associations.
1006.74 [Reserved]
1006.75 Plant location adjustments for producer milk and nonpool
milk.
1006.76 Payments by a handler operating a partially regulated
distributing plant.
1006.77 Adjustment of accounts.
1006.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1006.85 Assessment for order administration.
1006.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1006.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1006,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1006.2 Florida marketing area.
The marketing area means all the territory within the State of
Florida, except the counties of Escambia, Okaloosa, Santa Rosa, and
Walton, including all piers, docks and wharves connected therewith and
all craft moored thereat, and all territory occupied by government
(municipal, State or Federal) reservations, installations,
institutions, or other similar establishments if any part thereof is
within any of the listed states or political subdivisions.
Sec. 1006.3 Route disposition.
See Sec. 1000.3.
Sec. 1006.4 Plant.
See Sec. 1000.4.
Sec. 1006.5 Distributing plant.
See Sec. 1000.5.
Sec. 1006.6 Supply plant.
See Sec. 1000.6.
Sec. 1006.7 Pool plant.
Pool plant means a plant specified in paragraphs (a) through (d) of
this section, or a unit of plants as specified in paragraph (e) of this
section, but excluding a plant specified in paragraph (g) of this
section. The pooling standards described in paragraphs (c) and (d) of
this section are subject to modification pursuant to paragraph (f) of
this section:
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 50 percent or
more of the fluid milk products received at such plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) are disposed of as route disposition or are
transferred in the form of packaged fluid milk products to other
distributing plants. At least 25 percent of such route disposition and
transfers must be to outlets in the marketing area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 50 percent of the total quantity of
fluid milk products received at the plant (excluding concentrated milk
received from another plant by agreement for other than Class I use)
into ultra-pasteurized or aseptically-processed fluid milk products.
(c) A supply plant from which 60 percent or more of the total
quantity of milk that is received during the month from dairy farmers
and handlers described in Sec. 1000.9(c), including milk that is
diverted from the plant, is transferred to pool distributing plants.
Concentrated milk transferred from the supply plant to a distributing
plant for an agreed-upon use other than Class I shall be excluded from
the supply plant's shipments in computing the plant's shipping
percentage.
(d) A plant located within the marketing area that is operated by a
cooperative association if pool plant status under this paragraph is
requested for such plant by the cooperative association and during the
month 60 percent of the producer milk of members of such cooperative
association is delivered directly from farms to pool distributing
plants or is transferred to such plants as a fluid milk product
(excluding concentrated milk transferred to a distributing plant for an
agreed-upon use other than Class I) from the cooperative's plant.
(e) Two or more plants operated by the same handler and that are
located within the marketing area may qualify for pool status as a unit
by meeting the total and in-area route disposition requirements
specified in paragraph (a) of this section and the following additional
requirements:
(1) At least one of the plants in the unit must qualify as a pool
plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process only Class I or Class II
products and must be located in a pricing zone providing the same or a
lower Class I price than the price applicable at the distributing plant
included in the unit pursuant to paragraph (e)(1) of this section; and
(3) A written request to form a unit, or to add or remove plants
from a unit, must be filed with the market administrator prior to the
first day of the month for which it is to be effective.
(f) The applicable shipping percentages of paragraphs (c) and (d)
of this section may be increased or decreased by the market
administrator if the market administrator finds that such adjustment is
necessary to encourage needed shipments or to prevent uneconomic
shipments. Before making such a finding, the market administrator shall
investigate the need for adjustment either on the market
administrator's own initiative or at the request of interested parties
if the request is made in writing at least 15 days prior to the date
for which the requested revision is desired effective. If the
investigation shows that an adjustment of the shipping percentages
might be appropriate, the market administrator
[[Page 16238]]
shall issue a notice stating that an adjustment is being considered and
invite data, views and arguments. Any decision to revise an applicable
shipping percentage must be issued in writing at least one day before
the effective date.
(g) The term pool plant shall not apply to the following plants:
(1) A producer-handler plant;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant qualified pursuant to paragraph (a) of this section
which is not located within any Federal order marketing area, meets the
pooling requirements of another Federal order, and has had greater
route disposition in such other Federal order marketing area for 3
consecutive months;
(4) A plant qualified pursuant to paragraph (a) of this section
which is located in another Federal order marketing area, meets the
pooling standards of the other Federal order, and has not had a
majority of its route disposition in this marketing area for 3
consecutive months or is locked into pool status under such other
Federal order without regard to its route disposition in any other
Federal order marketing area; and
(5) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under such other order than are made to plants regulated under this
order, or such plant has automatic pooling status under such other
order.
Sec. 1006.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1006.9 Handler.
See Sec. 1000.9.
Sec. 1006.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is monthly route disposition in the marketing area;
(b) Receives no fluid milk products, and acquires no fluid milk
products for route disposition, from sources other than own farm
production;
(c) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products
received from own farm production; and
(d) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled, and the processing and
packaging operations, are the producer-handler's own enterprise and are
operated at the producer-handler's own risk.
Sec. 1006.11 [Reserved]
Sec. 1006.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1006.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1006.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I; and
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order.
Sec. 1006.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk) and butterfat contained in milk of a producer
that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(c) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(d) Diverted by the operator of a pool plant or a handler described
in Sec. 1000.9(c) to a nonpool plant, subject to the following
conditions:
(1) In any month, not less than 10 days' production of the producer
whose milk is diverted is physically received at a pool plant during
the month;
(2) The total quantity of milk so diverted during the month by a
cooperative association shall not exceed 20 percent during the months
of July through November, 25 percent during the months of December
through February, and 40 percent during all other months, of the
producer milk that the cooperative association caused to be delivered
to, and physically received at, pool plants during the month;
(3) The operator of a pool plant that is not a cooperative
association may divert any milk that is not under the control of a
cooperative association that diverts milk during the month pursuant to
paragraph (d) of this section. The total quantity of milk so diverted
during the month shall not exceed 20 percent during the months of July
through November, 25 percent during the months of December through
February, and 40 percent during all other months, of the producer milk
physically received at such plant (or such unit of plants in the case
of plants that pool as a unit pursuant to Sec. 1006.7(d)) during the
month, excluding the quantity of producer milk received from a handler
described in Sec. 1000.9(c);
(4) Any milk diverted in excess of the limits prescribed in
paragraphs (d)(3) and (4) of this section shall not be producer milk.
If the diverting handler or cooperative association fails to designate
the dairy farmers' deliveries that will not be producer milk, no milk
diverted by the handler or cooperative association shall be producer
milk;
(5) Diverted milk shall be priced at the location of the plant to
which diverted; and
(6) The delivery day requirements and the diversion percentages in
paragraphs (d)(1) through (3) of this section may be increased or
decreased by the market administrator if the market administrator finds
that such revision is necessary to assure orderly marketing and
efficient handling of milk in the marketing area. Before making such a
finding, the market administrator shall investigate the need for the
revision either on the market administrator's own initiative or at the
request of interested persons. If the investigation shows that a
revision might be appropriate, the market administrator shall issue a
notice stating that the revision is being considered and inviting
written data, views, and arguments. Any decision to revise an
applicable percentage must be issued in writing at least one day before
the effective date.
[[Page 16239]]
Sec. 1006.14 Other source milk.
See Sec. 1000.14.
Sec. 1006.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1006.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1006.17 [Reserved]
Sec. 1006.18 Cooperative association.
See Sec. 1000.18.
Sec. 1006.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1006.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 7th day
after the end of the month, in the detail and on prescribed forms, as
follows:
(a) With respect to each of its pool plants, the quantities of skim
milk and butterfat contained in or represented by:
(1) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c);
(2) Receipts of milk from handlers described in Sec. 1000.9(c);
(3) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(4) Receipts of other source milk;
(5) Inventories at the beginning and end of the month of fluid milk
products and bulk fluid cream products; and
(6) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The quantities of all skim milk and butterfat contained in
receipts of milk from producers; and
(2) The utilization or disposition of all such receipts.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1006.31 Payroll reports.
(a) On or before the 20th day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1006.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for the month, in detail prescribed
by the market administrator, showing for each producer the information
specified in Sec. 1006.73(e).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1006.32 Other reports.
In addition to the reports required pursuant to Secs. 1006.30 and
1006.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1006.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1006.41 [Reserved]
Sec. 1006.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1006.43 General classification rules.
See Sec. 1000.43.
Sec. 1006.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1006.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1006.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1006.51 Class I differential and price.
The Class I differential shall be the differential established for
Hillsborough County, Florida, which is reported in Sec. 1000.52. The
Class I price shall be the price computed pursuant to Sec. 1000.50(a)
for Hillsborough County, Florida.
Sec. 1006.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1006.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1006.54 Equivalent price.
See Sec. 1000.54.
Uniform Prices
Sec. 1006.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c) with respect to
milk that was not received at a pool plant by adding the amounts
computed in paragraphs (a) through (e) of this section and subtracting
from that total amount the value computed in paragraph (f) of this
section. Receipts of nonfluid milk products that are distributed as
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec. 1000.76(a)(4) or
(d) shall be excluded from pricing under this section.
(a) Multiply the pounds of skim milk and butterfat in producer milk
that were classified in each class pursuant to Sec. 1000.44(c) by the
applicable skim milk and butterfat prices, and add the resulting
amounts;
(b) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) by the respective skim
milk and butterfat prices applicable at the location of the pool plant;
(c) Multiply the difference between the Class IV price for the
preceding month and the current month's Class I, II, or III price, as
the case may be, by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(d) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from a plant regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants;
(e) Multiply the Class I price applicable at the location of the
nearest unregulated supply plants from which an equivalent volume was
received by the pounds of skim milk and butterfat
[[Page 16240]]
in receipts of concentrated fluid milk products assigned to Class I
pursuant to Sec. 1000.43(d) and Sec. 1000.44(a)(3)(i) and the pounds of
skim milk and butterfat subtracted from Class I pursuant to
Sec. 1000.44(a)(8) and the corresponding step of Sec. 1000.44(b),
excluding such skim milk and butterfat in receipts of fluid milk
products from an unregulated supply plant to the extent that an
equivalent amount of skim milk or butterfat disposed of to such plant
by handlers fully regulated under any Federal milk order is classified
and priced as Class I milk and is not used as an offset for any other
payment obligation under any order; and
(f) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
Sec. 1006.61 Computation of uniform prices.
On or before the 11th day of each month, the market administrator
shall compute a uniform butterfat price, a uniform skim milk price, and
a uniform price for producer milk receipts reported for the prior
month. The report of any handler who has not made payments required
pursuant to Sec. 1006.71 for the preceding month shall not be included
in the computation of these prices, and such handler's report shall not
be included in the computation for succeeding months until the handler
has made full payment of outstanding monthly obligations.
(a) Uniform butterfat price. The uniform butterfat price per pound,
rounded to the nearest one-hundredth cent, shall be computed by
multiplying the pounds of butterfat in producer milk allocated to each
class pursuant to Sec. 1000.44(b) by the respective class butterfat
prices and dividing the sum of such values by the total pounds of such
butterfat.
(b) Uniform skim milk price. The uniform skim milk price per
hundredweight, rounded to the nearest cent, shall be computed as
follows:
(1) Combine into one total the values computed pursuant to
Sec. 1005.60 for all handlers;
(2) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1006.75;
(3) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(4) Subtract the value of the total pounds of butterfat for all
handlers. The butterfat value shall be computed by multiplying the
pounds of butterfat by the butterfat price computed in paragraph (a) of
this section;
(5) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(i) The total skim pounds of producer milk; and
(ii) The total skim pounds for which a value is computed pursuant
to Sec. 1006.60(e); and
(6) Subtract not less than 4 cents and not more than 5 cents.
(c) Uniform price. The uniform price per hundredweight, rounded to
the nearest cent, shall be the sum of the following:
(1) Multiply the uniform butterfat price for the month pursuant to
paragraph (a) of this section times 3.5 pounds of butterfat; and
(2) Multiply the uniform skim milk price for the month pursuant to
paragraph (b) of this section times 96.5 pounds of skim milk.
Sec. 1006.62 Announcement of uniform prices.
On or before the 11th day after the end of the month, the market
administrator shall announce the uniform prices for the month computed
pursuant to Sec. 1006.61.
Payments for Milk
Sec. 1006.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1006.71 Payments to the producer-settlement fund.
Each handler shall make a payment to the producer-settlement fund
in a manner that provides receipt of the funds by the market
administrator no later than the 12th day after the end of the month
(except as provided in Sec. 1000.90). Payment shall be the amount, if
any, by which the amount specified in paragraph (a) of this section
exceeds the amount specified in paragraph (b) of this section:
(a) The total value of milk of the handler for the month as
determined pursuant to Sec. 1006.60; and
(b) The sum of the value at the uniform prices for skim milk and
butterfat, adjusted for plant location, of the handler's receipts of
producer milk; and the value at the uniform price, as adjusted pursuant
to Sec. 1006.75, applicable at the location of the plant from which
received of other source milk for which a value is computed pursuant to
Sec. 1006.60(e).
Sec. 1006.72 Payments from the producer-settlement fund.
No later than one day after the date of payment receipt required
under Sec. 1006.71, the market administrator shall pay to each handler
the amount, if any, by which the amount computed pursuant to
Sec. 1006.71(b) exceeds the amount computed pursuant to
Sec. 1006.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1006.73 Payments to producers and to cooperative associations.
(a) Each pool plant operator that is not paying a cooperative
association for producer milk shall pay each producer as follows:
(1) Partial payments. (i) For each producer who has not
discontinued shipments as of the 15th day of the month, payment shall
be made so that it is received by the producer on or before the 20th
day of the month (except as provided in Sec. 1000.90) for milk received
during the first 15 days of the month at not less than 85 percent of
the preceding month's uniform price, adjusted for plant location
pursuant to Sec. 1006.75 and proper deductions authorized in writing by
the producer; and
(ii) For each producer who has not discontinued shipments as of the
last day of the month, payment shall be made so that it is received by
the producer on or before the 5th day of the following month (except as
provided in Sec. 1000.90) for milk received from the 16th to the last
day of the month at not less than 85 percent of the preceding month's
uniform price, adjusted for plant location pursuant to Sec. 1006.75 and
proper deductions authorized in writing by the producer.
(2) Final payment. For milk received during the month, a payment
computed as follows shall be made so that it is received by each
producer one day after the payment date required in Sec. 1006.72:
(i) Multiply the hundredweight of producer skim milk received times
the uniform skim milk price for the month;
(ii) Multiply the pounds of butterfat received times the uniform
butterfat price for the month;
(iii) Multiply the hundredweight of producer milk received times
the plant location adjustment pursuant to Sec. 1006.75; and
(iv) Add the amounts computed in paragraphs (a)(2)(i), (ii), and
(iii) of this section, and from that sum:
[[Page 16241]]
(A) Subtract the partial payments made pursuant to paragraph (a)(1)
of this section;
(B) Subtract the deduction for marketing services pursuant to
Sec. 1000.86;
(C) Add or subtract for errors made in previous payments to the
producer; and
(D) Subtract proper deductions authorized in writing by the
producer.
(b) One day before partial and final payments are due pursuant to
paragraph (a) of this section, each pool plant operator shall pay a
cooperative association for milk received as follows:
(1) Partial payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk (including the
milk of producers who are not members of such association and who the
market administrator determines have authorized the cooperative
association to collect payment for their milk) received from a
cooperative association in any capacity, except as the operator of a
pool plant, the payment shall be equal to the hundredweight of milk
received multiplied by 90 percent of the preceding month's uniform
price, adjusted for plant location pursuant to Sec. 1006.75.
(2) Partial payment to a cooperative association for milk
transferred from its pool plant. For bulk fluid milk products and bulk
fluid cream products received during the first 15 days of the month
from a cooperative association in its capacity as the operator of a
pool plant, the partial payment shall be at the pool plant operator's
estimated use value of the milk using the most recent class prices
available for skim milk and butterfat at the receiving plant's
location.
(3) Final payment to a cooperative association for milk transferred
from its pool plant. For bulk fluid milk products and bulk fluid cream
products received during the month from a cooperative association in
its capacity as the operator of a pool plant, the final payment shall
be the classified value of such milk as determined by multiplying the
pounds of skim milk and butterfat assigned to each class pursuant to
Sec. 1000.44 by the class prices for the month at the receiving plant's
location, and subtracting from this sum the partial payment made
pursuant to paragraph (b)(2) of this section.
(4) Final payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk received from a
cooperative association during the month, including the milk of
producers who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, the final payment for such milk shall
be an amount equal to the sum of the individual payments otherwise
payable for such milk pursuant to paragraph (a)(2) of this section.
(c) If a handler has not received full payment from the market
administrator pursuant to Sec. 1006.72 by the payment date specified in
paragraph (a) or (b) of this section, the handler may reduce payments
pursuant to paragraphs (a) and (b) of this section, but by not more
than the amount of the underpayment. The payments shall be completed on
the next scheduled payment date after receipt of the balance due from
the market administrator.
(d) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant as the case may be.
(e) In making payments to producers pursuant to this section, each
pool plant operator shall furnish each producer, except a producer
whose milk was received from a cooperative association described in
Sec. 1000.9(a) or (c), a supporting statement in such form that it may
be retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and the payroll number of the producer;
(2) The month and dates that milk was received from the producer,
including the daily and total pounds of milk received;
(3) The total pounds of butterfat in the producer's milk;
(4) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(5) The rate used in making payment if the rate is other than the
applicable minimum rate;
(6) The amount, or rate per hundredweight, and nature of each
deduction claimed by the handler; and
(7) The net amount of payment to the producer or cooperative
association.
Sec. 1006.74 [Reserved]
Sec. 1006.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1006.50 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1006.73
and 1000.76.
Sec. 1006.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1006.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1006.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1006.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1006.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1007--MILK IN THE SOUTHEAST MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1007.1 General provisions.
Definitions
1007.2 Southeast marketing area.
1007.3 Route disposition.
1007.4 Plant.
1007.5 Distributing plant.
1007.6 Supply plant.
1007.7 Pool plant.
1007.8 Nonpool plant.
1007.9 Handler.
1007.10 Producer-handler.
1007.11 [Reserved]
1007.12 Producer.
1007.13 Producer milk.
1007.14 Other source milk.
1007.15 Fluid milk product.
1007.16 Fluid cream product.
1007.17 [Reserved]
1007.18 Cooperative association.
1007.19 Commercial food processing establishment.
Handler Reports
1007.30 Reports of receipts and utilization.
1007.31 Payroll reports.
1007.32 Other reports.
Classification of Milk
1007.40 Classes of utilization.
1007.41 [Reserved]
[[Page 16242]]
1007.42 Classification of transfers and diversions.
1007.43 General classification rules.
1007.44 Classification of producer milk.
1007.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1007.50 Class prices, component prices, and advanced pricing
factors.
1007.51 Class I differential and price.
1007.52 Adjusted Class I differentials.
1007.53 Announcement of class prices, component prices, and
advanced pricing factors.
1007.54 Equivalent price.
Uniform Prices
1007.60 Handler's value of milk.
1007.61 Computation of uniform prices.
1007.62 Announcement of uniform prices.
Payments for Milk
1007.70 Producer-settlement fund.
1007.71 Payments to the producer-settlement fund.
1007.72 Payments from the producer-settlement fund.
1007.73 Payments to producers and to cooperative associations.
1007.74 [Reserved]
1007.75 Plant location adjustments for producer milk and nonpool
milk.
1007.76 Payments by a handler operating a partially regulated
distributing plant.
1007.77 Adjustment of accounts.
1007.78 Charges on overdue accounts.
Marketwide Service Payments
1007.80 Transportation credit balancing fund.
1007.81 Payments to the transportation credit balancing fund.
1007.82 Payments from the transportation credit balancing fund.
Administrative Assessment and Marketing Service Deduction
1007.85 Assessment for order administration.
1007.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1007.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1007,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1007.2 Southeast marketing area.
The marketing area means all territory within the bounds of the
following states and political subdivisions, including all piers, docks
and wharves connected therewith and all craft moored thereat, and all
territory occupied by government (municipal, State or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Alabama, Arkansas, Louisiana, and Mississippi
All of the States of Alabama, Arkansas, Louisiana, and
Mississippi.
Florida Counties
Escambia, Okaloosa, Santa Rosa, and Walton.
Georgia Counties
All of the State of Georgia except for the counties of Catoosa,
Chattooga, Dade, Fannin, Murray, Walker, and Whitfield.
Kentucky Counties
Allen, Ballard, Barren, Caldwell, Calloway, Carlisle, Christian,
Crittenden, Fulton, Graves, Hickman, Livingston, Logan, Lyon,
Marshall, McCracken, Metcalfe, Monroe, Simpson, Todd, Trigg, and
Warren.
Missouri Counties
Barry, Barton, Bollinger, Butler, Cape Girardeau, Carter, Cedar,
Christian, Crawford, Dade, Dallas, Dent, Douglas, Dunklin, Greene,
Howell, Iron, Jasper, Laclede, Lawrence, Madison, McDonald,
Mississippi, New Madrid, Newton, Oregon, Ozark, Pemiscot, Perry,
Polk, Reynolds, Ripley, Scott, Shannon, St. Francois, Stoddard,
Stone, Taney, Texas, Vernon, Washington, Wayne, Webster, and Wright.
Tennessee Counties
All of the State of Tennessee except for the counties of
Anderson, Blount, Bradley, Campbell, Carter, Claiborne, Cocke,
Cumberland, Grainger, Greene, Hamblen, Hamilton, Hancock, Hawkins,
Jefferson, Johnson, Knox, Loudon, Marion, McMinn, Meigs, Monroe,
Morgan, Polk, Rhea, Roane, Scott, Sequatchie, Sevier, Sullivan,
Unicoi, Union, and Washington.
Sec. 1007.3 Route disposition.
See Sec. 1000.3.
Sec. 1007.4 Plant.
See Sec. 1000.4.
Sec. 1007.5 Distributing plant.
See Sec. 1000.5.
Sec. 1007.6 Supply plant.
See Sec. 1000.6.
Sec. 1007.7 Pool plant.
Pool plant means a plant specified in paragraphs (a) through (d) of
this section, or a unit of plants as specified in paragraph (e) of this
section, but excluding a plant specified in paragraph (g) of this
section. The pooling standards described in paragraphs (c) and (d) of
this section are subject to modification pursuant to paragraph (f) of
this section:
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 50 percent or
more of the fluid milk products received at such plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) are disposed of as route disposition or are
transferred in the form of packaged fluid milk products to other
distributing plants. At least 25 percent of such route disposition and
transfers must be to outlets in the marketing area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 50 percent of the total quantity of
fluid milk products received at the plant (excluding concentrated milk
received from another plant by agreement for other than Class I use)
into ultra-pasteurized or aseptically-processed fluid milk products.
(c) A supply plant from which 50 percent or more of the total
quantity of milk that is received during the month from dairy farmers
and handlers described in Sec. 1000.9(c), including milk that is
diverted from the plant, is transferred to pool distributing plants.
Concentrated milk transferred from the supply plant to a distributing
plant for an agreed-upon use other than Class I shall be excluded from
the supply plant's shipments in computing the plant's shipping
percentage.
(d) A plant located within the marketing area that is operated by a
cooperative association if pool plant status under this paragraph is
requested for such plant by the cooperative association and during the
month at least 60 percent of the producer milk of members of such
cooperative association is delivered directly from farms to pool
distributing plants or is transferred to such plants as a fluid milk
product (excluding concentrated milk transferred to a distributing
plant for an agreed-upon use other than Class I) from the cooperative's
plant.
(e) Two or more plants operated by the same handler and located
within the marketing area may qualify for pool status as a unit by
meeting the total and in-area route disposition requirements specified
in paragraph (a) of this section and the following additional
requirements:
(1) At least one of the plants in the unit must qualify as a pool
plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process only Class I or Class II
products and must be located in a pricing zone providing the same or a
lower Class I price than the price applicable at the distributing plant
included in the unit
[[Page 16243]]
pursuant to paragraph (e)(1) of this section; and
(3) A written request to form a unit, or to add or remove plants
from a unit, must be filed with the market administrator prior to the
first day of the month for which it is to be effective.
(f) The applicable shipping percentages of paragraphs (c) and (d)
of this section may be increased or decreased by the market
administrator if the market administrator finds that such adjustment is
necessary to encourage needed shipments or to prevent uneconomic
shipments. Before making such a finding, the market administrator shall
investigate the need for adjustment either on the market
administrator's own initiative or at the request of interested parties
if the request is made in writing at least 15 days prior to the date
for which the requested revision is desired effective. If the
investigation shows that an adjustment of the shipping percentages
might be appropriate, the market administrator shall issue a notice
stating that an adjustment is being considered and invite data, views
and arguments. Any decision to revise an applicable shipping percentage
must be issued in writing at least one day before the effective date.
(g) The term pool plant shall not apply to the following plants:
(1) A producer-handler plant;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant qualified pursuant to paragraph (a) of this section
which is not located within any Federal order marketing area, meets the
pooling requirements of another Federal order, and has had greater
route disposition in such other Federal order marketing area for 3
consecutive months;
(4) A plant qualified pursuant to paragraph (a) of this section
which is located in another Federal order marketing area, meets the
pooling standards of the other Federal order, and has not had a
majority of its route disposition in this marketing area for 3
consecutive months or is locked into pool status under such other
Federal order without regard to its route disposition in any other
Federal order marketing area; and
(5) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under such other order than are made to plants regulated under this
order, or such plant has automatic pooling status under such other
order.
Sec. 1007.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1007.9 Handler.
See Sec. 1000.9.
Sec. 1007.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is monthly route disposition in the marketing area;
(b) Receives no fluid milk products, and acquires no fluid milk
products for route disposition, from sources other than own farm
production;
(c) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products
received from own farm production; and
(d) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled, and the processing and
packaging operations, are the producer-handler's own enterprise and are
operated at the producer-handler's own risk.
Sec. 1007.11 [Reserved]
Sec. 1007.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1007.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1007.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I; and
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order.
Sec. 1007.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk) and butterfat contained in milk of a producer
that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(c) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(d) Diverted by the operator of a pool plant or a handler described
in Sec. 1000.9(c) to a nonpool plant, subject to the following
conditions:
(1) In any month of January through June, not less than 4 days'
production of the producer whose milk is diverted is physically
received at a pool plant during the month;
(2) In any month of July through December, not less than 10 days'
production of the producer whose milk is diverted is physically
received at a pool plant during the month;
(3) The total quantity of milk so diverted during the month by a
cooperative association shall not exceed 33 percent during the months
of July through December, and 50 percent during the months of January
through June, of the producer milk that the cooperative association
caused to be delivered to, and physically received at, pool plants
during the month;
(4) The operator of a pool plant that is not a cooperative
association may divert any milk that is not under the control of a
cooperative association that diverts milk during the month pursuant to
paragraph (d) of this section. The total quantity of milk so diverted
during the month shall not exceed 33 percent during the months of July
through December, or 50 percent during the months of January through
June, of the producer milk physically received at such plant (or such
unit of plants in the case of plants that pool as a unit pursuant to
Sec. 1007.7(e)) during the month, excluding the quantity of producer
milk received from a handler described in Sec. 1000.9(c);
(5) Any milk diverted in excess of the limits prescribed in
paragraphs (d)(3) and (4) of this section shall not be producer milk.
If the diverting handler or cooperative association fails to designate
the dairy farmers' deliveries that will not be producer milk, no milk
[[Page 16244]]
diverted by the handler or cooperative association shall be producer
milk;
(6) Diverted milk shall be priced at the location of the plant to
which diverted; and
(7) The delivery day requirements and the diversion percentages in
paragraphs (d)(1) through (4) of this section may be increased or
decreased by the market administrator if the market administrator finds
that such revision is necessary to assure orderly marketing and
efficient handling of milk in the marketing area. Before making such a
finding, the market administrator shall investigate the need for the
revision either on the market administrator's own initiative or at the
request of interested persons. If the investigation shows that a
revision might be appropriate, the market administrator shall issue a
notice stating that the revision is being considered and inviting
written data, views, and arguments. Any decision to revise an
applicable percentage must be issued in writing at least one day before
the effective date.
Sec. 1007.14 Other source milk.
See Sec. 1000.14.
Sec. 1007.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1007.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1007.17 [Reserved]
Sec. 1007.18 Cooperative association.
See Sec. 1000.18.
Sec. 1007.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1007.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 7th day
after the end of the month, in the detail and on prescribed forms, as
follows:
(a) With respect to each of its pool plants, the quantities of skim
milk and butterfat contained in or represented by:
(1) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c);
(2) Receipts of milk from handlers described in Sec. 1000.9(c);
(3) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(4) Receipts of other source milk;
(5) Receipts of bulk milk from a plant regulated under another
Federal order, except Federal Order 1005, for which a transportation
credit is requested pursuant to Sec. 1007.82;
(6) Receipts of producer milk described in Sec. 1007.82(c)(2),
including the identity of the individual producers whose milk is
eligible for the transportation credit pursuant to that paragraph and
the date that such milk was received;
(7) For handlers submitting transportation credit requests,
transfers of bulk milk to nonpool plants, including the dates that such
milk was transferred;
(8) Inventories at the beginning and end of the month of fluid milk
products and bulk fluid cream products; and
(9) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraphs (a)(1), (a)(2), (a)(3),
(a)(4), and (a)(8) of this section. Receipts of milk that would have
been producer milk if the plant had been fully regulated shall be
reported in lieu of producer milk. The report shall show also the
quantity of any reconstituted skim milk in route disposition in the
marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The quantities of all skim milk and butterfat contained in
receipts of milk from producers;
(2) The utilization or disposition of all such receipts; and
(3) With respect to milk for which a cooperative association is
requesting a transportation credit pursuant to Sec. 1007.82, all of the
information required in paragraphs (a)(5), (a)(6), and (a)(7) of this
section.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1007.31 Payroll reports.
(a) On or before the 20th day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1007.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for the month, in detail prescribed
by the market administrator, showing for each producer the information
specified in Sec. 1007.73(e).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1007.32 Other reports.
(a) On or before the 20th day after the end of each month, each
handler described in Sec. 1000.9(a) and (c) shall report to the market
administrator any adjustments to transportation credit requests as
reported pursuant to Sec. 1007.30(a)(5), (6), and (7).
(b) In addition to the reports required pursuant to Secs. 1007.30,
31, and 32(a), each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1007.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1007.41 [Reserved]
Sec. 1007.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1007.43 General classification rules.
See Sec. 1000.43.
Sec. 1007.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1007.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1007.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1007.51 Class I differential and price.
The Class I differential shall be the differential established for
Fulton County, Georgia, which is reported in Sec. 1000.52. The Class I
price shall be the price computed pursuant to Sec. 1000.50(a) for
Fulton County, Georgia.
Sec. 1007.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1007.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1007.54 Equivalent price.
See Sec. 1000.54.
Uniform Prices
Sec. 1007.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk,
[[Page 16245]]
the market administrator shall determine for each month the value of
milk of each handler with respect to each of the handler's pool plants
and of each handler described in Sec. 1000.9(c) with respect to milk
that was not received at a pool plant by adding the amounts computed in
paragraphs (a) through (e) of this section and subtracting from that
total amount the value computed in paragraph (f) of this section.
Receipts of nonfluid milk products that are distributed as labeled
reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec. 1000.76(a)(4) or
(d) shall be excluded from pricing under this section.
(a) Multiply the pounds of skim milk and butterfat in producer milk
that were classified in each class pursuant to Sec. 1000.44(c) by the
applicable skim milk and butterfat prices, and add the resulting
amounts;
(b) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) by the respective skim
milk and butterfat prices applicable at the location of the pool plant;
(c) Multiply the difference between the Class IV price for the
preceding month and the current month's Class I, II, or III price, as
the case may be, by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(d) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3) (i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from a plant regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants;
(e) Multiply the Class I price applicable at the location of the
nearest unregulated supply plants from which an equivalent volume was
received by the pounds of skim milk and butterfat in receipts of
concentrated fluid milk products assigned to Class I pursuant to
Sec. 1000.43(d) and Sec. 1000.44(a)(3)(i) and the pounds of skim milk
and butterfat subtracted from Class I pursuant to Sec. 1000.44(a)(8)
and the corresponding step of Sec. 1000.44(b), excluding such skim milk
and butterfat in receipts of fluid milk products from an unregulated
supply plant to the extent that an equivalent amount of skim milk or
butterfat disposed of to such plant by handlers fully regulated under
any Federal milk order is classified and priced as Class I milk and is
not used as an offset for any other payment obligation under any order;
and
(f) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
Sec. 1007.61 Computation of uniform prices.
On or before the 11th day of each month, the market administrator
shall compute a uniform butterfat price, a uniform skim milk price, and
a uniform price for producer milk receipts reported for the prior
month. The report of any handler who has not made payments required
pursuant to Sec. 1007.71 for the preceding month shall not be included
in the computation of these prices, and such handler's report shall not
be included in the computation for succeeding months until the handler
has made full payment of outstanding monthly obligations.
(a) Uniform butterfat price. The uniform butterfat price per pound,
rounded to the nearest one-hundredth cent, shall be computed by
multiplying the pounds of butterfat in producer milk allocated to each
class pursuant to Sec. 1000.44(b) by the respective class butterfat
prices and dividing the sum of such values by the total pounds of such
butterfat.
(b) Uniform skim milk price. The uniform skim milk price per
hundredweight, rounded to the nearest cent, shall be computed as
follows:
(1) Combine into one total the values computed pursuant to
Sec. 1005.60 for all handlers;
(2) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1007.75;
(3) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(4) Subtract the value of the total pounds of butterfat for all
handlers. The butterfat value shall be computed by multiplying the
pounds of butterfat by the butterfat price computed in paragraph (a) of
this section;
(5) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(i) The total skim pounds of producer milk; and
(ii) The total skim pounds for which a value is computed pursuant
to Sec. 1007.60(e); and
(6) Subtract not less than 4 cents and not more than 5 cents.
(c) Uniform price. The uniform price per hundredweight, rounded to
the nearest cent, shall be the sum of the following:
(1) Multiply the uniform butterfat price for the month pursuant to
paragraph (a) of this section times 3.5 pounds of butterfat; and
(2) Multiply the uniform skim milk price for the month pursuant to
paragraph (b) of this section times 96.5 pounds of skim milk.
Sec. 1007.62 Announcement of uniform prices.
On or before the 11th day after the end of the month, the market
administrator shall announce the uniform prices for the month computed
pursuant to Sec. 1007.61.
Payments for Milk
Sec. 1007.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1007.71 Payments to the producer-settlement fund.
