[Federal Register Volume 59, Number 239 (Wednesday, December 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30368]
[[Page Unknown]]
[Federal Register: December 14, 1994]
_______________________________________________________________________
Part IV
Department of Agriculture
_______________________________________________________________________
Agricultural Marketing Service
_______________________________________________________________________
7 CFR Part 1001, et al.
Milk in the New England and Other Marketing Areas; Decision on Proposed
Amendments to Marketing Agreements and to Orders; Proposed Rules
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 1001, 1002, 1004, 1005, 1006, 1007, 1011, 1012, 1013,
1030, 1032, 1033, 1036, 1040, 1044, 1046, 1049, 1050, 1064, 1065,
1068, 1075, 1076, 1079, 1093, 1094, 1096, 1099, 1106, 1108, 1124,
1126, 1131, 1134, 1135, 1137, 1138, and 1139
[Docket Nos. AO-14-A67, etc.; DA-94-02]
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.
------------------------------------------------------------------------
7 CFR
part Marketing area AO Nos.
------------------------------------------------------------------------
1001.... New England................................. AO-14-A67
1002.... New York-New Jersey......................... AO-71-A82
1004.... Middle Atlantic............................. AO-160-A70
1005.... Carolina.................................... AO-388-A7
1006.... Upper Florida............................... AO-356-A31
1007.... Georgia..................................... AO-366-A37
1011.... Tennessee Valley............................ AO-251-A38
1012.... Tampa Bay................................... AO-347-A34
1013.... Southeastern Florida........................ AO-286-A41
1030.... Chicago Regional............................ AO-361-A32
1032.... Southern Illinois-Eastern Missouri.......... AO-313-A41
1033.... Ohio Valley................................. AO-166-A64
1036.... Eastern Ohio-Western Pennsylvania........... AO-179-A59
1040.... Southern Michigan........................... AO-225-A46
1044.... Michigan Upper Peninsula.................... AO-299-A29
1046.... Louisville-Lexington-Evansville............. AO-123-A65
1049.... Indiana..................................... AO-319-A42
1050.... Central Illinois............................ AO-355-A29
1064.... Greater Kansas City......................... AO-23-A62
1065.... Nebraska-Western Iowa....................... AO-86-A51
1068.... Upper Midwest............................... AO-178-A49
1075.... Black Hills, South Dakota................... AO-248-A23
(corr.)
1076.... Eastern South Dakota........................ AO-260-A33
1079.... Iowa........................................ AO-295-A45
1093.... Alabama-West Florida........................ AO-386-A15
1094.... New Orleans-Mississippi..................... AO-103-A57
1096.... Greater Louisiana........................... AO-257-A44
1099.... Paducah, Kentucky........................... AO-183-A48
1106.... Southwest Plains............................ AO-210-A55
1108.... Central Arkansas............................ AO-243-A47
1124.... Pacific Northwest........................... AO-368-A23
(corr.)
1126.... Texas....................................... AO-231-A63
1131.... Central Arizona............................. AO-271-A33
1134.... Western Colorado............................ AO-301-A24
1135.... Southwestern Idaho-Eastern Oregon........... AO-380-A13
(corr.)
1137.... Eastern Colorado............................ AO-326-A28
1138.... New Mexico-West Texas....................... AO-335-A39
1139.... Great Basin................................. AO-309-A33
------------------------------------------------------------------------
SUMMARY: This final decision adopts a formula to price Class II milk
under all Federal orders. The Class II milk price would be the basic
formula price for the second preceding month plus a fixed differential
of $0.30. The Class II price would, like the Class I price in all
Federal orders, be announced on or before the fifth day of the month
and apply to milk marketed during the following month. This final
decision would also eliminate the ``add-back'' provision which requires
that the difference between the Class II price and the Class III price
be added to the subsequent month's Class II price when the Class II
price for the month falls below the Class III price. Referenda will be
conducted in six markets and dairy farmers cooperatives will be polled
in the other markets to determine whether dairy farmers approve the
issuance of the orders as proposed to be amended.
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: This administrative action is governed by
the provisions of Sections 556 and 557 of Title 5 of the United States
Code and therefore is excluded from the requirements of Executive Order
12866.
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.
The amended orders will promote more orderly marketing of milk by
producers and regulated handlers.
These proposed amendments have been reviewed under Executive Order
12778, Civil Justice Reform. This rule is not intended to have a
retroactive effect. If adopted, this proposed 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 provision 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.
Prior documents in this proceeding:
Notice of Hearing: Issued December 14, 1993; published December 21,
1993 (58 FR 67380).
Recommended Decision: Issued August 22, 1994; published August 26,
1994 (59 FR 44074).
A public hearing was held upon proposed amendments to the marketing
agreements and the orders regulating the handling of milk in the New
England and other marketing areas. The hearing was held, pursuant to
the provisions of the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601-647), and the applicable rules of practice (7 CFR
Part 900), at Alexandria, Virginia, on January 6 and 7, 1994. Notice of
such hearing was issued on December 14, 1993, and published December
21, 1993 (58 FR 67380).
Upon the basis of the evidence introduced at the hearing and the
record thereof, the Administrator, on August 22, 1994, issued a
recommended decision containing notice of the opportunity to file
written exceptions thereto.
The material issues, findings and conclusions, rulings, and general
findings of the recommended decision are hereby approved and adopted
and are set forth in full herein, subject to the following
modification:
1. Eleven paragraphs are added at the end of the findings on issue
1.
The material issues on the record of the hearing relate to:
1. Replacing the current Class II pricing formula used to establish
the Class II milk price in all Federal milk orders.
2. Determining whether emergency marketing conditions exist that
would warrant omission of a recommended decision under the rules of
practice and procedure (7 CFR 900.12(d)).
Findings and Conclusions
The following findings and conclusions on the material issues are
based on evidence presented at the hearing and the record thereof:
1. Class II Milk Price
A proposal to replace the Class II milk price formula with the
basic formula price for the second preceding month plus a fixed
differential of $0.30 should be adopted. Further, this price will be
announced by the fifth day of the preceding month. Thus, for example,
the Class II price for Class II milk delivered by producers in
September would be announced on August 5, and would be the M-W price
for July plus $0.30. Adoption of this proposal will result in the Class
II milk price and the Class I milk price being announced at the same
time and being applicable for all Federal milk orders. Adoption of this
proposal would eliminate the need to retain in Federal milk orders the
section providing for the basic Class II formula price. Adoption of
this proposal also eliminates the ``add-back'' provision of current
Class II pricing where, for a given month, if the Class II price is
less than the Class III price for the same month, the difference
between these prices is ``added-back'' in computing the second
succeeding month's Class II price.
For most Federal milk orders, the current Class II milk price is
the Minnesota-Wisconsin (M-W) price for the second preceding month as
adjusted by an ``updating'' product price formula (the basic Class II
formula price provisions of those orders), plus an amount by which the
simple average of the basic formula prices (M-W prices) for the most
recent 12-month period, plus ten cents, exceeds the same 12-month
period's average of the basic Class II formula prices. The Class II
milk price is announced by the 15th of the previous month. However, if
the announced Class II price for a given month is less than the Class
III price for the same month, the difference between these prices is
``added-back'' in computing the second succeeding month's Class II
price. This feature is often referred to as the ``add-back'' provision.
The purpose of the basic Class II formula price (Section 51a in
most orders) is to provide a mechanism for updating the M-W price for
the second preceding month so that the Class II price for the current
month can be based on the M-W price but still reflect more current
marketing conditions that might indicate forthcoming changes in the M-W
price. This updating is done by comparing movements of wholesale prices
for butter, nonfat dry milk, and Cheddar cheese during the first 15
days of the preceding month with such prices during the same period a
month earlier.
