[Federal Register Volume 62, Number 134 (Monday, July 14, 1997)]
[Proposed Rules]
[Pages 37524-37525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18328]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1137
[DA-97-02]
Milk in the Eastern Colorado Marketing Area; Termination of
Proceeding on Proposed Suspension/Termination of Certain Provisions of
the Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule; termination of proceeding.
-----------------------------------------------------------------------
SUMMARY: This document terminates the proceeding that was initiated to
consider a proposal to suspend or terminate a portion of the
performance standard for regulating a distributing plant under the
Eastern Colorado Federal milk marketing order. Currently, the order
specifies that a distributing plant disposing of 10 percent or more of
its Grade A milk receipts, or 12,000 pounds per day, whichever is less,
as route disposition in the marketing area is a fully regulated
distributing plant. Brown-Swiss Gillette Dairy, a handler operating a
distributing plant that is partially regulated under 3 Federal milk
orders, requested the suspension or termination.
FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Marketing
Specialist, USDA/AMS/Dairy Division, Order Formulation Branch, Room
2971, South Building, P.O. Box 96456, Washington, DC 20090-6456, (202)
720-9368, e-mail address: Clifford__M__Carman@usda.gov.
SUPPLEMENTARY INFORMATION: Prior document in this proceeding:
Notice of Proposed Suspension: Issued April 2, 1997; published
April 8, 1997 (62 FR 16737).
Small Business Consideration
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.), the Agricultural Marketing Service has considered the economic
impact of this action on small entities and has certified that this
rule will not have a significant economic impact on a substantial
number of small entities. For the purpose of the Regulatory Flexibility
Act, a dairy farm is considered a ``small business'' if it has an
annual gross revenue of less than $500,000, and a dairy products
manufacturer 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.
For the month of January 1997, the milk of 426 producers was pooled
on the Eastern Colorado Federal milk order. Of these producers, 323
produced below the 326,000-pound production guideline and are
considered as small businesses. A majority of these producers produce
less than 100,000 pounds per month. Of the total number of producers
whose milk was pooled during that month, 6 were non-member producers
and 420 were members of either Mid-America
[[Page 37525]]
Dairymen or Western Dairymen Cooperative, Inc. For January 1997, 322
cooperative members and one non-member producer met the small business
criterion.
For the month of January 1997, there were 10 handlers operating 11
plants pooled or regulated under the Eastern Colorado milk order. Of
these handlers, half have 500 or fewer employees and qualify as small
businesses.
Brown Swiss-Gillette Dairy (Gillette) receives its milk from Black
Hills Milk Producers Cooperative. During the month of January 1997, 55
of the 58 producers supplying milk to Black Hills Milk Producers
Cooperative would be considered small businesses.
This document terminates the proceeding to suspend or terminate
part of a provision of the Eastern Colorado marketing order which makes
a distributing plant disposing of 10 percent or more of its Grade A
receipts, or 12,000 pounds per day, whichever is less, as route
disposition in a marketing area a fully regulated plant. The
termination of this proceeding will not have a significant economic
impact on a substantial number of small entities because the order will
continue to function as it has with no noticeable impact on producers
and will not result in any additional regulatory burden on handlers in
the Eastern Colorado marketing area. Handlers in the marketing area
will continue to pay the minimum order prices to producers.
Preliminary Statement
This termination of proceeding is issued pursuant to the provisions
of the Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674). Notice of proposed rulemaking was published in the
Federal Register on April 8, 1997 (62 FR 16737) concerning a proposed
suspension of part of a provision of the Eastern Colorado milk order.
The proposal would have suspended or terminated a portion of the
provision which specifies that a distributing plant disposing of 10
percent or more of its Grade A milk receipts, or 12,000 pounds per day,
whichever is less, as route disposition in the marketing area be
considered a fully regulated pool plant. Interested persons were
afforded opportunity to file written data, views and arguments thereon.