Each handler shall make a payment to the producer-settlement fund
in a manner that provides receipt of the funds by the market
administrator no later than the 12th day after the end of the month
(except as provided in Sec. 1000.90). Payment shall be the amount, if
any, by which the amount specified in paragraph (a) of this section
exceeds the amount specified in paragraph (b) of this section:
(a) The total value of milk of the handler for the month as
determined pursuant to Sec. 1007.60; and
(b) The sum of the value at the uniform prices for skim milk and
butterfat, adjusted for plant location, of the handler's receipts of
producer milk; and the value at the uniform price, as adjusted pursuant
to Sec. 1007.75, applicable at the location of the plant from which
received of other source milk for which a value is computed pursuant to
Sec. 1007.60(e).
Sec. 1007.72 Payments from the producer-settlement fund.
No later than one day after the date of payment receipt required
under Sec. 1007.71, the market administrator shall pay to each handler
the amount, if any, by which the amount computed pursuant to
Sec. 1007.71(b) exceeds the amount computed pursuant to
Sec. 1007.71(a). If, at such time, the balance
[[Page 16246]]
in the producer-settlement fund is insufficient to make all payments
pursuant to this section, the market administrator shall reduce
uniformly such payments and shall complete the payments as soon as the
funds are available.
Sec. 1007.73 Payments to producers and to cooperative associations.
(a) Each pool plant operator that is not paying a cooperative
association for producer milk shall pay each producer as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the 23rd day of the month, payment shall be made so
that it is received by the producer on or before the 26th day of the
month (except as provided in Sec. 1000.90) for milk received during the
first 15 days of the month at not less than 90 percent of the preceding
month's uniform price, adjusted for plant location pursuant to
Sec. 1007.75 and proper deductions authorized in writing by the
producer.
(2) Final payment. For milk received during the month, a payment
computed as follows shall be made so that it is received by each
producer one day after the payment date required in Sec. 1007.72:
(i) Multiply the hundredweight of producer skim milk received times
the uniform skim milk price for the month;
(ii) Multiply the pounds of butterfat received times the uniform
butterfat price for the month;
(iii) Multiply the hundredweight of producer milk received times
the plant location adjustment pursuant to Sec. 1007.75; and
(iv) Add the amounts computed in paragraph (a)(2)(i), (ii), and
(iii) of this section, and from that sum:
(A) Subtract the partial payment made pursuant to paragraph (a)(1)
of this section;
(B) Subtract the deduction for marketing services pursuant to
Sec. 1000.86;
(C) Add or subtract for errors made in previous payments to the
producer; and
(D) Subtract proper deductions authorized in writing by the
producer.
(b) One day before partial and final payments are due pursuant to
paragraph (a) of this section, each pool plant operator shall pay a
cooperative association for milk received as follows:
(1) Partial payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk (including the
milk of producers who are not members of such association and who the
market administrator determines have authorized the cooperative
association to collect payment for their milk) received during the
first 15 days of the month from a cooperative association in any
capacity, except as the operator of a pool plant, the payment shall be
equal to the hundredweight of milk received multiplied by 90 percent of
the preceding month's uniform price, adjusted for plant location
pursuant to Sec. 1007.75.
(2) Partial payment to a cooperative association for milk
transferred from its pool plant. For bulk fluid milk products and bulk
fluid cream products received during the first 15 days of the month
from a cooperative association in its capacity as the operator of a
pool plant, the partial payment shall be at the pool plant operator's
estimated use value of the milk using the most recent class prices
available for skim milk and butterfat at the receiving plant's
location.
(3) Final payment to a cooperative association for milk transferred
from its pool plant. For bulk fluid milk products and bulk fluid cream
products received during the month from a cooperative association in
its capacity as the operator of a pool plant, the final payment shall
be the classified value of such milk as determined by multiplying the
pounds of skim milk and butterfat assigned to each class pursuant to
Sec. 1000.44 by the class prices for the month at the receiving plant's
location, and subtracting from this sum the partial payment made
pursuant to paragraph (b)(2) of this section.
(4) Final payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk received from a
cooperative association during the month, including the milk of
producers who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, the final payment for such milk shall
be an amount equal to the sum of the individual payments otherwise
payable for such milk pursuant to paragraph (a)(2) of this section.
(c) If a handler has not received full payment from the market
administrator pursuant to Sec. 1007.72 by the payment date specified in
paragraph (a) or (b) of this section, the handler may reduce payments
pursuant to paragraphs (a) and (b) of this section, but by not more
than the amount of the underpayment. The payments shall be completed on
the next scheduled payment date after receipt of the balance due from
the market administrator.
(d) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant as the case may be.
(e) In making payments to producers pursuant to this section, each
pool plant operator shall furnish each producer, except a producer
whose milk was received from a cooperative association described in
Sec. 1000.9(a) or (c), a supporting statement in such form that it may
be retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and the payroll number of the producer;
(2) The month and dates that milk was received from the producer,
including the daily and total pounds of milk received;
(3) The total pounds of butterfat in the producer's milk;
(4) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(5) The rate used in making payment if the rate is other than the
applicable minimum rate;
(6) The amount, or rate per hundredweight, and nature of each
deduction claimed by the handler; and
(7) The net amount of payment to the producer or cooperative
association.
Sec. 1007.74 [Reserved]
Sec. 1007.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1007.50 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1007.73
and 1000.76.
Sec. 1007.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1007.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1007.78 Charges on overdue accounts.
See Sec. 1000.78.
[[Page 16247]]
Marketwide Service Payments
Sec. 1007.80 Transportation credit balancing fund.
The market administrator shall maintain a separate fund known as
the Transportation Credit Balancing Fund into which shall be deposited
the payments made by handlers pursuant to Sec. 1007.81 and out of which
shall be made the payments due handlers pursuant to Sec. 1007.82.
Payments due a handler shall be offset against payments due from the
handler.
Sec. 1007.81 Payments to the transportation credit balancing fund.
(a) On or before the 12th day after the end of the month (except as
provided in Sec. 1000.90), each handler operating a pool plant and each
handler specified in Sec. 1000.9(c) shall pay to the market
administrator a transportation credit balancing fund assessment
determined by multiplying the pounds of Class I producer milk assigned
pursuant to Sec. 1000.44 by $0.07 per hundredweight or such lesser
amount as the market administrator deems necessary to maintain a
balance in the fund equal to the total transportation credits disbursed
during the prior June-January period. In the event that during any
month of the June-January period the fund balance is insufficient to
cover the amount of credits that are due, the assessment should be
based upon the amount of credits that would have been disbursed had the
fund balance been sufficient.
(b) The market administrator shall announce publicly on or before
the 5th day of the month (except as provided in Sec. 1000.90) the
assessment pursuant to paragraph (a) of this section for the following
month.
Sec. 1007.82 Payments from the transportation credit balancing fund.
(a) Payments from the transportation credit balancing fund to
handlers and cooperative associations requesting transportation credits
shall be made as follows:
(1) On or before the 13th day (except as provided in Sec. 1000.90)
after the end of each of the months of July through December and any
other month in which transportation credits are in effect pursuant to
paragraph (b) of this section, the market administrator shall pay to
each handler that received, and reported pursuant to
Sec. 1007.30(a)(5), bulk milk transferred from a plant fully regulated
under another Federal order as described in paragraph (c)(1) of this
section or that received, and reported pursuant to Sec. 1007.30(a)(6),
milk directly from producers' farms as specified in paragraph (c)(2) of
this section, a preliminary amount determined pursuant to paragraph (d)
of this section to the extent that funds are available in the
transportation credit balancing fund. If an insufficient balance exists
to pay all of the credits computed pursuant to this section, the market
administrator shall distribute the balance available in the
transportation credit balancing fund by reducing payments pro rata
using the percentage derived by dividing the balance in the fund by the
total credits that are due for the month. The amount of credits
resulting from this initial proration shall be subject to audit
adjustment pursuant to paragraph (a)(2) of this section;
(2) The market administrator shall accept adjusted requests for
transportation credits on or before the 20th day of the month following
the month for which such credits were requested pursuant to
Sec. 1007.32(a). After such date, a preliminary audit will be conducted
by the market administrator, who will recalculate any necessary
proration of transportation credit payments for the preceding month
pursuant to paragraph (a) of this section. Handlers will be promptly
notified of an overpayment of credits based upon this final computation
and remedial payments to or from the transportation credit balancing
fund will be made on or before the next payment date for the following
month;
(3) Transportation credits paid pursuant to paragraphs (a)(1) and
(2) of this section shall be subject to final verification by the
market administrator pursuant to Sec. 1000.77. Adjusted payments to or
from the transportation credit balancing fund will remain subject to
the final proration established pursuant to paragraph (a)(2) of this
section; and
(4) In the event that a qualified cooperative association is the
responsible party for whose account such milk is received and written
documentation of this fact is provided to the market administrator
pursuant to Sec. 1007.30(c)(3) prior to the date payment is due, the
transportation credits for such milk computed pursuant to this section
shall be made to such cooperative association rather than to the
operator of the pool plant at which the milk was received.
(b) The market administrator may extend the period during which
transportation credits are in effect (i.e., the transportation credit
period) to the months of January and June if a written request to do so
is received 15 days prior to the beginning of the month for which the
request is made and, after conducting an independent investigation,
finds that such extension is necessary to assure the market of an
adequate supply of milk for fluid use. Before making such a finding,
the market administrator shall notify the Director of the Dairy
Division and all handlers in the market that an extension is being
considered and invite written data, views, and arguments. Any decision
to extend the transportation credit period must be issued in writing
prior to the first day of the month for which the extension is to be
effective.
(c) Transportation credits shall apply to the following milk:
(1) Bulk milk received from a plant regulated under another Federal
order, except Federal Order 1005, and allocated to Class I milk
pursuant to Sec. 1000.44(a)(9); and
(2) Bulk milk received directly from the farms of dairy farmers at
pool distributing plants subject to the following conditions:
(i) The quantity of such milk that shall be eligible for the
transportation credit shall be determined by multiplying the total
pounds of milk received from producers meeting the conditions of this
paragraph by the lower of:
(A) The marketwide estimated Class I utilization of all handlers
for the month pursuant to Sec. 1000.45(a); or
(B) The Class I utilization of all producer milk of the pool plant
operator receiving the milk after the computations described in
Sec. 1000.44;
(ii) The dairy farmer was not a ``producer'' under this order
during more than 2 of the immediately preceding months of February
through May and not more than 50 percent of the production of the dairy
farmer during those 2 months, in aggregate, was received as producer
milk under this order during those 2 months; and
(iii) The farm on which the milk was produced is not located within
the specified marketing area of this order or the marketing area of
Federal Order 1005.
(d) Transportation credits shall be computed as follows:
(1) The market administrator shall subtract from the pounds of milk
described in paragraphs (c)(1) and (2) of this section the pounds of
bulk milk transferred from the pool plant receiving the supplemental
milk if milk was transferred to a nonpool plant on the same calendar
day that the supplemental milk was received. For this purpose, the
transferred milk shall be subtracted from the most distant load of
supplemental milk received, and then in sequence with the next most
distant load until all of the transfers have been offset;
[[Page 16248]]
(2) With respect to the pounds of milk described in paragraph
(c)(1) of this section that remain after the computations described in
paragraph (d)(1) of this section, the market administrator shall:
(i) Determine the shortest hard-surface highway distance between
the shipping plant and the receiving plant;
(ii) Multiply the number of miles so determined by 0.35 cent;
(iii) Subtract the applicable Class I differential in Sec. 1000.52
for the county in which the shipping plant is located from the Class I
differential applicable for the county in which the receiving plant is
located;
(iv) Subtract any positive difference computed in paragraph
(d)(2)(iii) of this section from the amount computed in paragraph
(d)(2)(ii) of this section; and
(v) Multiply the remainder computed in paragraph (d)(2)(iv) of this
section by the hundredweight of milk described in paragraph (d)(2) of
this section.
(3) For the remaining milk described in paragraph (c)(2) of this
section after computations described in paragraph (d)(1) of this
section, the market administrator shall:
(i) Determine an origination point for each load of milk by
locating the nearest city to the last producer's farm from which milk
was picked up for delivery to the receiving pool plant;
(ii) Determine the shortest hard-surface highway distance between
the receiving pool plant and the origination point;
(iii) Subtract 85 miles from the mileage so determined;
(iv) Multiply the remaining miles so computed by 0.35 cent;
(v) Subtract the Class I differential specified in Sec. 1000.52
applicable for the county in which the origination point is located
from the Class I differential applicable at the receiving pool plant's
location;
(vi) Subtract any positive difference computed in paragraph
(d)(3)(v) of this section from the amount computed in paragraph
(d)(3)(iv) of this section; and
(vii) Multiply the remainder computed in paragraph (d)(3)(vi) of
this section by the hundredweight of milk described in paragraph (d)(3)
of this section.
Administrative Assessment and Marketing Service Deduction
Sec. 1007.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1007.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1030--MILK IN THE UPPER MIDWEST MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1030.1 General provisions.
Definitions
1030.2 Upper Midwest marketing area.
1030.3 Route disposition.
1030.4 Plant.
1030.5 Distributing plant.
1030.6 Supply plant.
1030.7 Pool plant.
1030.8 Nonpool plant.
1030.9 Handler.
1030.10 Producer-handler.
1030.11 [Reserved]
1030.12 Producer.
1030.13 Producer milk.
1030.14 Other source milk.
1030.15 Fluid milk product.
1030.16 Fluid cream product.
1030.17 [Reserved]
1030.18 Cooperative association.
1030.19 Commercial food processing establishment.
Handler Reports
1030.30 Reports of receipts and utilization.
1030.31 Payroll reports.
1030.32 Other reports.
Classification of Milk
1030.40 Classes of utilization.
1030.41 [Reserved]
1030.42 Classification of transfers and diversions.
1030.43 General classification rules.
1030.44 Classification of producer milk.
1030.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1030.50 Class prices, component prices, and advanced pricing
factors.
1030.51 Class I differential and price.
1030.52 Adjusted Class I differentials.
1030.53 Announcement of class prices, component prices, and
advanced pricing factors.
1030.54 Equivalent price.
1030.55 Transportation credits and assembly credits.
Producer Price Differential
1030.60 Handler's value of milk.
1030.61 Computation of producer price differential.
1030.62 Announcement of producer prices.
Payments for Milk
1030.70 Producer-settlement fund.
1030.71 Payments to the producer-settlement fund.
1030.72 Payments from the producer-settlement fund.
1030.73 Payments to producers and to cooperative associations.
1030.74 [Reserved]
1030.75 Plant location adjustments for producer milk and nonpool
milk.
1030.76 Payments by a handler operating a partially regulated
distributing plant.
1030.77 Adjustment of accounts.
1030.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1030.85 Assessment for order administration.
1030.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1030.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1030,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1030.2 Upper Midwest marketing area.
The marketing area means all territory within the bounds of the
following states and political subdivisions, including all piers,
docks, and wharves connected therewith and all craft moored thereat,
and all territory occupied by government (municipal, State, or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Illinois Counties
Boone, Carroll, Cook, De Kalb, Du Page, Jo Daviess, Kane,
Kendall, Lake, Lee, McHenry, Ogle, Stephenson, Will, and Winnebago.
Iowa Counties
Howard, Kossuth, Mitchell, Winnebago, Winneshiek, and Worth.
Michigan Counties
Delta, Dickinson, Gogebic, Iron, Menominee, and Ontonagon.
Minnesota
All counties except Lincoln, Nobles, Pipestone, and Rock.
North Dakota Counties
Barnes, Cass, Cavalier, Dickey, Grand Forks, Griggs, La Moure,
Nelson, Pembina, Ramsey, Ransom, Richland, Sargent, Steele, Traill,
and Walsh.
South Dakota Counties
Brown, Day, Edmunds, Grant, Marshall, McPherson, Roberts, and
Walworth.
Wisconsin Counties
All counties except Crawford and Grant.
Sec. 1030.3 Route disposition.
See Sec. 1000.3.
Sec. 1030.4 Plant.
See Sec. 1000.4.
Sec. 1030.5 Distributing plant.
See Sec. 1000.5.
[[Page 16249]]
Sec. 1030.6 Supply plant.
See Sec. 1000.6.
Sec. 1030.7 Pool plant.
Pool plant means a plant, unit of plants, or system of plants as
specified in paragraphs (a) through (f) of this section, but excluding
a plant specified in paragraph (h) of this section. The pooling
standards described in paragraphs (c) and (f) of this section are
subject to modification pursuant to paragraph (g) of this section:
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 15 percent or
more of the total quantity of fluid milk products physically received
at the plant (excluding concentrated milk received from another plant
by agreement for other than Class I use) are disposed of as route
disposition or are transferred in the form of packaged fluid milk
products to other distributing plants. At least 25 percent of such
route disposition and transfers must be to outlets in the marketing
area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 15 percent of the total quantity of
fluid milk products physically received at the plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) into ultra-pasteurized or aseptically-processed fluid
milk products.
(c) A supply plant from which the quantity of bulk fluid milk
products shipped to (and physically unloaded into) plants described in
paragraph (c)(1) of this section is not less than 10 percent of the
Grade A milk received from dairy farmers (except dairy farmers
described in Sec. 1030.12(b)) and handlers described in Sec. 1000.9(c),
including milk diverted pursuant to Sec. 1030.13, subject to the
following conditions:
(1) Qualifying shipments may be made to plants described in
paragraphs (c)(1)(i) through (iv) of this section, except that whenever
shipping requirements are increased pursuant to paragraph (g) of this
section, only shipments to pool plants described in paragraphs (a),
(b), and (e) of this section shall count as qualifying shipments for
the purpose of meeting the increased shipments:
(i) Pool plants described in Sec. 1030.7(a), (b) and (e);
(ii) Plants of producer-handlers;
(iii) Partially regulated distributing plants, except that credit
for such shipments shall be limited to the amount of such milk
classified as Class I at the transferee plant; and
(iv) Distributing plants fully regulated under other Federal
orders, except that credit for shipments to such plants shall be
limited to the quantity shipped to pool distributing plants during the
month and credits for shipments to other order plants shall not include
any such shipments made on the basis of agreed-upon Class II, Class
III, or Class IV utilization.
(2) The operator of a supply plant may include as qualifying
shipments under this paragraph milk delivered directly from producers'
farms pursuant to Secs. 1000.9(c) or 1030.13(c) to plants described in
paragraphs (a), (b), and (e) of this section.
(3) Concentrated milk transferred from the supply plant to a
distributing plant for an agreed-upon use other than Class I shall be
excluded from the supply plant's shipments in computing the supply
plant's shipping percentage.
(d) [Reserved]
(e) Two or more plants operated by the same handler and located in
the marketing area may qualify for pool status as a unit by meeting the
total and in-area route disposition requirements of a pool distributing
plant specified in paragraph (a) of this section and subject to the
following additional requirements:
(1) At least one of the plants in the unit must qualify as a pool
plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process Class I or Class II
products, using 50 percent or more of the total Grade A fluid milk
products received in bulk form at such plant or diverted therefrom by
the plant operator in Class I or Class II products; and
(3) The operator of the unit has filed a written request with the
market administrator prior to the first day of the month for which such
status is desired to be effective. The unit shall continue from month-
to-month thereafter without further notification. The handler shall
notify the market administrator in writing prior to the first day of
any month for which termination or any change of the unit is desired.
(f) A system of 2 or more supply plants operated by one or more
handlers may qualify for pooling by meeting the shipping requirements
of paragraph (c) of this section in the same manner as a single plant
subject to the following additional requirements:
(1) Each plant in the system is located within the marketing area
or was a pool supply plant pursuant to Sec. 1030.7(c) for each of the 3
months immediately preceding the effective date of this paragraph so
long as it continues to maintain pool status. Cooperative associations
may not use shipments pursuant to Sec. 1000.9(c) to qualify plants
located outside the marketing area;
(2) The handler(s) establishing the system submits a written
request to the market administrator on or before July 15 requesting
that such plants qualify as a system for the period of August through
July of the following year. Such request will contain a list of the
plants participating in the system in the order, beginning with the
last plant, in which the plants will be dropped from the system if the
system fails to qualify. Each plant that qualifies as a pool plant
within a system shall continue each month as a plant in the system
through the following July unless the handler(s) establishing the
system submits a written request to the market administrator that the
plant be deleted from the system or that the system be discontinued.
Any plant that has been so deleted from a system, or that has failed to
qualify in any month, will not be part of any system for the remaining
months through July. The handler(s) that established a system may add a
plant operated by such handler(s) to a system if such plant has been a
pool plant each of the 6 prior months and would otherwise be eligible
to be in a system, upon written request to the market administrator no
later than the 15th day of the prior month. In the event of an
ownership change or the business failure of a handler that is a
participant in a system, the system may be reorganized to reflect such
changes if a written request to file a new marketing agreement is
submitted to the market administrator; and
(3) If a system fails to qualify under the requirements of this
paragraph, the handler responsible for qualifying the system shall
notify the market administrator which plant or plants will be deleted
from the system so that the remaining plants may be pooled as a system.
If the handler fails to do so, the market administrator shall exclude
one or more plants, beginning at the bottom of the list of plants in
the system and continuing up the list as necessary until the deliveries
are sufficient to qualify the remaining plants in the system.
(g) The applicable shipping percentages of paragraphs (c) and (f)
of this section and the diversion limits described in
Sec. 1030.13(d)(2) may be increased or decreased, for all or part of
the marketing area, by the market administrator if the market
administrator finds that such adjustment is necessary to encourage
needed shipments or to prevent uneconomic shipments. Before making such
a finding, the market administrator shall investigate the need for
adjustment either on the market administrator's
[[Page 16250]]
own initiative or at the request of interested parties if the request
is made in writing at least 15 days prior to the month for which the
requested revision is desired effective. If the investigation shows
that an adjustment of the shipping percentages might be appropriate,
the market administrator shall issue a notice stating that an
adjustment is being considered and invite data, views and arguments.
Any decision to revise an applicable shipping or diversion percentage
must be issued in writing at least one day before the effective date.
(h) The term pool plant shall not apply to the following plants:
(1) A producer-handler as defined under any Federal order;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant located within the marketing area and qualified
pursuant to paragraph (a) of this section which meets the pooling
requirements of another Federal order, and from which more than 50
percent of its route disposition has been in the other Federal order
marketing area for 3 consecutive months;
(4) A plant located outside any Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of another Federal order and has had greater route
disposition in such other Federal order's marketing area for 3
consecutive months;
(5) A plant located in another Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of such other Federal order and does not have a
majority of its route distribution in this marketing area for 3
consecutive months or if the plant is required to be regulated under
such other Federal order without regard to its route disposition in any
other Federal order marketing area;
(6) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under the other Federal order than are made to plants regulated under
this order, or the plant has automatic pooling status under the other
Federal order; and
(7) That portion of a regulated plant designated as a nonpool plant
that is physically separate and operated separately from the pool
portion of such plant. The designation of a portion of a regulated
plant as a nonpool plant must be requested in advance and in writing by
the handler and must be approved by the market administrator.
(i) Any plant that qualifies as a pool plant in each of the
immediately preceding 3 months pursuant to paragraph (a) of this
section or the shipping percentages in paragraph (c) of this section
that is unable to meet such performance standards for the current month
because of unavoidable circumstances determined by the market
administrator to be beyond the control of the handler operating the
plant, such as a natural disaster (ice storm, wind storm, flood), fire,
breakdown of equipment, or work stoppage, shall be considered to have
met the minimum performance standards during the period of such
unavoidable circumstances, but such relief shall not be granted for
more than 2 consecutive months.
Sec. 1030.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1030.9 Handler.
See Sec. 1000.9.
Sec. 1030.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is route disposition in the marketing during the month;
(b) Receives fluid milk from own farm production or milk that is
fully subject to the pricing and pooling provisions of this or any
other Federal order;
(c) Receives at its plant or acquires for route disposition no more
than 150,000 pounds of fluid milk products from handlers fully
regulated under any Federal order. This limitation shall not apply if
the producer-handler's own farm production is less than 150,000 pounds
during the month;
(d) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products;
and
(e) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled (excluding receipts from
handlers fully regulated under any Federal order) and the processing
and packaging operations are the producer-handler's own enterprise and
at its own risk.
Sec. 1030.11 [Reserved]
Sec. 1030.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1030.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1030.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I; and
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order.
Sec. 1030.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk), including nonfat components, and butterfat in
milk of a producer that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(c) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(d) Diverted by the operator of a pool plant or a cooperative
association described in Sec. 1000.9(c) to a nonpool plant, subject to
the following conditions:
(1) Milk of a dairy farmer shall not be eligible for diversion
unless at least one day's production of such dairy farmer is physically
received as producer milk at a pool plant during the first month the
dairy farmer is a producer. If a dairy farmer loses producer status
under this order (except as a result of a temporary loss of Grade A
approval or as a result of the handler of the dairy farmer's milk
failing to pool the milk under any order), the dairy farmer's milk
shall not be eligible for diversion unless at least one day's
production of the dairy farmer has been physically received as
[[Page 16251]]
producer milk at a pool plant during the first month the dairy farmer
is re-associated with the market;
(2) The quantity of milk diverted by a handler described in
Sec. 1000.9(c) may not exceed 90 percent of the producer milk receipts
reported by the handler pursuant to Sec. 1030.30(c) provided that not
less than 10 percent of such receipts are delivered to plants described
in Sec. 1030.7(c)(1)(i) through (iii). These percentages are subject to
any adjustments that may be made pursuant to Sec. 1030.7(g); and
(3) Diverted milk shall be priced at the location of the plant to
which diverted.
Sec. 1030.14 Other source milk.
See Sec. 1000.14.
Sec. 1030.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1030.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1030.17 [Reserved]
Sec. 1030.18 Cooperative association.
See Sec. 1000.18.
Sec. 1030.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1030.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 9th day
after the end of the month, in the detail and on the prescribed forms,
as follows:
(a) Each handler that operates a pool plant shall report for each
of its operations the following information:
(1) Product pounds, pounds of butterfat, pounds of protein, pounds
of solids-not-fat other than protein (other solids), and the value of
the somatic cell adjustment pursuant to Sec. 1000.50(p), contained in
or represented by:
(i) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c); and
(ii) Receipts of milk from handlers described in Sec. 1000.9(c);
(2) Product pounds and pounds of butterfat contained in:
(i) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(ii) Receipts of other source milk; and
(iii) Inventories at the beginning and end of the month of fluid
milk products and bulk fluid cream products;
(3) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph; and
(4) Such other information with respect to the receipts and
utilization of skim milk, butterfat, milk protein, other nonfat solids,
and somatic cell information, as the market administrator may
prescribe.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The product pounds, pounds of butterfat, pounds of protein,
pounds of solids-not-fat other than protein (other solids), and the
value of the somatic cell adjustment pursuant to Sec. 1000.50(p),
contained in receipts of milk from producers; and
(2) The utilization or disposition of such receipts.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1030.31 Payroll reports.
(a) On or before the 22nd day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1030.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for the month, in the detail
prescribed by the market administrator, showing for each producer the
information described in Sec. 1030.73(f).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1030.32 Other reports.
In addition to the reports required pursuant to Secs. 1030.30 and
1030.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1030.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1030.41 [Reserved]
Sec. 1030.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1030.43 General classification rules.
See Sec. 1000.43.
Sec. 1030.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1030.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1030.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1030.51 Class I differential and price.
The Class I differential shall be the differential established for
Cook County, Illinois, which is reported in Sec. 1000.52. The Class I
price shall be the price computed pursuant to Sec. 1000.50(a) for Cook
County, Illinois.
Sec. 1030.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1030.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1030.54 Equivalent price.
See Sec. 1000.54.
Sec. 1030.55 Transportation credits and assembly credits.
(a) Each handler operating a pool distributing plant described in
Sec. 1030.7(a), (b), or (e) that receives bulk milk from another pool
plant shall receive a transportation credit for such milk computed as
follows:
(1) Determine the hundredweight of milk eligible for the credit by
completing the steps in paragraph (c) of this section;
(2) Multiply the hundredweight of milk eligible for the credit by
.28 cents times the number of miles between the transferor plant and
the transferee plant;
(3) Subtract the effective Class I price at the transferor plant
from the effective Class I price at the transferee plant;
(4) Multiply any positive amount resulting from the subtraction in
paragraph (a)(3) of this section by the hundredweight of milk eligible
for the credit; and
(5) Subtract the amount computed in paragraph (a)(4) of this
section from the
[[Page 16252]]
amount computed in paragraph (a)(2) of this section. If the amount
computed in paragraph (a)(4) of this section exceeds the amount
computed in paragraph (a)(2) of this section, the transportation credit
shall be zero.
(b) Each handler operating a pool distributing plant described in
Sec. 1030.7(a), (b), or (e) that receives milk from dairy farmers, each
handler that transfers or diverts bulk milk from a pool plant to a pool
distributing plant, and each handler described in Sec. 1000.9(c) that
delivers producer milk to a pool distributing plant shall receive an
assembly credit on the portion of such milk eligible for the credit
pursuant to paragraph (c) of this section. The credit shall be computed
by multiplying the hundredweight of milk eligible for the credit by 8
cents.
(c) The following procedure shall be used to determine the amount
of milk eligible for transportation and assembly credits pursuant to
paragraphs (a) and (b) of this section:
(1) At each pool distributing plant, determine the aggregate
quantity of Class I milk, excluding beginning inventory of packaged
fluid milk products;
(2) Subtract the quantity of packaged fluid milk products received
at the pool distributing plant from other pool plants and from nonpool
plants if such receipts are assigned to Class I;
(3) Subtract the quantity of bulk milk shipped from the pool
distributing plant to other plants to the extent that such milk is
classified as Class I milk;
(4) Subtract the quantity of bulk milk received at the pool
distributing plant from other order plants and unregulated supply
plants that is assigned to Class I pursuant to Secs. 1000.43(d) and
1000.44; and
(5) Assign the remaining quantity pro rata to physical receipts
during the month from:
(i) Producers;
(ii) Handlers described in Sec. 1000.9(c); and
(iii) Other pool plants.
(d) For purposes of this section, the distances to be computed
shall be determined by the market administrator using the shortest
available state and/or Federal highway mileage. Mileage determinations
are subject to redetermination at all times. In the event a handler
requests a redetermination of the mileage pertaining to any plant, the
market administrator shall notify the handler of such redetermination
within 30 days after the receipt of such request. Any financial
obligations resulting from a change in mileage shall not be retroactive
for any periods prior to the redetermination by the market
administrator.
Producer Price Differential
Sec. 1030.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c) with respect to
milk that was not received at a pool plant by adding the amounts
computed in paragraphs (a) through (i) of this section and subtracting
from that total amount the values computed in paragraphs (j) and (k) of
this section. Unless otherwise specified, the skim milk, butterfat, and
the combined pounds of skim milk and butterfat referred to in this
section shall result from the steps set forth in Sec. 1000.44(a), (b),
and (c), respectively, and the nonfat components of producer milk in
each class shall be based upon the proportion of such components in
producer skim milk. Receipts of nonfluid milk products that are
distributed as labeled reconstituted milk for which payments are made
to the producer-settlement fund of another Federal order under
Sec. 1000.76(a)(4) or (d) shall be excluded from pricing under this
section.
(a) Class I value.
(1) Multiply the pounds of skim milk in Class I by the Class I skim
milk price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class I by the Class I butterfat price.
(b) Class II value.
(1) Multiply the pounds of nonfat solids in Class II skim milk by
the Class II nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class II times the Class II butterfat price.
(c) Class III value.
(1) Multiply the pounds of protein in Class III skim milk by the
protein price;
(2) Add an amount obtained by multiplying the pounds of other
solids in Class III skim milk by the other solids price; and
(3) Add an amount obtained by multiplying the pounds of butterfat
in Class III by the butterfat price.
(d) Class IV value.
(1) Multiply the pounds of nonfat solids in Class IV skim milk by
the nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class IV by the butterfat price.
(e) Compute an adjustment for the somatic cell content of producer
milk by multiplying the values reported pursuant to Sec. 1030.30(a)(1)
and (c)(1) by the percentage of total producer milk allocated to Class
II, Class III, and Class IV pursuant to Sec. 1000.44(c);
(f) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) and the corresponding
step of Sec. 1000.44(b) by the skim milk prices and butterfat prices
applicable to each class.
(g) Multiply the difference between the current month's Class I,
II, or III price, as the case may be, and the Class IV price for the
preceding month and by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(h) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from plants regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants.
(i) Multiply the difference between the Class I price applicable at
the location of the nearest unregulated supply plants from which an
equivalent volume was received and the Class III price by the pounds of
skim milk and butterfat in receipts of concentrated fluid milk products
assigned to Class I pursuant to Sec. 1000.43(d) and
Sec. 1000.44(a)(3)(i) and the corresponding step of Sec. 1000.44(b) and
the pounds of skim milk and butterfat subtracted from Class I pursuant
to Sec. 1000.44(a)(8) and the corresponding step of Sec. 1000.44(b),
excluding such skim milk and butterfat in receipts of fluid milk
products from an unregulated supply plant to the extent that an
equivalent amount of skim milk or butterfat disposed of to such plant
by handlers fully regulated under any Federal milk order is classified
and priced as Class I milk and is not used as an offset for any other
payment obligation under any order.
(j) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of
[[Page 16253]]
nonfluid milk products that are allocated to Class I use pursuant to
Sec. 1000.43(d).
(k) Compute the amount of credits applicable pursuant to
Sec. 1030.55.
Sec. 1030.61 Computation of producer price differential.
For each month the market administrator shall compute a producer
price differential per hundredweight. The report of any handler who has
not made payments required pursuant to Sec. 1030.71 for the preceding
month shall not be included in the computation of the producer price
differential, and such handler's report shall not be included in the
computation for succeeding months until the handler has made full
payment of outstanding monthly obligations. Subject to the
aforementioned conditions, the market administrator shall compute the
producer price differential in the following manner:
(a) Combine into one total the values computed pursuant to
Sec. 1030.60 for all handlers required to file reports prescribed in
Sec. 1030.30;
(b) Subtract the total values obtained by multiplying each
handler's total pounds of protein, other solids, and butterfat
contained in the milk for which an obligation was computed pursuant to
Sec. 1030.60 by the protein price, the other solids price, and the
butterfat price, respectively, and the total value of the somatic cell
adjustment pursuant to Sec. 1030.30(a)(1) and (c)(1);
(c) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1030.75;
(d) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(e) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(1) The total hundredweight of producer milk; and
(2) The total hundredweight for which a value is computed pursuant
to Sec. 1030.60(i); and
(f) Subtract not less than 4 cents nor more than 5 cents from the
price computed pursuant to paragraph (e) of this section. The result
shall be known as the producer price differential for the month.
Sec. 1030.62 Announcement of producer prices.