The current Class II differential, which is included in the Class
II milk price, in most orders is 10 cents. A 15-cent differential
applies under the three Florida orders, and a 25-cent differential
applies under the Pacific Northwest order.
The proposal recommended for adoption was proposed by the Milk
Industry Foundation and International Ice Cream Association (MIF/IICA)
and the National Milk Producers Federation (NMPF), Proposal One as
published in the hearing notice. The MIF/IICA are national trade
associations for processors of fluid milk, cultured dairy products, and
manufacturers of frozen desert products. The MIF comprises some 220
member companies who operate nearly 500 plants nationwide and process
about 80 percent of all the Class II cultured dairy products in the
United States. The IICA comprises some 186 member companies who operate
about 350 plants nationwide that manufacture, as well as distribute,
approximately 85 percent of the ice cream and related frozen products
consumed in the United States. The NMPF is the national farm commodity
organization that represents dairy producers and the dairy cooperative
marketing associations they own and operate. The Federation's members
produce a substantial majority of the U.S. milk supply and market milk
in all Federal milk order areas.
A second proposal, Proposal Two as published in the hearing notice,
was offered by Friendship Dairies, Inc. Like the proposal recommended
for adoption, this proposal would replace the Class II price formula
with the basic formula price for the second preceding month, but would
add a fixed differential of $0.10 instead of $0.30. Announcement of the
Class II milk price under this proposal would also be by the fifth day
of the preceding month. Friendship Dairies, Inc. (Friendship), is a
family owned and operated cultured dairy products manufacturer
regulated under the New York-New Jersey (Order 2) marketing area and
processes most of the 250 million pounds of milk which it receives
annually from about 175 independent producers and milk marketing
cooperatives in Class II products such as cottage cheese and yogurt.
A third proposal, Proposal Three as published in the hearing
notice, was offered by Women Involved in Farm Economics (WIFE). This
proposal would replace the Class II price formula with the basic
formula plus a fixed differential of $0.50. No witness from WIFE
testified. However, testimony was received by a witness from the
National Farmers Organization (NFO) in support of a $0.50 Class II
differential. The NFO represents about 4,000 member dairy farmers and
others who market their milk through NFO in at least 13 Federal milk
orders.
A fourth proposal, Proposal Four as published in the hearing
notice, would replace the Class II price formula with a Class II price
of $0.60 above the Class III or Class III-A price, whichever was
higher. This proposal received no evidence or testimony at the hearing
and is considered abandoned.
The fifth proposal, Proposal Five as published in the hearing
notice, proposed including the ``add-back'' provision in the Class II
price calculation. Retention of the ``add-back'' provision was proposed
by the Central Milk Producers Cooperative (CMPC), a federation of milk
cooperatives with operations in the Chicago Regional (Order 30)
marketing area. Its membership includes: Associated Milk Producers,
Inc., Bongards' Creameries, Inc., Golden Guernsey Dairy Cooperative,
Independent Milk Producers Cooperative, Land O'Lakes, Inc., Manitowoc
Milk Producers Cooperative, Mid-America Dairymen, Inc., Midwest
Dairymen's Company, Milwaukee Cooperative Milk Producers, National
Farmers Organization, Southern Milk Sales, Inc., Wisconsin Dairies
Cooperative, Wisconsin Milk Producers Cooperative, Inc., and the
Woodstock Progressive Milk Producers Association. Members of CMPC
supply milk to bottlers with Class I and Class II utilization in
Federal Orders 30, 32, 40, 50, 68, and 79. They also supply milk to
primarily ``stand alone'' Class II plants in Federal Orders 30, 33, and
49. Certain CMPC members also operate plants processing Class I and
Class II products.
Testimony in support of adopting Proposal One, which would replace
the Class II price formula with the basic formula price for the second
preceding month plus a fixed differential of $0.30 and be announced by
the fifth day of the preceding month, included:
a. The proponents MIF/IICA and NMPF;
b. Prairie Farms Dairy, a large regional dairy cooperative that
processes and distributes a full line of Grade A dairy products, wholly
owns 15 dairy plants, manages one plant for Mid-America Dairymen, Inc.,
and jointly owns 11 plants with other cooperatives;
c. The Kroger Company, which operates seven fluid distributing
plants regulated under six Federal Orders. Kroger Company also operates
two nonpool ice cream manufacturing plants that distribute dairy
products in 22 Federal orders;
d. Crowley Foods, a major dairy products manufacturer that operates
six plants in Federal Orders 1, 2, and 4, four of which are involved in
the manufacture of Class II products; and
e. Dean Foods Company, which operates 34 fluid milk plants in 17
Federal orders, processing in excess of 4.5 billion pounds of milk per
year.
Except for supporting the fifth proposal, which would retain the
``add-back'' provision, the CMPC offered testimony in support of
replacing the Class II price formula with the basic price formula for
the second preceding month plus a fixed differential of $0.30, with
this price being announced by the fifth day of the preceding month.
Testimony offered by the proponent witness for the MIF/IICA cited
that price volatility in Federal order markets in the past few years
has resulted in the movement of Class II prices in a magnitude and
direction too often in the opposite direction of Class I and Class III
prices. The witness indicated that these more volatile and opposite-
moving price relationships have acted to severely limit Class II
processors in their ability to sell products on a forward contract
basis and have caused confusion to their customers who possess a
relatively limited knowledge of milk procurement and pricing. This
witness maintains that for efficient marketing and efficient pricing of
milk, both Class I and Class II prices should be reflecting movements
in the M-W price at the same time, in the same magnitude, and in the
same direction.
The MIF/IICA proponent witness offered testimony that revisited a
proposal that they submitted at the National Hearing in the fall of
1990 to change the method for establishing advance notice of the price
paid for Class II milk under Federal orders. At that hearing, the
proposal offered was to establish a Class II price by using the M-W
price for the second preceding month plus a fixed differential of
$0.15, explaining that the rationale for establishing a 15-cent
differential was based on a comparison of the Class II price with the
basic formula price over the decade of the 1980's. The proponent
witness observed that for the 10-year period of 1980 through 1990 the
Class II price averaged about $0.15 above the M-W price.
The witness also testified that because of the Food Security Act of
1985, and the subsequent 1990 Farm Bill, the groundwork was laid for
basing milk prices on market forces more than had been done in the
past. The MIF/IICA witness contends that the result has been more
volatile milk pricing which has rendered the current Class II price
formula ineffective in tracking the Class I price, and that the spread
between the Class II and the M-W price has increased from its longer-
term average.
The proponent witness testified that the Class II price has on
average approximated the basic formula price for the second preceding
month plus 30 cents. It is on this basis that, according to the
proponent witness, they are endorsing a Class II price based on the
basic formula price for the second preceding month plus a 30-cent fixed
differential. They maintain that this approach has the advantage of
being easily understood and is revenue-neutral when compared to the
current Class II price computation. They noted that it also allows for
the announcement of the Class II price for the month to be made a full
ten days earlier than under the current Class II pricing and
announcement structure.
From an economic point of view, the MIF/IICA proponent witness
stressed that while revising the price computation for determining the
Class II price is certainly needed, it is imperative not to have a
Class II price which would increase the probability of reducing an
already declining market for Class II product sales. Because the Class
II price has averaged nearly 30 cents above the basic formula price for
the second preceding month over the past six years, the witness
asserted that the level of the Class II price for raw milk to both
processors and producers would be maintained. The witness offered and
cited Federal order statistics that supported their position that Class
II product sales are steady-to-declining. The witness said this
underscores the economic need to maintain the cost of Class II milk at
its current level relative to the basic formula price.
Lastly, the MIF/IICA proponent witness testified that the changing
cost structure of milk components under Federal orders reinforces their
position of a fixed 30-cent differential added to the second preceding
month's basic formula price in determining the Class II milk price. The
witness noted that since 1990, the butter price has been reduced under
the Federal price support program while the cost of nonfat dry milk has
risen. Noting also that the butterfat differential computation was
changed in mid-1990, these two developments have significantly
increased the cost structure for Class II products, particularly for
lower to nonfat Class II products.