Five comments opposing the proposed suspension or termination were
received. No supporting comments were received.
Statement of Consideration
This document terminates the proceeding to suspend or terminate a
portion of the performance standard for regulating a distributing plant
under the Eastern Colorado milk order. Currently, the order specifies
that a distributing plant disposing of 10 percent or more of its Grade
A milk receipts, or 12,000 pounds per day, whichever is less, as route
disposition in the marketing area is a fully regulated distributing
plant.
Gillette requested the termination or suspension of the 12,000-
pound limitation, contending that the limitation is unreasonable when
considering the plant size which must be maintained in order for
Gillette to survive financially and also maintain its status as a
partially regulated plant. Gillette also states that the 12,000-pound
limitation is unreasonable when compared to the amount of packaged
products delivered in one truckload, which greatly exceeds this
limitation. Gillette states that termination or suspension will assure
equity among producers and among handlers.
A comment filed on behalf of Western Dairymen Cooperative, Inc.
(WDCI), a cooperative association marketing approximately 83% of the
total amount of milk pooled on Order 137, opposes the proposed
suspension as requested by Brown Swiss-Gillette Dairy. WDCI states that
Gillette's route disposition in the Eastern Colorado marketing area is
significant in the northern sections of the marketing area and contends
that Gillette vigorously competes with fully regulated handlers serving
the retail markets in that portion of the marketing area. Due to
Gillette's partially regulated handler status that only obligates
Gillette to pay into the producer-settlement fund the difference
between Order 137's uniform price less $.58 and what it actually pays
its producers, WDCI states that it is possible that Gillette already
possesses a price advantage over fully regulated competing handlers in
the Order 137 marketing area. WDCI also states that the 12,000-pound
per day disposition criterion is a reasonable performance standard and
any disposition in excess of this amount by a handler should result in
such handler being fully regulated. WDCI opposes the proposed
suspension contending that it would open the door for unequal costs
among handlers and would result in harm to producers whose milk is
pooled under Order 137.
Borden/Meadow Gold Dairies, Inc., an Order 137 regulated handler,
which competes for sales with Gillette, also opposes the proposed
suspension or termination. Borden/Meadow Gold Dairies states that the
12,000-pound per day route disposition limitation includes enough sales
to cause competitive market pricing and that Gillette has a choice
whether to increase their share of sales in the Eastern Colorado
marketing area and become fully regulated or stay within the limitation
and remain partially regulated. Furthermore, the commentor recommends
that the Department should not suspend the 12,000-pound per day
limitation while the Federal order reform process is under review.
Sinton Dairy Foods Company, Dairy Gold Foods, and Robinson Dairy,
handlers regulated under Order 137, also submitted comments in
opposition to Gillette's request. The handlers state that removal of
the 12,000-pound per day limitation would allow Gillette to expand
their sales without being a fully regulated handler. Additionally, the
handlers maintain that all handlers should be subject to the same
provisions.
The comments submitted in response to the proposed suspension or
termination reveal that there is overwhelming opposition to Gillette's
proposal. For January 1997, WDCI and the 4 handlers that submitted
opposing comments represented a significant amount of Class I producer
milk on such market. The comments indicate that the 12,000-pound per
day limitation is reasonable for this market. The removal of the
12,000-pound limitation would place fully regulated handlers at a
competitive disadvantage. Any handler exceeding this limitation will be
competing with fully regulated handlers and should be subject to the
same order provisions. Gillette will remain a partially regulated pool
plant or become fully regulated according to the standards of the
Eastern Colorado milk order. Therefore, the proceeding to suspend or
terminate part of the pool plant definition is terminated.
List of Subjects in 7 CFR Part 1137
Milk marketing orders.
The authority citation for 7 CFR Part 1137 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
Dated: July 8, 1997.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Services.
[FR Doc. 97-18328 Filed 7-11-97; 8:45 am]
BILLING CODE 3410-02-P