On or before the 13th day after the end of each month, the market
administrator shall announce publicly the following prices and
information:
(a) The producer price differential;
(b) The protein price;
(c) The nonfat solids price;
(d) The other solids price;
(e) The butterfat price;
(f) The somatic cell adjustment rate;
(g) The average butterfat, nonfat solids, protein and other solids
content of producer milk; and
(h) The statistical uniform price for milk containing 3.5 percent
butterfat, computed by combining the Class III price and the producer
price differential.
Payments for Milk
Sec. 1030.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1030.71 Payments to the producer-settlement fund.
Each handler shall make payment to the producer-settlement fund in
a manner that provides receipt of the funds by the market administrator
no later than the 15th day after the end of the month (except as
provided in Sec. 1000.90). Payment shall be the amount, if any, by
which the amount specified in paragraph (a) of this section exceeds the
amount specified in paragraph (b) of this section:
(a) The total value of milk to the handler for the month as
determined pursuant to Sec. 1030.60.
(b) The sum of:
(1) An amount obtained by multiplying the total hundredweight of
producer milk as determined pursuant to Sec. 1000.44(c) by the producer
price differential as adjusted pursuant to Sec. 1030.75;
(2) An amount obtained by multiplying the total pounds of protein,
other solids, and butterfat contained in producer milk by the protein,
other solids, and butterfat prices respectively;
(3) The total value of the somatic cell adjustment to producer
milk; and
(4) An amount obtained by multiplying the pounds of skim milk and
butterfat for which a value was computed pursuant to Sec. 1030.60(i) by
the producer price differential as adjusted pursuant to Sec. 1030.75
for the location of the plant from which received.
Sec. 1030.72 Payments from the producer-settlement fund.
No later than the 16th day after the end of each month (except as
provided in Sec. 1000.90), the market administrator shall pay to each
handler the amount, if any, by which the amount computed pursuant to
Sec. 1030.71(b) exceeds the amount computed pursuant to
Sec. 1030.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1030.73 Payments to producers and to cooperative associations.
(a) Each handler shall pay each producer for producer milk for
which payment is not made to a cooperative association pursuant to
paragraph (b) of this section, as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the date of this partial payment, payment shall be made
so that it is received by each producer on or before the 26th day of
the month (except as provided in Sec. 1000.90) for milk received during
the first 15 days of the month from the producer at not less than the
lowest announced class price for the preceding month, less proper
deductions authorized in writing by the producer.
(2) Final payment. For milk received during the month, payment
shall be made so that it is received by each producer no later than the
17th day after the end of the month (except as provided in
Sec. 1000.90) in an amount equal to not less than the sum of:
(i) The hundredweight of producer milk received times the producer
price differential for the month as adjusted pursuant to Sec. 1030.75;
(ii) The pounds of butterfat received times the butterfat price for
the month;
(iii) The pounds of protein received times the protein price for
the month;
(iv) The pounds of other solids received times the other solids
price for the month;
(v) The hundredweight of milk received times the somatic cell
adjustment for the month;
(vi) Less any payment made pursuant to paragraph (a)(1) of this
section;
(vii) Less proper deductions authorized in writing by such
producer, and plus or minus adjustments for errors in previous payments
to such producer subject to approval by the market administrator; and
(viii) Less deductions for marketing services pursuant to
Sec. 1000.86.
(b) Payments for milk received from cooperative association
members. On or before the day prior to the dates specified in
paragraphs (a)(1) and (a)(2) of this section (except as provided in
Sec. 1000.90), each handler shall pay to a cooperative association for
milk from producers who market their milk through the cooperative
association and who have authorized the cooperative to collect such
payments on their behalf an amount equal to the sum of the individual
payments otherwise payable for such producer milk pursuant to
[[Page 16254]]
paragraphs (a)(1) and (a)(2) of this section.
(c) Payment for milk received from cooperative association pool
plants or from cooperatives as handlers pursuant to Sec. 1000.9(c). On
or before the day prior to the dates specified in paragraphs (a)(1) and
(a)(2) of this section (except as provided in Sec. 1000.90), each
handler who receives fluid milk products at its plant from a
cooperative association in its capacity as the operator of a pool plant
or who receives milk from a cooperative association in its capacity as
a handler pursuant to Sec. 1000.9(c), including the milk of producers
who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, shall pay the cooperative for such milk
as follows:
(1) For bulk fluid milk products and bulk fluid cream products
received from a cooperative association in its capacity as the operator
of a pool plant and for milk received from a cooperative association in
its capacity as a handler pursuant to Sec. 1000.9(c) during the first
15 days of the month, at not less than the lowest announced class
prices per hundredweight for the preceding month;
(2) For the total quantity of bulk fluid milk products and bulk
fluid cream products received from a cooperative association in its
capacity as the operator of a pool plant, at not less than the total
value of such products received from the association's pool plants, as
determined by multiplying the respective quantities assigned to each
class under Sec. 1000.44, as follows:
(i) The hundredweight of Class I skim milk times the Class I skim
milk price for the month plus the pounds of Class I butterfat times the
Class I butterfat price for the month. The Class I price to be used
shall be that price effective at the location of the receiving plant;
(ii) The pounds of nonfat solids in Class II skim milk by the Class
II nonfat solids price;
(iii) The pounds of butterfat in Class II times the Class II
butterfat price;
(iv) The pounds of nonfat solids in Class IV times the nonfat
solids price;
(v) The pounds of butterfat in Class III and Class IV milk times
the butterfat price;
(vi) The pounds of protein in Class III milk times the protein
price;
(vii) The pounds of other solids in Class III milk times the other
solids price;
(viii) The hundredweight of Class II, Class III, and Class IV milk
times the somatic cell adjustment; and
(ix) Add together the amounts computed in paragraphs (c)(2)(i)
through (viii) of this section and from that sum deduct any payment
made pursuant to paragraph (c)(1) of this section; and
(3) For the total quantity of milk received during the month from a
cooperative association in its capacity as a handler under
Sec. 1000.9(c) as follows:
(i) The hundredweight of producer milk received times the producer
price differential as adjusted pursuant to Sec. 1030.75;
(ii) The pounds of butterfat received times the butterfat price for
the month;
(iii) The pounds of protein received times the protein price for
the month;
(iv) The pounds of other solids received times the other solids
price for the month;
(v) The hundredweight of milk received times the somatic cell
adjustment for the month; and
(vi) Add together the amounts computed in paragraphs (c)(3)(i)
through (v) of this section and from that sum deduct any payment made
pursuant to paragraph (c)(1) of this section.
(d) If a handler has not received full payment from the market
administrator pursuant to Sec. 1030.72 by the payment date specified in
paragraph (a), (b) or (c) of this section, the handler may reduce pro
rata its payments to producers or to the cooperative association (with
respect to receipts described in paragraph (b) of this section,
prorating the underpayment to the volume of milk received from the
cooperative association in proportion to the total milk received from
producers by the handler), but not by more than the amount of the
underpayment. The payments shall be completed on the next scheduled
payment date after receipt of the balance due from the market
administrator.
(e) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant, as the case may be.
(f) In making payments to producers pursuant to this section, each
handler shall furnish each producer, except a producer whose milk was
received from a cooperative association handler described in
Sec. 1000.9(a) or (c), a supporting statement in a form that may be
retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and payroll number of the producer;
(2) The daily and total pounds, and the month and dates such milk
was received from that producer;
(3) The total pounds of butterfat, protein, and other solids
contained in the producer's milk;
(4) The somatic cell count of the producer's milk;
(5) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(6) The rate used in making payment if the rate is other than the
applicable minimum rate;
(7) The amount, or rate per hundredweight, or rate per pound of
component, and the nature of each deduction claimed by the handler; and
(8) The net amount of payment to the producer or cooperative
association.
Sec. 1030.74 [Reserved]
Sec. 1030.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1030.51 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1030.73
and 1000.76.
Sec. 1030.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1030.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1030.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1030.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1030.86 Deduction for marketing services.
See Sec. 1000.86.
[[Page 16255]]
PART 1032--MILK IN THE CENTRAL MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1032.1 General provisions.
Definitions
1032.2 Central marketing area.
1032.3 Route disposition.
1032.4 Plant.
1032.5 Distributing plant.
1032.6 Supply plant.
1032.7 Pool plant.
1032.8 Nonpool plant.
1032.9 Handler.
1032.10 Producer-handler.
1032.11 [Reserved]
1032.12 Producer.
1032.13 Producer milk.
1032.14 Other source milk.
1032.15 Fluid milk product.
1032.16 Fluid cream product.
1032.17 [Reserved]
1032.18 Cooperative association.
1032.19 Commercial food processing establishment.
Handler Reports
1032.30 Reports of receipts and utilization.
1032.31 Payroll reports.
1032.32 Other reports.
Classification of Milk
1032.40 Classes of utilization.
1032.41 [Reserved]
1032.42 Classification of transfers and diversions.
1032.43 General classification rules.
1032.44 Classification of producer milk.
1032.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1032.50 Class prices, component prices, and advanced pricing
factors.
1032.51 Class I differential and price.
1032.52 Adjusted Class I differentials.
1032.53 Announcement of class prices, component prices, and
advanced pricing factors.
1032.54 Equivalent price.
Producer Price Differential
1032.60 Handler's value of milk.
1032.61 Computation of producer price differential.
1032.62 Announcement of producer prices.
Payments for Milk
1032.70 Producer-settlement fund.
1032.71 Payments to the producer-settlement fund.
1032.72 Payments from the producer-settlement fund.
1032.73 Payments to producers and to cooperative associations.
1032.74 [Reserved]
1032.75 Plant location adjustments for producer milk and nonpool
milk.
1032.76 Payments by a handler operating a partially regulated
distributing plant.
1032.77 Adjustment of accounts.
1032.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1032.85 Assessment for order administration.
1032.86 Deduction for marketing services.
Authority: 7 U.S.C. 601--674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1032.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1032,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1032.2 Central marketing area.
The marketing area means all territory within the bounds of the
following states and political subdivisions, including all piers,
docks, and wharves connected therewith and all craft moored thereat,
and all territory occupied by government (municipal, State, or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Colorado Counties
Adams, Arapahoe, Baca, Bent, Boulder, Chaffee, Clear Creek,
Cheyenne, Crowley, Custer, Delta, Denver, Douglas, Eagle, El Paso,
Elbert, Freemont, Garfield, Gilpin, Gunnison, Huerfano, Jefferson,
Kiowa, Kit Carson, Lake, Larimer, Las Animas, Lincoln, Logan, Mesa,
Montrose, Morgan, Otero, Park, Phillips, Pitkin, Prowers, Pueblo,
Sedgwick, Summit, Teller, Washington, Weld, and Yuma.
Illinois Counties
Adams, Alexander, Bond, Brown, Bureau, Calhoun, Cass, Champaign,
Christian, Clark, Clay, Clinton, Coles, Crawford, Cumberland, De
Witt, Douglas, Edgar, Edwards, Effingham, Fayette, Ford, Franklin,
Fulton, Gallatin, Greene, Grundy, Hamilton, Hancock, Hardin,
Henderson, Henry, Iroquois, Jackson, Jasper, Jefferson, Jersey,
Johnson, Kankakee, Knox, La Salle, Lawrence, Livingston, Logan,
McDonough, McLean, Macon, Macoupin, Madison, Marion, Marshall,
Mason, Massac, Menard, Mercer, Monroe, Montgomery, Morgan, Moultrie,
Peoria, Perry, Piatt, Pike, Pope, Pulaski, Putnam, Randolph,
Richland, Rock Island, Saline, Sangamon, Schuyler, Scott, Shelby,
St. Clair, Stark, Tazewell, Union, Vermilion, Wabash, Warren,
Washington, Wayne, White, Whiteside, Williamson, and Woodford.
Iowa Counties
All Iowa counties except Howard, Kossuth, Mitchell, Winnebago,
Winneshiek, and Worth.
Kansas
All of the State of Kansas.
Minnesota Counties
Lincoln, Nobles, Pipestone, and Rock.
Missouri Counties and Cities
The counties of Andrew, Atchison, Bates, Buchanan, Caldwell,
Carroll, Cass, Clay, Clinton, Daviess, De Kalb, Franklin, Gentry,
Grundy, Harrison, Henry, Hickory, Holt, Jackson, Jefferson, Johnson,
Lafayette, Lincoln, Livingston, Mercer, Nodaway, Pettis, Platte,
Putnam, Ray, Saline, Schuyler, St. Charles, St. Clair, Ste.
Genevieve, St. Louis, Sullivan, Warren, and Worth; and the city of
St. Louis.
Nebraska Counties
Adams, Antelope, Boone, Buffalo, Burt, Butler, Cass, Cedar,
Chase, Clay, Colfax, Cuming, Custer, Dakota, Dawson, Dixon, Dodge,
Douglas, Dundy, Fillmore, Franklin, Frontier, Furnas, Gage, Gosper,
Greeley, Hall, Hamilton, Harlan, Hayes, Hitchcock, Howard,
Jefferson, Johnson, Kearney, Keith, Knox, Lancaster, Lincoln,
Madison, Merrick, Nance, Nemaha, Nuckolls, Otoe, Pawnee, Perkins,
Phelps, Pierce, Platte, Polk, Red Willow, Richardson, Saline, Sarpy,
Saunders, Seward, Sherman, Stanton, Thayer, Thurston, Valley,
Washington, Wayne, Webster, and York.
Oklahoma
All of the State of Oklahoma.
South Dakota Counties
Aurora, Beadle, Bon Homme, Brookings, Clark, Clay, Codington,
Davison, Deuel, Douglas, Hamlin, Hanson, Hutchinson, Jerauld,
Kingsbury, Lake, Lincoln, McCook, Miner, Minnehaha, Moody, Sanborn,
Spink, Turner, Union, and Yankton.
Wisconsin Counties
Crawford and Grant.
Sec. 1032.3 Route disposition.
See Sec. 1000.3.
Sec. 1032.4 Plant.
See Sec. 1000.4.
Sec. 1032.5 Distributing plant.
See Sec. 1000.5.
Sec. 1032.6 Supply plant.
See Sec. 1000.6.
Sec. 1032.7 Pool plant.
Pool plant means a plant, unit of plants, or system of plants as
specified in paragraphs (a) through (f) of this section, but excluding
a plant specified in paragraph (h) of this section. The pooling
standards described in paragraphs (c), (d), and (f) of this section are
subject to modification pursuant to paragraph (g) of this section:
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 25 percent or
more of the total quantity of fluid milk products physically received
[[Page 16256]]
at the plant (excluding concentrated milk received from another plant
by agreement for other than Class I use) are disposed of as route
disposition or are transferred in the form of packaged fluid milk
products to other distributing plants. At least 25 percent of such
route disposition and transfers must be to outlets in the marketing
area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 25 percent of the total quantity of
fluid milk products physically received at the plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) into ultra-pasteurized or aseptically-processed fluid
milk products.
(c) A supply plant from which the quantity of bulk fluid milk
products transferred or diverted to plants described in paragraph (a)
or (b) of this section during each of the months of September through
November and January is 35 percent or more of the total Grade A milk
received at the plant from dairy farmers (except dairy farmers
described in Sec. 1032.12(b)) and handlers described in Sec. 1000.9(c),
including milk diverted by the plant operator, and 25 percent for all
other months, subject to the following conditions:
(1) A supply plant that has qualified as a pool plant during each
of the immediately preceding months of August through April shall
continue to so qualify in each of the following months of May through
July, unless the plant operator files a written request with the market
administrator that such plant not be a pool plant, such nonpool status
to be effective the first month following such request and thereafter
until the plant qualifies as a pool plant on the basis of milk
shipments;
(2) A pool plant operator may include as qualifying shipments milk
diverted to pool distributing plants pursuant to Sec. 1032.13(c);
(3) Concentrated milk transferred from the supply plant to a
distributing plant for an agreed-upon use other than Class I shall be
excluded from the supply plant's shipments in computing the supply
plant's shipping percentage;
(4) The operator of a supply plant may include as qualifying
shipments transfers of fluid milk products to distributing plants
regulated under any other Federal order, except that credit for such
transfers shall be limited to the amount of milk, including milk
shipped directly from producers' farms, delivered to distributing
plants qualified as pool plants pursuant to paragraphs (a) or (b) of
this section; and
(5) No plant may qualify as a pool plant due to a reduction in the
shipping percentage pursuant to paragraph (g) of this section unless it
has been a pool supply plant during each of the immediately preceding 3
months.
(d) A plant located in the marketing area and operated by a
cooperative association if, during the month or the immediately
preceding 12-month period, 35 percent or more of the producer milk of
members of the association (and any producer milk of nonmembers and
members of another cooperative association which may be marketed by the
cooperative association) is physically received in the form of bulk
fluid milk products (excluding concentrated milk transferred to a
distributing plant for an agreed-upon use other than Class I) at plants
specified in paragraph (a) or (b) of this section either directly from
farms or by transfer from supply plants operated by the cooperative
association and from plants of the cooperative association for which
pool plant status has been requested under this paragraph subject to
the following conditions:
(1) The plant does not qualify as a pool plant under paragraph (a),
(b) or (c) of this section or under comparable provisions of another
Federal order; and
(2) The plant is approved by a duly constituted regulatory agency
for the handling of milk approved for fluid consumption in the
marketing area.
(e) Two or more plants operated by the same handler and located in
the marketing area may qualify for pool status as a unit by meeting the
total and in-area route disposition requirements of a pool distributing
plant specified in paragraph (a) of this section subject to the
following additional requirements:
(1) At least one of the plants in the unit must qualify as a pool
plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process Class I or Class II
products, using 50 percent or more of the total Grade A fluid milk
products received in bulk form at such plant or diverted therefrom by
the plant operator in Class I or Class II products, and must be located
in a pricing zone providing the same or a lower Class I price than the
price applicable at the distributing plant included in the unit
pursuant to paragraph (e)(1) of this section; and
(3) The operator of the unit has filed a written request with the
market administrator prior to the first day of the month for which such
status is desired to be effective. The unit shall continue from month
to month thereafter without further notification. The handler shall
notify the market administrator in writing prior to the first day of
any month for which termination or any change of the unit is desired.
(f) A system of supply plants may qualify for pooling if 2 or more
plants operated by one or more handlers meet the applicable percentage
requirements of paragraph (c) of this section in the same manner as a
single plant, subject to the following additional requirements:
(1) Each plant in the system is located within the marketing area;
(2) The handler(s) establishing the system submits a written
request to the market administrator on or before September 1 requesting
that such plants qualify as a system for the period of September
through August of the following year. Such request will contain a list
of the plants participating in the system;
(3) Each plant included within a pool supply plant system shall
continue each month as a plant in the system through the following
August unless the handler(s) establishing the system submits a written
request to the market administrator that the plant be deleted from the
system or that the system be discontinued. Any plant that has been so
deleted from a system, or that has failed to qualify in any month, will
not be part of any system for the remaining months through August. No
plant may be added in any subsequent month through the following August
to a system that qualifies in September; and
(4) If a system fails to qualify under the requirements of this
paragraph, the handler responsible for qualifying the system shall
notify the market administrator which plant or plants will be deleted
from the system so that the remaining plants may be pooled as a system.
If the handler fails to do so, the market administrator shall exclude
one or more plants, beginning at the bottom of the list of plants in
the system and continuing up the list as necessary until the deliveries
are sufficient to qualify the remaining plants in the system.
(g) The applicable shipping percentages of paragraphs (c), (d), and
(f) of this section may be increased or decreased, for all or part of
the marketing area, by the market administrator if the market
administrator finds that such adjustment is necessary to encourage
needed shipments or to prevent uneconomic shipments. Before making such
a finding, the market administrator shall investigate the need for
adjustment either on the market administrator's own initiative or at
the request of interested parties if the request is made in writing at
least 15 days prior to the month for which the requested revision is
desired effective. If the investigation shows that an adjustment of the
shipping percentages might be
[[Page 16257]]
appropriate, the market administrator shall issue a notice stating that
an adjustment is being considered and invite data, views and arguments.
Any decision to revise an applicable shipping percentage must be issued
in writing at least one day before the effective date.
(h) The term pool plant shall not apply to the following plants:
(1) A producer-handler as defined under any Federal order;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant located within the marketing area and qualified
pursuant to paragraph (a) of this section which meets the pooling
requirements of another Federal order, and from which more than 50
percent of its route disposition has been in the other Federal order
marketing area for 3 consecutive months. On the basis of a written
application made by the plant operator at least 15 days prior to the
date for which a determination of the market administrator is to be
effective, the market administrator may determine that the route
disposition in the respective marketing areas to be used for purposes
of this paragraph shall exclude (for a specified period of time) route
disposition made under limited term contracts to governmental bases and
institutions;
(4) A plant located outside any Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of another Federal order and has had greater route
disposition in such other Federal order's marketing area for 3
consecutive months;
(5) A plant located in another Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of such other Federal order and does not have a
majority of its route distribution in this marketing area for 3
consecutive months or if the plant is required to be regulated under
such other Federal order without regard to its route disposition in any
other Federal order marketing area;
(6) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under the other Federal order than are made to plants regulated under
this order, or the plant has automatic pooling status under the other
Federal order; and
(7) That portion of a regulated plant designated as a nonpool plant
that is physically separate and operated separately from the pool
portion of such plant. The designation of a portion of a regulated
plant as a nonpool plant must be requested in advance and in writing by
the handler and must be approved by the market administrator.
Sec. 1032.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1032.9 Handler.
See Sec. 1000.9.
Sec. 1032.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is route disposition in the marketing area during the month;
(b) Receives fluid milk from own farm production or milk that is
fully subject to the pricing and pooling provisions of this or any
other Federal order;
(c) Receives at its plant or acquires for route disposition no more
than 150,000 pounds of fluid milk products from handlers fully
regulated under any Federal order. This limitation shall not apply if
the producer-handler's own farm production is less than 150,000 pounds
during the month;
(d) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products;
and
(e) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled (excluding receipts from
handlers fully regulated under any Federal order) and the processing
and packaging operations are the producer-handler's own enterprise and
at its own risk.
Sec. 1032.11 [Reserved]
Sec. 1032.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1032.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1032.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I; and
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order.
Sec. 1032.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk), including nonfat components, and butterfat in
milk of a producer that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(c) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(d) Diverted by the operator of a pool plant or a cooperative
association described in Sec. 1000.9(c) to a nonpool plant, subject to
the following conditions:
(1) Milk of a dairy farmer shall not be eligible for diversion
until at least one day's production of such dairy farmer has been
physically received as producer milk at a pool plant and the dairy
farmer has continuously retained producer status since that time. If a
dairy farmer loses producer status under this order (except as a result
of a temporary loss of Grade A approval), the dairy farmer's milk shall
not be eligible for diversion until milk of the dairy farmer has been
physically received as producer milk at a pool plant;
(2) Of the quantity of producer milk received during the month
(including diversions, but excluding the quantity of producer milk
received from a handler described in Sec. 1000.9(c)) the handler
diverts to nonpool plants not more than 65 percent during the months of
September through November and January, and not more than 75 percent
during the months of February through April and December;
(3) Diverted milk shall be priced at the location of the plant to
which diverted;
(4) Any milk diverted in excess of the limits prescribed in
paragraph (d)(2) of
[[Page 16258]]
this section shall not be producer milk. If the diverting handler or
cooperative association fails to designate the dairy farmers'
deliveries that are not to be producer milk, no milk diverted by the
handler or cooperative association during the month to a nonpool plant
shall be producer milk; and
(5) The applicable diversion limits in paragraph (d)(2) of this
section may be increased or decreased by the market administrator if
the market administrator finds that such revision is necessary to
assure orderly marketing and efficient handling of milk in the
marketing area. Before making such a finding, the market administrator
shall investigate the need for the revision either on the market
administrator's own initiative or at the request of interested persons
if the request is made in writing at least 15 days prior to the month
for which the requested revision is desired effective. If the
investigation shows that a revision might be appropriate, the market
administrator shall issue a notice stating that the revision is being
considered and inviting written data, views, and arguments. Any
decision to revise an applicable percentage must be issued in writing
at least one day before the effective date.
Sec. 1032.14 Other source milk.
See Sec. 1000.14.
Sec. 1032.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1032.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1032.17 [Reserved]
Sec. 1032.18 Cooperative association.
See Sec. 1000.18.
Sec. 1032.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1032.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 7th day
after the end of the month, in the detail and on the prescribed forms,
as follows:
(a) Each handler that operates a pool plant pursuant to Sec. 1032.7
shall report for each of its operations the following information:
(1) Product pounds, pounds of butterfat, pounds of protein, pounds
of solids-not-fat other than protein (other solids), and the value of
the somatic cell adjustment pursuant to Sec. 1000.50(p), contained in
or represented by:
(i) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c); and
(ii) Receipts of milk from handlers described in Sec. 1000.9(c);
(2) Product pounds and pounds of butterfat contained in:
(i) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(ii) Receipts of other source milk; and (iii) Inventories at the
beginning and end of the month of fluid milk products and bulk fluid
cream products;
(3) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph; and
(4) Such other information with respect to the receipts and
utilization of skim milk, butterfat, milk protein, other nonfat solids,
and somatic cell information, as the market administrator may
prescribe.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The product pounds, pounds of butterfat, pounds of protein,
pounds of solids-not-fat other than protein (other solids), and the
value of the somatic cell adjustment pursuant to Sec. 1000.50(p),
contained in receipts of milk from producers; and
(2) The utilization or disposition of such receipts.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1032.31 Payroll reports.
(a) On or before the 20th day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1032.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for the month, in the detail
prescribed by the market administrator, showing for each producer the
information described in Sec. 1032.73(f).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1032.32 Other reports.
In addition to the reports required pursuant to Secs. 1032.30 and
1032.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1032.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1032.41 [Reserved]
Sec. 1032.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1032.43 General classification rules.
See Sec. 1000.43.
Sec. 1032.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1032.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1032.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1032.51 Class I differential and price.
The Class I differential shall be the differential established for
Jackson County, Missouri, which is reported in Sec. 1000.52. The Class
I price shall be the price computed pursuant to Sec. 1000.50(a) for
Jackson County, Missouri.
Sec. 1032.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1032.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1032.54 Equivalent price.
See Sec. 1000.54.
Producer Price Differential
Sec. 1032.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c)
[[Page 16259]]
with respect to milk that was not received at a pool plant by adding
the amounts computed in paragraphs (a) through (i) of this section and
subtracting from that total amount the value computed in paragraph (j)
of this section. Unless otherwise specified, the skim milk, butterfat,
and the combined pounds of skim milk and butterfat referred to in this
section shall result from the steps set forth in Sec. 1000.44(a), (b),
and (c), respectively, and the nonfat components of producer milk in
each class shall be based upon the proportion of such components in
producer skim milk. Receipts of nonfluid milk products that are
distributed as labeled reconstituted milk for which payments are made
to the producer-settlement fund of another Federal order under
Sec. 1000.76(a)(4) or (d) shall be excluded from pricing under this
section.
(a) Class I value.
(1) Multiply the pounds of skim milk in Class I by the Class I skim
milk price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class I by the Class I butterfat price.
(b) Class II value.
(1) Multiply the pounds of nonfat solids in Class II skim milk by
the Class II nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class II times the Class II butterfat price.
(c) Class III value.
(1) Multiply the pounds of protein in Class III skim milk by the
protein price;
(2) Add an amount obtained by multiplying the pounds of other
solids in Class III skim milk by the other solids price; and
(3) Add an amount obtained by multiplying the pounds of butterfat
in Class III by the butterfat price.
(d) Class IV value.
(1) Multiply the pounds of nonfat solids in Class IV skim milk by
the nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class IV by the butterfat price.
(e) Compute an adjustment for the somatic cell content of producer
milk by multiplying the values reported pursuant to Sec. 1032.30(a)(1)
and (c)(1) by the percentage of total producer milk allocated to Class
II, Class III, and Class IV pursuant to Sec. 1000.44(c);
(f) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) and the corresponding
step of Sec. 1000.44(b) by the skim milk prices and butterfat prices
applicable to each class.
(g) Multiply the difference between the current month's Class I,
II, or III price, as the case may be, and the Class IV price for the
preceding month by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(h) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from a plant regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants.
(i) Multiply the difference between the Class I price applicable at
the location of the nearest unregulated supply plants from which an
equivalent volume was received and the Class III price by the pounds of
skim milk and butterfat in receipts of concentrated fluid milk products
assigned to Class I pursuant to Sec. 1000.43(d) and
Sec. 1000.44(a)(3)(i) and the corresponding step of Sec. 1000.44(b) and
the pounds of skim milk and butterfat subtracted from Class I pursuant
to Sec. 1000.44(a)(8) and the corresponding step of Sec. 1000.44(b),
excluding such skim milk and butterfat in receipts of fluid milk
products from an unregulated supply plant to the extent that an
equivalent amount of skim milk or butterfat disposed of to such plant
by handlers fully regulated under any Federal milk order is classified
and priced as Class I milk and is not used as an offset for any other
payment obligation under any order.
(j) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
Sec. 1032.61 Computation of producer price differential.
For each month the market administrator shall compute a producer
price differential per hundredweight. The report of any handler who has
not made payments required pursuant to Sec. 1032.71 for the preceding
month shall not be included in the computation of the producer price
differential, and such handler's report shall not be included in the
computation for succeeding months until the handler has made full
payment of outstanding monthly obligations. Subject to the
aforementioned conditions, the market administrator shall compute the
producer price differential in the following manner:
(a) Combine into one total the values computed pursuant to
Sec. 1032.60 for all handlers required to file reports prescribed in
Sec. 1032.30;
(b) Subtract the total values obtained by multiplying each
handler's total pounds of protein, other solids, and butterfat
contained in the milk for which an obligation was computed pursuant to
Sec. 1032.60 by the protein price, the other solids price, and the
butterfat price, respectively, and the total value of the somatic cell
adjustment pursuant to Sec. 1032.30(a)(1) and (c)(1);
(c) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1032.75;
(d) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(e) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(1) The total hundredweight of producer milk; and
(2) The total hundredweight for which a value is computed pursuant
to Sec. 1032.60(i); and
(f) Subtract not less than 4 cents nor more than 5 cents from the
price computed pursuant to paragraph (e) of this section. The result
shall be known as the producer price differential for the month.
Sec. 1032.62 Announcement of producer prices.
On or before the 11th day after the end of each month, the market
administrator shall announce publicly the following prices and
information:
(a) The producer price differential;
(b) The protein price;
(c) The nonfat solids price;
(d) The other solids price;
(e) The butterfat price;
(f) The somatic cell adjustment rate;
(g) The average butterfat, protein, nonfat solids, and other solids
content of producer milk; and
(h) The statistical uniform price for milk containing 3.5 percent
butterfat, computed by combining the Class III price and the producer
price differential.
Payments for Milk
Sec. 1032.70 Producer-settlement fund.
See Sec. 1000.70.
[[Page 16260]]
Sec. 1032.71 Payments to the producer-settlement fund.
Each handler shall make payment to the producer-settlement fund in
a manner that provides receipt of the funds by the market administrator
no later than the 14th day after the end of the month (except as
provided in Sec. 1000.90). Payment shall be the amount, if any, by
which the amount specified in paragraph (a) of this section exceeds the
amount specified in paragraph (b) of this section:
(a) The total value of milk to the handler for the month as
determined pursuant to Sec. 1032.60.
(b) The sum of:
(1) An amount obtained by multiplying the total hundredweight of
producer milk as determined pursuant to Sec. 1000.44(c) by the producer
price differential as adjusted pursuant to Sec. 1032.75;
(2) An amount obtained by multiplying the total pounds of protein,
other solids, and butterfat contained in producer milk by the protein,
other solids, and butterfat prices respectively;
(3) The total value of the somatic cell adjustment to producer
milk; and
(4) An amount obtained by multiplying the pounds of skim milk and
butterfat for which a value was computed pursuant to Sec. 1032.60(i) by
the producer price differential as adjusted pursuant to Sec. 1032.75
for the location of the plant from which received.
Sec. 1032.72 Payments from the producer-settlement fund.
No later than the 15th day after the end of each month (except as
provided in Sec. 1000.90), the market administrator shall pay to each
handler the amount, if any, by which the amount computed pursuant to
Sec. 1032.71(b) exceeds the amount computed pursuant to
Sec. 1032.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1032.73 Payments to producers and to cooperative associations.
(a) Each handler shall pay each producer for producer milk for
which payment is not made to a cooperative association pursuant to
paragraph (b) of this section, as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the date of this partial payment, payment shall be made
so that it is received by each producer on or before the 26th day of
the month (except as provided in Sec. 1000.90) for milk received during
the first 15 days of the month from the producer at not less than the
lowest announced class price for the preceding month, less proper
deductions authorized in writing by the producer.
(2) Final payment. For milk received during the month, payment
shall be made so that it is received by each producer no later than the
17th day after the end of the month (except as provided in
Sec. 1000.90) in an amount equal to not less than the sum of:
(i) The hundredweight of producer milk received times the producer
price differential for the month as adjusted pursuant to Sec. 1032.75;
(ii) The pounds of butterfat received times the butterfat price for
the month;
(iii) The pounds of protein received times the protein price for
the month;
(iv) The pounds of other solids received times the other solids
price for the month;
(v) The hundredweight of milk received times the somatic cell
adjustment for the month;
(vi) Less any payment made pursuant to paragraph (a)(1) of this
section;
(vii) Less proper deductions authorized in writing by such producer
and plus or minus adjustments for errors in previous payments to such
producer; and
(viii) Less deductions for marketing services pursuant to
Sec. 1000.86.
(b) Payments for milk received from cooperative association
members. On or before the day prior to the dates specified in
paragraphs (a)(1) and (a)(2) of this section (except as provided in
Sec. 1000.90), each handler shall pay to a cooperative association for
milk from producers who market their milk through the cooperative
association and who have authorized the cooperative to collect such
payments on their behalf an amount equal to the sum of the individual
payments otherwise payable for such producer milk pursuant to
paragraphs (a)(1) and (a)(2) of this section.