The NMPF witness offered testimony and evidence in support of the
testimony of the MIF/IICA position. The witness compared the actual
Class II price each month under the Chicago Regional order with what
the Class II price would have been under their alternative proposal for
the six-year period from 1988 to 1993. These comparisons on average,
the witness said, would neither have increased handler's costs nor have
changed prices received by dairy farmers. This proponent witness
maintained that this alternative proposal would have generated more
stable prices over the past six years and that the range between
monthly high and low prices would have been less than the actual Class
II price range. According to the witness, their proposal assures that
monthly fluctuations in Class I and Class II prices will be identical.
Also, according to the NMPF witness, under the current Class II pricing
formula, Class I and Class II prices could, and often did, move in
opposite directions in the same month. They maintained that consistent
movements in Class I and Class II prices would lessen confusion and
mitigate marketing problems that arise when Class I and Class II prices
move in opposite directions in the same month.
The NMPF proponent witness testified that their proposed
alternative for determining the Class II milk price is simple, easy to
understand, and can be calculated as soon as the basic formula price is
announced by the USDA. In addition to joining the MIF/IICA position in
support of Proposal One, this witness asserted that based on data for
the past six years, adoption of their proposal would result in no
changes in either Class II prices paid by handlers or prices received
by producers. Additionally, this witness observed that there would be
little overall price impact, but prices would be more stable, and
market conditions would improve.
A joint brief filed by the MIF/IICA and the NMPF reiterated their
testimony calling for adoption of Proposal One. The witness for Prairie
Farms Dairy, Inc., offered testimony in support of the need to adopt
the MIF/IICA and NMPF's Class II pricing proposal. This witness offered
testimony supporting the proponents' observations of the pricing
problems and business impacts that occur when Class I and Class II
prices move in different directions in the same month. This witness
attributes, in part, the decline in sales of Class II products to the
wide price swings of the Class II price and how retailers have reacted
to these swings. The Prairie Farms witness asserted that adoption of
the MIF/IICA and NMPF proposal would not negatively affect farmers,
that returns to processors would be more constant, and that consumers
would see a more stable average price on Class II products, which might
result in increased sales.
The Prairie Farms witness viewed the 10-cent differential as a
``nuisance'' differential and summarized their opinion in four major
points in support of Proposal One: (1) That the proposal is supported
by the majority of the dairy industry; (2) the proposal would result in
a 10-day earlier announcement of the Class II price along with the
Class I price, which would simplify price changes to customers in a
more timely manner; (3) that Class I and Class II prices will move in
the same direction and at the same magnitude; and (4) that Class II
price swings will be more moderate, resulting in more stable consumer
prices that hopefully will increase Class II product sales.
The witness representing Kroger Company testified to their support
for the MIF/IICA and NMPF proposal, offering that adoption of the
proposal will enable processors to intelligently inform their customers
of changes in costs for Class I and Class II products simultaneously.
This witness similarly expressed concern of a declining Class II
products market. In support of the fixed 30-cent differential feature
for Class II pricing, the Kroger witness maintained that the value of
Class II milk to dairy farmers is greater than the intended target
differential of ten cents contained in the current Class II pricing
formula. This witness also asserted that it is important to establish a
pricing level which recognizes these market realities. He maintained
that a 30-cent Class II differential added to the basic formula price
recognizes the increased value of Class II milk and establishes a
competitive price level for Class II products. The Kroger witness
testified that this proposal would, over time, establish revenue
neutrality with the current Class II pricing method.
The witness for Crowley Foods, testifying in support of the MIF/
IICA and NMPF proposal, voiced identical concerns about Class I and
Class II price relationships and went further to mention that the 30-
cent fixed differential also offers a happy medium between the price
concerns of producers and processors. Additionally, the Crowley Foods
witness said that announcing the Class II price an additional ten days
in advance of the current Class II price announcement would afford
improved promotional planning and ensure that Class II prices move in
tandem with fluid prices.
Testimony by the witness for Dean Foods offered his organization's
support for the MIF/IICA and NMPF proposal.
The witness representing the CMPC offered testimony in support of
Proposal One. However, CMPC sees the need to retain the ``add-back''
feature of Class II milk pricing. Hence, their support as proponents
for Proposal Five.
The CMPC witness emphasized the role of Class II products in the
market place, offering evidence that customers demand the same basic
product and equal service levels (and costs) for their Class II milk as
with Class I milk. However, this witness testified, the current Class
II pricing system does not generate adequate returns to pay for the
costs of service so closely associated with Class I.
This witness offered evidence in support for a 30-cent
differential, indicating it is the minimum justifiable differential
level. However, the witness tempered support for this level with
concern that in no event should such apparent increase in the Class II
differential be permitted to result in no real price increase, hence
their support for the fifth proposal for retention of the ``add-back.''
The impetus for retaining the add-back provision offered by the CMPC
witness drew from the Recommended Decision of October 31, 1989 (54 FR
33709) that concluded that Class II milk should not be less than the
value for Class III milk. Although the CMPC witness acknowledged that a
Class II differential increase without an add-back feature would lessen
the risk of loss to producers, they continue to assert that the add-
back provision provides the necessary guaranty against such loss.
The brief filed by CMPC elaborated further on their support for
retention of the add-back provision. In their view, the add-back
provides the month-to-month guaranty against lost revenue to producers.
This is necessary to retain, stated the CMPC brief, because producer
and handler prices are computed on a month-to-month basis and not on
the basis of annual, or three year or six year average prices.
Support for Proposal One was offered in a brief filed on behalf of
the Southern Foods Group, Inc. (SFG), and Anderson-Erickson Dairy
Company (AE). The SFG owns and operates six fluid processing plants in
Texas and Louisiana and processes Class II products. The AE operates a
fluid processing plant and an ice cream plant in Des Moines, Iowa. In
the opinion of SFG/AE, only Proposal One provides the changes necessary
to correct the problems currently associated with Class II milk
pricing.
The SFG/AE brief points to producer and handler agreement that
Class II pricing needs to move in the same direction and at the same
rate as Class I prices and that advance pricing of Class II milk is
critical to the ability of the industry to sell finished Class II
products. They also point out that there is universal agreement that
the existing Class II price formula is unacceptable and that Class II
pricing should be based on the Minnesota-Wisconsin (M-W) price series.
On the basis of the record, the SFG/AE concludes that the Class II
price must be based on the second prior month's M-W plus a differential
of not more than thirty cents without an add-back.
Testimony offered in support of Proposal Two, which would establish
the Class II price as the basic formula price for the second preceding
month plus a fixed differential of $0.10 and have this price announced
by the fifth day of the preceding month, was received from:
a. The proponent, Friendship Dairies, Inc.;
b. Kraft General Foods, a large handler of producer milk that
operates plants that process Class II and Class III products in many
states; and
c. Galloway Company, a regulated handler under Federal Order 30
that primarily produces sweetened condensed milk, and ice cream mixes.
The proponent witness representing Friendship Dairies, Inc.,
offered testimony on the need for the Class II differential to be set
at ten cents, and for the ``add-back'' provision of current Class II
milk pricing to be eliminated. The testimony offered in support of
their proposal rested largely on prior decisions issued by the
Department which had determined that ten cents above the basic formula
price was the appropriate price (differential) level for Class II milk.
Additionally, this proponent witness agreed with other testimony that
eliminating the Class II product price formula and using the second
preceding month's basic formula price would more accurately reflect the
true direction or magnitude in the movement of the Class III price and
simplify the pricing of Class II milk. This witness emphasized that
this distortion was most attributable to the ``add-back'' provision.
