[Federal Register Volume 59, Number 67 (Thursday, April 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8409]
Federal Register / Vol. 59, No. 67 / Thursday, April 7, 1994 /
[[Page Unknown]]
[Federal Register: April 7, 1994]
VOL. 59, NO. 67
Thursday, April 7, 1994
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 1001 and 1002
[DA-94-09]
Milk in the New England and New York-New Jersey Marketing Areas;
Termination of Certain Provisions of the Orders
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule terminates the seasonal production incentive plans
for paying producers under the New England and New York-New Jersey
Federal milk orders. This termination was requested by cooperative
associations that represent producers who supply about one-half of the
milk regulated under the orders. The seasonal incentive plans have been
suspended during each of the last three years and are no longer
effective in carrying out their intended purpose.
EFFECTIVE DATE: April 7, 1994.
FOR FURTHER INFORMATION CONTACT: Gino M. Tosi, Marketing Specialist,
USDA/AMS/Dairy Division, Order Formulation Branch, room 2971, South
Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1366.
SUPPLEMENTARY INFORMATION: Prior document in this proceeding:
Notice of Proposed Termination or Suspension: Issued February 15,
1994; published February 24, 1994 (59 FR 8873).
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the
Agency to examine the impact of a proposed rule on small entities.
Pursuant to 5 U.S.C. 605(b), the Administrator of the Agricultural
Marketing Service has certified that this rule will not have a
significant economic impact on a substantial number of small entities.
This rule lessens the regulatory impact of the orders on dairy farmers
and will not affect milk handlers.
The Department is issuing this rule in conformance with Executive
Order 12866.
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This rule is not intended to have a retroactive
effect. This rule will not preempt any state or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674), 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 file with
the Secretary a petition stating that the order, any provisions of the
order, or any obligation imposed in connection with the order is not in
accordance with the law and requesting a modification of an order or to
be exempted from the order. 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.
This order of termination is issued pursuant to the provisions of
the Agricultural Marketing Agreement Act and of the orders regulating
the handling of milk in the New England and New York-New Jersey
marketing areas.
Notice of proposed rulemaking was published in the Federal Register
on February 24,1994 (59 FR 8873) concerning a proposed termination or
suspension of certain provisions of the orders. Interested persons were
afforded opportunity to file written data, views and arguments.
Comments supporting the proposed termination were received from
Dairylea Cooperative, Inc, and Agri-Mark, two of the cooperatives who
proposed termination. One comment was received from a dairy farmer who
opposed termination.
After consideration of all relevant material, including the
proposal in the notice, the comments received and other available
information, it is hereby found and determined that the following
provisions of the orders do not tend to effectuate the declared policy
of the Act:
1. In Sec. 1001.62, paragraphs (c) and (d); and
2. In Sec. 1002.61, paragraphs (d) and (e).
Statement of Consideration
This rule terminates the seasonal plans for paying producers under
the New England and New York-New Jersey Federal orders. These seasonal
payment plans provide for making deductions from prices paid to
producers during the normal flush-production months of March through
June and returning to producers the deducted amounts during the normal
short-production months of August through November. The plans are
intended to provide an incentive for dairy farmers to level out their
production during the year.
The termination of the payment plans was requested by cooperative
associations that represent dairy farmers who supply handlers regulated
under the orders. Collectively, these cooperatives represent about 51
percent of the producers associated with the New England marketing area
and about 48 percent of the producers associated with the New York-New
Jersey marketing area. The cooperative associations proposing the
terminations are Agri-Mark, Inc.; Allied Federated Cooperatives, Inc.;
Atlantic Dairy Cooperative, Inc.; Dairylea Cooperative, Inc., and its
members cooperatives: Cortland Bulk Milk Producers Cooperative, Oneida-
Madison Milk Producers Cooperative Association, Inc., and Steamburg
Milk Producers Cooperative Association, Inc., and its affiliated
cooperatives: Deer River Bulk Milk Cooperative, Inc., and Jefferson
Bulk Milk Cooperative, Inc.; Eastern Milk Producers Cooperative
Association, Inc., and its affiliated cooperatives: Chateaugay Co-
operative Marketing Association, Inc., Konhokton Milk Producers Co-
operative Association, Inc., Middlebury Milk Producers Cooperative
Association, Inc., and Sullivan County Co-operative Dairy Association,
Inc.; and Upstate Milk Cooperatives, Inc.
Proponents contend that the ``Louisville'' seasonal payment plans
are no longer effective or necessary to reduce the seasonal spring-to-
fall swings in milk production as was intended when they were first
provided for in these orders some 25 years ago. Proponents indicated
that the seasonal payment plans are largely ineffective because of a
general lack of awareness about the plans in the dairy farming
community. They also contend that the price differentials are too low
relative to milk prices to provide an incentive for dairy farmers to
modify their seasonal production patterns. The proponents further
indicated concern about the impact of reducing returns to producers
during the spring months when producer milk prices are already
generally lower than during other times of the year.