(c) Payment for milk received from cooperative association pool
plants or from cooperatives as handlers pursuant to Sec. 1000.9(c). On
or before the day prior to the dates specified in paragraphs (a)(1) and
(a)(2) of this section (except as provided in Sec. 1000.90), each
handler who receives fluid milk products at its plant from a
cooperative association in its capacity as the operator of a pool plant
or who receives milk from a cooperative association in its capacity as
a handler pursuant to Sec. 1000.9(c), including the milk of producers
who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, shall pay the cooperative for such milk
as follows:
(1) For bulk fluid milk products and bulk fluid cream products
received from a cooperative association in its capacity as the operator
of a pool plant and for milk received from a cooperative association in
its capacity as a handler pursuant to Sec. 1000.9(c) during the first
15 days of the month, at not less than the lowest announced class
prices per hundredweight for the preceding month;
(2) For the total quantity of bulk fluid milk products and bulk
fluid cream products received from a cooperative association in its
capacity as the operator of a pool plant, at not less than the total
value of such products received from the association's pool plants, as
determined by multiplying the respective quantities assigned to each
class under Sec. 1000.44 as follows:
(i) The hundredweight of Class I skim milk times the Class I skim
milk price for the month plus the pounds of Class I butterfat times the
Class I butterfat price for the month. The Class I prices to be used
shall be the prices effective at the location of the receiving plant;
(ii) The pounds of nonfat solids in Class II skim milk by the Class
II nonfat solids price;
(iii) The pounds of butterfat in Class II times the Class II
butterfat price;
(iv) The pounds of nonfat solids in Class IV times the nonfat
solids price;
(v) The pounds of butterfat in Class III and Class IV milk times
the butterfat price;
(vi) The pounds of protein in Class III milk times the protein
price;
(vii) The pounds of other solids in Class III milk times the other
solids price;
(viii) The hundredweight of Class II, Class III, and Class IV milk
times the somatic cell adjustment; and
(ix) Add together the amounts computed in paragraphs (c)(2)(i)
through (viii) of this section and from that sum deduct any payment
made pursuant to paragraph (c)(1) of this section; and
(3) For the total quantity of milk received during the month from a
cooperative association in its capacity as a handler under
Sec. 1000.9(c) as follows:
(i) The hundredweight of producer milk received times the producer
price differential as adjusted pursuant to Sec. 1032.75;
(ii) The pounds of butterfat received times the butterfat price for
the month;
(iii) The pounds of protein received times the protein price for
the month;
[[Page 16261]]
(iv) The pounds of other solids received times the other solids
price for the month;
(v) The hundredweight of milk received times the somatic cell
adjustment for the month; and
(vi) Add together the amounts computed in paragraphs (c)(3)(i)
through (v) of this section and from that sum deduct any payment made
pursuant to paragraph (c)(1) of this section.
(d) If a handler has not received full payment from the market
administrator pursuant to Sec. 1032.72 by the payment date specified in
paragraph (a), (b) or (c) of this section, the handler may reduce pro
rata its payments to producers or to the cooperative association (with
respect to receipts described in paragraph (b) of this section,
prorating the underpayment to the volume of milk received from the
cooperative association in proportion to the total milk received from
producers by the handler), but not by more than the amount of the
underpayment. The payments shall be completed on the next scheduled
payment date after receipt of the balance due from the market
administrator.
(e) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant, as the case may be.
(f) In making payments to producers pursuant to this section, each
handler shall furnish each producer, except a producer whose milk was
received from a cooperative association handler described in
Sec. 1000.9(a) or (c), a supporting statement in a form that may be
retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and payroll number of the producer;
(2) The daily and total pounds, and the month and dates such milk
was received from that producer;
(3) The total pounds of butterfat, protein, and other solids
contained in the producer's milk;
(4) The somatic cell count of the producer's milk;
(5) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(6) The rate used in making payment if the rate is other than the
applicable minimum rate;
(7) The amount, or rate per hundredweight, or rate per pound of
component, and the nature of each deduction claimed by the handler; and
(8) The net amount of payment to the producer or cooperative
association.
Sec. 1032.74 [Reserved]
Sec. 1032.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1032.51 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1032.73
and 1000.76.
Sec. 1032.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1032.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1032.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1032.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1032.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1033--MILK IN THE MIDEAST MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1033.1 General provisions.
Definitions
1033.2 Mideast marketing area.
1033.3 Route disposition.
1033.4 Plant.
1033.5 Distributing plant.
1033.6 Supply plant.
1033.7 Pool plant.
1033.8 Nonpool plant.
1033.9 Handler.
1033.10 Producer-handler.
1033.11 [Reserved]
1033.12 Producer.
1033.13 Producer milk.
1033.14 Other source milk.
1033.15 Fluid milk product.
1033.16 Fluid cream product.
1033.17 [Reserved]
1033.18 Cooperative association.
1033.19 Commercial food processing establishment.
Handler Reports
1033.30 Reports of receipts and utilization.
1033.31 Payroll reports.
1033.32 Other reports.
Classification of Milk
1033.40 Classes of utilization.
1033.41 [Reserved]
1033.42 Classification of transfers and diversions.
1033.43 General classification rules.
1033.44 Classification of producer milk.
1033.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1033.50 Class prices, component prices, and advanced pricing
factors.
1033.51 Class I differential and price.
1033.52 Adjusted Class I differentials.
1033.53 Announcement of class prices, component prices, and
advanced pricing factors.
1033.54 Equivalent price.
Producer Price Differential
1033.60 Handler's value of milk.
1033.61 Computation of producer price differential.
1033.62 Announcement of producer prices.
Payments for Milk
1033.70 Producer-settlement fund.
1033.71 Payments to the producer-settlement fund.
1033.72 Payments from the producer-settlement fund.
1033.73 Payments to producers and to cooperative associations.
1033.74 [Reserved]
1033.75 Plant location adjustments for producer milk and nonpool
milk.
1033.76 Payments by a handler operating a partially regulated
distributing plant.
1033.77 Adjustment of accounts.
1033.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1033.85 Assessment for order administration.
1033.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1033.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1033,
all references to sections in part 1000 refer to part 1000 of this
chapter.
[[Page 16262]]
Definitions
Sec. 1033.2 Mideast marketing area.
The marketing area means all territory within the bounds of the
following states and political subdivisions, including all piers,
docks, and wharves connected therewith and all craft moored thereat,
and all territory occupied by government (municipal, State, or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Ohio
The townships of Woodville and Madison in Sandusky County and
all other counties in Ohio except Erie, Huron, and Ottawa.
Indiana Counties
Adams, Allen, Bartholomew, Benton, Blackford, Boone, Brown,
Carroll, Cass, Clay, Clinton, Dearborn, Decatur, De Kalb, Delaware,
Elkhart, Fayette, Fountain, Franklin, Fulton, Grant, Hamilton,
Hancock, Hendricks, Henry, Howard, Huntington, Jackson, Jasper, Jay,
Jefferson, Jennings, Johnson, Kosciusko, Lagrange, Lake, La Porte,
Lawrence, Madison, Marion, Marshall, Miami, Monroe, Montgomery,
Morgan, Newton, Noble, Ohio, Owen, Parke, Porter, Pulaski, Putnam,
Randolph, Ripley, Rush, Shelby, St. Joseph, Starke, Steuben,
Switzerland, Tippecanoe, Tipton, Union, Vermillion, Vigo, Wabash,
Warren, Wayne, Wells, White, and Whitley.
Kentucky Counties
Boone, Boyd, Bracken, Campbell, Floyd, Grant, Greenup, Harrison,
Johnson, Kenton, Lawrence, Lewis, Magoffin, Martin, Mason,
Pendleton, Pike, and Robertson.
Michigan Counties
All counties except Delta, Dickinson, Gogebic, Iron, Menominee,
and Ontonagon.
Pennsylvania Counties
Allegheny, Armstrong, Beaver, Butler, Crawford, Erie, Fayette,
Greene, Lawrence, Mercer, Venango, and Washington.
In Clarion County only the townships of Ashland, Beaver,
Licking, Madison, Perry, Piney, Richland, Salem, and Toby.
All of Westmoreland County except the townships of Cook,
Donegal, Fairfield, Ligonier, and St. Clair, and the boroughs of
Bolivar, Donegal, Ligonier, New Florence, and Seward.
West Virginia Counties
Barbour, Boone, Brooke, Cabell, Calhoun, Doddridge, Fayette,
Gilmer, Hancock, Harrison, Jackson, Kanawha, Lewis, Lincoln, Logan,
Marion, Marshall, Mason, Mingo, Monongalia, Ohio, Pleasants,
Preston, Putnam, Raleigh, Randolph, Ritchie, Roane, Taylor, Tucker,
Tyler, Upshur, Wayne, Wetzel, Wirt, Wood, and Wyoming.
Sec. 1033.3 Route disposition.
See Sec. 1000.3.
Sec. 1033.4 Plant.
See Sec. 1000.4.
Sec. 1033.5 Distributing plant.
See Sec. 1000.5.
Sec. 1033.6 Supply plant.
See Sec. 1000.6.
Sec. 1033.7 Pool plant.
Pool plant means a plant, unit of plants, or a system of plants as
specified in paragraphs (a) through (f) of this section, but excluding
a plant specified in paragraph (h) of this section. The pooling
standards described in paragraphs (c) through (f) of this section are
subject to modification pursuant to paragraph (g) of this section:
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 30 percent or
more of the total quantity of fluid milk products physically received
at the plant (excluding concentrated milk received from another plant
by agreement for other than Class I use) are disposed of as route
disposition or are transferred in the form of packaged fluid milk
products to other distributing plants. At least 25 percent of such
route disposition and transfers must be to outlets in the marketing
area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 30 percent of the total quantity of
fluid milk products physically received at the plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) into ultra-pasteurized or aseptically-processed fluid
milk products.
(c) A supply plant from which the quantity of bulk fluid milk
products shipped to, received at, and physically unloaded into plants
described in paragraph (a) or (b) of this section as a percent of the
Grade A milk received at the plant from dairy farmers (except dairy
farmers described in Sec. 1033.12(b)) and handlers described in
Sec. 1033.9(c), as reported in Sec. 1033.30(a), is not less than 30
percent of the milk received from dairy farmers, including milk
diverted pursuant to Sec. 1033.13, subject to the following conditions:
(1) Qualifying shipments pursuant to this paragraph may be made to
the following plants, except whenever the authority provided in
paragraph (g) of this section is applied to increase the shipping
requirements specified in this section, only shipments to pool plants
described in Sec. 1033.7(a) and (b), shall count as qualifying
shipments for the purpose of meeting the increased shipments:
(i) Pool plants described in Sec. 1033.7(a) and (b);
(ii) Plants of producer-handlers;
(iii) Partially regulated distributing plants, except that credit
for such shipments shall be limited to the amount of such milk
classified as Class I at the transferee plant; and
(iv) Distributing plants fully regulated under other Federal
orders, except that credit for transfers to such plants shall be
limited to the quantity shipped to pool distributing plants during the
month. Qualifying transfers to other order plants shall not include
transfers made on the basis of agreed-upon Class II, Class III, or
Class IV utilization.
(2) The operator of a supply plant may include deliveries to pool
distributing plants directly from farms of producers pursuant to
Sec. 1033.13(c) as up to 90 percent of the supply plant's qualifying
shipments.
(3) Concentrated milk transferred from the supply plant to a
distributing plant for an agreed-upon use other than Class I shall be
excluded from the supply plant's shipments in computing the supply
plant's shipping percentage.
(4) A supply plant that meets the shipping requirements of this
paragraph during each of the immediately preceding months of September
through February shall be a pool plant during the following months of
March through August unless the milk received at the plant fails to
meet the requirements of a duly constituted regulatory agency, the
plant fails to meet a shipping requirement instituted pursuant to
paragraph (g) of this section, or the plant operator requests nonpool
status for the plant. Such nonpool status shall be effective on the
first day of the month following the receipt of such request and
thereafter until the plant again qualifies as a pool plant on the basis
of its deliveries to a pool distributing plant(s). The automatic pool
qualification of a plant can be waived if the handler or cooperative
requests in writing to the market administrator the nonpool status of
such plant. The request must be made prior to the beginning of any
month during the March through August period. The plant shall be a
nonpool plant for such month and thereafter until it requalifies under
paragraph (c) of this section on the basis of actual shipments
therefrom. To requalify as a pool plant under paragraph (d), (e) or (f)
of this section, such plant must first have met the percentage shipping
requirements of paragraph (c) of this section for 6 consecutive months.
[[Page 16263]]
(5) A supply plant that does not meet the minimum delivery
requirements specified in this paragraph to qualify for pool status in
the current month because a distributing plant to which the supply
plant delivered its fluid milk products during such month failed to
qualify as a pool plant pursuant to paragraph (a) or (b) of this
section shall continue to be a pool plant for the current month if such
supply plant qualified as a pool plant in the 3 immediately preceding
months.
(d) A plant operated by a cooperative association if, during the
month, 30 percent or more of the producer milk of members of the
association is delivered to a distributing pool plant(s) or to a
nonpool plant(s), and classification other than Class I is not
requested. Deliveries for qualification purposes may be made directly
from the farm or by transfer from such association's plant, subject to
the following conditions:
(1) The cooperative requests pool status for such plant;
(2) The 30-percent delivery requirement may be met for the current
month or it may be met on the basis of deliveries during the preceding
12-month period ending with the current month;
(3) The plant is approved by a duly constituted regulatory
authority to handle milk for fluid consumption; and
(4) The plant does not qualify as a pool plant under paragraph (a),
(b), or (c) of this section or under the similar provisions of another
Federal order applicable to a distributing plant or supply plant.
(e) A plant located inside the marketing area which has been a pool
plant under this order or its predecessor orders for twelve consecutive
months, but is not otherwise qualified under this paragraph, if it has
a marketing agreement with a cooperative association and it fulfills
the following conditions:
(1) The aggregate monthly quantity supplied by all parties to such
an agreement as a percentage of the producer milk receipts included in
the unit during the month is not less than 35 percent; and
(2) Shipments for qualification purposes shall include both
transfers from supply plants to plants described in paragraph (c)(1) of
this section, and deliveries made direct from the farm to plants
qualified under paragraph (a) of this section.
(f) A system of supply plants may qualify for pooling if 2 or more
plants operated by one or more handlers meet the applicable percentage
requirements of paragraph (c) of this section in the same manner as a
single plant subject to the following additional requirements:
(1) Each plant in the system is located within the marketing area,
or was a pool supply plant for each of the 3 months immediately
preceding the effective date of this paragraph so long as it continues
to maintain pool status. Cooperative associations may not use shipments
pursuant to Sec. 1033.9(c) to qualify plants located outside the
marketing area;
(2) A written notification to the market administrator listing the
plants to be included in the system and the handler that is responsible
for meeting the performance requirements of this paragraph under a
marketing agreement certified to the market administrator by the
designated handler and any others included in the system, and the
period during which such consideration shall apply. Such notice, and
notice of any change in designation, shall be furnished on or before
the 5th working day following the month to which the notice applies.
The listed plants included in the system shall also be in the sequence
in which they shall qualify for pool plant status based on the minimum
deliveries required. If the deliveries made are insufficient to qualify
the entire system for pooling, the last listed plant shall be excluded
from the system, followed by the plant next-to-last on the list, and
continuing in this sequence until remaining listed plants have met the
minimum shipping requirements; and
(3) Each plant that qualifies as a pool plant within a system shall
continue each month as a plant in the system unless the plant
subsequently fails to qualify for pooling, or the responsible handler
submits a written notification to the market administrator prior to the
first day of the month that the plant is to be deleted from the system,
or that the system is to be discontinued. In any month of March through
August, a system shall not contain any plant which was not qualified
under this paragraph, either individually or as a member of a system,
during the previous September through February.
(g) The applicable shipping percentages of paragraphs (c) through
(f) of this section may be increased or decreased by the market
administrator if the market administrator finds that such adjustment is
necessary to encourage needed shipments or to prevent uneconomic
shipments. Before making such a finding, the market administrator shall
investigate the need for adjustment either on the market
administrator's own initiative or at the request of interested parties
if the request is made in writing at least 15 days prior to the month
for which the requested revision is desired effective. If the
investigation shows that an adjustment of the shipping percentages
might be appropriate, the market administrator shall issue a notice
stating that an adjustment is being considered and invite data, views
and arguments. Any decision to revise an applicable shipping percentage
must be issued in writing at least one day before the effective date.
(h) The term pool plant shall not apply to the following plants:
(1) A producer-handler as defined under any Federal order;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant located within the marketing area and qualified
pursuant to paragraph (a) of this section that meets the pooling
requirements of another Federal order, and from which more than 50
percent of its route disposition has been in the other Federal order
marketing area for 3 consecutive months;
(4) A plant located outside any Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of another Federal order and has had greater route
disposition in such other Federal order's marketing area for 3
consecutive months;
(5) A plant located in another Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of such other Federal order and does not have a
majority of its route distribution in this marketing area for 3
consecutive months or if the plant is required to be regulated under
such other Federal order without regard to its route disposition in any
other Federal order marketing area;
(6) A plant qualified pursuant to paragraph (c) of this section
that also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under the other Federal order than are made to plants regulated under
this order, or the plant has automatic pooling status under the other
Federal order; and
(7) That portion of a regulated plant designated as a nonpool plant
that is physically separate and operated separately from the pool
portion of such plant. The designation of a portion of a regulated
plant as a nonpool plant must be requested in advance and in writing by
the handler and must be approved by the market administrator.
(i) Any plant that qualifies as a pool plant in each of the
immediately preceding 3 months pursuant to
[[Page 16264]]
paragraph (a) of this section or the shipping percentages in paragraph
(c) of this section that is unable to meet such performance standards
for the current month because of unavoidable circumstances determined
by the market administrator to be beyond the control of the handler
operating the plant, such as a natural disaster (ice storm, wind storm,
flood), fire, breakdown of equipment, or work stoppage, shall be
considered to have met the minimum performance standards during the
period of such unavoidable circumstances, but such relief shall not be
granted for more than 2 consecutive months.
Sec. 1033.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1033.9 Handler.
See Sec. 1000.9.
Sec. 1033.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is route disposition in the marketing area during the month;
(b) Receives fluid milk from own farm production or that is fully
subject to the pricing and pooling provisions of this or any other
Federal order;
(c) Receives at its plant or acquires for route disposition no more
than 150,000 pounds of fluid milk products from handlers fully
regulated under any Federal order. This limitation shall not apply if
the producer-handler's own farm production is less than 150,000 pounds
during the month;
(d) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products;
and
(e) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled (excluding receipts from
handlers fully regulated under any Federal order) and the processing
and packaging operations are the producer-handler's own enterprise and
at its own risk.
Sec. 1033.11 [Reserved]
Sec. 1033.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1033.13; or
(2) Received by a handler described in Sec. 1033.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1033.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I; and
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order.
Sec. 1033.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk), including nonfat components, and butterfat in
milk of a producer that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(c) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(d) Diverted by the operator of a pool plant or by a cooperative
association described in Sec. 1033.9(c) to a nonpool plant, subject to
the following conditions:
(1) Milk of a dairy farmer shall not be eligible for diversion
until milk of such dairy farmer has been physically received as
producer milk at a pool plant and the dairy farmer has continuously
retained producer status since that time. If a dairy farmer loses
producer status under this order (except as a result of a temporary
loss of Grade A approval), the dairy farmer's milk shall not be
eligible for diversion until milk of the dairy farmer has been
physically received as producer milk at a pool plant;
(2) The equivalent of at least one day's production is caused by
the handler to be physically received at a pool plant in each of the
months of September through November;
(3) Of the total quantity of producer milk received during the
month (including diversions but excluding the quantity of producer milk
received from a handler described in Sec. 1000.9(c)), the handler
diverted to nonpool plants not more than 60 percent during the months
of September through February;
(4) Diverted milk shall be priced at the location of the plant to
which diverted;
(5) Any milk diverted in excess of the limits set forth in
paragraph (d)(3) of this section shall not be producer milk. The
diverting handler shall designate the dairy farmer deliveries that
shall not be producer milk. If the handler fails to designate the dairy
farmer deliveries which are ineligible, producer milk status shall be
forfeited with respect to all milk diverted to nonpool plants by such
handler; and
(6) The delivery day requirements and the diversion percentages in
paragraphs (d)(2) and (d)(3) of this section may be increased or
decreased by the market administrator if the market administrator finds
that such revision is necessary to assure orderly marketing and
efficient handling of milk in the marketing area. Before making such a
finding, the market administrator shall investigate the need for the
revision either on the market administrator's own initiative or at the
request of interested persons if the request is made in writing at
least 15 days prior to the month for which the requested revision is
desired effective. If the investigation shows that a revision might be
appropriate, the market administrator shall issue a notice stating that
the revision is being considered and inviting written data, views, and
arguments. Any decision to revise an applicable percentage must be
issued in writing at least one day before the effective date.
Sec. 1033.14 Other source milk.
See Sec. 1000.14.
Sec. 1033.15 Fluid milk products.
See Sec. 1000.15.
Sec. 1033.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1033.17 [Reserved]
Sec. 1033.18 Cooperative association.
See Sec. 1000.18.
Sec. 1033.19 Commercial food processing establishment.
See Sec. 1000.19.
[[Page 16265]]
Handler Reports
Sec. 1033.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 7th day
after the end of the month, in the detail and on the prescribed forms,
as follows:
(a) Each handler that operates a pool plant pursuant to Sec. 1033.7
shall report for each of its operations the following information:
(1) Product pounds, pounds of butterfat, pounds of protein, pounds
of solids-not-fat other than protein (other solids), and the value of
the somatic cell adjustment pursuant to Sec. 1000.50(p), contained in
or represented by:
(i) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c); and
(ii) Receipts of milk from handlers described in Sec. 1000.9(c);
(2) Product pounds and pounds of butterfat contained in:
(i) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(ii) Receipts of other source milk; and
(iii) Inventories at the beginning and end of the month of fluid
milk products and bulk fluid cream products;
(3) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph; and
(4) Such other information with respect to the receipts and
utilization of skim milk, butterfat, milk protein, other nonfat solids,
and somatic cell information as the market administrator may prescribe.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The product pounds, pounds of butterfat, pounds of protein,
pounds of solids-not-fat other than protein (other solids), and the
value of the somatic cell adjustment pursuant to Sec. 1000.50(p),
contained in receipts of milk from producers; and
(2) The utilization or disposition of such receipts.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1033.31 Payroll reports.
(a) On or before the 22nd day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1033.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for the month, in the detail
prescribed by the market administrator, showing for each producer the
information described in Sec. 1033.73(e).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1033.32 Other reports.
In addition to the reports required pursuant to Secs. 1033.30 and
1033.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1033.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1033.41 [Reserved]
Sec. 1033.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1033.43 General classification rules.
See Sec. 1000.43.
Sec. 1033.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1033.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1033.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1033.51 Class I differential and price.
The Class I differential shall be the differential established for
Cuyahoga County, Ohio which is reported in Sec. 1000.52. The Class I
price shall be the price computed pursuant to Sec. 1000.50(a) for
Cuyahoga County, Ohio.
Sec. 1033.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1033.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1033.54 Equivalent price.
See Sec. 1000.54.
Producer Price Differential
Sec. 1033.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c) with respect to
milk that was not received at a pool plant by adding the amounts
computed in paragraphs (a) through (i) of this section and subtracting
from that total amount the value computed in paragraph (j) of this
section. Unless otherwise specified, the skim milk, butterfat, and the
combined pounds of skim milk and butterfat referred to in this section
shall result from the steps set forth in Sec. 1000.44(a), (b), and (c),
respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim
milk. Receipts of nonfluid milk products that are distributed as
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec. 1000.76(a)(4) or
(d) shall be excluded from pricing under this section.
(a) Class I value.
(1) Multiply the pounds of skim milk in Class I by the Class I skim
milk price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class I by the Class I butterfat price.
(b) Class II value.
(1) Multiply the pounds of nonfat solids in Class II skim milk by
the Class II nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class II times the Class II butterfat price.
(c) Class III value.
(1) Multiply the pounds of protein in Class III skim milk by the
protein price;
(2) Add an amount obtained by multiplying the pounds of other
solids in Class III skim milk by the other solids price; and
(3) Add an amount obtained by multiplying the pounds of butterfat
in Class III by the butterfat price.
(d) Class IV value.
(1) Multiply the pounds of nonfat solids in Class IV skim milk by
the nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class IV by the butterfat price.
[[Page 16266]]
(e) Compute an adjustment for the somatic cell content of producer
milk by multiplying the values reported pursuant to Sec. 1033.30(a)(1)
and (c)(1) by the percentage of total producer milk allocated to Class
II, Class III, and Class IV pursuant to Sec. 1000.44(c);
(f) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) and the corresponding
step of Sec. 1000.44(b) by the skim milk prices and butterfat prices
applicable to each class.
(g) Multiply the difference between the current month's Class I,
II, or III price, as the case may be, and the Class IV price for the
preceding month by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(h) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from a plant regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants.
(i) Multiply the difference between the Class I price applicable at
the location of the nearest unregulated supply plants from which an
equivalent volume was received and the Class III price by the pounds of
skim milk and butterfat in receipts of concentrated fluid milk products
assigned to Class I pursuant to Sec. 1000.43(d) and
Sec. 1000.44(a)(3)(i) and the corresponding step of Sec. 1000.44(b) and
the pounds of skim milk and butterfat subtracted from Class I pursuant
to Sec. 1000.44(a)(8) and the corresponding step of Sec. 1000.44(b),
excluding such skim milk and butterfat in receipts of fluid milk
products from an unregulated supply plant to the extent that an
equivalent amount of skim milk or butterfat disposed of to such plant
by handlers fully regulated under any Federal milk order is classified
and priced as Class I milk and is not used as an offset for any other
payment obligation under any order.
(j) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
Sec. 1033.61 Computation of producer price differential.
For each month the market administrator shall compute a producer
price differential per hundredweight. The report of any handler who has
not made payments required pursuant to Sec. 1033.71 for the preceding
month shall not be included in the computation of the producer price
differential, and such handler's report shall not be included in the
computation for succeeding months until the handler has made full
payment of outstanding monthly obligations. Subject to the
aforementioned conditions, the market administrator shall compute the
producer price differential in the following manner:
(a) Combine into one total the values computed pursuant to
Sec. 1033.60 for all handlers required to file reports prescribed in
Sec. 1033.30;
(b) Subtract the total values obtained by multiplying each
handler's total pounds of protein, other solids, and butterfat
contained in the milk for which an obligation was computed pursuant to
Sec. 1033.60 by the protein price, the other solids price, and the
butterfat price, respectively, and the total value of the somatic cell
adjustment pursuant to Sec. 1033.30(a)(1) and (c)(1);
(c) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1033.75;
(d) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(e) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(1) The total hundredweight of producer milk; and
(2) The total hundredweight for which a value is computed pursuant
to Sec. 1033.60(i); and
(f) Subtract not less than 4 cents nor more than 5 cents from the
price computed pursuant to paragraph (e) of this section. The result
shall be known as the producer price differential for the month.
Sec. 1033.62 Announcement of producer prices.
On or before the 13th day after the end of each month, the market
administrator shall announce publicly the following prices and
information:
(a) The producer price differential;
(b) The protein price;
(c) The nonfat solids price;
(d) The other solids price;
(e) The butterfat price;
(f) The somatic cell adjustment rate;
(g) The average butterfat, protein, nonfat solids, and other solids
content of producer milk; and
(h) The statistical uniform price for milk containing 3.5 percent
butterfat, computed by combining the Class III price and the producer
price differential.
Payments for Milk
Sec. 1033.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1033.71 Payments to the producer-settlement fund.
Each handler shall make payment to the producer-settlement fund in
a manner that provides receipt of the funds by the market administrator
no later than the 15th day after the end of the month (except as
provided in Sec. 1000.90). Payment shall be the amount, if any, by
which the amount specified in paragraph (a) of this section exceeds the
amount specified in paragraph (b) of this section:
(a) The total value of milk to the handler for the month as
determined pursuant to Sec. 1033.60.
(b) The sum of:
(1) An amount obtained by multiplying the total hundredweight of
producer milk as determined pursuant to Sec. 1000.44(c) by the producer
price differential as adjusted pursuant to Sec. 1033.75;
(2) An amount obtained by multiplying the total pounds of protein,
other solids, and butterfat contained in producer milk by the protein,
other solids, and butterfat prices, respectively;
(3) The total value of the somatic cell adjustment to producer
milk; and
(4) An amount obtained by multiplying the pounds of skim milk and
butterfat for which a value was computed pursuant to Sec. 1033.60(i) by
the producer price differential as adjusted pursuant to Sec. 1033.75
for the location of the plant from which received.
Sec. 1033.72 Payments from the producer-settlement fund.
No later than the 16th day after the end of each month (except as
provided in Sec. 1000.90), the market administrator shall pay to each
handler the amount, if any, by which the amount computed pursuant to
Sec. 1033.71(b) exceeds the amount computed pursuant to
Sec. 1033.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly
[[Page 16267]]
such payments and shall complete the payments as soon as the funds are
available.
Sec. 1033.73 Payments to producers and to cooperative associations.
(a) Each handler shall pay each producer for producer milk for
which payment is not made to a cooperative association pursuant to
paragraph (b) of this section, as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the date of this partial payment, payment shall be made
so that it is received by each producer on or before the 26th day of
the month (except as provided in Sec. 1000.90) for milk received during
the first 15 days of the month from the producer at not less than the
lowest announced class price for the preceding month, less proper
deductions authorized in writing by the producer.
(2) Final payment. For milk received during the month, payment
shall be made so that it is received by each producer no later than the
17th day after the end of the month (except as provided in
Sec. 1000.90) in an amount equal to not less than the sum of:
(i) The hundredweight of producer milk received times the producer
price differential for the month as adjusted pursuant to Sec. 1033.75;
(ii) The pounds of butterfat received times the butterfat price for
the month;
(iii) The pounds of protein received times the protein price for
the month;
(iv) The pounds of other solids received times the other solids
price for the month;
(v) The hundredweight of milk received times the somatic cell
adjustment for the month;
(vi) Less any payment made pursuant to paragraph (a)(1) of this
section;
(vii) Less proper deductions authorized in writing by such producer
and plus or minus adjustments for errors in previous payments to such
producer; and
(viii) Less deductions for marketing services pursuant to
Sec. 1000.86.
(b) Payments for milk received from cooperative associations. On or
before the day prior to the dates specified in paragraphs (a)(1) and
(a)(2) of this section (except as provided in Sec. 1000.90), each
handler shall pay to a cooperative association for milk received as
follows:
(1) Partial payment to a cooperative association. For bulk fluid
milk/skimmed milk received during the first 15 days of the month from a
cooperative association in any capacity, except as the operator of a
pool plant, the partial payment shall be equal to the hundredweight of
milk received multiplied by the lowest announced class price for the
preceding month.
(2) Partial payment to a cooperative association for milk
transferred from its pool plant. For bulk fluid milk/skimmed milk
products received during the first 15 days of the month from a
cooperative association in its capacity as the operator of a pool
plant, the partial payment shall be at the pool plant operator's
estimated use value of the milk using the most recent class prices
available at the receiving plant's location.
(3) Final payment to a cooperative association for milk transferred
from its pool plant. Following the classification of bulk fluid milk
products and bulk fluid cream products received during the month from a
cooperative association in its capacity as the operator of a pool
plant, the final payment for such receipts shall be determined as
follows:
(i) The hundredweight of Class I skim milk times the Class I skim
milk price for the month plus the pounds of Class I butterfat times the
Class I butterfat price for the month. The Class I prices to be used
shall be the prices effective at the location of the receiving plant;
(ii) The pounds of nonfat solids in Class II skim milk by the Class
II nonfat solids price;
(iii) The pounds of butterfat in Class II times the Class II
butterfat price;
(iv) The pounds of nonfat solids in Class IV times the nonfat
solids price;
(v) The pounds of butterfat in Class III and Class IV milk times
the butterfat price;
(vi) The pounds of protein in Class III milk times the protein
price;
(vii) The pounds of other solids in Class III milk times the other
solids price;
(viii) The hundredweight of Class II, Class III, and Class IV milk
times the somatic cell adjustment; and
(ix) Add together the amounts computed in paragraphs (b)(3)(i)
through (viii) of this section and from that sum deduct any payment
made pursuant to paragraph (b)(2) of this section; and
(4) Final payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk received from a
cooperative association during the month, including the milk of
producers who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, the final payment for such milk shall
be an amount equal to the sum of the individual payments otherwise
payable for such milk pursuant to paragraph (a)(2) of this section.
(c) If a handler has not received full payment from the market
administrator pursuant to Sec. 1033.72 by the payment date specified in
paragraph (a) or (b) of this section, the handler may reduce payments
pursuant to paragraphs (a) and (b) of this section, but not by more
than the amount of the underpayment. The payments shall be completed on
the next scheduled payment date after receipt of the balance due from
the market administrator.
(d) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant, as the case may be.
(e) In making payments to producers pursuant to this section, each
handler shall furnish each producer, except a producer whose milk was
received from a cooperative association handler described in
Sec. 1000.9(a) or (c), a supporting statement in a form that may be
retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and payroll number of the producer;
(2) The daily and total pounds, and the month and dates such milk
was received from that producer;
(3) The total pounds of butterfat, protein, and other solids
contained in the producer's milk;
(4) The somatic cell count of the producer's milk;
(5) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(6) The rate used in making payment if the rate is other than the
applicable minimum rate;
(7) The amount, or rate per hundredweight, or rate per pound of
component, and the nature of each deduction claimed by the handler; and
(8) The net amount of payment to the producer or cooperative
association.
[[Page 16268]]
Sec. 1033.74 [Reserved]
Sec. 1033.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1033.51 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1033.73
and 1000.76.
Sec. 1033.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1033.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1033.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1033.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1033.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1124--MILK IN THE PACIFIC NORTHWEST MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1124.1 General provisions.
Definitions
1124.2 Pacific Northwest marketing area.
1124.3 Route disposition.
1124.4 Plant.
1124.5 Distributing plant.
1124.6 Supply plant.
1124.7 Pool plant.
1124.8 Nonpool plant.
1124.9 Handler.
1124.10 Producer-handler.
1124.11 Cooperative reserve supply unit.
1124.12 Producer.
1124.13 Producer milk.
1124.14 Other source milk.
1124.15 Fluid milk product.
1124.16 Fluid cream product.
1124.17 [Reserved]
1124.18 Cooperative association.
1124.19 Commercial food processing establishment.
Handler Reports
1124.30 Reports of receipts and utilization.
1124.31 Payroll reports.
1124.32 Other reports.
Classification of Milk
1124.40 Classes of utilization.
1124.41 [Reserved]
1124.42 Classification of transfers and diversions.
1124.43 General classification rules.
1124.44 Classification of producer milk.
1124.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1124.50 Class prices, component prices, and advanced pricing
factors.
1124.51 Class I differential and price.
1124.52 Adjusted Class I differentials.
1124.53 Announcement of class prices, component prices, and
advanced pricing factors.
1124.54 Equivalent price.
Producer Price Differential
1124.60 Handler's value of milk.
1124.61 Computation of producer price differential.
1124.62 Announcement of producer prices.
Payments for Milk
1124.70 Producer-settlement fund.
1124.71 Payments to the producer-settlement fund.
1124.72 Payments from the producer-settlement fund.
1124.73 Payments to producers and to cooperative associations.
1124.74 [Reserved]
1124.75 Plant location adjustments for producer milk and nonpool
milk.
1124.76 Payments by a handler operating a partially regulated
distributing plant.