The Friendship witness offered testimony that demonstrated that the
add-back provision resulted in price enhancement of the Class II price
above the intended 10-cent target differential. Additionally, this
witness testified that when the Class II price is dramatically higher
than the Class III-A price, the economic incentive exists for using
nonfat dry milk (NFDM) in place of fresh fluid milk. According to this
witness, while increasing the price of Class II milk may increase the
blend price producers receive in the short term, the long-term effect
will be to promote the use of NFDM for manufacturing Class II products.
Even if the Class II price had not increased, said the Friendship
witness, the decreasing value placed on butterfat has had the effect of
increasing the cost of a hundredweight of Class II skim milk. Because
the cost of milk is the single most significant factor affecting the
price of most finished Class II products, especially cottage cheese,
this absolute increase in cost is staggering and sales have declined,
said the witness. According to the witness, any resulting decline in
the use of milk for skim-based Class II products would yield a lower
price to dairy farmers and would compound the continuing shift of milk
value from the fat to skim component.
While the Friendship witness applauded the advance pricing feature
of Class II milk, he asserted that the add-back provision of current
Class II pricing effectively obliterates any benefits of advance
pricing, citing that prices have become volatile. This volatility has
caused confusion in the marketplace because Class II prices too often
move completely independent of the Class III and Class I price,
according to this witness. The result of this confusion, said the
witness, is manufacturers attempting to quote a price based upon a
forecast, only to rescind because of a large movement in prices due to
the add-back feature of current Class II milk pricing. This reality,
said the witness, has implications at the consumer level because
special featured prices on products that are offered to supermarket
chains to promote sales must be guaranteed well in advance so that
advertising and related promotional business can be planned. The
witness sees the result of current pricing practices as lower Class II
product sales and lower returns to dairy farmers.
The Friendship witness testified that their proposal achieves the
Department's intent that the Class II price be Class III plus ten
cents. The witness said that adoption of any other proposal would
deviate from this intent. Further, said the witness, supply and demand
conditions, at least in Order 2, do not warrant any increase in the
Class II price.
Support for the 10-cent differential level for Class II milk was
offered from Kraft General Foods (Kraft). The Kraft witness testified
that current Class II pricing has not achieved the targeted Class II
differential of ten cents above the Class III price. Rather, it has
exceeded the intended differential, and the difference has been
compounded in recent years. On a month-to-month basis, said Kraft, the
advance Class II price formula has resulted in gross distortions
between the Class II and Class III price in the amount of difference
and the direction of price movements.
The Kraft witness expressed disagreement with the MIF/IICA and NMPF
proposal only from the view that the appropriate differential level
should be ten cents and not thirty cents. The witness noted that
current Class II pricing has resulted in an effective Class II
differential level of almost thirty cents. This is not what should be
adopted as the Class II differential because the effective thirty cents
is a result of the failure of the formula used to compute the Class II
price, he said. According to the Kraft witness, it is one thing to
achieve enhancement of the minimum regulated price by mistake and quite
another to do so by design. Like the Friendship witness, the Kraft
witness drew heavily on previous decisions that reiterated that the
appropriate Class II price be the Class III price plus ten cents. This
witness was of the opinion that supply and demand conditions did not
warrant any increase in the current target differential.
Like the Friendship witness, the Kraft witness joined in the
concern that if the Class II differential level is increased above the
current intended 10-cent level, there would likely be increased
substitution of NFDM for fluid milk in Class II products. Kraft also
agreed with Friendship that the add-back provision should be
eliminated.
The witness from Galloway Company offered testimony in support of
Proposal Two. Much of this witness's testimony supported testimony of
the Friendship and Kraft witnesses and further elaborated on the
concern for the substitution of NFDM for fluid milk in the manufacture
of Class II products. Noting the wide price disparity between Class
III-A and Class II, this witness said that processors will make their
ingredient selection based on arbitrary and capricious pricing
regulations if the Class II price is increased. Increasing the Class II
price would not enhance producer revenue because of the ability to
substitute lower-priced ingredients in the manufacture of Class II
products.
A brief filed on behalf of Friendship, Kraft, Galloway Company, and
the Sorrento Cheese Company, Buffalo, New York, expressed opposition to
the 30-cent differential of Proposal One. This brief maintained that
the appropriate differential should be ten cents and that placing the
differential at thirty cents would be undue price enhancement of the
Class II price and would only institutionalize an unintended aberration
from the target differential. They contend that testimony of the
proponents of Proposal One is flawed because it is based on the Class
II prices that prevailed in 1990 when the M-W price recorded some of
its lowest prices in a decade and because of the effects of the add-
back provision.
This brief cites past decisions that affirm that the current target
10-cent differential is appropriate, although because of the add-back
provision, the target differential could not be met and this resulted
in high Class II prices. It further revisits past decisions wherein
concern was expressed that producer milk may not be made available for
Class II use if the price falls below the Class III price. While
experience has not borne this out, they say, caution still needs to be
exercised in the relationship of Class II prices to Class III-A prices
and substitution of powder for producer milk in the manufacture of
Class II products. Increasing the differential would only provide
additional stimulus to reduce handler purchases of producer milk. This
brief also counters arguments on the role of over-order premiums,
maintaining that such payments reflect the cost of services incurred by
producers (such as balancing and transportation) and not the value of
milk. They contend that such premiums should not be relevant to the raw
product value of milk.
Lastly, the brief asserts that Proposal One's differential of
thirty cents is an undue enhancement of the Class II price and has no
basis from an economic point-of-view. The view presented is that thirty
cents represents a differential of convenience between divergent views
and is not arrived at on the basis of supply and demand considerations
which, they say, any price change must be predicated upon.
In support of Proposal Three, a witness representing NFO testified
that in addition to supporting a 50-cent Class II differential, they
were also supporting the CMPC proposal that the add-back provision of
current Class II pricing be retained. This witness testified that the
record of the previous 43-day National Hearing in 1990 clearly
supported a Class II differential of at least fifty cents. The witness
indicated that if the classified pricing structure of Federal orders is
to be of value, then there has to be meaningful price differences
between classes. A class price break of only ten cents between Class
III and Class II was not meaningful in the view of this witness.
Additionally, said the NFO witness, handlers are already paying much
more than the effective 30-cent Class II differential to secure Class
II milk supplies, perhaps as much as $0.70 to $0.80 cents above Class
III is regularly being paid. According to this witness, this indicates
that the value of Class II milk is worth at least 50 cents over the
Class III price. The NFO brief further emphasized that 50 cents
establishes a differential level which is at least minimally
significant in a classified price sense. Since Federal milk orders have
three classes, then there should be a difference in the use value among
the three categories of products sufficient enough to justify separate
classes, said NFO.
Another reason offered by the NFO witness for a 50-cent Class II
differential is the devaluation of butterfat relative to the nonfat
component of milk. Because Class II products have a significant
butterfat content when viewed across all Class II products, Class II
milk producers have suffered losses in milk used in this class, and
this represents a reduction in costs to processors. This argument was
reiterated in their brief.
The NFO witness testified that even though they would like to see a
$1.00 Class II differential, a 50-cent level should be sufficient,
provided that the add-back be retained to maintain the intent that
Class II prices be equal to or above Class III prices. If the
differential level were set at $1.00, the NFO witness testified that
this would negate the need for an add-back because of the unlikelihood
that the Class III price would exceed the Class II price.
In their brief, the NFO revisited past decisions that affirmed the
establishment and intended role of the add-back provision. The NFO
reasserted that the add-back provides reinforcement to the principle
that Class II prices by definition should not be less than Class III
prices. The culprit in the volatility of Class II prices, according to
NFO, is the basic Class II formula price and not the add-back. However,
NFO did acknowledge that the add-back does play a role, albeit a minor
one, in Class II price volatility.