In addition, it has been noted that the seasonal incentive payment
plans are no longer necessary or effective since they have been
suspended for the past three years. The proponents point out that these
past suspension actions were supported by the need for dairy farmers to
have additional monies available during the spring months during which
prices to producers decline precipitously. Proponents expect that milk
prices will decline in the spring months of 1994 and in the spring
months of future years. They also maintain that retaining the payment
plans will continue to put cash flow pressures on dairy farmers during
a time of increased cash needs for spring planting.
In the comments, Agri-Mark reiterated its support for the
termination of the seasonal payment plans. The cooperative's primary
support for termination involves the volatility of milk prices at low
levels for the past several years. Agri-Mark maintains that if the
Louisville seasonal payment plan had been in effect, about $20 million
would have been removed from producer payments in the spring planting
months and would have resulted in cash flow difficulties for many
farms. Agri-Mark said that even those farmers who have contra-seasonal
milk production would have reduced income during the spring and summer
months.
In further support for the termination of the seasonal payment
plans, Agri-Mark indicated that actual seasonal price movements in the
marketplace, to some extent, accomplished the fall price incentives
originally intended by the Louisville payment plan. The cooperative
noted that during the past three years, while the Louisville plans were
suspended, the blend price in the August-November period averaged
slightly more that $1.00 above the March-June period in both the New
England and New York-New Jersey orders. Agri-Mark expects this pattern
to generally continue.
One comment in opposition to this termination was received from a
dairy farmer who supplies the New York-New Jersey marketing area. This
farmer expressed the view that the Louisville payment plan is still
effective in reducing the variability of milk production even though
the Louisville plan differential levels are too low to be as meaningful
as they were in earlier years when the differential level represented a
greater percentage of the price of milk. The farmer also expressed the
view that withholding money from a producer's milk check in the spring
months when cash is needed for meeting spring planting costs was not
particularly burdensome.
The ``Louisville'' seasonal incentive payment plan has been in
effect in the New England and New York-New Jersey orders since the late
1960's when there was significant variability between milk production
in the spring and fall months. Market statistics reveal that this
variability was as much as 30 percent when the plans were first
implemented in the orders, and there was considerable institutional and
economic pressure to reduce this seasonality of production because of
the high costs of marketing seasonal surpluses of milk. It is
reasonable to conclude from a review of current-day statistics that the
plans have played a role in reducing this variability, as commented
upon by the producer in opposition to the termination action. However,
the seasonality of milk production has not changed much since 1980, and
there are certainly a number of other reasons for this in addition to
the ``small'' Louisville differentials relative to the per
hundredweight price of milk from the 1960's and 1970's versus today.
Without question, it is also reasonable to attribute, in part, the
narrowing of production seasonality to advances in production
practices, including improvement in feeding programs, breeding and
other management practices.
One of the most important consideration in this termination action
is the fact that the plans have not been operational for the last three
years and thus have had no impact on the seasonality of milk
production. The prior suspension actions, as well as this request to
terminate the payment plans, were supported by a significant number of
producers who were concerned about their prices being reduced any more
than what would normally occur because of seasonally lower prices in
the spring. The seasonal variability in the basic formula price for
milk (the M-W price) in today's marketplace already provides an
incentive for producers to make their own individual production
decisions in response to the seasonal price changes. Since the payment
plans have not been operational or effective, they should be
terminated.
Therefore, the seasonal incentive payment plans of the two markets
are hereby terminated.
It is hereby found and determined that thirty days' notice of the
effective date hereof is impractical, unnecessary and contrary to the
public interest in that:
(a) The termination is necessary to reflect current marketing
conditions and to assure orderly marketing conditions in the marketing
area;
(b) This termination does not require of persons affected
substantial or extensive preparation prior to the effective date; and
(c) Notice of proposed rulemaking was given interested parties and
they were afforded opportunity to file written data, views or arguments
concerning this suspension.
Therefore, good cause exists for making this order effective upon
publication in the Federal Register.
List of Subjects in 7 CFR Parts 1001 and 1002
Milk marketing orders.
For the reasons set forth in the preamble, the following provisions
in title 7, parts 1001 and 1002, are amended as follows:
1. The authority citation for 7 CFR parts 1001 and 1002 continues
to read as follows:
Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-
674.
PART 1001--MILK IN THE NEW ENGLAND MARKETING AREA
Sec. 1001.62 [Amended]
2. In Sec. 1001.62, paragraphs (c) and (d) are removed and
reserved.
PART 1002--MILK IN THE NEW YORK-NEW JERSEY MARKETING AREA
Sec. 1002.61 [Amended]
3. In Sec. 1002.61, paragraphs (d) and (e) are removed and
reserved.
Dated: April 4, 1994.
Patricia Jensen,
Acting Assistant Secretary, Marketing and Inspection Services.
[FR Doc. 94-8409 Filed 4-6-94; 8:45 am]
BILLING CODE 3410-02-P