1124.77 Adjustment of accounts.
1124.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1124.85 Assessment for order administration.
1124.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1124.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1124,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1124.2 Pacific Northwest marketing area.
The marketing area means all territory within the bounds of the
following states and political subdivisions, including all piers,
docks, and wharves connected therewith and all craft moored thereat,
and all territory occupied by government (municipal, State, or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Washington
All of the State of Washington.
Idaho Counties
Benewah, Bonner, Boundary, Kootenai, Latah, and Shoshone.
Oregon Counties
Benton, Clackamas, Clatsop, Columbia, Coos, Crook, Curry,
Deschutes, Douglas, Gilliam, Hood River, Jackson, Jefferson,
Josephine, Klamath, Lake, Lane, Lincoln, Linn, Marion, Morrow,
Multnomah, Polk, Sherman, Tillamook, Umatilla, Wasco, Washington,
Wheeler, and Yamhill.
Sec. 1124.3 Route disposition.
See Sec. 1000.3.
Sec. 1124.4 Plant.
See Sec. 1000.4.
Sec. 1124.5 Distributing plant.
See Sec. 1000.5.
Sec. 1124.6 Supply plant.
See Sec. 1000.6.
Sec. 1124.7 Pool plant.
Pool plant means a plant, unit of plants, or a system of plants as
specified in paragraphs (a) through (f) of this section, but excluding
a plant specified in paragraph (h) of this section. The pooling
standards described in paragraph (c) of this section are subject to
modification pursuant to paragraph (g) of this section:
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 25 percent or
more of the total quantity of fluid milk products physically received
at the plant (excluding concentrated milk received from another plant
by agreement for other than Class I use) are disposed of as route
disposition or are transferred in the form of packaged fluid milk
products to other distributing plants. At least 25 percent of such
route disposition and transfers must be to outlets in the marketing
area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 25 percent of the total quantity of
fluid milk products physically received at the plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) into ultra-pasteurized or aseptically-processed fluid
milk products.
(c) A supply plant from which during any month not less than 20
percent of the total quantity of milk that is physically received at
such plant from dairy farmers eligible to be producers pursuant to
Sec. 1124.12 (excluding milk received at such plant as diverted milk
[[Page 16269]]
from another plant, which milk is classified other than Class I under
this order and is subject to the pricing and pooling provisions of this
or another order issued pursuant to the Act) or diverted as producer
milk to another plant pursuant to Sec. 1124.13, is shipped in the form
of a fluid milk product (excluding concentrated milk transferred by
agreement for other than Class I use) to a pool distributing plant or
is a route disposition in the marketing area of fluid milk products
processed and packaged at such plant;
(1) A supply plant that has qualified as a pool plant during each
of the immediately preceding months of September through February shall
continue to so qualify in each of the following months of March through
August, unless the plant operator files a written request with the
market administrator that such plant not be a pool plant, such nonpool
status to be effective the first month following such request and
thereafter until the plant qualifies as a pool plant on the basis of
milk shipments;
(2) A cooperative association that operates a supply plant may
include as qualifying shipments its deliveries to pool distributing
plants directly from farms of producers pursuant to Sec. 1000.9(c);
(3) A pool plant operator may include as qualifying shipments milk
diverted to pool distributing plants pursuant to Sec. 1124.13(d);
(4) No plant may qualify as a pool plant due to a reduction in the
shipping percentage pursuant to paragraph (g) of this section unless it
has been a pool supply plant during each of the immediately preceding 3
months.
(d)--(f) [Reserved]
(g) The applicable shipping percentage of paragraph (c) of this
section may be increased or decreased by the market administrator if
the market administrator finds that such adjustment is necessary to
encourage needed shipments or to prevent uneconomic shipments. Before
making such a finding, the market administrator shall investigate the
need for adjustment either on the market administrator's own initiative
or at the request of interested parties if the request is made in
writing at least 15 days prior to the month for which the requested
revision is desired effective. If the investigation shows that an
adjustment of the shipping percentages might be appropriate, the market
administrator shall issue a notice stating that an adjustment is being
considered and invite data, views and arguments. Any decision to revise
an applicable shipping percentage must be issued in writing at least
one day before the effective date.
(h) The term pool plant shall not apply to the following plants:
(1) A producer-handler as defined under any Federal order;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant located within the marketing area and qualified
pursuant to paragraph (a) of this section which meets the pooling
requirements of another Federal order, and from which more than 50
percent of its route disposition has been in the other Federal order
marketing area for 3 consecutive months;
(4) A plant located outside any Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of another Federal order and has had greater route
disposition in such other Federal order's marketing area for 3
consecutive months;
(5) A plant located in another Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of such other Federal order and does not have a
majority of its route distribution in this marketing area for 3
consecutive months or if the plant is required to be regulated under
such other Federal order without regard to its route disposition in any
other Federal order marketing area; and
(6) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under the other Federal order than are made to plants regulated under
this order, or the plant has automatic pooling status under the other
Federal order.
Sec. 1124.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1124.9 Handler.
See Sec. 1000.9.
Sec. 1124.10 Producer-handler.
Producer-handler means a person who operates a dairy farm and a
distributing plant from which there is route disposition within the
marketing area during the month and who the market administrator has
designated a producer-handler after determining that all of the
requirements of this section have been met.
(a) Requirements for designation. Designation of any person as a
producer-handler by the market administrator shall be contingent upon
meeting the conditions set forth in paragraphs (a)(1) through (4) of
this section. Following the cancellation of a previous producer-handler
designation, a person seeking to have his/her producer-handler
designation reinstated must demonstrate that these conditions have been
met for the preceding month.
(1) The care and management of the dairy animals and other
resources and facilities designated in paragraph (b)(1) of this section
necessary to produce all Class I milk handled (excluding receipts from
handlers fully regulated under any Federal order) are under the
complete and exclusive control and management of the producer-handler
and are operated as the producer-handler's own enterprise and at its
own risk.
(2) The plant operation designated in paragraph (b)(2) of this
section at which the producer-handler processes and packages, and from
which it distributes, its own milk production is under the complete and
exclusive control and management of the producer-handler and is
operated as the producer-handler's own enterprise and at its sole risk.
(3) The producer-handler neither receives at its designated milk
production resources and facilities nor receives, handles, processes,
or distributes at or through any of its designated milk handling,
processing, or distributing resources and facilities other source milk
products for reconstitution into fluid milk products or fluid milk
products derived from any source other than:
(i) Its designated milk production resources and facilities (own
farm production);
(ii) Pool handlers and plants regulated under any Federal order
within the limitation specified in paragraph (c)(2) of this section; or
(iii) Nonfat milk solids which are used to fortify fluid milk
products.
(4) The producer-handler is neither directly nor indirectly
associated with the business control or management of, nor has a
financial interest in, another handler's operation; nor is any other
handler so associated with the producer-handler's operation.
(b) Designation of resources and facilities. Designation of a
person as a producer-handler shall include the determination of what
shall constitute the person's milk production, handling, processing,
and distribution resources and facilities, all of which shall be
considered an integrated operation.
(1) Milk production resources and facilities shall include all
resources and facilities (milking herd(s), buildings housing such
herd(s), and the land on which such buildings are located) used for the
production of milk which are
[[Page 16270]]
directly or indirectly, solely or partially, owned, operated, or
controlled by the producer-handler, in which the producer-handler in
any way has an interest, including any contractual arrangement, or
which are directly, indirectly, or partially owned, operated, or
controlled by any partner or stockholder of the producer-handler.
However, for purposes of this paragraph, any such milk production
resources and facilities which do not constitute an actual or potential
source of milk supply for the producer-handler's operation shall not be
considered a part of the producer-handler's milk production resources
and facilities.
(2) Milk handling, processing, and distribution resources and
facilities shall include all resources and facilities (including store
outlets) used for handling, processing, and distributing fluid milk
products which are solely or partially owned by, and directly or
indirectly operated or controlled by, the producer-handler or in which
the producer-handler in any way has an interest, including any
contractual arrangement, or over which the producer-handler directly or
indirectly exercises any degree of management or control.
(3) All designations shall remain in effect until canceled pursuant
to paragraph (c) of this section.
(c) Cancellation. The designation as a producer-handler shall be
canceled upon determination by the market administrator that any of the
requirements of paragraphs (a)(1) through (4) of this section are not
continuing to be met, or under any of the conditions described in
paragraphs (c)(1) and (2) of this section. Cancellation of a producer-
handler's status pursuant to this paragraph shall be effective on the
first day of the month following the month in which the requirements
were not met or the conditions for cancellation occurred.
(1) Milk from the milk production resources and facilities of the
producer-handler, designated in paragraph (b)(1) of this section, is
delivered in the name of another person as producer milk to another
handler.
(2) The producer-handler handles fluid milk products derived from
sources other than the milk production facilities and resources
designated in paragraph (b)(1) of this section, except that it may
receive at its plant, or acquire for route disposition, fluid milk
products from fully regulated plants and handlers under any Federal
order if such receipts do not exceed 150,000 pounds monthly. This
limitation shall not apply if the producer-handler's own farm
production is less than 150,000 pounds during the month.
(d) Public announcement. The market administrator shall publicly
announce:
(1) The name, plant location(s), and farm location(s) of persons
designated as producer-handlers;
(2) The names of those persons whose designations have been
canceled; and
(3) The effective dates of producer-handler status or loss of
producer-handler status for each. Such announcements shall be
controlling with respect to the accounting at plants of other handlers
for fluid milk products received from any producer-handler.
(e) Burden of establishing and maintaining producer-handler status.
The burden rests upon the handler who is designated as a producer-
handler to establish through records required pursuant to Sec. 1000.27
that the requirements set forth in paragraph (a) of this section have
been and are continuing to be met, and that the conditions set forth in
paragraph (c) of this section for cancellation of designation do not
exist.
Sec. 1124.11 Cooperative reserve supply unit.
Cooperative reserve supply unit means any cooperative association
or its agent that is a handler pursuant to Sec. 1000.9(c) that does not
own or operate a plant, if such cooperative has been qualified to
receive payments pursuant to Sec. 1124.73 and has been a handler of
producer milk under this or its predecessor order during each of the 12
previous months, and if a majority of the cooperative's member
producers are located within 125 miles of a plant described in
Sec. 1124.7(a). A cooperative reserve supply unit shall be subject to
the following conditions:
(a) The cooperative shall file a request with the market
administrator for cooperative reserve supply unit status at least 15
days prior to the first day of the month in which such status is
desired to be effective. Once qualified as a cooperative reserve supply
unit pursuant to this paragraph, such status shall continue to be
effective unless the cooperative requests termination prior to the
first day of the month that change of status is requested, or the
cooperative fails to meet all of the conditions of this section.
(b) The cooperative reserve supply unit supplies fluid milk
products to pool distributing plants located within 125 miles of a
majority of the cooperative's member producers in compliance with any
announcement by the market administrator requesting a minimum level of
shipments as further provided below:
(1) The market administrator may require such supplies of bulk
fluid milk from cooperative reserve supply units whenever the market
administrator finds that milk supplies for Class I use are needed for
plants defined in Sec. 1124.7(a) or (b). Before making such a finding,
the market administrator shall investigate the need for such shipments
either on the market administrator's own initiative or at the request
of interested persons if the request is made in writing at least 15
days prior to the month for which the requested revision is desired
effective. If the market administrator's investigation shows that such
shipments might be appropriate, the market administrator shall issue a
notice stating that a shipping announcement is being considered and
inviting data, views and arguments with respect to the proposed
shipping announcement. Any decision on the required shipment of bulk
fluid milk from cooperative reserve supply units must be made in
writing at least one day before the effective date.
(2) Failure of a cooperative reserve supply unit to comply with any
announced shipping requirements, including making any significant
change in the unit's marketing operation that the market administrator
determines has the impact of evading or forcing such an announcement,
shall result in immediate loss of cooperative reserve supply unit
status until such time as the unit has been a handler pursuant to
Sec. 1000.9(c) for at least 12 consecutive months.
Sec. 1124.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1124.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1124.13(e);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I;
[[Page 16271]]
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order; and
(5) A dairy farmer whose milk was received at a nonpool plant
during the month from the same farm as other than producer milk under
this or any other Federal order. Such a dairy farmer shall be known as
a dairy farmer for other markets.
Sec. 1124.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk), including nonfat components, and butterfat in
milk of a producer that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a cooperative reserve supply unit described in
Sec. 1124.11. All milk received pursuant to this paragraph shall be
priced at the location of the plant where it is first physically
received and shall not be subject to the conditions specified in
paragraph (e) of this section;
(c) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(d) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(e) Diverted by the operator of a pool plant or a cooperative
association described in Sec. 1000.9(c), excluding a cooperative
reserve supply unit described in Sec. 1124.11, to a nonpool plant,
subject to the following conditions:
(1) Of the quantity of producer milk received during the month
(including diversions, but excluding the quantity of producer milk
received from a handler described in Sec. 1000.9(c)) the handler
diverts to nonpool plants not more than 80 percent during the months of
September through February, and not more than 99 percent during the
months of March through August;
(2) Two or more handlers described in Sec. 1000.9(c) may have their
allowable diversions computed on the basis of their combined deliveries
of producer milk which they caused to be delivered to pool plants or
diverted during the month if each has filed a request in writing with
the market administrator before the first day of the month the
agreement is to be effective. The request shall specify the basis for
assigning overdiverted milk to the producer deliveries of each
according to a method approved by the market administrator.
(3) Diverted milk shall be priced at the location of the plant to
which diverted;
(4) Any milk diverted in excess of the limits prescribed in
paragraph (e)(1) of this section shall not be producer milk. If the
diverting handler or cooperative association fails to designate the
dairy farmers' deliveries that are not to be producer milk, no milk
diverted by the handler or cooperative association during the month to
a nonpool plant shall be producer milk. In the event some of the milk
of any producer is determined not to be producer milk pursuant to this
paragraph, other milk delivered by such producer as producer milk
during the month will not be subject to Sec. 1124.12(b)(5); and
(5) The applicable diversion limits in paragraph (e)(1) of this
section may be increased or decreased by the market administrator if
the market administrator finds that such revision is necessary to
assure orderly marketing and efficient handling of milk in the
marketing area. Before making such a finding, the market administrator
shall investigate the need for the revision either on the market
administrator's own initiative or at the request of interested persons
if the request is made at least 15 days prior to the month for which
the requested revision is desired effective. If the investigation shows
that a revision might be appropriate, the market administrator shall
issue a notice stating that the revision is being considered and
inviting written data, views, and arguments. Any decision to revise an
applicable percentage must be issued in writing at least one day before
the effective date.
Sec. 1124.14 Other source milk.
See Sec. 1000.14.
Sec. 1124.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1124.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1124.17 [Reserved]
Sec. 1124.18 Cooperative association.
See Sec. 1000.18.
Sec. 1124.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1124.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 9th day
after the end of the month, in the detail and on the prescribed forms,
as follows:
(a) Each handler that operates a pool plant pursuant to Sec. 1124.7
shall report for each of its operations the following information:
(1) Product pounds, pounds of butterfat, pounds of protein, and
pounds of solids-not-fat other than protein (other solids) contained in
or represented by:
(i) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c); and
(ii) Receipts of milk from handlers described in Sec. 1000.9(c);
(2) Product pounds and pounds of butterfat contained in:
(i) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(ii) Receipts of other source milk; and
(iii) Inventories at the beginning and end of the month of fluid
milk products and bulk fluid cream products;
(3) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph; and
(4) Such other information with respect to the receipts and
utilization of skim milk, butterfat, milk protein, and other nonfat
solids, as the market administrator may prescribe.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The product pounds, pounds of butterfat, pounds of protein, and
the pounds of solids-not-fat other than protein (other solids)
contained in receipts of milk from producers; and
(2) The utilization or disposition of such receipts.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
[[Page 16272]]
Sec. 1124.31 Payroll reports.
(a) On or before the 20th day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1124.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for the month, in the detail
prescribed by the market administrator, showing for each producer the
information described in Sec. 1124.73(f).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1124.32 Other reports.
In addition to the reports required pursuant to Secs. 1124.30 and
1124.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1124.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1124.41 [Reserved]
Sec. 1124.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1124.43 General classification rules.
See Sec. 1000.43.
Sec. 1124.44 Classification of producer milk.
In addition to the provisions provided in Sec. 1000.44, the words
``, or acquired for distribution,'' are inserted following the word
``received'' in Sec. 1000.44(a)(3)(iv).
Sec. 1124.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1124.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1124.51 Class I differential and price.
The Class I differential shall be the differential established for
King County, Washington, which is reported in Sec. 1000.52. The Class I
price shall be the price computed pursuant to Sec. 1000.50(a) for King
County, Washington.
Sec. 1124.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1124.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1124.54 Equivalent price.
See Sec. 1000.54.
Producer Price Differential
Sec. 1124.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c) with respect to
milk that was not received at a pool plant by adding the amounts
computed in paragraphs (a) through (h) of this section and subtracting
from that total amount the value computed in paragraph (i) of this
section. Unless otherwise specified, the skim milk, butterfat, and the
combined pounds of skim milk and butterfat referred to in this section
shall result from the steps set forth in Sec. 1000.44(a), (b), and (c),
respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim
milk. Receipts of nonfluid milk products that are distributed as
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec. 1000.76(a)(4) or
(d) shall be excluded from pricing under this section.
(a) Class I value.
(1) Multiply the hundredweight of skim milk in Class I by the Class
I skim milk price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class I by the Class I butterfat price.
(b) Class II value.
(1) Multiply the pounds of nonfat solids in Class II skim milk by
the Class II nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class II times the Class II butterfat price.
(c) Class III value.
(1) Multiply the pounds of protein in Class III skim milk by the
protein price;
(2) Add an amount obtained by multiplying the pounds of other
solids in Class III skim milk by the other solids price; and
(3) Add an amount obtained by multiplying the pounds of butterfat
in Class III by the butterfat price.
(d) Class IV value.
(1) Multiply the pounds of nonfat solids in Class IV skim milk by
the nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class IV by the butterfat price.
(e) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) and the corresponding
steps of Sec. 1000.44(b) by the skim milk prices and butterfat prices
applicable to each class.
(f) Multiply the difference between the current month's Class I,
II, or III price, as the case may be, and the Class IV price for the
preceding month by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(g) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from plants regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants.
(h) Multiply the difference between the Class I price applicable at
the location of the nearest unregulated supply plants from which an
equivalent volume was received and the Class III price by the pounds of
skim milk and butterfat in receipts of concentrated fluid milk products
assigned to Class I pursuant to Sec. 1000.43(d) and
Sec. 1000.44(a)(3)(i) and the corresponding step of Sec. 1000.44(b) and
the pounds of skim milk and butterfat subtracted from Class I pursuant
to Sec. 1000.44(a)(8) and the corresponding step of Sec. 1000.44(b),
excluding such skim milk and butterfat in receipts of fluid milk
products from an unregulated supply plant to the extent that an
equivalent amount of skim milk or butterfat disposed of to such plant
by handlers fully regulated under any Federal milk order is classified
and priced as Class I milk and is not used as an offset for any other
payment obligation under any order.
(i) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
[[Page 16273]]
Sec. 1124.61 Computation of producer price differential.
For each month the market administrator shall compute a producer
price differential per hundredweight. The report of any handler who has
not made payments required pursuant to Sec. 1124.71 for the preceding
month shall not be included in the computation of the producer price
differential, and such handler's report shall not be included in the
computation for succeeding months until the handler has made full
payment of outstanding monthly obligations. Subject to the
aforementioned conditions, the market administrator shall compute the
producer price differential in the following manner:
(a) Combine into one total the values computed pursuant to
Sec. 1124.60 for all handlers required to file reports prescribed in
Sec. 1124.30;
(b) Subtract the total values obtained by multiplying each
handler's total pounds of protein, other solids, and butterfat
contained in the milk for which an obligation was computed pursuant to
Sec. 1124.60 by the protein price, the other solids price, and the
butterfat price, respectively;
(c) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1124.75;
(d) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(e) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(1) The total hundredweight of producer milk; and
(2) The total hundredweight for which a value is computed pursuant
to Sec. 1124.60(h); and
(f) Subtract not less than 4 cents nor more than 5 cents from the
price computed pursuant to paragraph (e) of this section. The result
shall be known as the producer price differential for the month.
Sec. 1124.62 Announcement of producer prices.
On or before the 14th day after the end of each month, the market
administrator shall announce publicly the following prices and
information:
(a) The producer price differential;
(b) The protein price;
(c) The nonfat solids price;
(d) The other solids price;
(e) The butterfat price;
(f) The average butterfat, protein, nonfat solids, and other solids
content of producer milk; and
(g) The statistical uniform price for milk containing 3.5 percent
butterfat, computed by combining the Class III price and the producer
price differential.
Payments for Milk
Sec. 1124.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1124.71 Payments to the producer-settlement fund.
Each handler shall make payment to the producer-settlement fund in
a manner that provides receipt of the funds by the market administrator
no later than the 16th day after the end of the month (except as
provided in Sec. 1000.90). Payment shall be the amount, if any, by
which the amount specified in paragraph (a) of this section exceeds the
amount specified in paragraph (b) of this section:
(a) The total value of milk to the handler for the month as
determined pursuant to Sec. 1124.60.
(b) The sum of:
(1) An amount obtained by multiplying the total hundredweight of
producer milk as determined pursuant to Sec. 1000.44(c) by the producer
price differential as adjusted pursuant to Sec. 1124.75;
(2) An amount obtained by multiplying the total pounds of protein,
other solids, and butterfat contained in producer milk by the protein,
other solids, and butterfat prices, respectively; and
(3) An amount obtained by multiplying the pounds of skim milk and
butterfat for which a value was computed pursuant to Sec. 1124.60(h) by
the producer price differential as adjusted pursuant to Sec. 1124.75
for the location of the plant from which received.
Sec. 1124.72 Payments from the producer-settlement fund.
No later than the 18th day after the end of each month (except as
provided in Sec. 1000.90), the market administrator shall pay to each
handler the amount, if any, by which the amount computed pursuant to
Sec. 1124.71(b) exceeds the amount computed pursuant to
Sec. 1124.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1124.73 Payments to producers and to cooperative associations.
(a) Each handler shall pay each producer for producer milk for
which payment is not made to a cooperative association pursuant to
paragraph (b) of this section, as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the 18th day of the month, partial payment shall be
made so that it is received by each producer on or before the last day
of the month (except as provided in Sec. 1000.90) for milk received
during the first 15 days of the month from the producer at not less
than the lowest announced class price for the preceding month, less
proper deductions authorized in writing by the producer.
(2) Final payment. For milk received during the month, payment
shall be made so that it is received by each producer no later than the
19th day after the end of the month (except as provided in
Sec. 1000.90) in an amount equal to not less than the sum of:
(i) The hundredweight of producer milk received times the producer
price differential for the month as adjusted pursuant to Sec. 1124.75;
(ii) The pounds of butterfat received times the butterfat price for
the month;
(iii) The pounds of protein received times the protein price for
the month;
(iv) The pounds of other solids received times the other solids
price for the month;
(v) Less any payment made pursuant to paragraph (a)(1) of this
section;
(vi) Less proper deductions authorized in writing by such producer
and plus or minus adjustments for errors in previous payments to such
producer subject to approval by the market administrator; and
(vii) Less deductions for marketing services pursuant to
Sec. 1000.86.
(b) Payments for milk received from cooperative association
members. On or before the 2nd day prior to the dates specified in
paragraphs (a)(1) and (a)(2) of this section (except as provided in
Sec. 1000.90), each handler shall pay to a cooperative association for
milk from producers who market their milk through the cooperative
association and who have authorized the cooperative to collect such
payments on their behalf an amount equal to the sum of the individual
payments otherwise payable for such producer milk pursuant to
paragraphs (a)(1) and (a)(2) of this section.
(c) Payment for milk received from cooperative association pool
plants or from cooperatives as handlers pursuant to Sec. 1000.9(c). On
or before the 2nd day prior to the dates specified in paragraphs (a)(1)
and (a)(2) of this section (except as provided in Sec. 1000.90), each
handler who receives fluid milk products at its plant from a
cooperative association in its capacity as the operator of a pool plant
or who receives milk from a cooperative association in its capacity as
a handler pursuant to Sec. 1000.9(c), including the
[[Page 16274]]
milk of producers who are not members of such association and who the
market administrator determines have authorized the cooperative
association to collect payment for their milk, shall pay the
cooperative for such milk as follows:
(1) For bulk fluid milk products and bulk fluid cream products
received from a cooperative association in its capacity as the operator
of a pool plant and for milk received from a cooperative association in
its capacity as a handler pursuant to Sec. 1000.9(c) during the first
15 days of the month, at not less than the lowest announced class price
per hundredweight for the preceding month.
(2) For the total quantity of bulk fluid milk products and bulk
fluid cream products received from a cooperative association in its
capacity as the operator of a pool plant, at not less than the total
value of such products received from the association's pool plants, as
determined by multiplying the respective quantities assigned to each
class under Sec. 1000.44, as follows:
(i) The hundredweight of Class I skim milk times the Class I skim
milk price for the month plus the pounds of Class I butterfat times the
Class I butterfat price for the month. The Class I prices to be used
shall be the prices effective at the location of the receiving plant;
(ii) The pounds of nonfat solids in Class II skim milk by the Class
II nonfat solids price;
(iii) The pounds of butterfat in Class II times the Class II
butterfat price;
(iv) The pounds of nonfat solids in Class IV times the nonfat
solids price;
(v) The pounds of butterfat in Class III and Class IV milk times
the butterfat price;
(vi) The pounds of protein in Class III milk times the protein
price;
(vii) The pounds of other solids in Class III milk times the other
solids price; and
(viii) Add together the amounts computed in paragraphs (c)(2)(i)
through (vii) of this section and from that sum deduct any payment made
pursuant to paragraph (c)(1) of this section; and
(3) For the total quantity of milk received during the month from a
cooperative association in its capacity as a handler under
Sec. 1000.9(c) as follows:
(i) The hundredweight of producer milk received times the producer
price differential as adjusted pursuant to Sec. 1124.75;
(ii) The pounds of butterfat received times the butterfat price for
the month;
(iii) The pounds of protein received times the protein price for
the month;
(iv) The pounds of other solids received times the other solids
price for the month; and
(v) Add together the amounts computed in paragraphs (c)(3)(i)
through (iv) of this section and from that sum deduct any payment made
pursuant to paragraph (c)(1) of this section.
(d) If a handler has not received full payment from the market
administrator pursuant to Sec. 1124.72 by the payment date specified in
paragraph (a), (b) or (c) of this section, the handler may reduce pro
rata its payments to producers or to the cooperative association (with
respect to receipts described in paragraph (b) of this section,
prorating the underpayment to the volume of milk received from the
cooperative association in proportion to the total milk received from
producers by the handler), but not by more than the amount of the
underpayment. The payments shall be completed on the next scheduled
payment date after receipt of the balance due from the market
administrator.
(e) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant, as the case may be.
(f) In making payments to producers pursuant to this section, each
handler shall furnish each producer, except a producer whose milk was
received from a cooperative association handler described in
Sec. 1000.9(a) or (c), a supporting statement in a form that may be
retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and payroll number of the producer;
(2) The daily and total pounds, and the month and dates such milk
was received from that producer;
(3) The total pounds of butterfat, protein, and other solids
contained in the producer's milk;
(4) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(5) The rate used in making payment if the rate is other than the
applicable minimum rate;
(6) The amount, or rate per hundredweight, or rate per pound of
component, and the nature of each deduction claimed by the handler; and
(7) The net amount of payment to the producer or cooperative
association.
Sec. 1124.74 [Reserved]
Sec. 1124.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1124.51 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1124.73
and 1000.76.
Sec. 1124.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1124.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1124.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1124.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1124.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1126--MILK IN THE SOUTHWEST MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1126.1 General provisions.
DEFINITIONS
1126.2 Southwest marketing area.
1126.3 Route disposition.
1126.4 Plant.
1126.5 Distributing plant.
1126.6 Supply plant.
1126.7 Pool plant.
1126.8 Nonpool plant.
1126.9 Handler.
1126.10 Producer-handler.
1126.11 [Reserved]
1126.12 Producer.
1126.13 Producer milk.
1126.14 Other source milk.
1126.15 Fluid milk product.
1126.16 Fluid cream product.
1126.17 [Reserved]
1126.18 Cooperative association.
1126.19 Commercial food processing establishment.
[[Page 16275]]
Handler Reports
1126.30 Reports of receipts and utilization.
1126.31 Payroll reports.
1126.32 Other reports.
Classification of Milk
1126.40 Classes of utilization.
1126.41 [Reserved]
1126.42 Classification of transfers and diversions.
1126.43 General classification rules.
1126.44 Classification of producer milk.
1126.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1126.50 Class prices, component prices, and advanced pricing
factors.
1126.51 Class I differential and price.
1126.52 Adjusted Class I differentials.
1126.53 Announcement of class prices, component prices, and
advanced pricing factors.
1126.54 Equivalent price.
Producer Price Differential
1126.60 Handler's value of milk.
1126.61 Computation of producer price differential.
1126.62 Announcement of producer prices.
Payments for Milk
1126.70 Producer-settlement fund.
1126.71 Payments to the producer-settlement fund.
1126.72 Payments from the producer-settlement fund.
1126.73 Payments to producers and to cooperative associations.
1126.74 [Reserved]
1126.75 Plant location adjustments for producer milk and nonpool
milk.
1126.76 Payments by a handler operating a partially regulated
distributing plant.
1126.77 Adjustment of accounts.
1126.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1126.85 Assessment for order administration.
1126.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1126.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part, 1126,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1126.2 Southwest marketing area.
The marketing area means all territory within the bounds of the
following states and political subdivisions, including all piers, docks
and wharves connected therewith and all craft moored thereat, and all
territory occupied by government (municipal, State or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
New Mexico and Texas
All of the States of New Mexico and Texas.
Colorado Counties
Archuleta, LaPlata, and Montezuma.
Sec. 1126.3 Route disposition.
See Sec. 1000.3.
Sec. 1126.4 Plant.
See Sec. 1000.4.
Sec. 1126.5 Distributing plant.
See Sec. 1000.5.
Sec. 1126.6 Supply plant.
See Sec. 1000.6.
Sec. 1126.7 Pool plant.
Pool plant means a plant specified in paragraphs (a) through (d) of
this section, or a unit of plants as specified in paragraph (e) of this
section, but excluding a plant specified in paragraph (g) of this
section. The pooling standards described in paragraphs (c) and (d) of
this section are subject to modification pursuant to paragraph (f) of
this section:
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 25 percent or
more of the total quantity of fluid milk products physically received
at the plant (excluding concentrated milk received from another plant
by agreement for other than Class I use) are disposed of as route
disposition or are transferred in the form of packaged fluid milk
products to other distributing plants. At least 25 percent of such
route disposition and transfers must be to outlets in the marketing
area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 25 percent of the total quantity of
fluid milk products physically received at the plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) into ultra-pasteurized or aseptically-processed fluid
milk products.
(c) A supply plant from which 50 percent or more of the total
quantity of milk that is physically received during the month from
dairy farmers and handlers described in Sec. 1000.9(c), including milk
that is diverted as producer milk to other plants, is transferred to
pool distributing plants. Concentrated milk transferred from the supply
plant to a distributing plant for an agreed-upon use other than Class I
shall be excluded from the supply plant's shipments in computing the
plant's shipping percentage.
(d) A plant located within the marketing area that is operated by a
cooperative association if pool plant status under this paragraph is
requested for such plant by the cooperative association and during the
month at least 30 percent of the producer milk of members of such
cooperative association is delivered directly from farms to pool
distributing plants or is transferred to such plants as a fluid milk
product (excluding concentrated milk transferred to a distributing
plant for an agreed-upon use other than Class I) from the cooperative's
plant.
(e) Two or more plants operated by the same handler and located
within the marketing area may qualify for pool status as a unit by
meeting the total and in-area route disposition requirements specified
in paragraph (a) of this section and the following additional
requirements:
(1) At least one of the plants in the unit must qualify as a pool
plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process only Class I or Class II
products and must be located in a pricing zone providing the same or a
lower Class I price than the price applicable at the distributing plant
included in the unit pursuant to paragraph (e)(1) of this section; and
(3) A written request to form a unit, or to add or remove plants
from a unit, must be filed with the market administrator prior to the
first day of the month for which it is to be effective.
(f) The applicable shipping percentages of paragraphs (c) and (d)
of this section may be increased or decreased by the market
administrator if the market administrator finds that such adjustment is
necessary to encourage needed shipments or to prevent uneconomic
shipments. Before making such a finding, the market administrator shall
investigate the need for adjustment either on the market
administrator's own initiative or at the request of interested parties
if the request is made in writing at least 15 days prior to the month
for which the requested revision is desired effective. If the
investigation shows that an adjustment of the shipping percentages
might be appropriate, the market administrator shall issue a notice
stating that an adjustment is being considered and invite data, views
and arguments. Any decision to revise an applicable shipping percentage
must be issued in
[[Page 16276]]
writing at least one day before the effective date.
(g) The term pool plant shall not apply to the following plants:
(1) A producer-handler plant;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant qualified pursuant to paragraph (a) of this section
that is located within the marketing area if the plant also meets the
pooling requirements of another Federal order, and more than 50 percent
of its route distribution has been in such other Federal order
marketing area for 3 consecutive months;
(4) A plant qualified pursuant to paragraph (a) of this section
which is not located within any Federal order marketing area that meets
the pooling requirements of another Federal order and has had greater
route disposition in such other Federal order's marketing area for 3
consecutive months;
(5) A plant qualified pursuant to paragraph (a) of this section
that is located in another Federal order marketing area if the plant
meets the pooling requirements of such other Federal order and does not
have a majority of its route distribution in this marketing area for 3
consecutive months or if the plant is required to be regulated under
such other Federal order without regard to its route disposition in any
other Federal order marketing area;
(6) A plant qualified pursuant to paragraph (c) or (d) of this
section which also meets the pooling requirements of another Federal
order and from which greater qualifying shipments are made to plants
regulated under the other Federal order than are made to plants
regulated under this order, or the plant has automatic pooling status
under the other Federal order; and
(7) That portion of a pool plant designated as a nonpool plant that
is physically separate and operated separately from the pool portion of
such plant. The designation of a portion of a regulated plant as a
nonpool plant must be requested in writing by the handler and must be
approved by the market administrator.
Sec. 1126.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1126.9 Handler.
See Sec. 1000.9.