Opponents to retaining the add-back provision argued in submitted
briefs that it should be eliminated for a number of reasons. All
opponents agreed that if the Class II milk pricing method adopts using
the second preceding month's basic formula price and adding a fixed
differential, then the add-back can only serve to enhance the Class II
price.
The SFG/AE brief dismisses concern that producers won't deliver
milk for Class II use if the Class II price falls below the Class III
price. In addition to this not happening in the marketplace, SFG/AE
points out, it is also a function of when the price is announced.
Producers don't know until the month is over that the Class II price
was below the Class III price. Therefore, no purpose beyond price
enhancement is served by an add-back provision.
This theme is further developed in a brief filed on behalf of
Friendship. While CMPC views a ``loss'' to producer revenues without
retaining the add-back, there is in effect no ``loss'' Friendship
argues. Class II prices below Class III prices arise only during months
in which the cheese-driven M-W price is increasing, said Friendship. In
periods of falling M-W prices, the Class II differential will exceed
the target differential. Producers will not be denied the benefit of
the Class II differential--rather its payment is delayed by two months,
they said. In periods of M-W price volatility, the fact that Class I
and Class II differentials would be added to the M-W prices for the
second preceding month will actually serve to restrain, they said, the
extent to which such volatility is reflected in producer prices.
Further, the Friendship brief finds it inconsistent to call Class II
prices below Class III prices a ``loss'' because it is not balanced
against any concept of gain or a ``pay-back'' in months of a declining
M-W and the effective Class II differential at windfall levels above
the M-W.
It is clear from the record that there is universal endorsement for
changing how Class II milk is priced under Federal orders. The record
supports the conclusion that the basic Class II price formula that
``updates'' the second preceding month's M-W in establishing the Class
II price is not functioning as intended; is no longer necessary and
contributes, in part, to price volatility; and results in a distorted
relationship with other class prices. The record is also clear on the
unanimous support for retaining the advance-pricing of Class II milk
and that the Class II price should be announced at the same time as
Class I prices by using the second preceding month's M-W price and
adding a fixed differential. The only issues of disagreement regarding
Class II milk pricing are what is the appropriate Class II differential
and whether or not the ``add-back'' provision should be retained.
Class II Differential
Most handlers and producers agree that the appropriate differential
value for Class II milk is at least thirty cents above the Class III
price. The record testimony and evidence supports this conclusion on
the basis that this differential value is representative of the
additional value of milk used in this class; that it has been the
effective differential paid for Class II milk on average since 1987;
and that handlers regularly pay over-order premiums to secure milk for
Class II uses above and beyond the service feature of over-order
premiums.
Past decisions regarding the pricing of Class II milk concluded
that the basic Class II formula price and target differential of ten
cents should not be changed. The most recent past decision concluded
that the target differential of ten cents should be maintained because
supply and demand conditions revealed that there were adequate reserves
of Class III milk to meet Class II needs. That decision on the 43-day
National Hearing of 1990 recognized that many in the industry believed
that Class II prices should move in the same magnitude and direction as
Class I. That decision and this hearing clearly reveal that Class I and
Class II products are frequently processed together and marketed by
handlers in common distribution channels. However, with a basic
differential of ten cents, the decision on the 1990 43-day National
Hearing continued the existing theory of coordinating the Class II
price with the current month's Class III price because Class III
products could be used as a source of ingredients for Class II
products. In this regard, the need to coordinate the Class II price
with the Class III price was the operative principle in the pricing of
Class II milk. It was for these reasons that the updating product price
formula (represented by the basic Class II formula price) was intended
and retained.
This decision makes a clear break from the past in that Class II
milk pricing will function in a manner consistent with Class I pricing
largely in recognition of the similarity of the distribution and
marketing channels shared by milk used in both classes. The record
testimony and evidence in this hearing support the conclusion that
current Class II pricing results in prices that do not always move in
the same direction and magnitude as Class I prices even though both
products tend to move in the same marketing channels. Linking the Class
II pricing method to that of Class I should better reflect and respond
to market conditions as well as simplify the procedure.
As indicated in the brief by CMPC, the Class II price is driven
largely by changes in the basic formula price--the M-W price. As this
price changes through movements in the hard product price markets, so
will the Class II price. Therefore, any change in the Class II price is
due primarily to hard product market forces, and not due to the level
of the differential which will not change from month-to-month.
By establishing the Class II milk price at the second preceding
month's M-W and adding a fixed differential, as with Class I prices,
the intent of providing coordination with Class I prices is achieved.
Additionally, a consistent and predictable relationship between Class I
and Class II prices is also achieved. However, because of the need to
retain advance pricing for orderly marketing, there may be times when
the current month's Class III price will be greater than the Class II
price. Inversely, it is also true, that there may be times when the
Class II price is more than 30-cents greater than the current month's
Class III price. Nevertheless, the intended target differential is
maintained, as with Class I pricing, albeit with a lag as exists with
Class I pricing. This is a reality that both producers and handlers
must accept with the retention of advanced pricing and have accepted
with regard to the Class I price for many years.
The record on this hearing expressed concern for the substitution
of NFDM for fresh producer milk used to make Class II products because
the price relationship between the Class II price and, for most Federal
orders, the Class III-A price, may provide the economic incentive to do
so. In this regard, there was a call on one hand to have the Class II
price be coordinated with the movement in Class I price and at the same
time have the Class II price also be coordinated with lower-class
prices. The impossibility of this is clear. In addition, both handlers
and producers will know, in advance, the prices for both Class I and
Class II milk at the same time. Delivery, procurement, and processing
decisions can be made with surety of what prices will be. However, the
Class III or Class III-A price will not be known until after the month
has ended. It would seem that without knowing what the Class III or
Class III-A price will be in advance, the argument that NFDM will
substitute for producer milk is weakened. This is not to say that
substitution will not occur, because the record reveals that it does.
Substitution may occur if a handler predicts the future price
relationship between the Class II price and Class III or Class III-A
price, and predicts that the future relationship will provide the
economic incentive for substitution. Economic prediction, in and of
itself, is not a proper basis for determining the appropriate value the
milk has in Class II uses.
Significantly different conclusions were reached between the
proponents of retaining the current 10-cent target differential, the
proponents for a 30-cent differential, and the proponents for a 50-cent
differential on the basis of the changing value of milk components. The
10-cent proponents argue that the increasing value of skim to butterfat
effectively has raised the costs of Class II products. The 30-cent
proponents argue that the changing cost structure provides, in part,
the rationale for maintaining what the recent past's average
differential has been. The proponents for a 50-cent differential argue
that because the utilization of butterfat to manufacture Class II
products is relatively high, processors enjoy a price decrease. The
arguments presented on the changing cost structure of milk components
is not an issue for the purposes of establishing the Class II price.
Rather, it is a butterfat differential issue that has already been
decided upon in other rulemaking decisions.
As indicated in the brief submitted by SFG/AE, Federal order
statistics reveal that there is an abundant supply of milk for all
class uses of producer milk. As indicated in this brief, and in the
brief filed on behalf of Friendship, Kraft, Sorrento Cheese Company,
and Galloway Company, a price increase must be predicated upon supply
and demand considerations. Establishing the Class II differential for
any given month at thirty cents above the second preceding month's
basic formula price is not intended to effectuate a price increase or a
price decrease for Class II milk. Rather it is a recognition of the
effective differential that has been functioning for a long period of
time. The record provides no evidence on any difficulty in procuring
milk for Class II use under the current pricing structure. However, the
record does indicate that the pricing structure creates problems
regarding the timing and certainty of prices, in part, because of its
reliance on the basic Class II pricing formula used to update the M-W.