Sec. 1126.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is route disposition in the marketing area during the month;
(b) Receives fluid milk products from own farm production or milk
that is fully subject to the pricing and pooling provisions of this or
another Federal order;
(c) Receives no more than 150,000 pounds of fluid milk products
from handlers fully regulated under any Federal order, including such
products received at a location other than the producer-handler's
processing plant for distribution on routes. This limitation shall not
apply if the producer-handler's own farm production is less than
150,000 pounds during the month;
(d) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products;
and
(e) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled (excluding receipts from
handlers fully regulated under any Federal order) and the processing
and packaging operations are the producer-handler's own enterprise and
at its own risk.
Sec. 1126.11 [Reserved]
Sec. 1126.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1126.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1126.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and the milk is allocated by request to a utilization other than
Class I; and
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order.
Sec. 1126.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk), including nonfat components, and butterfat
contained in milk of a producer that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(c) Diverted by a pool plant operator for the account of the
handler operating such plant to another pool plant. Milk so diverted
shall be priced at the location of the plant to which diverted; or
(d) Diverted by the operator of a pool plant or a handler described
in Sec. 1000.9(c) to a nonpool plant, subject to the following
conditions:
(1) Milk of a dairy farmer shall not be eligible for diversion
unless a delivery of at least 40,000 pounds or one day's milk
production, whichever is less, of such dairy farmer has been physically
received as producer milk at a pool plant and the dairy farmer has
continuously retained producer status since that time;
(2) The total quantity of milk diverted during the month by a
cooperative association shall not exceed 50 percent of the total
quantity of producer milk that the cooperative association caused to be
received at pool plants and diverted;
(3) The operator of a pool plant that is not a cooperative
association may divert any milk that is not under the control of a
cooperative association that diverts milk during the month pursuant to
this paragraph. The total quantity of milk so diverted during the month
shall not exceed 50 percent of the total quantity of the producer milk
physically received at such plant (or such unit of plants in the case
of plants that pool as a unit pursuant to Sec. 1126.7(e)) and diverted;
(4) Any milk diverted in excess of the limits prescribed in
paragraphs (d)(2) and (3) of this section shall not be producer milk.
If the diverting handler or cooperative association fails to designate
the dairy farmers' deliveries that will not be producer milk, no milk
diverted by the handler or cooperative association shall be producer
milk;
(5) Diverted milk shall be priced at the location of the plant to
which diverted; and
(6) The delivery requirement in paragraph (d)(1) and the diversion
[[Page 16277]]
percentages in paragraphs (d)(2) and (3) of this section may be
increased or decreased by the market administrator if there is a
finding that such revision is necessary to assure orderly marketing and
efficient handling of milk in the marketing area. Before making such a
finding, the market administrator shall investigate the need for the
revision either on the market administrator's own initiative or at the
request of interested persons if the request is made in writing at
least 15 days prior to the month for which the requested revision is
desired effective. If the investigation shows that a revision might be
appropriate, the market administrator shall issue a notice stating that
the revision is being considered and inviting written data, views, and
arguments. Any decision to revise the delivery day requirement or any
diversion percentage must be issued in writing at least one day before
the effective date.
Sec. 1126.14 Other source milk.
See Sec. 1000.14.
Sec. 1126.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1126.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1126.17 [Reserved]
Sec. 1126.18 Cooperative association.
See Sec. 1000.18.
Sec. 1126.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1126.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 8th day
after the end of the month, in the detail and on prescribed forms, as
follows:
(a) Each pool plant operator shall report for each of its
operations the following information:
(1) Product pounds, pounds of butterfat, pounds of protein, pounds
of nonfat solids other than protein (other solids), and the value of
the somatic cell adjustment pursuant to Sec. 1000.50(p) contained in or
represented by:
(i) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c); and
(ii) Receipts of milk from handlers described in Sec. 1000.9(c);
(2) Product pounds and pounds of butterfat contained in:
(i) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(ii) Receipts of other source milk; and
(iii) Inventories at the beginning and end of the month of fluid
milk products and bulk fluid cream products;
(3) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph; and
(4) Such other information with respect to the receipts and
utilization of skim milk, butterfat, milk protein, other nonfat solids,
and somatic cell information, as the market administrator may
prescribe.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The product pounds, pounds of butterfat, pounds of protein,
pounds of solids-not-fat other than protein (other solids), and the
value of the somatic cell adjustment pursuant to Sec. 1000.50(p),
contained in receipts of milk from producers; and
(2) The utilization or disposition of such receipts.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1126.31 Payroll reports.
(a) On or before the 20th day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1126.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for the month, in the detail
prescribed by the market administrator, showing for each producer the
information specified in Sec. 1126.73(e).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1126.32 Other reports.
In addition to the reports required pursuant to Secs. 1126.30 and
1126.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1126.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1126.41 [Reserved]
Sec. 1126.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1126.43 General classification rules.
See Sec. 1000.43.
Sec. 1126.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1126.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1126.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1126.51 Class I differential and price.
The Class I differential shall be the differential established for
Dallas County, Texas, which is reported in Sec. 1000.52. The Class I
price shall be the price computed pursuant to Sec. 1000.50(a) for
Dallas County, Texas.
Sec. 1126.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1126.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1126.54 Equivalent price.
See Sec. 1000.54.
Producer Price Differential
Sec. 1126.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c) with respect to
milk that was not received at a pool plant by adding the amounts
computed in paragraphs (a) through (i) of this section and subtracting
from that total amount the value computed in paragraph (j) of this
section. Unless otherwise specified, the
[[Page 16278]]
skim milk, butterfat, and the combined pounds of skim milk and
butterfat referred to in this section shall result from the steps set
forth in Sec. 1000.44(a), (b), and (c), respectively, and the nonfat
components of producer milk in each class shall be based upon the
proportion of such components in producer skim milk. Receipts of
nonfluid milk products that are distributed as labeled reconstituted
milk for which payments are made to the producer-settlement fund of
another Federal order under Sec. 1000.76(a)(4) or (d) shall be excluded
from pricing under this section.
(a) Class I value.
(1) Multiply the pounds of skim milk in Class I by the Class I skim
milk price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class I by the Class I butterfat price.
(b) Class II value.
(1) Multiply the pounds of nonfat solids in Class II skim milk by
the Class II nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class II times the Class II butterfat price.
(c) Class III value.
(1) Multiply the pounds of protein in Class III skim milk by the
protein price;
(2) Add an amount obtained by multiplying the pounds of other
solids in Class III skim milk by the other solids price; and
(3) Add an amount obtained by multiplying the pounds of butterfat
in Class III by the butterfat price.
(d) Class IV value.
(1) Multiply the pounds of nonfat solids in Class IV skim milk by
the nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class IV by the butterfat price.
(e) Compute an adjustment for the somatic cell content of producer
milk by multiplying the values reported pursuant to Sec. 1126.30(a)(1)
and (c)(1) by the percentage of total producer milk allocated to Class
II, Class III, and Class IV pursuant to Sec. 1000.44(c);
(f) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) and the corresponding
step of Sec. 1000.44(b) by the skim milk prices and butterfat prices
applicable to each class.
(g) Multiply the difference between the current month's Class I,
II, or III price, as the case may be, and the Class IV price for the
preceding month by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(h) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from plants regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants.
(i) Multiply the difference between the Class I price applicable at
the location of the nearest unregulated supply plants from which an
equivalent volume was received and the Class III price by the pounds of
skim milk and butterfat in receipts of concentrated fluid milk products
assigned to Class I pursuant to Sec. 1000.43(d) and
Sec. 1000.44(a)(3)(i) and the corresponding step of Sec. 1000.44(b) and
the pounds of skim milk and butterfat subtracted from Class I pursuant
to Sec. 1000.44(a)(8) and the corresponding step of Sec. 1000.44(b),
excluding such skim milk and butterfat in receipts of fluid milk
products from an unregulated supply plant to the extent that an
equivalent amount of skim milk or butterfat disposed of to such plant
by handlers fully regulated under any Federal milk order is classified
and priced as Class I milk and is not used as an offset for any other
payment obligation under any order.
(j) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
Sec. 1126.61 Computation of producer price differential.
For each month the market administrator shall compute a producer
price differential per hundredweight. The report of any handler who has
not made payments required pursuant to Sec. 1126.71 for the preceding
month shall not be included in the computation of the producer price
differential, and such handler's report shall not be included in the
computation for succeeding months until the handler has made full
payment of outstanding monthly obligations. Subject to the
aforementioned conditions, the market administrator shall compute the
producer price differential in the following manner:
(a) Combine into one total the values computed pursuant to
Sec. 1126.60 for all handlers required to file reports prescribed in
Sec. 1126.30;
(b) Subtract the total of the values obtained by multiplying each
handler's total pounds of protein, other solids, and butterfat
contained in the milk for which an obligation was computed pursuant to
Sec. 1126.60 by the protein price, other solids price, and the
butterfat price, respectively, and the total value of the somatic cell
adjustment pursuant to Sec. 1126.30(a)(1) and (c)(1);
(c) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1126.75;
(d) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(e) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(1) The total hundredweight of producer milk; and
(2) The total hundredweight for which a value is computed pursuant
to Sec. 1126.60(i); and
(f) Subtract not less than 4 cents nor more than 5 cents from the
price computed pursuant to paragraph (e) of this section. The result
shall be known as the producer price differential for the month.
Sec. 1126.62 Announcement of producer prices.
On or before the 13th day after the end of each month, the market
administrator shall announce the following prices and information:
(a) The producer price differential;
(b) The protein price;
(c) The nonfat solids price;
(d) The other solids price;
(e) The butterfat price;
(f) The somatic cell adjustment rate;
(g) The average butterfat, protein, nonfat solids, and other solids
content of producer milk; and
(h) The statistical uniform price for milk containing 3.5 percent
butterfat, computed by combining the Class III price and the producer
price differential.
Payments for Milk
Sec. 1126.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1126.71 Payments to the producer-settlement fund.
Each handler shall make payment to the producer-settlement fund in
a manner that provides receipt of the funds by the market administrator
no later than the 16th day after the end of the month (except as
provided in
[[Page 16279]]
Sec. 1000.90). Payment shall be the amount, if any, by which the amount
specified in paragraph (a) of this section exceeds the amount specified
in paragraph (b) of this section:
(a) The total value of milk to the handler for the month as
determined pursuant to Sec. 1126.60.
(b) The sum of:
(1) An amount obtained by multiplying the total hundredweight of
producer milk as determined pursuant to Sec. 1000.44(c) by the producer
price differential as adjusted pursuant to Sec. 1126.75;
(2) An amount obtained by multiplying the total pounds of protein,
other solids, and butterfat contained in producer milk by the protein,
other solids, and butterfat prices respectively;
(3) The total value of the somatic cell adjustment to producer
milk; and
(4) An amount obtained by multiplying the pounds of skim milk and
butterfat for which a value was computed pursuant to Sec. 1126.60(i) by
the producer price differential as adjusted pursuant to Sec. 1126.75
for the location of the plant from which received.
Sec. 1126.72 Payments from the producer-settlement fund.
No later than the 17th day after the end of each month (except as
provided in Sec. 1000.90), the market administrator shall pay to each
handler the amount, if any, by which the amount computed pursuant to
Sec. 1126.71(b) exceeds the amount computed pursuant to
Sec. 1126.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1126.73 Payments to producers and to cooperative associations.
(a) Each handler shall pay each producer for producer milk for
which payment is not made to a cooperative association pursuant to
paragraph (b) of this section, as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the 23rd day of the month, payment shall be made so
that it is received by the producer on or before the 26th day of the
month (except as provided in Sec. 1000.90) for milk received during the
first 15 days of the month at not less than the lowest announced class
price for the preceding month, less proper deductions authorized in
writing by the producer.
(2) Final payment. For milk received during the month, payment
shall be made so that it is received by each producer no later than the
18th day after the end of the month (except as provided in
Sec. 1000.90) in an amount computed as follows:
(i) Multiply the hundredweight of producer milk received times the
producer price differential for the month as adjusted pursuant to
Sec. 1126.75;
(ii) Multiply the pounds of butterfat received times the butterfat
price for the month;
(iii) Multiply the pounds of protein received times the protein
price for the month;
(iv) Multiply the pounds of other solids received times the other
solids price for the month;
(v) Multiply the hundredweight of milk received times the somatic
cell adjustment for the month;
(vi) Add the amounts computed in paragraphs (a)(2)(i) through (v)
of this section, and from that sum:
(A) Subtract the partial payment made pursuant to paragraph (a)(1)
of this section;
(B) Subtract the deduction for marketing services pursuant to
Sec. 1000.86;
(C) Add or subtract for errors made in previous payments to the
producer subject to approval by the market administrator; and
(D) Subtract proper deductions authorized in writing by the
producer.
(b) On or before the day prior to the dates specified for partial
and final payments pursuant to paragraph (a) of this section (except as
provided in Sec. 1000.90), each pool plant operator shall pay a
cooperative association for milk received as follows:
(1) Partial payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk (including the
milk of producers who are not members of such association and who the
market administrator determines have authorized the cooperative
association to collect payment for their milk) received during the
first 15 days of the month from a cooperative association in any
capacity, except as the operator of a pool plant, the payment shall be
equal to the hundredweight of milk received multiplied by the lowest
announced class price for the preceding month.
(2) Partial payment to a cooperative association for milk
transferred from its pool plant. For bulk milk/skimmed milk products
received during the first 15 days of the month from a cooperative
association in its capacity as the operator of a pool plant, the
partial payment shall be at the pool plant operator's estimated use
value of the milk using the most recent class prices available at the
receiving plant's location.
(3) Final payment to a cooperative association for milk transferred
from its pool plant. Following the classification of bulk fluid milk
products and bulk fluid cream products received during the month from a
cooperative association in its capacity as the operator of a pool
plant, the final payment for such receipts shall be determined as
follows:
(i) The hundredweight of Class I skim milk times the Class I skim
milk price for the month plus the pounds of Class I butterfat times the
Class I butterfat price for the month. The Class I prices to be used
shall be the prices effective at the location of the receiving plant;
(ii) The pounds of nonfat solids in Class II skim milk by the Class
II nonfat solids price;
(iii) The pounds of butterfat in Class II times the Class II
butterfat price;
(iv) The pounds of nonfat solids in Class IV times the nonfat
solids price;
(v) The pounds of butterfat in Class III and Class IV milk times
the butterfat price;
(vi) The pounds of protein in Class III milk times the protein
price;
(vii) The pounds of other solids in Class III milk times the other
solids price;
(viii) The hundredweight of Class II, Class III, and Class IV milk
times the somatic cell adjustment; and
(ix) Add together the amounts computed in paragraphs (b)(3)(i)
through (viii) of this section and from that sum deduct any payments
made pursuant to paragraph (b)(2) of this section.
(4) Final payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk received from a
cooperative association during the month, including the milk of
producers who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, the final payment for such milk shall
be an amount equal to the sum of the individual payments otherwise
payable for such milk pursuant to paragraph (a)(2) of this section.
(c) If a handler has not received full payment from the market
administrator pursuant to Sec. 1126.72 by the payment date specified in
paragraph (a) or (b) of this section, the handler may reduce pro rata
its payments to producers or to cooperative associations pursuant to
paragraphs (a) and (b) of this section, but by not more than the amount
of the underpayment. The payments shall be
[[Page 16280]]
completed on the next scheduled payment date after receipt of the
balance due from the market administrator.
(d) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund, and in the event that the handler
subsequently locates and pays the producer or a lawful claimant, or in
the event that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant as the case may be.
(e) In making payments to producers pursuant to this section, each
pool plant operator shall furnish each producer, except a producer
whose milk was received from a cooperative association handler
described in Sec. 1000.9(a) or (c), a supporting statement in a form
that may be retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and the payroll number of the producer;
(2) The month and dates that milk was received from the producer,
including the daily and total pounds of milk received;
(3) The total pounds of butterfat, protein, and other solids
contained in the producer's milk;
(4) The somatic cell count of the producer's milk;
(5) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(6) The rate used in making payment if the rate is other than the
applicable minimum rate;
(7) The amount, or rate per hundredweight, or rate per pound of
component, and the nature of each deduction claimed by the handler; and
(8) The net amount of payment to the producer or cooperative
association.
Sec. 1126.74 [Reserved]
Sec. 1126.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1126.51 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1126.73
and 1000.76.
Sec. 1126.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1126.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1126.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1126.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1126.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1131--MILK IN ARIZONA-LAS VEGAS MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1131.1 General provisions.
Definitions
1131.2 Arizona-Las Vegas marketing area.
1131.3 Route disposition.
1131.4 Plant.
1131.5 Distributing plant.
1131.6 Supply plant.
1131.7 Pool plant.
1131.8 Nonpool plant.
1131.9 Handler.
1131.10 Producer-handler.
1131.11 [Reserved]
1131.12 Producer.
1131.13 Producer milk.
1131.14 Other source milk.
1131.15 Fluid milk product.
1131.16 Fluid cream product.
1131.17 [Reserved]
1131.18 Cooperative association.
1131.19 Commercial food processing establishment.
Handler Reports
1131.30 Reports of receipts and utilization.
1131.31 Payroll reports.
1131.32 Other reports.
Classification of Milk
1131.40 Classes of utilization.
1131.41 [Reserved]
1131.42 Classification of transfers and diversions.
1131.43 General classification rules.
1131.44 Classification of producer milk.
1131.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1131.50 Class prices, component prices, and advanced pricing
factors.
1131.51 Class I differential and price.
1131.52 Adjusted Class I differentials.
1131.53 Announcement of class prices, component prices, and
advanced pricing factors.
1131.54 Equivalent price.
Uniform Prices
1131.60 Handler's value of milk.
1131.61 Computation of uniform prices.
1131.62 Announcement of uniform prices.
Payments for Milk
1131.70 Producer-settlement fund.
1131.71 Payments to the producer-settlement fund.
1131.72 Payments from the producer-settlement fund.
1131.73 Payments to producers and to cooperative associations.
1131.74 [Reserved]
1131.75 Plant location adjustments for producers and nonpool milk.
1131.76 Payments by a handler operating a partially regulated
distributing plant.
1131.77 Adjustment of accounts.
1131.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1131.85 Assessment for order administration.
1131.86 Deduction for marketing services.
Authority: 7 U.S.C. 601--674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1131.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part, 1131,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1131.2 Arizona-Las Vegas marketing area.
The marketing area means all territory within the bounds of the
following states and political subdivisions, including all piers, docks
and wharves connected therewith and all craft moored thereat, and all
territory occupied by government (municipal, State or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Arizona
All of the State of Arizona.
Nevada Counties
Clark.
Sec. 1131.3 Route disposition.
See Sec. 1000.3.
Sec. 1131.4 Plant.
See Sec. 1000.4.
Sec. 1131.5 Distributing plant.
See Sec. 1000.5.
[[Page 16281]]
Sec. 1131.6 Supply plant.
See Sec. 1000.6.
Sec. 1131.7 Pool plant.
Pool Plant means a plant or unit of plants specified in paragraphs
(a) through (e) of this section, but excluding a plant specified in
paragraph (g) of this section. The pooling standards described in
paragraphs (c) and (d) of this section are subject to modification
pursuant to paragraph (f) of this section.
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 25 percent or
more of the total quantity of fluid milk products physically received
at the plant (excluding concentrated milk received from another plant
by agreement for other than Class I use) are disposed of as route
disposition or are transferred in the form of packaged fluid milk
products to other distributing plants. At least 25 percent of such
route disposition and transfers must be to outlets in the marketing
area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 25 percent of the total quantity of
fluid milk products physically received at the plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) into ultra-pasteurized or aseptically-processed fluid
milk products.
(c) A supply plant from which 50 percent or more of the total
quantity of milk that is physically received at such plant from dairy
farmers and handlers described in Sec. 1000.9(c), including milk that
is diverted as producer milk to other plants, is transferred to pool
distributing plants. Concentrated milk transferred from the supply
plant to a distributing plant for an agreed-upon use other than Class I
shall be excluded from the supply plant's shipments in computing the
plant's shipping percentage.
(d) A plant located within the marketing area and operated by a
cooperative association if, during the month, or the immediately
preceding 12-month period ending with the current month, 35 percent or
more of the producer milk of members of the association (and any
producer milk of nonmembers and members of another cooperative
association which may be marketed by the cooperative association) is
physically received in the form of bulk fluid milk products (excluding
concentrated milk transferred to a distributing plant for an agreed-
upon use other than Class I) at plants specified in paragraph (a) or
(b) of this section either directly from farms or by transfer from
supply plants operated by the cooperative association and from plants
of the cooperative association for which pool plant status has been
requested under this paragraph subject to the following conditions:
(1) The plant does not qualify as a pool plant under paragraph (a),
(b) or (c) of this section or under comparable provisions of another
Federal order; and
(2) The plant is approved by a duly constituted regulatory agency
for the handling of milk approved for fluid consumption in the
marketing area.
(e) Two or more plants operated by the same handler and located in
the marketing area may qualify for pool plant status as a unit by
together meeting the requirements specified in paragraph (a) of this
section and subject to all of the following additional requirements:
(1) At least one of the plants in the unit must qualify as a pool
plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process Class I or Class II
products, using 50 percent or more of the total Grade A fluid milk
products received in bulk form at such plant or diverted therefrom by
the plant operator in Class I or Class II products, and must be located
in a pricing zone providing the same or lower Class I price than the
price applicable at the distributing plant included in the unit
pursuant to paragraph (e)(1) of this section; and
(3) A written request to form a unit must be filed by the handler
with the market administrator prior to the first day of the month for
which such status is desired to be effective. The unit shall continue
from month to month thereafter without further notification. The
handler shall notify the market administrator in writing prior to the
first day of any month for which termination or any change of the unit
is desired.
(f) The applicable shipping percentages of paragraphs (c) and (d)
of this section may be increased or decreased by the market
administrator if the market administrator finds that such adjustment is
necessary to encourage needed shipments or to prevent uneconomic
shipments. Before making such a finding, the market administrator shall
investigate the need for adjustment either on the market
administrator's own initiative or at the request of interested parties
if the request is made in writing at least 15 days prior to the month
for which the requested revision is desired effective. If the
investigation shows that an adjustment of the shipping percentages
might be appropriate, the market administrator shall issue a notice
stating that an adjustment is being considered and invite data, views
and arguments. Any decision to revise an applicable shipping percentage
must be issued in writing at least one day before the effective date.
(g) The term pool plant shall not apply to the following plants:
(1) A producer-handler as defined under any Federal order;
(2) An exempt plant as defined in Sec. 1000.8(e);
(3) A plant located within the marketing area and qualified
pursuant to paragraph (a) of this section which meets the pooling
requirements of another Federal order, and from which more than 50
percent of its route disposition has been in the other Federal order
marketing area for 3 consecutive months;
(4) A plant located outside any Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of another Federal order and has had greater route
disposition in such other Federal order's marketing area for 3
consecutive months;
(5) A plant located in another Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of such other Federal order and does not have a
majority of its route distribution in this marketing area for 3
consecutive months or if the plant is required to be regulated under
such other Federal order without regard to its route disposition in any
other Federal order marketing area;
(6) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under the other Federal order than are made to plants regulated under
this order, or the plant has automatic pooling status under the other
Federal order; and
(7) That portion of a regulated plant designated as a nonpool plant
that is physically separate and operated separately from the pool
portion of such plant. The designation of a portion of a regulated
plant as a nonpool plant must be requested in advance and in writing by
the handler and must be approved by the market administrator.
Sec. 1131.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1131.9 Handler.
See Sec. 1000.9.
Sec. 1131.10 Producer-handler.
Producer-handler means a person who:
[[Page 16282]]
(a) Operates a dairy farm and a distributing plant from which there
is route disposition in the marketing area during the month;
(b) Receives fluid milk products from own farm production or milk
that is fully subject to the pricing and pooling provisions of this or
another Federal order;
(c) Receives at its plant or acquires for route disposition no more
than 150,000 pounds of fluid milk products from handlers fully
regulated under any Federal order. This limitation shall not apply if
the producer-handler's own farm production is less than 150,000 pounds
during the month;
(d) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products;
(e) Does not distribute fluid milk products to a wholesale customer
who also is serviced by a plant described in Sec. 1131.7(a), (b), or
(e), or a handler described in Sec. 1000.8(c) that supplied the same
product in the same-sized package with a similar label to the wholesale
customer during the month; and
(f) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled (excluding receipts from
handlers fully regulated under any Federal order) and the operation of
the distributing plant are the personal enterprise of, and at the
personal risk of, such person in his/her capacity as a producer-
handler.
Sec. 1131.11 [Reserved]
Sec. 1131.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1131.13; or
(2) Received by a handler described in Sec. 1000.9(c).
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is received at an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1131.13(d);
(3) A dairy farmer whose milk is received by diversion at a pool
plant from a handler regulated under another Federal order if the other
Federal order designates the dairy farmer as a producer under that
order and that milk is allocated by request to a utilization other than
Class I;
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order; and
(5) A dairy farmer whose milk is received at a pool plant if during
the month milk from the same farm is received at a nonpool plant
(except a nonpool plant that has no utilization of milk products in any
class other than Class III or Class IV) other than as producer milk
under this or some other Federal order. Such a dairy farmer shall be
known as a dairy farmer for other markets.
Sec. 1131.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk) and butterfat in milk of a producer that is:
(a) Received by the operator of a pool plant directly from a
producer or a handler described in Sec. 1000.9(c). All milk received
pursuant to this paragraph shall be priced at the location of the plant
where it is first physically received;
(b) Received by a handler described in Sec. 1000.9(c) in excess of
the quantity delivered to pool plants;
(c) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(d) Diverted by the operator of a pool plant or a cooperative
association described in Sec. 1000.9(c) to a nonpool plant, subject to
the following conditions:
(1) Milk of a dairy farmer shall not be eligible for diversion
unless at least one day's production of such dairy farmer is physically
received at a pool plant during the month;
(2) The total quantity of milk diverted by a handler in any month
shall not exceed 50 percent of the total producer milk caused by the
handler to be received at pool plants and diverted;
(3) Diverted milk shall be priced at the location of the plant to
which diverted;
(4) Any milk diverted in excess of the limits prescribed in
paragraph (d)(2) of this section shall not be producer milk. If the
diverting handler or cooperative association fails to designate the
dairy farmers' deliveries that are not to be producer milk, no milk
diverted by the handler or cooperative association during the month to
a nonpool plant shall be producer milk. In the event some of the milk
of any producer is determined not to be producer milk pursuant to this
paragraph, other milk delivered by such producer as producer milk
during the month will not be subject to Sec. 1131.12(b)(5); and
(5) The delivery day requirement in paragraph (d)(1) of this
section and diversion percentage in paragraph (d)(2) of this section
may be increased or decreased by the market administrator if the market
administrator finds that such revision is necessary to assure orderly
marketing and efficient handling of milk in the marketing area. Before
making such a finding, the market administrator shall investigate the
need for the revision either on the market administrator's own
initiative or at the request of interested persons if the request is
made in writing at least 15 days prior to the month for which the
requested revision is desired effective. If the investigation shows
that a revision might be appropriate, the market administrator shall
issue a notice stating that the revision is being considered and
inviting written data, views, and arguments. Any decision to revise the
delivery day requirement or the diversion percentage must be issued in
writing at least one day before the effective date.
Sec. 1131.14 Other source milk.
See Sec. 1000.14.
Sec. 1131.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1131.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1131.17 [Reserved]
Sec. 1131.18 Cooperative association.
See Sec. 1000.18.
Sec. 1131.19 Commercial food processing establishment.
See Sec. 1000.19.
Handler Reports
Sec. 1131.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market
administrator's office receives the report on or before the 7th day
after the end of the month, in the detail and on the forms prescribed
by the market administrator, as follows:
(a) With respect to each of its pool plants, the quantities of skim
milk and butterfat contained in or represented by:
(1) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c);
(2) Receipts of milk from handlers described in Sec. 1000.9(c);
[[Page 16283]]
(3) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(4) Receipts of other source milk;
(5) Inventories at the beginning and end of the month of fluid milk
products and bulk fluid cream products; and (6) The utilization or
disposition of all milk and milk products required to be reported
pursuant to this paragraph.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. Such
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Sec. 1000.9(c) shall report:
(1) The quantities of all skim milk and butterfat contained in
receipts of milk from producers; and
(2) The utilization or disposition of all such receipts.
(d) Each handler described in Sec. 1131.10 shall report:
(1) The pounds of milk received from each of the handler's own-farm
production units, showing separately the production of each farm unit
and the number of dairy cows in production at each farm unit;
(2) Fluid milk products and bulk fluid cream products received at
its plant or acquired for route disposition from pool plants, other
order plants, and handlers described in Sec. 1000.9(c);
(3) Receipts of other source milk not reported pursuant to
paragraph (d)(2) of this section;
(4) Inventories at the beginning and end of the month of fluid milk
products and fluid cream products; and (5) The utilization or
disposition of all milk and milk products required to be reported
pursuant to this paragraph.
(e) Each handler not specified in paragraphs (a) through (d) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1131.31 Payroll reports.
(a) On or before the 20th day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1131.7 and each
handler described in Sec. 1000.9(c) shall report to the market
administrator its producer payroll for such month, in the detail
prescribed by the market administrator, showing for each producer:
(1) The month;
(2) The producer's name and address;
(3) The daily and total pounds of milk received from the producer;
(4) The total butterfat content of such milk; and
(5) The price per hundredweight, the gross amount due, the amount
and nature of any deductions, and the net amount paid.
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1131.32 Other reports.
In addition to the reports required pursuant to Sec. 1131.30 and
Sec. 1131.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1131.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1131.41 [Reserved]
Sec. 1131.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1131.43 General classification rules.
See Sec. 1000.43.
Sec. 1131.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1131.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1131.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1131.51 Class I differential and price.
The Class I differential shall be the differential established for
Maricopa County, Arizona, which is reported in Sec. 1000.52. The Class
I price shall be the price computed pursuant to Sec. 1000.50(a) for
Maricopa County, Arizona.
Sec. 1131.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1131.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1131.54 Equivalent price.
See Sec. 1000.54.
Uniform Prices
Sec. 1131.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1000.9(c) with respect to
milk that was not received at a pool plant by adding the amounts
computed in paragraphs (a) through (e) of this section and subtracting
from that total amount the value computed in paragraph (f) of this
section. Receipts of nonfluid milk products that are distributed as
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec. 1000.76(a)(4) or
(d) shall be excluded from pricing under this section.
(a) Multiply the pounds of skim milk and butterfat in producer milk
that were classified in each class pursuant to Sec. 1000.44(c) by the
applicable skim milk and butterfat prices, and add the resulting
amounts;
(b) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) and the corresponding
steps of Sec. 1000.44(b) by the respective skim milk and butterfat
prices applicable at the location of the pool plant;
(c) Multiply the difference between the current month's Class I,
II, or III price, as the case may be, and the Class IV price for the
preceding month by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(d) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from plants regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants;
(e) Multiply the Class I price applicable at the location of the
nearest unregulated supply plants from which an equivalent volume was
received by the pounds of skim milk and butterfat in receipts of
concentrated fluid milk products assigned to Class I pursuant to
[[Page 16284]]
Sec. 1000.43(d) and Sec. 1000.44(a)(3)(i) and the corresponding steps
of Sec. 1000.44(b) and the pounds of skim milk and butterfat subtracted
from Class I pursuant to Sec. 1000.44(a)(8) and the corresponding step
of Sec. 1000.44(b), excluding such skim milk and butterfat in receipts
of fluid milk products from an unregulated supply plant to the extent
that an equivalent amount of skim milk or butterfat disposed of to such
plant by handlers fully regulated under any Federal milk order is
classified and priced as Class I milk and is not used as an offset for
any other payment obligation under any order; and
(f) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and butterfat
contained in receipts of nonfluid milk products that are allocated to
Class I use pursuant to Sec. 1000.43(d).
Sec. 1131.61 Computation of uniform prices.
On or before the 11th day of each month, the market administrator
shall compute a uniform butterfat price, a uniform skim milk price, and
a uniform price for producer milk receipts reported for the prior
month. The report of any handler who has not made payments required
pursuant to Sec. 1131.71 for the preceding month shall not be included
in the computation of these prices, and such handler's report shall not
be included in the computation for succeeding months until the handler
has made full payment of outstanding monthly obligations.
(a) Uniform butterfat price. The uniform butterfat price per pound,
rounded to the nearest one-hundredth cent, shall be computed by
multiplying the pounds of butterfat in producer milk allocated to each
class pursuant to Sec. 1000.44(b) by the respective class butterfat
prices and dividing the sum of such values by the total pounds of such
butterfat.
(b) Uniform skim milk price. The uniform skim milk price per
hundredweight, rounded to the nearest cent, shall be computed as
follows:
(1) Combine into one total the values computed pursuant to
Sec. 1131.60 for all handlers;
(2) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1131.75;
(3) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(4) Subtract the value of the total pounds of butterfat for all
handlers. The butterfat value shall be computed by multiplying the
pounds of butterfat by the butterfat price computed in paragraph (a) of
this section;
(5) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(i) The total skim pounds of producer milk; and
(ii) The total skim pounds for which a value is computed pursuant
to Sec. 1131.60(e); and
(6) Subtract not less than 4 cents and not more than 5 cents.
(c) Uniform price. The uniform price per hundredweight, rounded to
the nearest cent, shall be the sum of the following:
(1) Multiply the uniform butterfat price for the month pursuant to
paragraph (a) of this section times 3.5 pounds of butterfat; and
(2) Multiply the uniform skim milk price for the month pursuant to
paragraph (b) of this section times .965.
Sec. 1131.62 Announcement of uniform prices.
On or before the 11th day after the end of the month, the market
administrator shall announce the uniform prices for the month computed
pursuant to Sec. 1131.61.
Payments for Milk
Sec. 1131.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1131.71 Payments to the producer-settlement fund.
Each handler shall make payment to the producer-settlement fund in
a manner that provides receipt of the funds by the market administrator
no later than the 13th day after the end of the month (except as
provided in Sec. 1000.90). Payments due the market administrator shall
be deemed not to have been made until the money owed has been received
at the market administrator's office, or deposited into the market
administrator's bank account. Payment shall be the amount, if any, by
which the amount specified in paragraph (a) of this section exceeds the
amount specified in paragraph (b) of this section:
(a) The total value of milk to the handler for the month as
determined pursuant to Sec. 1131.60.
(b) The sum of:
(1) The value at the uniform prices for skim milk and butterfat,
adjusted for plant location, of the handler's receipts of producer
milk; and
(2) The value at the uniform price as adjusted pursuant to
Sec. 1131.75 applicable at the location of the plant from which
received of other source milk for which a value is computed pursuant to
Sec. 1131.60(e).
Sec. 1131.72 Payments from the producer-settlement fund.
No later than the 14th day after the end of each month (except as
provided in Sec. 1000.90), the market administrator shall pay to each
handler the amount, if any, by which the amount computed pursuant to
Sec. 1131.71(b) exceeds the amount computed pursuant to
Sec. 1131.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1131.73 Payments to producers and to cooperative associations.