An analysis of the record evidence and officially noticed materials
does point to the fact that the Class II price has averaged nearly
thirty cents above the basic formula price for the second preceding
month since 1987. Additionally, an analysis of the effective
differential (the difference between the current month's Class III
price and Class II price since adoption of the add-back provision) for
the four-year period of 1990 through 1993 indicates that the Class II
differential has averaged thirty cents above the Class III price. It is
because of these market realities that there exists so strong an
agreement between producers and processors that the true differential
level of thirty cents for Class II milk is warranted. Some describe
this differential level as the appropriate level, some the minimum
justifiable differential, and by some, a differential level that
represents the maximum that can be called for on the basis of supply
and demand considerations.
The Add-Back Provision
Only two proponents, CMPC who supported a 30-cent differential, and
NFO, who advocated a 50-cent differential, called for retention of the
add-back provision. The add-back provision of current Class II milk
pricing was established in December 1989 as part of a decision to have
true advanced pricing for Class II milk. Prior to that time, the Class
II milk price that was announced was a tentative price which could be
retroactively updated when the Class III price for the month was
greater than the tentative Class II price. In this way, the Class II
price was ``floored'' by the Class III price. The intent of the add-
back provision was to maintain in principle this relationship between
Class II and Class III prices.
The decision on the 43-day National Hearing of 1990 recognized
that, at the time of the hearing, the effective Class II differential
had averaged about 4 cents higher than the intended differential of ten
cents per hundredweight. This decision also affirmed the intent of the
add-back was to ensure that producers not receive less than the Class
III value for Class II milk in the blend price when the basic formula
price exceeded the announced Class II price so that returns to
producers would not be reduced. In this way, the Class II price was
coordinated with the current month's Class III price.
Now that there exists much more pricing data under the current
Class II pricing method, it is clear that the effect of the add-back
provision resulted in a Class II price that can never achieve the
intended target differential. While the goal of the add-back was to
provide a degree of coordination with the Class III price, it did not
attempt price coordination with the Class III price in months when the
effective Class II differential was well above the targeted
differential. Retention of the add-back feature for any proposal
presented at this hearing would have similar results.
The add-back provision similarly does not balance prices paid by
handlers in months when producers receive more (and at times much more)
than the intended target differential. In this view, the add-back
feature only works to the price advantage of the producer who, because
of the unintended effect of a pricing provision, enjoys all protection
from market price changes that handlers do not.
To retain the add-back provision under the proposal recommended for
adoption herein could only result in increasing the minimum Class II
milk price. An analysis of what the Class II price would have been with
and without an add-back provision reveals that in 1990 the add-back
would have enhanced the effective Class II differential by 19 cents;
for 1991 it would have enhanced the Class II differential by 24 cents;
for 1992 it would have enhanced the Class II differential by 15 cents;
and for 1993 the Class II differential would have been enhanced by 34
cents. Additionally, because this decision makes a clear break from the
past in that Class II prices are more importantly coordinated with the
Class I price, there remains no rational argument for its retention.
The need for advance pricing, as well as the need for coordination with
Class I price movements, means moving away from price coordination with
the current month's Class III price. Both objectives cannot be
simultaneously satisfied.
Comments and exceptions received on the recommended decision
indicate overwhelming support and concurrence for changing the Class II
milk pricing method. In total, nine commenting entities indicated that
the decision correctly recommends that the Class II milk price should
be coordinated with the Class I milk price. In light of this, all
submitted comments and exceptions similarly supported the finding that
the ``add-back'' provision is no longer warranted because it was
intended to coordinate the Class II price with the Class III price.
Save the exceptions received from Friendship, Kraft General Foods,
Sorrento Cheese Company, and Galloway Company (Friendship), the
recommended Class II differential level of thirty cents was also
strongly supported. Friendship takes exception to the recommended 30-
cent differential level for a number of reasons. First, they take issue
with the recommended decision's conclusion that the 30-cent
differential level ``is a recognition of the effective differential
that has been functioning for a long period of time.'' They contend
that the conclusion is inaccurate and can only be made by assembling
the facts in a misleading, result-oriented manner. The Friendship
exception argues that what the average Class II differential level has
been, and which years should carry significance in determining this
level, yields different outcomes. Depending on what year one chooses to
begin with, and whether or not 1990 should carry any weight at all (in
1990 the Class II milk price averaged 61 cents above the Class III milk
price) results in different ``averages'' of the relationship between
the Class II and Class III prices. Further, according to the Friendship
exception, the recommended decision did not explain the rationale for
excluding the early years of the 1980's from the calculated Class II
differential average or why the aberration of 1990 is included in the
decision. This, according to Friendship, is arbitrary and capricious.
The Friendship exception also views the recommended 30-cent
differential level as clear price enhancement. According to Friendship,
reliance on the simple arithmetic mean demonstrates that thirty cents
would indeed result in enhancing the Class II price. Friendship
indicated that this is twenty cents more than the intended Class II
differential of ten cents that has been in place since 1981.
Friendship also views the recommended decision as placing an
inappropriate reliance on the majority view of producers and handlers
and therefore represents a political, and not an economic, value of the
recommended 30-cent differential level on Class II milk. Their
exception indicated that producer and processor agreement cannot serve
to relieve the Secretary of his responsibility to analyze and explain
his decision by established statutory and administrative pricing
standards and is contrary to law.
Finally, the Friendship exception asserts that rationale for
justifying a 30-cent differential level seeks to avoid application of
the pricing standards required by 7 U.S.C. 608c(18). According to
Friendship, if the effective Class II differential of the past has
averaged thirty cents, it has done so only because of the unintended
price enhancement of the add-back provision. If that price enhancement
is now proposed by the Department to be incorporated in the Class II
pricing structure as the intended price, says Friendship, then the
rationale supporting the price enhancement must be expressed to satisfy
Sec. 608c(18) requirements so as not to incorporate a past regulatory
error into current economic reality.
The Class II milk pricing method can best be described as
evolutionary. In 1981, the basic Class II pricing formula was adopted
into the Class II pricing method, and Class II milk prices first
enjoyed a limited form of advanced pricing. However, announced Class II
milk prices could be increased retroactively whenever the Class II
price for the month was below the same month's Class III price. This
pricing method worked reasonably well until 1989 when the volatility in
the basic formula price (the M-W price) resulted in too many instances
where announced Class II prices were retroactively increased. Although
Class II prices had been announced in advance since 1981, such advanced
pricing in practice did not constitute true advance pricing because the
Class II price could be retroactively increased.
In 1989 the elimination of the retroactive pricing aspect of Class
II milk pricing was recognized as a desirable goal by virtually the
entire dairy industry and is reflected in the decision that established
true advanced pricing for Class II milk in the interests of promoting
more orderly marketing conditions. To accomplish this, announced Class
II prices were final prices. If the Class II price for the month turned
out to be less than the same month's Class III price, then the
difference was added in the next month's announced Class II price
calculation and announcement. The 1989 decision recognized that this
``add-back'' feature would produce greater variation in prices on a
monthly basis. However, the Class II price level would essentially be
maintained while at the same time relieving the problems associated
with retroactive Class II pricing.
The decision on the 43-day National Hearing found no basis for
changing either the pricing method or the intended target differential
for Class II milk. Additionally, that decision affirmed that the add-
back feature was to ensure in principle that producers not receive less
than the Class III value for their milk. In this way, the Class II milk
price was coordinated with the Class III price.
Along the evolutionary path to promoting more orderly marketing
conditions, a better method for pricing Class II milk has been
recommended. The record evidence is clear that Class II milk pricing is
more appropriately coordinated with Class I milk pricing for the
reasons already indicated. Additionally, the record reveals that a
fixed 30-cent differential level is appropriate because it represents
an effective additional value for milk in this class for a number of
reasons also already indicated. It is important to capture this
effective value in the new pricing method of coordination with Class I
pricing, which does not constitute a price increase which cannot be
supported on the basis of the record evidence.