(a) Except as provided in paragraphs (b) and (c) of this section,
each handler shall make payment to each producer from whom milk is
received during the month as follows:
(1) Partial payment. For each producer who has not discontinued
shipments as of the 25th day of the month, payment shall be made so
that it is received by the producer on or before the 27th day of each
month (except as provided in Sec. 1000.90) for milk received from such
producer during the first 15 days of the month at not less than 1.3
times the lowest class price for the preceding month less proper
deductions authorized in writing by the producer.
(2) Final payment. For milk received during the month, a payment
computed as follows shall be made so that it is received by each
producer one day after the payment date required in Sec. 1131.72:
(i) Multiply the hundredweight of producer skim milk received times
the uniform skim milk price for the month;
(ii) Multiply the pounds of producer butterfat received times the
uniform butterfat price for the month;
(iii) Multiply the hundredweight of producer milk received times
the plant location adjustment pursuant to Sec. 1131.75; and
(iv) Add the amounts computed in paragraph (a)(2)(i), (ii), and
(iii) of this section, and from that sum:
(A) Subtract the partial payment made pursuant to paragraph (a)(1)
of this section;
(B) Subtract the deduction for marketing services pursuant to
Sec. 1000.86;
(C) Add or subtract for errors made in previous payments to the
producer,
[[Page 16285]]
subject to approval by the market administrator; and
(D) Subtract proper deductions authorized in writing by the
producer.
(b) Two days prior to the dates on which partial and final payments
are due pursuant to paragraph (a) of this section, each pool plant
operator shall pay a cooperative association for milk received as
follows:
(1) Partial payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk (including the
milk of producers who are not members of such association and who the
market administrator determines have authorized the cooperative
association to collect payment for their milk) received during the
first 15 days of the month from a cooperative association in any
capacity except as the operator of a pool plant, the payment shall be
an amount not less than 1.3 times the lowest class price for the
preceding month multiplied by the hundredweight of milk.
(2) Partial payment to a cooperative association for milk
transferred from its pool plant. For bulk fluid milk products and bulk
fluid cream products received during the first 15 days of the month
from a cooperative association in its capacity as the operator of a
pool plant, the partial payment shall be at the pool plant operator's
estimated use value of the milk using the most recent class prices
available for skim milk and butterfat at the receiving plant's
location.
(3) Final payment to a cooperative association for milk transferred
from its pool plant. For bulk fluid milk products and bulk fluid cream
products received during the month from a cooperative association in
its capacity as the operator of a pool plant, the final payment shall
be the classified value of such milk as determined by multiplying the
pounds of skim milk and butterfat assigned to each class pursuant to
Sec. 1000.44 by the class prices for the month at the receiving plant's
location, and subtracting from this sum the partial payment made
pursuant to paragraph (b)(2) of this section.
(4) Final payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk received from a
cooperative association during the month, including the milk of
producers who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, the final payment for such milk shall
be an amount equal to the sum of the individual payments otherwise
payable for such milk pursuant to paragraph (a)(2) of this section.
(c) If a handler has not received full payment from the market
administrator pursuant to Sec. 1131.72 by the payment date specified in
paragraph (a) or (b) of this section, the handler may reduce pro rata
his payments pursuant to such paragraphs, but by not more than the
amount of such underpayment. Payments to producers shall be completed
on the next scheduled payment date after receipt of the balance due
from the market administrator.
(d) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer-settlement fund. In the event the handler subsequently locates
and pays the producer or a lawful claimant, or in the event that the
handler no longer exists and a lawful claim is later established, the
market administrator shall make the required payment from the producer-
settlement fund to the handler or the lawful claimant, as the case may
be.
(e) In making payments to producers pursuant to this section, each
pool plant operator shall furnish each producer, except a producer
whose milk was received from a cooperative association described in
Sec. 1000.9(a) or (c), a supporting statement in such form that it may
be retained by the recipient which shall show:
(1) The month, and identity of the producer;
(2) The daily and total pounds and the total pounds of butterfat
content of producer milk;
(3) The minimum rate at which payment to the producer is required
pursuant to this order;
(4) The rate used in making payments if the rate is other than the
applicable minimum rate;
(5) The amount, rate per hundredweight, and nature of each
deduction claimed by the handler; and
(6) The net amount of payment to the producer or cooperative
association.
Sec. 1131.74 [Reserved]
Sec. 1131.75 Plant location adjustments for producers and on nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1131.51 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1131.73
and 1000.76.
Sec. 1131.76 Payments by handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1131.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1131.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1131.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1131.86 Deduction for marketing services.
See Sec. 1000.86.
PART 1135--MILK IN THE WESTERN MARKETING AREA
Subpart--Order Regulating Handling
General Provisions
Sec.
1135.1 General provisions.
Definitions
1135.2 Western marketing area.
1135.3 Route disposition.
1135.4 Plant.
1135.5 Distributing plant.
1135.6 Supply plant.
1135.7 Pool plant.
1135.8 Nonpool plant.
1135.9 Handler.
1135.10 Producer-handler.
1135.11 Proprietary bulk tank handler.
1135.12 Producer.
1135.13 Producer milk.
1135.14 Other source milk.
1135.15 Fluid milk product.
1135.16 Fluid cream product.
1135.17 [Reserved]
1135.18 Cooperative association.
1135.19 Commercial food processing establishment.
Handler Reports
1135.30 Reports of receipts and utilization.
1135.31 Payroll reports.
1135.32 Other reports.
Classification of Milk
1135.40 Classes of utilization.
1135.41 [Reserved]
1135.42 Classification of transfers and diversions.
1135.43 General classification rules.
1135.44 Classification of producer milk.
1135.45 Market administrator's reports and announcements concerning
classification.
Class Prices
1135.50 Class prices, component prices, and advanced pricing
factors.
1135.51 Class I differential and price.
1135.52 Adjusted Class I differentials.
[[Page 16286]]
1135.53 Announcement of class prices, component prices, and
advanced pricing factors.
1135.54 Equivalent price.
Producer Price Differential
1135.60 Handler's value of milk.
1135.61 Computation of producer price differential.
1135.62 Announcement of producer prices.
Payments for Milk
1135.70 Producer-settlement fund.
1135.71 Payments to the producer-settlement fund.
1135.72 Payments from the producer-settlement fund.
1135.73 Payments to producers and to cooperative associations.
1135.74 [Reserved]
1135.75 Plant location adjustments for producer milk and nonpool
milk.
1135.76 Payments by a handler operating a partially regulated
distributing plant.
1135.77 Adjustment of accounts.
1135.78 Charges on overdue accounts.
Administrative Assessment and Marketing Service Deduction
1135.85 Assessment for order administration.
1135.86 Deduction for marketing services.
Authority: 7 U.S.C. 601-674.
Subpart--Order Regulating Handling
General Provisions
Sec. 1135.1 General provisions.
The terms, definitions, and provisions in part 1000 of this chapter
apply to and are hereby made a part of this order. In this part 1135,
all references to sections in part 1000 refer to part 1000 of this
chapter.
Definitions
Sec. 1135.2 Western marketing area.
The marketing area means all territory within the bounds of the
following states and political subdivisions, including all piers, docks
and wharves connected therewith and all craft moored thereat, and all
territory occupied by government (municipal, State or Federal)
reservations, installations, institutions, or other similar
establishments if any part thereof is within any of the listed states
or political subdivisions:
Utah
All of the State of Utah.
Idaho Counties
Ada, Adams, Bannock, Bear Lake, Bingham, Blaine, Boise,
Bonneville, Camas, Canyon, Caribou, Cassia, Elmore, Franklin, Gem,
Gooding, Jefferson, Jerome, Lincoln, Madison, Minidoka, Oneida,
Owyhee, Payette, Power, Twin Falls, Valley, and Washington.
Nevada Counties
Elko, Lincoln, and White Pine.
Oregon Counties
Baker, Grant, Harney, Malheur, and Union.
Wyoming Counties
Lincoln and Uinta.
Sec. 1135.3 Route disposition.
See Sec. 1000.3.
Sec. 1135.4 Plant.
See Sec. 1000.4.
Sec. 1135.5 Distributing plant.
See Sec. 1000.5.
Sec. 1135.6 Supply plant.
See Sec. 1000.6.
Sec. 1135.7 Pool plant.
Pool Plant means a plant or unit of plants specified in paragraphs
(a) through (e) of this section, but excluding a plant specified in
paragraph (g) of this section. The pooling standards described in
paragraphs (c) and (d) of this section are subject to modification
pursuant to paragraph (f) of this section.
(a) A distributing plant, other than a plant qualified as a pool
plant pursuant to paragraph (b) of this section or section 7(b) of any
other Federal milk order, from which during the month 25 percent or
more of the total quantity of fluid milk products physically received
at the plant (excluding concentrated milk received from another plant
by agreement for other than Class I use) are disposed of as route
disposition or are transferred in the form of packaged fluid milk
products to other distributing plants. At least 25 percent of such
route disposition and transfers must be to outlets in the marketing
area.
(b) Any distributing plant located in the marketing area which
during the month processed at least 25 percent of the total quantity of
fluid milk products physically received at the plant (excluding
concentrated milk received from another plant by agreement for other
than Class I use) into ultra-pasteurized or aseptically-processed fluid
milk products.
(c) A supply plant from which during the month the quantity of bulk
fluid milk products transferred or diverted to plants described in
paragraph (a) or (b) of this section is 35 percent or more of the total
Grade A milk received at the plant from dairy farmers (except dairy
farmers described in Sec. 1135.12(b)) and handlers described in
Sec. 1000.9(c) and Sec. 1135.11, including milk diverted by the plant
operator, subject to the following conditions:
(1) A supply plant that has qualified as a pool plant during each
of the immediately preceding months of September through February shall
continue to so qualify in each of the following months of March through
August unless the plant operator files a written request with the
market administrator that such plant not be a pool plant, such nonpool
status to be effective the first month following such request. A plant
withdrawn from pool supply plant status may not be reinstated for any
subsequent month of the March through July period unless it qualifies
as a pool plant on the basis of milk shipments;
(2) A pool plant operator may include as qualifying shipments milk
diverted to pool distributing plants pursuant to Sec. 1135.13(c);
(3) Concentrated milk transferred from the supply plant to a
distributing plant for an agreed-upon use other than Class I shall be
excluded from the supply plant's shipments in computing the plant's
shipping percentage; and
(4) No plant may qualify as a pool plant due to a reduction in the
shipping percentage pursuant to paragraph (f) of this section unless it
has been a pool supply plant during each of the immediately preceding 3
months.
(d) A milk manufacturing plant located within the marketing area
that is operated by a cooperative association if, during the month or
the immediately preceding 12-month period ending with the current
month, 35% or more of such cooperative's member producer milk (and any
producer milk of nonmembers and members of another cooperative
association which may be marketed by the cooperative association) is
physically received in the form of bulk fluid milk products (excluding
concentrated milk transferred to a distributing plant for an agreed-
upon use other than Class I) at plants specified in paragraph (a) or
(b) of this section either directly from farms or by transfer from
supply plants operated by the cooperative association and from plants
of the cooperative association for which pool plant status has been
requested under this paragraph subject to the following conditions:
(1) The plant does not qualify as a pool plant under paragraph (a),
(b) or (c) of this section or under comparable provisions of another
Federal order; and
(2) The plant is approved by a duly constituted regulatory agency
for the handling of milk approved for fluid consumption in the
marketing area.
(e) Two or more plants located in the marketing area and operated
by the same handler may qualify for pool plant status as a unit by
together meeting the requirements specified in paragraph (a)
[[Page 16287]]
of this section and subject to the following additional requirements:
(1) At least one of the plants in the unit must individually
qualify as a pool plant pursuant to paragraph (a) of this section;
(2) Other plants in the unit must process Class I or Class II
products, using 50 percent or more of the total Grade A fluid milk
products received in bulk form at such plant or diverted therefrom by
the plant operator in Class I or Class II products, and must be located
in a pricing zone providing the same or a lower Class I price than the
price applicable at the distributing plant included in the unit
pursuant to paragraph (e)(1) of this section; and
(3) A written request to form a unit must be filed by the handler
with the market administrator prior to the first day of the month for
which such status is to be effective. The unit shall continue from
month to month thereafter without further notification. The handler
shall notify the market administrator in writing prior to the first day
of any month for which termination or any change of the unit is
desired.
(f) The applicable shipping percentages of paragraphs (c) and (d)
of this section may be increased or decreased by the market
administrator if the market administrator finds that such adjustment is
necessary to encourage needed shipments or to prevent uneconomic
shipments. Before making such a finding, the market administrator shall
investigate the need for adjustment either on the market
administrator's own initiative or at the request of interested parties
if the request is made in writing at least 15 days prior to the month
for which the requested revision is desired effective. If the
investigation shows that an adjustment of the shipping percentages
might be appropriate, the market administrator shall issue a notice
stating that an adjustment is being considered and invite data, views
and arguments. Any decision to revise an applicable shipping percentage
must be issued in writing at least one day before the effective date.
(g) The term pool plant shall not apply to the following plants:
(1) A producer-handler as defined under any Federal order;
(2) An exempt plant as defined in 1000.8(e);
(3) A plant located within the marketing area and qualified
pursuant to paragraph (a) of this section which meets the pooling
requirements of another Federal order, and from which more than 50
percent of its route disposition has been in the other Federal order
marketing area for 3 consecutive months;
(4) A plant located outside any Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of another Federal order and has had greater route
disposition in such other Federal order's marketing area for 3
consecutive months;
(5) A plant located in another Federal order marketing area and
qualified pursuant to paragraph (a) of this section that meets the
pooling requirements of such other Federal order and does not have a
majority of its route distribution in this marketing area for 3
consecutive months or if the plant is required to be regulated under
such other Federal order without regard to its route disposition in any
other Federal order marketing area;
(6) A plant qualified pursuant to paragraph (c) of this section
which also meets the pooling requirements of another Federal order and
from which greater qualifying shipments are made to plants regulated
under the other Federal order than are made to plants regulated under
this order, or the plant has automatic pooling status under the other
Federal order; and
(7) That portion of a regulated plant designated as a nonpool plant
that is physically separate and operated separately from the pool
portion of such plant. The designation of a portion of a regulated
plant as a nonpool plant must be requested in advance and in writing by
the handler and must be approved by the market administrator.
Sec. 1135.8 Nonpool plant.
See Sec. 1000.8.
Sec. 1135.9 Handler.
In addition to the handlers defined in Sec. 1000.9, handler shall
include a person meeting the standards set forth in Sec. 1135.11.
Sec. 1135.10 Producer-handler.
Producer-handler means a person who:
(a) Operates a dairy farm and a distributing plant from which there
is route disposition in the marketing area during the month;
(b) Receives fluid milk products from own farm production or milk
that is fully subject to the pricing and pooling provisions of this or
another Federal order;
(c) Receives at its plant or acquires for route disposition no more
than 150,000 pounds of fluid milk products from handlers fully
regulated under any Federal order. This limitation shall not apply if
the producer-handler's own farm production is less than 150,000 pounds
during the month;
(d) Disposes of no other source milk as Class I milk except by
increasing the nonfat milk solids content of the fluid milk products;
and
(e) Provides proof satisfactory to the market administrator that
the care and management of the dairy animals and other resources
necessary to produce all Class I milk handled (excluding receipts from
handlers fully regulated under any Federal order) and the processing
and packaging operations are the producer-handler's own enterprise and
are operated at its own risk.
Sec. 1135.11 Proprietary bulk tank handler.
Any person, except a cooperative association, with respect to milk
that it receives for its account from the farm of a producer in a tank
truck owned and operated by, or under the control of, such person and
which is delivered during the month for the account of such person to
the pool plant of another handler or diverted pursuant to Sec. 1135.13,
subject to the following conditions:
(a) Such person must operate a plant located in the marketing area
at which milk is processed only into Class II, Class III, or Class IV
products; and
(b) Prior to operating as a handler pursuant to this paragraph,
such person must submit to the marker administrator a statement signed
by the applicant and the operator of the pool plant to which the milk
will be delivered specifying that the applicant will be the responsible
handler for the milk.
Sec. 1135.12 Producer.
(a) Except as provided in paragraph (b) of this section, producer
means any person who produces milk approved by a duly constituted
regulatory agency for fluid consumption as Grade A milk and whose milk
(or components of milk) is:
(1) Received at a pool plant directly from the producer or diverted
by the plant operator in accordance with Sec. 1135.13; or
(2) Received by a handler described in Sec. 1000.9(c) or
Sec. 1135.11.
(b) Producer shall not include:
(1) A producer-handler as defined in any Federal order;
(2) A dairy farmer whose milk is delivered to an exempt plant,
excluding producer milk diverted to the exempt plant pursuant to
Sec. 1135.13(d);
(3) A dairy farmer whose milk is diverted to a pool plant by a
handler regulated under another Federal order if the other Federal
order designates the dairy farmer as a producer under that order and
that milk is allocated by request to a utilization other than Class I;
[[Page 16288]]
(4) A dairy farmer whose milk is reported as diverted to a plant
fully regulated under another Federal order with respect to that
portion of the milk so diverted that is assigned to Class I under the
provisions of such other order; and
(5) A dairy farmer whose milk was received at a nonpool plant
during the month from the same farm (except a nonpool plant that has no
utilization of milk products in any Class other than Class III or Class
IV) as other than producer milk under this or any other Federal order.
Such a dairy farmer shall be known as a dairy farmer for other markets.
Sec. 1135.13 Producer milk.
Producer milk means the skim milk (or the skim equivalent of
components of skim milk), including nonfat components, and butterfat in
milk of a producer that is:
(a) Received by the operator of a pool plant directly from a
producer, a handler described in Sec. 1000.9(c), or a handler described
in Sec. 1135.11. All milk received pursuant to this paragraph shall be
priced at the location of the plant where it is first physically
received;
(b) Received by a handler described in Sec. 1000.9(c) or in
Sec. 1135.11 in excess of the quantity delivered to pool plants;
(c) Diverted by a pool plant operator to another pool plant. Milk
so diverted shall be priced at the location of the plant to which
diverted; or
(d) Diverted by the operator of a pool plant, a cooperative
association described in Sec. 1000.9(c), or a proprietary bulk tank
handler described in Sec. 1135.11, to a nonpool plant, subject to the
following conditions:
(1) Milk of a dairy farmer shall not be eligible for diversion
unless at least one day's milk production of such dairy farmer has been
physically received as producer milk at a pool plant and the dairy
farmer has continuously retained producer status since that time. If a
dairy farmer loses producer status under this order (except as a result
of a temporary loss of Grade A approval), the dairy farmer's milk shall
not be eligible for diversion until one day's milk production has been
physically received as producer milk at a pool plant;
(2) Of the quantity of producer milk received during the month
(including diversions) the handler diverts to nonpool plants not more
than 90 percent;
(3) Two or more handlers described in Sec. 1000.9(c) may have their
allowable diversions computed on the basis of their combined deliveries
of producer milk which they caused to be delivered to pool plants or
diverted during the month if each has filed a request in writing with
the market administrator before the first day of the month the
agreement is to be effective. The request shall specify the basis for
assigning overdiverted milk to the producer deliveries of each
according to a method approved by the market administrator.
(4) Diverted milk shall be priced at the location of the plant to
which diverted;
(5) Any milk diverted in excess of the limits prescribed in
paragraph (d)(2) of this section shall not be producer milk. If the
diverting handler, cooperative association, or proprietary bulk tank
handler fails to designate the dairy farmers' deliveries that are not
to be producer milk, no milk diverted by the handler, cooperative
association, or proprietary bulk tank handler during the month to a
nonpool plant shall be producer milk. In the event some of the milk of
any producer is determined not to be producer milk pursuant to this
paragraph, other milk delivered by such producer as producer milk
during the month will not be subject to Sec. 1135.12(b)(5); and
(6) The delivery day requirement in paragraph (d)(1) of this
section and the diversion percentage in paragraph (d)(2) of this
section may be increased or decreased by the market administrator if
the market administrator finds that such revision is necessary to
assure orderly marketing and efficient handling of milk in the
marketing area. Before making such a finding, the market administrator
shall investigate the need for the revision either on the market
administrator's own initiative or at the request of interested persons
if the request is made in writing at least 15 days prior to the month
for which the requested revision is desired effective. If the
investigation shows that a revision might be appropriate, the market
administrator shall issue a notice stating that the revision is being
considered and inviting written data, views, and arguments. Any
decision to revise the delivery day requirement or the diversion
percentage must be issued in writing at least one day before the
effective date.
Sec. 1135.14 Other source milk.
See Sec. 1000.14.
Sec. 1135.15 Fluid milk product.
See Sec. 1000.15.
Sec. 1135.16 Fluid cream product.
See Sec. 1000.16.
Sec. 1135.17 [Reserved]
Sec. 1135.18 Cooperative association.
See Sec. 1000.18.
Sec. 1135.19 Commercial food processing establishment.
See Sec. 1000.19
Handler Reports
Sec. 1135.30 Reports of receipts and utilization.
Each handler shall report monthly so that the market administrator
receives the report on or before the 7th day after the end of each
month, in the detail and on the forms prescribed by the market
administrator, as follows:
(a) Each handler that operates a pool plant pursuant to Sec. 1135.7
shall report for each of its operations the following information:
(1) Product pounds, pounds of butterfat, pounds of protein, and
pounds of solids-not-fat other than protein (other solids), contained
in or represented by:
(i) Receipts of producer milk, including producer milk diverted by
the reporting handler, from sources other than handlers described in
Sec. 1000.9(c) and Sec. 1135.11; and
(ii) Receipts of milk from handlers described in Sec. 1000.9(c) and
Sec. 1135.11;
(2) Product pounds and pounds of butterfat contained in:
(i) Receipts of fluid milk products and bulk fluid cream products
from other pool plants;
(ii) Receipts of other source milk; and
(iii) Inventories at the beginning and end of the month of fluid
milk products and bulk fluid cream products;
(3) The utilization or disposition of all milk and milk products
required to be reported pursuant to this paragraph; and
(4) Such other information with respect to the receipts and
utilization of skim milk, butterfat, milk protein, and other nonfat
solids, as the market administrator may prescribe.
(b) Each handler operating a partially regulated distributing plant
shall report with respect to such plant in the same manner as
prescribed for reports required by paragraph (a) of this section.
Receipts of milk that would have been producer milk if the plant had
been fully regulated shall be reported in lieu of producer milk. The
report shall show also the quantity of any reconstituted skim milk in
route disposition in the marketing area.
(c) Each handler described in Secs. 1000.9(c) or 1135.11 shall
report:
(1) The product pounds, pounds of butterfat, pounds of protein, and
the pounds of solids-not-fat other than protein (other solids)
contained in receipts of milk from producers; and
[[Page 16289]]
(2) The utilization or disposition of such receipts.
(d) Each handler not specified in paragraphs (a) through (c) of
this section shall report with respect to its receipts and utilization
of milk and milk products in such manner as the market administrator
may prescribe.
Sec. 1135.31 Payroll reports.
(a) On or before the 21st day after the end of each month, each
handler that operates a pool plant pursuant to Sec. 1135.7 and each
handler described in Sec. 1000.9(c) and in Sec. 1135.11 shall report to
the market administrator its producer payroll for the month, in the
detail prescribed by the market administrator, showing for each
producer the information described in Sec. 1135.73(e).
(b) Each handler operating a partially regulated distributing plant
who elects to make payment pursuant to Sec. 1000.76(b) shall report for
each dairy farmer who would have been a producer if the plant had been
fully regulated in the same manner as prescribed for reports required
by paragraph (a) of this section.
Sec. 1135.32 Other reports.
In addition to the reports required pursuant to Secs. 1135.30 and
1135.31, each handler shall report any information the market
administrator deems necessary to verify or establish each handler's
obligation under the order.
Classification of Milk
Sec. 1135.40 Classes of utilization.
See Sec. 1000.40.
Sec. 1135.41 [Reserved]
Sec. 1135.42 Classification of transfers and diversions.
See Sec. 1000.42.
Sec. 1135.43 General classification rules.
See Sec. 1000.43.
Sec. 1135.44 Classification of producer milk.
See Sec. 1000.44.
Sec. 1135.45 Market administrator's reports and announcements
concerning classification.
See Sec. 1000.45.
Class Prices
Sec. 1135.50 Class prices, component prices, and advanced pricing
factors.
See Sec. 1000.50.
Sec. 1135.51 Class I differential and price.
The Class I differential shall be the differential established at
Salt Lake County, Utah, which is reported in Sec. 1000.52. The Class I
price shall be the price computed pursuant to Sec. 1000.50(a) for Salt
Lake County, Utah.
Sec. 1135.52 Adjusted Class I differentials.
See Sec. 1000.52.
Sec. 1135.53 Announcement of class prices, component prices, and
advanced pricing factors.
See Sec. 1000.53.
Sec. 1135.54 Equivalent price.
See Sec. 1000.54.
Producer Price Differential
Sec. 1135.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants, and of each handler described in Sec. 1000.9(c) and each
handler described in Sec. 1135.11, with respect to milk that was not
received at a pool plant, by adding the amounts computed in paragraphs
(a) through (h) of this section and subtracting from that total amount
the value computed in paragraph (i) of this section. Unless otherwise
specified, the skim milk, butterfat, and the combined pounds of skim
milk and butterfat referred to in this section shall result from the
steps set forth in Sec. 1000.44(a), (b), and (c), respectively, and the
nonfat components of producer milk in each class shall be based upon
the proportion of such nonfat components in producer skim milk.
Receipts of nonfluid milk products that are distributed as labeled
reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec. 1000.76(a)(4) or
(d) shall be excluded from pricing under this section.
(a) Class I value.
(1) Multiply the hundredweight of skim milk in Class I by the Class
I skim milk price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class I by the Class I butterfat price.
(b) Class II value.
(1) Multiply the pounds of nonfat solids in Class II skim milk by
the Class II nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class II times the Class II butterfat price.
(c) Class III value.
(1) Multiply the pounds of protein in Class III skim milk by the
protein price;
(2) Add an amount obtained by multiplying the pounds of other
solids in Class III skim milk by the other solids price; and
(3) Add an amount obtained by multiplying the pounds of butterfat
in Class III by the butterfat price.
(d) Class IV value.
(1) Multiply the pounds of nonfat solids in Class IV skim milk by
the nonfat solids price; and
(2) Add an amount obtained by multiplying the pounds of butterfat
in Class IV by the butterfat price.
(e) Multiply the pounds of skim milk and butterfat overage assigned
to each class pursuant to Sec. 1000.44(a)(11) and the corresponding
step of Sec. 1000.44(b) by the skim milk prices and butterfat prices
applicable to each class.
(f) Multiply the difference between the current month's Class I,
II, or III price, as the case may be, and the Class IV price for the
preceding month by the hundredweight of skim milk and butterfat
subtracted from Class I, II, or III, respectively, pursuant to
Sec. 1000.44(a)(7) and the corresponding step of Sec. 1000.44(b);
(g) Multiply the difference between the Class I price applicable at
the location of the pool plant and the Class IV price by the
hundredweight of skim milk and butterfat assigned to Class I pursuant
to Sec. 1000.43(d) and the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(3)(i) through (vi)
and the corresponding step of Sec. 1000.44(b), excluding receipts of
bulk fluid cream products from plants regulated under other Federal
orders and bulk concentrated fluid milk products from pool plants,
plants regulated under other Federal orders, and unregulated supply
plants.
(h) Multiply the difference between the Class I price applicable at
the location of the nearest unregulated supply plants from which an
equivalent volume was received and the Class III price by the pounds of
skim milk and butterfat in receipts of concentrated fluid milk products
assigned to Class I pursuant to Sec. 1000.43(d) and
Sec. 1000.44(a)(3)(i) and the pounds of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1000.44(a)(8) and the
corresponding step of Sec. 1000.44(b), excluding such skim milk and
butterfat in receipts of fluid milk products from an unregulated supply
plant to the extent that an equivalent amount of skim milk or butterfat
disposed of to such plant by handlers fully regulated under any Federal
milk order is classified and priced as Class I milk and is not used as
an offset for any other payment obligation under any order.
(i) For reconstituted milk made from receipts of nonfluid milk
products, multiply $1.00 (but not more than the difference between the
Class I price applicable at the location of the pool plant and the
Class IV price) by the hundredweight of skim milk and
[[Page 16290]]
butterfat contained in receipts of nonfluid milk products that are
allocated to Class I use pursuant to Sec. 1000.43(d).
Sec. 1135.61 Computation of producer price differential.
For each month the market administrator shall compute a producer
price differential per hundredweight. The report of any handler who has
not made payments required pursuant to Sec. 1135.71 for the preceding
month shall not be included in the computation of the producer price
differential, and such handler's report shall not be included in the
computation for succeeding months until the handler has made full
payment of outstanding monthly obligations. Subject to the
aforementioned conditions, the market administrator shall compute the
producer price differential in the following manner:
(a) Combine into one total the values computed pursuant to
Sec. 1135.60 for all handlers required to file reports prescribed in
Sec. 1135.30;
(b) Subtract the total values obtained by multiplying each
handler's total pounds of protein, other solids, and butterfat
contained in the milk for which an obligation was computed pursuant to
Sec. 1135.60 by the protein price, the other solids price, and the
butterfat price, respectively;
(c) Add an amount equal to the sum of the location adjustments
computed pursuant to Sec. 1135.75;
(d) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund;
(e) Divide the resulting amount by the sum of the following for all
handlers included in these computations:
(1) The total hundredweight of producer milk; and
(2) The total hundredweight for which a value is computed pursuant
to Sec. 1135.60(h); and
(f) Subtract not less than 4 cents nor more than 5 cents from the
price computed pursuant to paragraph (e) of this section. The result
shall be known as the producer price differential for the month.
Sec. 1135.62 Announcement of producer prices.
On or before the 12th day after the end of each month, the market
administrator shall announce publicly the following prices and
information:
(a) The producer price differential;
(b) The protein price;
(c) The nonfat solids price;
(d) The other solids price;
(e) The butterfat price;
(f) [Reserved]
(g) The average butterfat, protein, nonfat solids, and other solids
content of producer milk; and
(h) The statistical uniform price for milk containing 3.5 percent
butterfat, computed by combining the Class III price and the producer
price differential.
Payments for Milk
Sec. 1135.70 Producer-settlement fund.
See Sec. 1000.70.
Sec. 1135.71 Payments to the producer-settlement fund.
Each handler shall make payment to the producer-settlement fund in
a manner that provides receipt of the funds by the market administrator
no later than the 14th day after the end of the month (except as
provided in Sec. 1000.90). Payment shall be the amount, if any, by
which the amount specified in paragraph (a) of this section exceeds the
amount specified in paragraph (b) of this section:
(a) The total value of milk to the handler for the month as
determined pursuant to Sec. 1135.60.
(b) The sum of:
(1) An amount obtained by multiplying the total hundredweight of
producer milk as determined pursuant to Sec. 1000.44(c) by the producer
price differential as adjusted pursuant to Sec. 1135.75;
(2) An amount obtained by multiplying the total pounds of protein,
other solids, and butterfat contained in producer milk by the protein,
other solids, and butterfat prices respectively;
(3) [Reserved]
(4) An amount obtained by multiplying the pounds of skim milk and
butterfat for which a value was computed pursuant to Sec. 1135.60(h) by
the producer price differential as adjusted pursuant to Sec. 1135.75
for the location of the plant from which received.
Sec. 1135.72 Payments from the producer-settlement fund.
No later than the 15th day after the end of each month (except as
provided in Sec. 1000.90), the market administrator shall pay to each
handler the amount, if any, by which the amount computed pursuant to
Sec. 1135.71(b) exceeds the amount computed pursuant to
Sec. 1135.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this
section, the market administrator shall reduce uniformly such payments
and shall complete the payments as soon as the funds are available.
Sec. 1135.73 Payments to producers and to cooperative associations.
(a) Except as provided in paragraph (b) of this section, each
handler shall make payment to each producer from whom milk is received
during the month as follows:
(1) Partial Payment. On or before the 25th day of each month
(except as provided in Sec. 1000.90) to each producer an amount not
less than 1.2 times the lowest class price for the preceding month
multiplied by the hundredweight of milk received from such producer
during the first 15 days of the month, less proper deductions
authorized in writing by such producer to be made from payments due
pursuant to this paragraph.
(2) Final Payment. On or before the 17th day of the following month
(except as provided in Sec. 1000.90), not less than an amount computed
by the sum of the following:
(i) The hundredweight of producer milk received times the producer
price differential for the month as adjusted pursuant to Sec. 1135.75;
(ii) The pounds of butterfat in producer milk received times the
butterfat price for the month;
(iii) The pounds of protein in producer milk received times the
protein price for the month;
(iv) The pounds of other solids in producer milk received times the
other solids price for the month;
(v) [Reserved]
(vi) Less any payments made pursuant to paragraph (a)(1) of this
section;
(vii) Less proper deductions authorized in writing by such producer
and plus or minus adjustments for errors in previous payments to such
producer subject to approval by the market administrator; and
(viii) Less deductions made for marketing service pursuant to
Sec. 1000.86.
(b) One day prior to the dates on which partial and final payments
are due pursuant to paragraph (a) of this section, each pool plant
operator shall pay a cooperative association for milk received as
follows:
(1) Partial payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk (including the
milk of producers who are not members of such association and who the
market administrator determines have authorized the cooperative
association to collect payment for their milk) received during the
first 15 days of the month from a cooperative association in any
capacity, except as the operator of a pool plant, the payment shall be
an amount not less than 1.2 times the lowest class price for the
preceding
[[Page 16291]]
month multiplied by the hundredweight of milk.
(2) Partial payment to a cooperative association for milk
transferred from its pool plant. For bulk fluid milk products and bulk
fluid cream products received during the first 15 days of the month
from a cooperative association in its capacity as the operator of a
pool plant, the partial payment shall be at the pool plant operator's
estimated use value of the milk using the most recent class prices
available at the receiving plant's location.
(3) Final payment to a cooperative association for milk transferred
from its pool plant. For the total quantity of bulk fluid milk products
and bulk fluid cream products received from a cooperative association
in its capacity as the operator of a pool plant, the final payment
shall be at not less than the total value of such products received
from the association's pool plants, as determined by multiplying the
respective quantities assigned to each class under Sec. 1000.44, as
follows:
(i) The hundredweight of Class I skim milk times the Class I skim
milk price for the month plus the pounds of Class I butterfat times the
Class I butterfat price for the month. The Class I prices to be used
shall be the prices effective at the location of the receiving plant;
(ii) The pounds of nonfat solids in Class II skim milk by the Class
II nonfat solids price;
(iii) The pounds of butterfat in Class II times the Class II
butterfat price;
(iv) The pounds of nonfat solids in Class IV times the nonfat
solids price;
(v) The pounds of butterfat in Class III and Class IV milk times
the butterfat price;
(vi) The pounds of protein in Class III milk times the protein
price;
(vii) The pounds of other solids in Class III milk times the other
solids price; and (viii) Add together the amounts computed in
paragraphs (b)(3) (i) through (vii) of this section and from that sum
deduct any payment made pursuant to paragraph (b)(1) of this section.