The near unanimous interpretation of the disorderly features of
current Class II pricing, other than the differential level, should not
be construed as a reflection of non-economic analysis of the Class II
milk pricing method problem. However, near unanimity on the issue of
establishing an appropriate differential level is construed by
Friendship to be ``political.'' It is noted that Friendship joins in
strong support of all other aspects of the recommended pricing decision
but alleges that the recommended 30-cent differential is non-economic
and is somehow political in nature. The record makes it abundantly
clear that the appropriate differential level is certainly greater than
ten cents. Beyond saying that the 10-cent level is historic, no
justification is offered for retaining a 10-cent differential when it
is also clear of the need to coordinate Class II milk pricing with
Class I pricing.
The recommended 30-cent differential level is reasonable and
economically justified because it has been the average effective
differential above the Class III price since the implementation of the
1989 decision. This ``effective'' differential is not found to be
causing disorderly marketing conditions. Other features of Class II
milk pricing, namely the basic Class II formula price and the add-back
provision, does result in disorderly conditions. It is for these
reasons, along with the more important need to coordinate Class II
pricing with Class I pricing that has resulted in the findings and
conclusions of this decision. Such a revised pricing method is the most
logical following step in the evolution of Class II milk pricing.
Additionally, thirty cents is found to be the appropriate differential
value for milk used in Class II uses because it relies upon the pricing
data since the 1989 decision that was implemented in December of that
year. The reality that the 1990 average Class II differential was in
some way aberrant and should therefore not be included in the analysis
of determining the appropriate differential level is without merit. The
resulting relationship between Class II and Class III prices in 1990
reflected the supply and demand conditions prevailing at that time just
as it did in other years. Further, because one does not like a pricing
outcome or its impact does not discount its economic importance. To not
consider such reality would be manipulating germane data in a ``result-
oriented manner.''
2. Need for Emergency Action
On the basis of the record evidence and testimony, no emergency
conditions could be ascertained that would warrant the omission of a
recommended decision.
Rulings on Proposed Findings and Conclusions
Briefs and proposed findings and conclusions were filed on behalf
of certain interested parties. These briefs, proposed findings and
conclusions, and the evidence in the record were considered in making
the findings and conclusions set forth above. To the extent that the
suggested findings and conclusions filed by interested parties are
inconsistent with the findings and conclusions set forth herein, the
requests to make such findings or reach such conclusions are denied for
the reasons previously stated in this decision.
General Findings
The findings and determinations hereinafter set forth supplement
those that were made when the New England and other 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 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;
(b) 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 the 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; and
(c) 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, marketing
agreements upon which a hearing has been held.
Rulings on Exceptions
In arriving at the findings and conclusions, and the regulatory
provisions of this decision, each of the exceptions received was
carefully and fully considered in conjunction with the record evidence.
To the extent that the findings and conclusions and the regulatory
provisions of this decision are at variance with any of the exceptions,
such exceptions are hereby overruled for the reasons previously stated
in this decision.
Marketing Agreement and Order
Annexed hereto and made a part hereof are two documents, a
Marketing Agreement regulating the handling of milk, and an Order
amending the orders regulating the handling of milk in the New England
and other marketing areas, which have been decided upon as the detailed
and appropriate means of effectuating the foregoing conclusions.
It is hereby ordered that this entire decision and the two
documents annexed hereto be published in the Federal Register.
Referendum Order To Determine Producer Approval; Determination of
Representative Period; and Designation of Referendum Agents
It is hereby directed that referenda be conducted and completed on
or before the 30th day from the date this decision is issued, in
accordance with the procedure for the conduct of referenda (7 CFR
900.300-311), to determine whether the issuance of the orders as
amended, and as hereby proposed to be amended, regulating the handling
of milk in the New York-New Jersey, Georgia, Eastern Ohio-Western
Pennsylvania, Alabama-West Florida, Paducah, Kentucky, and Southwestern
Idaho-Eastern Oregon marketing areas is approved or favored by
producers, as defined under the terms of each of the orders as amended
and as hereby proposed to be amended, who during such representative
period were engaged in the production of milk for sale within the
aforesaid marketing areas.
The representative period for the conduct of such referenda is
hereby determined to be March 1994 for the New York-New Jersey order;
June 1994 for the Southwestern Idaho-Eastern Oregon order; and August
1994 for the Georgia, Eastern Ohio-Western Pennsylvania, Alabama-West
Florida and Paducah, Kentucky orders.
The agents of the Secretary to conduct such referenda are hereby
designated to be the respective market administrators of the aforesaid
orders.
Determination of Producer Approval and Representative Period
June 1994 is hereby determined to be the representative period for
the purpose of ascertaining whether the issuance of the orders, as
amended and as hereby proposed to be amended, regulating the handling
of milk in the Chicago Regional, Indiana, and Upper Midwest marketing
areas; and August 1994 for orders regulating the handling of milk in
all other marketing areas except those for which referenda are
provided, is approved or favored by producers, as defined under the
terms of each of the orders as amended and as hereby proposed to be
amended, who during such representative period were engaged in the
production of milk for sale within the aforesaid marketing areas.
List of Subjects in 7 CFR Parts 1001, 1002, 1004, 1005, 1006, 1007,
1011, 1012, 1013, 1030, 1032, 1033, 1036, 1040, 1044, 1046, 1049, 1050,
1064, 1065, 1068, 1075, 1076, 1079, 1093, 1094, 1096, 1099, 1106, 1108,
1124, 1126, 1131, 1134, 1135, 1137, 1138, and 1139
Milk marketing orders.
Dated: December 2, 1994.
Patricia Jensen,
Acting Assistant Secretary, Marketing and Regulatory Programs.
Order Amending the Orders Regulating the Handling of Milk in the New
England and Other Marketing Areas
(This order shall not become effective unless and until the
requirements of Sec. 900.14 of the rules and 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) Findings. A public hearing was held upon certain proposed
amendments to the tentative marketing agreements and to the orders
regulating the handling of milk in the New England and other marketing
areas. The hearing was held pursuant to the provisions of the
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), and the applicable rules of practice and procedure (7 CFR Part
900).
Upon the basis of the evidence introduced at such hearing and the
record thereof, it is found that:
(1) The said orders as hereby 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 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
(3) 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
marketing agreements upon which a hearing has been held.
Order Relative to Handling
It is therefore ordered, That on and after the effective date
hereof, the handling of milk in the New England 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 recommended decision issued by the
Administrator, Agricultural Marketing Service, on August 22, 1994, and
published in the Federal Register on August 26, 1994 (59 FR 44074),
shall be and are the terms and provisions of this order, amending the
orders, and are set forth in full herein.
Accordingly, this decision proposes 7 CFR chapter X be amended as
follows:
The authority citation for 7 CFR Parts 1001 through 1139 continues
to read as follows:
Authority: Sec. 1-19, 48 Stat 31, as amended; 7 U.S.C. 601-674.
PART 1001--MILK IN THE NEW ENGLAND MARKETING AREA
Sec. 1001.21 [Removed and Reserved]
1. Section 1001.21 is removed and reserved.
2. Section 1001.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1001.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
3. Section 1001.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' without revising the text of
the paragraph, and by removing paragraph (b), to read as follows:
Sec. 1001.51 Basic formula price.
* * * * *
4. Section 1001.54 is revised to read as follows:
Sec. 1001.54 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I and Class II prices for the
following month, and the Class III and Class III-A prices for the
preceding month.
PART 1002--MILK IN THE NEW YORK-NEW JERSEY MARKETING AREA
Sec. 1002.19 [Removed and Reserved]
1. Section 1002.19 is removed and reserved.
2. Section 1002.50 is amended by revising paragraph (c) to read as
follows:
Sec. 1002.50 Class prices.
* * * * *
(c) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
3. Section 1002.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' without revising the text of
the paragraph, and by removing paragraph (b), to read as follows:
Sec. 1002.51 Basic formula price.