(4) Final payment to a cooperative association for bulk milk
received directly from producers' farms. For bulk milk received from a
cooperative association during the month, including the milk of
producers who are not members of such association and who the market
administrator determines have authorized the cooperative association to
collect payment for their milk, the final payment for such milk shall
be an amount equal to the sum of the individual payments otherwise
payable for such milk pursuant to paragraph (a)(2) of this section.
(c) If a handler has not received full payment from the market
administrator pursuant to Sec. 1135.72 by the payment date specified in
paragraph (a) or (b) of this section, the handler may reduce pro rata
its payments to producers or to the cooperative association by not more
than the amount of such underpayment. The payments shall be completed
on the next scheduled payment date after receipt of the balance due
from the market administrator.
(d) If a handler claims that a required payment to a producer
cannot be made because the producer is deceased or cannot be located,
or because the cooperative association or its lawful successor or
assignee is no longer in existence, the payment shall be made to the
producer settlement fund, and in the event the handler subsequently
locates and pays the producer or a lawful claimant, or in the event
that the handler no longer exists and a lawful claim is later
established, the market administrator shall make the required payment
from the producer-settlement fund to the handler or to the lawful
claimant, as the case may be.
(e) In making payments to producers pursuant to this section, each
handler shall furnish each producer, except a producer whose milk was
received from a cooperative association handler described in
Sec. 1000.9 (a) or (c), a supporting statement in a form that may be
retained by the recipient which shall show:
(1) The name, address, Grade A identifier assigned by a duly
constituted regulatory agency, and payroll number of the producer;
(2) The daily and total pounds, and the month and dates such milk
was received from that producer;
(3) The total pounds of butterfat, protein, and other solids
contained in the producer's milk;
(4) [Reserved]
(5) The minimum rate or rates at which payment to the producer is
required pursuant to this order;
(6) The rate used in making payment if the rate is other than the
applicable minimum rate;
(7) The amount, or rate per hundredweight, or rate per pounds of
component, and the nature of each deduction claimed by the handler; and
(8) The net amount of payment to the producer or cooperative
association.
Sec. 1135.74 [Reserved]
Sec. 1135.75 Plant location adjustments for producer milk and nonpool
milk.
For purposes of making payments for producer milk and nonpool milk,
a plant location adjustment shall be determined by subtracting the
Class I price specified in Sec. 1135.51 from the Class I price at the
plant's location. The difference, plus or minus as the case may be,
shall be used to adjust the payments required pursuant to Secs. 1135.73
and 1000.76.
Sec. 1135.76 Payments by a handler operating a partially regulated
distributing plant.
See Sec. 1000.76.
Sec. 1135.77 Adjustment of accounts.
See Sec. 1000.77.
Sec. 1135.78 Charges on overdue accounts.
See Sec. 1000.78.
Administrative Assessment and Marketing Service Deduction
Sec. 1135.85 Assessment for order administration.
See Sec. 1000.85.
Sec. 1135.86 Deduction for marketing services.
See Sec. 1000.86.
Note: Appendices A through F are to the Preamble and will not be
condified in Title 7 of the Code of Federal Regulations.
Appendix A: Summary of Preliminary Suggested Order Consolidation Report
Ten marketing areas are suggested in the preliminary
consolidation report. As a means of determining where
interrelationships among the current marketing areas are strongest,
data relating to the receipts and distribution of fluid milk
products by distributing plants were gathered for all known
distributing plants located in the 47 contiguous States, not
including the State of California, for the month of October 1995. At
this time, California is not included as a suggested order area. The
1996 Farm Bill allows for the inclusion of a California Federal milk
order if California producers petition for and approve an order. If
a California order were included in the suggested Federal order
structure at a later time, it would encompass the entire State and
would include no area outside the State of California. Although
interest in a Federal order has been expressed by some California
producer groups, no definite action has been taken.
An analysis of the distribution and procurement patterns of the
fluid processing plants, along with other factors, was used to
determine which order areas were most closely related. Proposals
submitted by the public were also taken into account. The primary
criteria used in determining which markets exhibit a sufficient
degree of association in terms of sales, procurement, and structural
relationships to warrant consolidation were:
1. Overlapping route disposition.
2. Overlapping areas of milk supply.
3. Number of handlers within a market.
4. Natural boundaries.
5. Cooperative association service areas.
[[Page 16292]]
6. Features common to existing orders, such as similar multiple
component pricing payment plans.
7. Milk utilization in common dairy products.
The requirement to consolidate existing marketing areas does not
specify expansion of regulation to previously nonfederally regulated
areas where such expansion would have the effect of regulating
handlers not currently regulated. However, a number of the current
marketing areas enclose unregulated areas. These ``pockets'' are
included in the suggested merged marketing areas only if their
inclusion does not change the current regulatory status of a plant.
In the process of consolidating marketing areas, some handlers who
currently are partially regulated may become fully regulated because
their sales in a combined marketing area will likely meet the
pooling standards of a suggested consolidated order. Further
expansion of the marketing areas, which would result in regulating
additional handlers, is an issue that should be addressed by the
industry. Proposals to take such action should be accompanied by
supporting data, views, and arguments concerning the need and basis
for any such expansion.
The 10 suggested consolidated marketing areas and the major
reasons for consolidation are:
1. NORTHEAST--current marketing areas of the New England, New
York-New Jersey, and Middle Atlantic Federal milk orders. Reasons
for consolidation include the existence of overlapping sales and
procurement areas between New England and New York-New Jersey and
between New York-New Jersey and Middle Atlantic. The orders are also
surrounded by nonfederally regulated territory. A further measure of
association is evident by industry efforts to study and pursue
consolidation of the three Federal orders, as well as some of the
nonfederally regulated territory, prior to the 1996 Farm Bill.
2. APPALACHIAN--current marketing areas of the Carolina and
Tennessee Valley Federal milk orders, and a portion of the
Louisville-Lexington-Evansville Federal milk order. Overlapping
sales and procurement areas between these marketing areas are major
factors for supporting such a consolidation.
3. FLORIDA--current marketing areas of the Upper Florida, Tampa
Bay, and Southeastern Florida Federal milk orders. Natural boundary
limitations and overlapping sales and procurement areas among the
three orders are major reasons for consolidation, as well as a
measure of association evidenced by cooperative association
proposals to consolidate these three marketing areas. Further, the
cooperative associations in this area have worked together for a
number of years to accommodate needed movements of milk between the
three Florida Federal orders.
4. SOUTHEAST--current marketing area of the Southeast Federal
milk order, plus 1 county from the Louisville-Lexington-Evansville
Federal milk order marketing area, 15 currently unregulated Kentucky
counties, and 2 currently unregulated northeast Texas counties.
Major reasons for this consolidation include sales and procurement
area overlaps between the Southeast order and the Kentucky and Texas
counties suggested for inclusion. There is minimal sales area
overlap with handlers regulated under other Federal orders.
5. MIDEAST--current marketing areas of the Ohio Valley, Eastern
Ohio-Western Pennsylvania, Southern Michigan, and Indiana Federal
milk orders, plus most of the current marketing area of the
Louisville-Lexington-Evansville Federal milk order, Zone 2 of the
Michigan Upper Peninsula Federal milk order, and 12 counties of the
Southern Illinois-Eastern Missouri Federal milk order. Major
criteria suggesting this consolidation include the overlap of fluid
sales in the Ohio Valley marketing area by handlers from the other
areas suggested to be consolidated. With the consolidation, most
route disposition by handlers located within the suggested Mideast
order would be within the marketing area. Also, nearly all milk
produced within the area would be pooled under the consolidated
order. The portion of the Michigan Upper Peninsula marketing area
suggested to be included in the Mideast consolidated area has sales
and milk procurement areas in common with the Southern Michigan area
and has minimal association with the western end of the current
Michigan Upper Peninsula marketing area.
6. UPPER MIDWEST--current marketing areas of the Chicago
Regional and Upper Midwest Federal milk orders, plus Zones I and
I(a) of the Michigan Upper Peninsula Federal milk order and seven
unregulated or partly unregulated Wisconsin counties. Major
consolidation criteria include an overlapping procurement area
between the Chicago Regional and Upper Midwest orders, overlapping
procurement and route disposition area between the western end of
the Michigan Upper Peninsula order and the Chicago Regional order,
natural boundary limitations, and the prevalence of cheese as a
major manufactured product for the substantial reserve milk supplies
that exceed fluid milk needs.
7. CENTRAL--current marketing areas of the Southern Illinois-
Eastern Missouri (less 12 counties included in the suggested Mideast
marketing area), Central Illinois, Greater Kansas City, Nebraska-
Western Iowa (less 11 currently-regulated counties suggested to be
unregulated), Eastern South Dakota, Iowa, Southwest Plains, and
Eastern Colorado Federal milk orders, plus 63 currently-unregulated
counties in seven of the states. Major criteria suggesting this
consolidation include the overlapping procurement and route
disposition between the current orders. The suggested consolidation
would result in a concentration of both the sales and supplies of
milk within the consolidated marketing area. The suggested
consolidation would combine several relatively small orders and
provide for the release of market data without revealing proprietary
information. In addition, most of the producers in these areas share
membership in several common cooperatives.
8. SOUTHWEST--current marketing areas of the Texas, New Mexico-
West Texas, and Central Arizona Federal milk orders. Major criteria
suggesting consolidation include sales and procurement area overlaps
and common cooperative association membership between the Texas and
New Mexico-West Texas marketing areas, and similar marketing
concerns with respect to trade with Mexico for all three orders. In
addition, there is some route disposition by Central Arizona
handlers into the New Mexico-West Texas marketing area, and the
Central Arizona market contains a small number of handlers.
9. WESTERN--current marketing areas of the Western Colorado,
Southwestern Idaho-Eastern Oregon, and Great Basin Federal milk
orders. Major criteria suggesting consolidation include overlapping
sales between Southwestern Idaho-Eastern Oregon and Great Basin, as
well as a significant overlap in procurement for the two orders in
five Idaho counties. The two orders also share a similar multiple
component pricing plan. The Western Colorado order is included
because it is a small market where data cannot be released without
revealing confidential information unless combined with the adjacent
Great Basin order.
10. PACIFIC NORTHWEST--current marketing area of the Pacific
Northwest Federal milk order plus 1 currently-unregulated county in
Oregon. The degree of association with other marketing areas is
insufficient to warrant consolidation.
Following is a table summarizing relevant data for the
consolidated markets:
Consolidated Market Summary
[Based on October 1995 data]
----------------------------------------------------------------------------------------------------------------
Number of
Total producer fully Combined class
Consolidated order milk (1,000 regulated I utilization
lbs.) distributing (percent)
plants
----------------------------------------------------------------------------------------------------------------
Northeast....................................................... 1,934,833 85 46.7
Appalachian..................................................... 320,198 25 82.5
Florida......................................................... 200,397 18 88.3
Southeast....................................................... 443,921 38 84.3
[[Page 16293]]
Mideast......................................................... 11,140,952 68 57.8
Upper Midwest................................................... 2 1,046,539 27 4 34.2
Central......................................................... 932,929 42 50.6
Southwest....................................................... 861,307 31 48.3
Western......................................................... 304,793 14 5 31.7
Pacific Northwest............................................... 501,257 23 36.3
Total....................................................... 7,687,126 371 n/a
-----------------------------------------------
----------------------------------------------------------------------------------------------------------------
\1\ Producer milk for F.O. 44 is included. Producer milk for a F.O. 32 handler who would be pooled under the
suggested Mideast market is included in the Central consolidated market.
\2\ Producer milk for F.O. 30 and F.O. 68 only.
\3\ Producer milk for a F.O. 32 handler that would be in the Mideast consolidated market is included.
\4\ A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would
result in a 15.3% combined Class I utilization.
\5\ A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would
result in a 21.8% combined Class I utilization.
Appendix B: Summary of Pricing Options
Several options for modifying Class I pricing under the Federal
milk market order program, representing a spectrum of views, are
discussed in this summary report. The accompanying technical report
summarizes all of the comments and proposals received by the
Department related to Class I pricing under Federal orders.
Most Class I pricing concepts that were suggested would continue
to employ a market-driven basic formula price (BFP) with an added
differential. Differentials are a composite of one or more of the
following elements: (1) A fixed component, (2) a location
adjustment, (3) an adjustor relating to utilization, or (4) the cost
of balancing the market. Based on the pricing concepts received, the
following options were developed:
Option 1A: Location-Specific Differential--$1.60 per
hundredweight fixed differential for three surplus regions (Upper
Midwest, West, and Southwest) within a nine-zone national price
surface, plus for the other six zones an added component that
reflects regional differences in the value of fluid and
manufacturing milk.
Option 1B: Modified Location-Specific Differential Option--$1.00
per hundredweight fixed differential plus an added component that
reflects the cost of moving bulk milk to deficit markets.
Option 2: Relative Use Differential--$1.60 per hundredweight
fixed differential plus a formula-based differential driven by the
ratio of Class I milk to all other uses of milk.
Option 3A: Flat Differential Option--$1.60 per hundredweight
flat differential, uniformly applied across all orders to generate
an identical minimum Class I price.
Option 3B: Flat Differential Modified by Class I Use--$2.00 per
hundredweight differential in markets where Class I utilization is
less than 70 percent on an annual basis and a differential equal to
$2.00 + $0.075(Class I use %--70%) in markets where the Class I
utilization is equal to or exceeds 70 percent.
Option 4: Demand-Based Differential--$1.00 per hundredweight
fixed differential plus a transportation credit based on location of
reserve milk supplies.
Estimated Class I differentials are presented for each option to
provide a preliminary basis for determining impacts that may occur.
The report provides estimated differentials for the suggested 10
consolidated orders and for the current 32 Federal milk marketing
orders.
The report concludes by soliciting comments on the options
presented and poses a series of questions for the public to address
when submitting comments back to the Department on the issue of
Class I pricing.
Appendix C: Summary of Classification Report
The Agricultural Marketing Agreement Act of 1937 provides that
all milk should be classified ``in accordance with the form in which
or the purpose for which it is used.'' This has resulted in a system
of uniform classification provisions that places milk used for fluid
purposes in the highest use class, Class I, and other manufactured
products in lower classes, Classes II, III, and III-A.
Currently products packaged for fluid consumption such as whole
milk, skim milk, buttermilk, and flavored milk drinks are classified
as Class I products. Class II products include ice cream, yogurt,
cottage cheese, and cream. Class III and Class III-A products
include cheese, butter, and nonfat dry milk.
Among the changes in classification recommended in the technical
report are the following:
Eggnog would be reclassified from Class II to Class I.
Any fluid beverage having less than 6.5 percent nonfat
milk solids would be reclassified from Class II to Class I.
Cream cheese would be reclassified from Class III to
Class II.
The technical report recommends changing the classification of
milk used in nonfat dry milk from Class III-A to Class III. The
report recommends that if Class III-A pricing is not eliminated, the
following four alternatives be considered:
Place a floor beneath the Class III-A price;
Restrict III-A pricing to certain months or to certain
markets;
Provide an up-charge for nonfat dry milk used in
higher-valued products; or
Provide for a combination of these options.
Maintaining the classification of milk used to make nonfat dry
milk in Class III-A is also an option, although not discussed in the
technical report.
The technical report addresses Class III-A pricing because of
industry concerns about the substitution of nonfat dry milk for
fluid milk in Class II and III uses when the Class III-A price is
substantially below the Class III price.
Appendix D: Summary of Identical Provisions Report
Federal milk marketing orders contain numerous provisions that
establish the regulations for the operation of the orders. Over the
years, the orders have been individualized to account for specific
situations associated with a given marketing area. However, there
are several provisions within the orders that are similar or that
could be similar and still provide for efficient and orderly
marketing of milk.
The technical report does the following:
[[Page 16294]]
Suggests a model for establishing the consolidated
orders and provides suggestions on the order language that can be
adopted uniformly throughout all orders.
Reviewed, simplified, modified, and eliminated
differences in order provisions that:
Define various terms used in the orders.
Establish regulatory standards for plants and handlers.
Provide for uniform reporting dates of milk receipts
and utilization.
Provide for uniform dates for payment of milk.
Provide for computation of a uniform price.
Reduces performance standards to make it easier for
producers to associate with a market.
At this time, it is impossible to determine if there would be
any financial impact on producers, handlers, or consumers as a
result of any of these suggested provision revisions. It is
projected that there will be little impact on the overall program
because the changes primarily provide for uniformity. There may be
minimal impact on selected individual producers, handlers, or
consumers, but this cannot be determined until more specific
information is developed regarding the orders (i.e., marketing area
and pricing). The suggested identical provisions will be applied to
each of the suggested consolidated orders and determinations will be
based on the marketing conditions of the given region.
One suggested change in the report that may stimulate some
debate is the definition of a producer-handler. The technical report
suggests applying the most liberal standard to the producer-handler
definition to prevent any producer-handler from becoming regulated
as a result of milk order reform. Producer-handlers have been exempt
from full regulation because they assume the full risks associated
with being a producer and a distributor of milk produced with only
occasional and small volumes of milk being purchased from other
dairy farmers.
Appendix E: Summary of Basic Formula Price Report
The basic formula price (BFP) is used to determine Federal order
prices for milk used in manufactured products and, with the addition
of differentials, to determine minimum Class I and II prices for
milk pooled under the Federal orders. The current BFP is based on a
survey of prices paid for manufacturing grade (Grade B) milk by
plants in Minnesota and Wisconsin, updated by month-to-month changes
in commodity prices (especially cheese). The continuing decline in
the volume of Grade B milk produced in the upper Midwest and
nationally is an indication that, in the near future, the M-W price
series may not be statistically reliable as an indicator of the
value of milk used in manufactured products.
The BFP Committee has received input provided during a public
BFP Forum held in Madison, Wisconsin, and from over 200 written
public comments, and conducted a survey of transaction prices for
manufactured dairy products. The Committee also has sponsored
analysis by a group of university researchers, and conducted
extensive study and analysis of its own. The BFP Committee evaluated
alternatives to the BFP against the criteria of stability,
predictability, simplicity, uniformity, transparency, sound
economics and reduced regulation. Options identified by the
Committee were grouped into the following categories:
Options Considered: Economic formulas
Product price and component formulas
Futures markets
California pricing
Cost of production
Informal rulemaking
Competitive pay price
Pooling differentials only
At this time, the Committee has identified four options for
further discussion and debate:
A four-class, multiple component pricing plan to price
butterfat, protein and lactose used in cheese (Class III), and
butterfat and nonfat solids used in butter/powder (Class IV).
A three-class, multiple component pricing plan to price
protein used in cheese, butterfat used in butter, and other nonfat
solids used in powder (Class III--one manufacturing class).
A product price formula computed from the butter,
powder and cheese shares of U.S. production, using seasonal product
yields and a California cost-based make allowance; and
A competitive pay price series using a national
weighted average price paid for Grade A milk used in manufactured
products, updated by a product price formula. The price series would
contain an adjuster to attempt to remove the effect of current
regulation and to reduce it to a level more comparable to the
current BFP.
As a basis for Class I prices, the BFP could be made more stable
by using an economic formula or using a moving average of a
manufacturing price. Class II prices could be based on components or
continue to include a differential from the manufacturing price
level.
The BFP Committee is continuing to study and analyze
alternatives in response to public comments.
Appendix F: Summary of Revised Preliminary Suggested Order
Consolidation Report
The ten marketing areas suggested in the initial preliminary
consolidation report have increased to eleven and been modified to
some extent in this revised preliminary report. Several of the
initially suggested marketing areas were the subjects of numerous
comments containing information that indicated that the boundaries
of those areas should be re-evaluated. In addition, shifts in
regulation and distributing plant distribution areas were known to
have occurred. As a result, more detailed and updated (January 1997)
data was obtained relating to the receipts of producer milk and
distribution of fluid milk products by distributing plants in a
number of the initially-suggested order marketing areas. As a
result, changes were made in the suggested marketing areas of the
Northeast, Appalachian, Southeast, Mideast, Upper Midwest, Central,
Southwest, and Western regions, and a new Arizona-Las Vegas area was
added.
An analysis of the distribution and procurement patterns of the
fluid processing plants, along with other factors, was used to
determine which order areas were most closely related. Proposals
submitted by the public were also taken into account. The primary
criteria used in determining which markets exhibit a sufficient
degree of association in terms of sales, procurement, and structural
relationships to warrant consolidation continued to be:
1. Overlapping route disposition.
2. Overlapping areas of milk supply.
3. Number of handlers within a market.
4. Natural boundaries.
5. Cooperative association service areas.
6. Features common to existing orders, such as similar multiple
component pricing plans.
7. Milk utilization in common dairy products.
In the initial preliminary report, it was observed that the Farm
Bill requirement to consolidate existing marketing areas does not
specify expansion of regulation to previously non-Federally
regulated areas where such expansion would have the effect of
regulating handlers not currently regulated. This revised
preliminary report suggests that some currently non-Federally
regulated area be added on the basis of comments supported by data,
views and arguments filed by interested persons. Specifically,
unregulated areas contiguous to the initial suggested consolidated
Northeast and Mideast marketing areas are suggested for inclusion in
those suggested order areas. Some handlers currently not subject to
full Federal order regulation would become pool plants if the
suggested areas are added. Handlers who would be affected will be
notified of the possible change in their status, and encouraged to
comment.
As in the initial preliminary report, ``pockets'' of unregulated
areas enclosed in the current marketing areas are included in the
suggested consolidated marketing areas if their inclusion does not
change the current regulatory status of a plant. However, in the
process of consolidating marketing areas, some handlers who
currently are partially regulated may become fully regulated because
their sales in a combined marketing area will meet the pooling
standards of a suggested consolidated order area. As a result, this
report suggests that some unregulated areas contiguous to currently-
regulated areas be added to Federal order areas where additional
handlers would be affected.
The 11 modified suggested marketing areas (with those modified
from the initial preliminary report, and the modifications, marked
by *) and the major reasons for consolidation are:
*1. NORTHEAST--current marketing areas of the New England, New
York-New Jersey, and Middle Atlantic Federal milk orders, *with the
addition of: contiguous unregulated areas of New Hampshire, Vermont
and New York; the western non-Federally regulated portion of
Massachusetts, the Western New York State order area, and
Pennsylvania Milk Marketing Board Areas 2 and 3 in northeastern
Pennsylvania.
[[Page 16295]]
Reasons for consolidation include the existence of overlapping
sales and procurement areas between New England and New York-New
Jersey and between New York-New Jersey and Middle Atlantic. In
several cases, handlers who would become regulated because their
total sales in the combined areas would meet pooling standards are
located in areas where they compete with handlers who would not be
similarly regulated. Handler equity suggests that these handlers,
too, should become regulated. Another important measure of
association is evidenced by industry efforts to study and pursue
consolidation of the three Federal orders, as well as some of the
nonfederally regulated territory, prior to the 1996 Farm Bill.
Sixteen additional distributing plants would be pooled as a
result of the expansion of the consolidated area. Nine of these
plants currently are partially regulated.
*2. APPALACHIAN--current marketing areas of the Carolina and
Tennessee Valley Federal milk orders, *with the addition of: all of
the Louisville-Lexington-Evansville Federal order area (except one
county--in the suggested Southeast area) and 26 currently-
unregulated counties in Indiana and Kentucky.
More detailed and updated data showing overlapping sales and
procurement areas between these marketing areas are major factors
for supporting such a consolidation.
3. FLORIDA--current marketing areas of the Upper Florida, Tampa
Bay, and Southeastern Florida Federal milk orders.
Natural boundary limitations and overlapping sales and
procurement areas among the three orders are major reasons for
consolidation, as well as a measure of association evidenced by
cooperative association proposals to consolidate these three
marketing areas. Further, the cooperative associations in this area
have worked together for a number of years to accommodate needed
movements of milk between the three Florida Federal orders.
*4. SOUTHEAST--current marketing area of the Southeast Federal
milk order, plus 1 county from the Louisville-Lexington-Evansville
Federal milk order marketing area, plus 15 currently-unregulated
Kentucky counties, *minus 2 currently-unregulated counties in
northeast Texas (in the suggested Southwest area).
Major reasons for this consolidation include sales and
procurement area overlaps between the Southeast order and this
county. There is minimal sales area overlap with handlers regulated
under other Federal orders. Collection of additional data showed
greater disposition in the two Texas counties from Texas handlers
than from Southeast handlers. There are no handlers in these two
counties that would be affected.
*5. MIDEAST--current marketing areas of the Ohio Valley, Eastern
Ohio-Western Pennsylvania, Southern Michigan, and Indiana Federal
milk orders, plus Zone 2 of the Michigan Upper Peninsula Federal
milk order, and currently-unregulated counties in Michigan, Indiana,
and Ohio *with the addition of: Pennsylvania Milk Marketing Board
Area 6 (in western/central Pennsylvania) and 2 currently-unregulated
counties in New York, and *minus the Louisville-Lexington-Evansville
order area, 12 counties in Illinois, and unregulated counties in
Indiana and Kentucky that are being suggested for inclusion in the
Appalachian area.
Major criteria suggesting this consolidation include the overlap
of fluid sales in the Ohio Valley marketing area by handlers from
the other areas suggested to be consolidated. With the
consolidation, most route disposition by handlers located within the
suggested Mideast order would be within the marketing area. Also,
nearly all milk produced within the area would be pooled under the
consolidated order. The portion of the Michigan Upper Peninsula
marketing area suggested to be included in the Mideast consolidated
area has sales and milk procurement areas in common with the
Southern Michigan area and has minimal association with the western
end of the current Michigan Upper Peninsula marketing area.
Collection of additional data and recent changes in marketing
patterns indicate that the relationship between the Louisville-
Lexington-Evansville (L-L-E) area and the order areas initially
included in the suggested Appalachian area is closer than
relationship between L-L-E and the Mideast area.
Seven distributing plants that would not have been pool plants
as a result of the initially-suggested consolidation would become
pool plants due to the suggested expansion of the consolidated area
into Pennsylvania and New York. The number of pool plants also is
affected by a shift of pool plants from one consolidated area to
another because of the shift of territory from the initially-
suggested Mideast area to the revised suggested Appalachian area.
*6. UPPER MIDWEST--current marketing areas of the Chicago
Regional, Upper Midwest, Zones I and I(a) of the Michigan Upper
Peninsula Federal milk orders, and unregulated portions of
Wisconsin, *with the addition of: the Iowa, Eastern South Dakota,
and most of the Nebraska-Western Iowa Federal order areas, plus
currently-unregulated counties in Iowa and Nebraska.
Major consolidation criteria include an overlapping procurement
area between the Chicago Regional and Upper Midwest orders and
overlapping procurement and route disposition area between the
western end of the Michigan Upper Peninsula order and the Chicago
Regional order. More-detailed and updated information revealed more
significant overlapping procurement and route disposition areas
between the Iowa, Eastern South Dakota and Nebraska-Western orders
and Chicago Regional and Upper Midwest orders than had been observed
in the initial study. In addition, a common pricing plan for
producers, natural boundary limitations, and the prevalence of
cheese as a major manufactured product for the substantial reserve
milk supplies that exceed fluid milk needs exist in these orders.
Some of the western Nebraska area is more closely associated with
the Eastern Colorado area, however, and is suggested to remain with
the Central consolidated area.
Eleven additional handlers that would have been pooled under the
consolidated Central order in the initial Preliminary Report would
be pooled under a consolidated Upper Midwest order under this
revised report.
*7. CENTRAL--current marketing areas of the Southern Illinois-
Eastern Missouri, Central Illinois, Greater Kansas City, Southwest
Plains, and Eastern Colorado Federal milk orders, 10 counties
currently in the Nebraska-Western Iowa Federal order area, plus 55
currently-unregulated counties in Kansas, Missouri, Illinois,
Nebraska and Colorado, *plus the 12 counties in the current Southern
Illinois-Eastern Missouri area that initially were suggested as part
of the consolidated Mideast area, *minus the Eastern South Dakota,
Iowa and most of the Nebraska-Western Iowa Federal order marketing
areas.
Major criteria suggesting this consolidation include the
overlapping procurement and route disposition between the current
orders. The suggested consolidation would result in a concentration
of both the sales and supplies of milk within the consolidated
marketing area. The suggested consolidation would combine several
relatively small orders and provide for the release of market data
without revealing proprietary information. In addition, most of the
producers in these areas share membership in several common
cooperatives.
*8. SOUTHWEST--current marketing areas of Texas and New Mexico-
West Texas Federal milk orders, *with the addition of: two northeast
Texas counties previously suggested to be added to the Southeast
marketing area, and 47 currently-unregulated counties in southwest
Texas, and *minus the Central Arizona marketing area.
Major criteria suggesting consolidation include sales and
procurement area overlaps and common cooperative association
membership between the Texas and New Mexico-West Texas marketing
areas, and similar marketing concerns with respect to trade with
Mexico for both orders. Addition of the currently-unregulated Texas
counties will result in the regulation of no additional handlers,
and will reduce handlers' recordkeeping and reporting burden and the
market administrator's administrative costs. In the initial
consolidation report, the Central Arizona area was found to have a
minimal association with the New Mexico-West Texas and Texas order
areas. Further analysis showed that it has a much more significant
degree of association with the Clark County, Nevada, portion of the
current Great Basin order area.
The revised suggested consolidated Southwest area would include
4 fewer fully regulated pool plants as a result of the removal of
the Central Arizona area.
*9. ARIZONA-LAS VEGAS--*an eleventh marketing area composed of
the current marketing area of the Central Arizona order and the
Clark County, Nevada, portion of the current Great Basin marketing
area, plus eight currently-unregulated Arizona counties.
The major criterion suggesting consolidation is sales overlap
between the sole Las Vegas, Nevada, handler and handlers regulated
under the Central Arizona order in both Clark County, Nevada, and
unregulated portions of northern Arizona. In addition,
[[Page 16296]]
both areas exchange significant volumes of bulk and packaged milk
with Southern California.
The suggested Arizona-Las Vegas marketing area would include
five fully regulated handlers, with no additional handlers regulated
because of the addition of the currently-unregulated northern
Arizona area.
*10. WESTERN--current marketing areas of the Western Colorado,
Southwestern Idaho-Eastern Oregon, and Great Basin Federal milk
orders, *minus Clark County, Nevada. Major criteria suggesting
consolidation include overlapping sales between Southwestern Idaho-
Eastern Oregon and Great Basin, as well as a significant overlap in
procurement for the two orders in five Idaho counties. The two
orders also share a similar multiple component pricing plan. The
Western Colorado order is included because it is a small market
where data cannot be released without revealing confidential
information unless combined with the adjacent Great Basin order.
Collection of more-detailed data indicates that the strength of
earlier relationships between the former Great Basin and Lake Mead
orders that justified their 1988 merger have dwindled significantly,
with the Las Vegas area now more closely related to southern
California and competing most heavily with Central Arizona handlers.
11. PACIFIC NORTHWEST--current marketing area of the Pacific
Northwest Federal milk order plus 1 currently-unregulated county in
Oregon. The degree of association with other marketing areas is
insufficient to warrant consolidation.
Following is a table summarizing relevant data for the
consolidated markets.
Consolidated Market Summary
[Based on October 1995 Data]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of fully Total producer milk (1000 Combined class I use Weighted average
regulated distributing lbs.) (percent) utilization value
plants --------------------------------------------------------------------------------
Consolidated order --------------------------
Initial Revised Initial report Revised Initial Revised Initial Revised
report report report \1\ report report report report
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast.................................... 85 92 1,934,833 2,102,620 46.7 49.0 $13.44 $13.49
Appalachian.................................. 25 29 320,198 \2\ 412,813 82.5 81.5 14.11 13.94
Florida...................................... 18 16 \3\ 200,397 204,541 88.3 88.3 15.05 15.05
Southeast.................................... 38 40 \4\ 443,921 442,705 84.3 84.3 14.26 14.25
Mideast...................................... 68 68 \5\ 1,140,952 1,103,366 57.8 57.2 12.96 12.94
Upper Midwest................................ 27 39 \6\ 1,046,539 1,354,209 \7\ 34.2 \8\ 37.6 12.59 12.62
Central...................................... 42 30 \9\ 932,929 599,334 50.6 53.5 13.15 13.21
Southwest.................................... 31 26 861,307 680,232 48.3 48.1 13.36 13.39
Arizona-Las Vegas............................ N/A 7 N/A \10\ 181,07 N/A 48.9 N/A 13.26
5
Western...................................... 14 11 304,793 293,714 \11\ 31.7 \12\ 29.6 12.79 12.78
Pacific Northwest............................ 23 21 501,257 493,207 36.3 35.6 12.45 12.44
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Total.................................... 371 379 7,687,126 7,867,816 N/A N/A N/A N/A
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Consolidated Market Summary Table Footnotes
\1\ Initial report producer deliveries, adjusted to include only those handlers who would be fully regulated (i.e. Status = 1) in the revised suggested
marketing area, unless otherwise noted. When applicable, producer deliveries for currently non-Federally regulated plants which would be fully
regulated in a revised suggested consolidated order are included in the appropriate suggested consolidated order.
\2\ Includes producer milk for one currently fully regulated plant which would be exempt (i.e. Status = 3B) in the Appalachian market in the revised
preliminary report.
\3\ Excludes producer milk for one currently fully regulated F.O. 7 plant which would be regulated in the Florida market in the initial preliminary
report.
\4\ Includes producer milk for one currently fully regulated F.O. 7 plant which would be regulated in the Florida market in the initial preliminary
report.
\5\ Producer milk for F.O. 44 is included. Producer milk for a F.O. 32 handler who would be pooled under the initially-suggested Mideast market is
included in the initially-suggested Central market.
\6\ Producer milk for F.O. 30 and F.O. 68 only.
\7\ A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 15.3% combined Class I
utilization.
\8\ A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 19.7% combined Class I
utilization.
\9\ Includes producer milk for a F.O. 32 handler that would be in the initially-suggested Mideast market.
\10\ Excludes producer milk for one currently fully regulated F.O. 139 plant and one currently unregulated plant which would be regulated in the Arizona-
Las Vegas market in the revised preliminary report.
\11\ A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 21.8% combined Class I
utilization.
\12\ A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 21.6% combined Class I
utilization.
[FR Doc. 99-6547 Filed 4-1-99; 8:45 am]
BILLING CODE 3410-02-P