* * * * *
4. Section 1002.56 is amended by revising the introductory text,
removing the introductory text of paragraph (a), redesignating
paragraph (a)(1) as paragraph (a), revising paragraph (b),
redesignating paragraph (a)(2) as paragraph (c), redesignating
paragraph (a)(3) as paragraph (d), redesignating paragraph (a)(4) as
paragraph (e), redesignating paragraph (a)(5) as paragraph (f), and
redesignating paragraph (a)(6) as paragraph (g), to read as follows:
Sec. 1002.56 Announcement of class prices and butterfat differential.
The market administrator shall announce publicly on or before the
fifth day of each month, the following:
* * * * *
(b) The Class II price for the following month applicable at the
201-210 mile zone and at the 1-10 mile zone.
* * * * *
PART 1004--MILK IN THE MIDDLE ATLANTIC MARKETING AREA
Sec. 1004.21 [Removed and Reserved]
1. Section 1004.21 is removed and reserved.
2. Section 1004.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1004.50 Class and component prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
3. Section 1004.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' without revising the text of
the paragraph, and by removing paragraph (b), to read as follows:
Sec. 1004.51 Basic formula price.
* * * * *
4. Section 1004.53 is amended by revising the introductory text,
removing the introductory text of paragraph (a), redesignating
paragraph (a)(1) as paragraph (a), revising paragraph (b),
redesignating paragraph (a)(2) as paragraph (c), and redesignating
paragraph (a)(3) as paragraph (d) to read as follows:
Sec. 1004.53 Announcement of class prices and component prices.
The market administrator shall announce publicly on or before the
fifth day of each month, the following:
* * * * *
(b) The Class II price for the following month;
* * * * *
PART 1005--MILK IN THE CAROLINA MARKETING AREA
Sec. 1005.20 [Removed]
1. Section 1005.20 is removed.
2. Section 1005.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1005.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1005.52 [Removed and Reserved]
3. Section 1005.52 is removed and reserved.
4. Section 1005.54 is revised to read as follows:
Sec. 1005.54 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1006--MILK IN THE UPPER FLORIDA MARKETING AREA
Sec. 1006.19 [Removed and Reserved]
1. Section 1006.19 is removed and reserved.
2. Section 1006.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1006.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1006.51a [Removed]
3. Section 1006.51a is removed.
4. Section 1006.53 is revised to read as follows:
Sec. 1006.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1007--MILK IN THE GEORGIA MARKETING AREA
Sec. 1007.20 [Removed and Reserved]
1. Section 1007.20 is removed and reserved.
2. Section 1007.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1007.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1007.51a [Removed]
3. Section 1007.51a is removed.
4. Section 1007.53 is revised to read as follows:
Sec. 1007.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1011--MILK IN THE TENNESSEE VALLEY MARKETING AREA
Sec. 1011.20 [Removed]
1. Section 1011.20 is removed.
2. Section 1011.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1011.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1011.51a [Removed]
3. Section 1011.51a is removed.
4. Section 1011.53 is revised to read as follows:
Sec. 1011.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A price for the
preceding month.
PART 1012--MILK IN THE TAMPA BAY MARKETING AREA
Sec. 1012.19 [Removed and Reserved]
1. Section 1012.19 is removed and reserved.
2. Section 1012.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1012.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1012.51a [Removed]
3. Section 1012.51a is removed.
4. Section 1012.53 is revised to read as follows:
Sec. 1012.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1013--MILK IN THE SOUTHEASTERN FLORIDA MARKETING AREA
Sec. 1013.19 [Removed and Reserved]
1. Section 1013.19 is removed and reserved.
2. Section 1013.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1013.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1013.51a [Removed]
3. Section 1013.51a is removed.
4. Section 1013.53 is revised to read as follows:
Sec. 1013.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1030--MILK IN THE CHICAGO REGIONAL MARKETING AREA
Sec. 1030.20 [Removed and Reserved]
1. Section 1030.20 is removed and reserved.
2. Section 1030.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1030.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1030.51a [Removed]
3. Section 1030.51a is removed.
4. Section 1030.53 is revised to read as follows:
Sec. 1030.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1032--MILK IN THE SOUTHERN ILLINOIS-EASTERN MISSOURI MARKETING
AREA
Sec. 1032.20 [Removed]
1. Section 1032.20 is removed.
2. Section 1032.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1032.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1032.51a [Removed]
3. Section 1032.51a is removed.
4. Section 1032.53 is revised to read as follows:
Sec. 1032.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1033--MILK IN THE OHIO VALLEY MARKETING AREA
Sec. 1033.20 [Removed and Reserved]
1. Section 1033.20 is removed and reserved.
2. Section 1033.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1033.50 Class and component prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
3. Section 1033.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' without revising the text of
the paragraph, and by removing paragraph (b), to read as follows:
Sec. 1033.51 Basic formula price.
* * * * *
4. Section 1033.53 is amended by revising the introductory text,
removing the introductory text of paragraph (a), redesignating
paragraph (a)(1) as paragraph (a), revising paragraph (b),
redesignating paragraph (a)(2) as paragraph (c), redesignating
paragraph (a)(3) as paragraph (d), redesignating paragraph (a)(4) as
paragraph (e) and redesignating paragraph (a)(5) as paragraph (f), to
read as follows:
Sec. 1033.53 Announcement of class and component prices.
The market administrator shall announce publicly on or before the
fifth day of each month, the following:
* * * * *
(b) The Class II price for the following month;
* * * * *
PART 1036--MILK IN THE EASTERN OHIO-WESTERN PENNSYLVANIA MARKETING
AREA
Sec. 1036.20 [Removed and Reserved]
1. Section 1036.20 is removed and reserved.
2. Section 1036.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1036.50 Class and component prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1036.51a [Removed]
3. Section 1036.51a is removed.
4. Section 1036.53 is amended by revising the introductory text,
removing the introductory text of paragraph (a), redesignating
paragraph (a)(1) as paragraph (a), revising paragraph (b),
redesignating paragraph (a)(2) as paragraph (c), redesignating
paragraph (a)(3) as paragraph (d), redesignating paragraph (a)(4) as
paragraph (e) and redesignating paragraph (a)(5) as paragraph (f), to
read as follows:
Sec. 1036.53 Announcement of class and component prices.
The market administrator shall announce publicly on or before the
fifth day of each month, the following:
* * * * *
(b) The Class II price for the following month;
* * * * *
PART 1040--MILK IN THE SOUTHERN MICHIGAN MARKETING AREA
Sec. 1040.21 [Removed]
1. Section 1040.21 is removed.
2. Section 1040.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1040.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1040.51a [Removed]
3. Section 1040.51a is removed.
4. Section 1040.53 is revised to read as follows:
Sec. 1040.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1044--MILK IN THE MICHIGAN UPPER PENINSULA MARKETING AREA
Sec. 1044.20 [Removed and Reserved]
1. Section 1044.20 is removed and reserved.
2. Section 1044.22 is amended by revising paragraph (i)(1)(i) and
removing paragraph (i)(3), to read as follows:
Sec. 1044.22 Additional duties of the market administrator.
* * * * *
(i) * * *
(1) * * *
(i) The Class I price and Class II price for the following month;
* * * * *
3. Section 1044.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1044.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
4. Section 1044.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' without revising the text of
the paragraph, and by removing paragraph (b), to read as follows:
Sec. 1044.51 Basic formula price.
* * * * *
PART 1046--MILK IN THE LOUISVILLE-LEXINGTON-EVANSVILLE MARKETING
AREA
Sec. 1046.20 [Removed]
1. Section 1046.20 is removed.
2. Section 1046.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1046.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1046.51a [Removed]
3. Section 1046.51a is removed.
4. Section 1046.53 is revised to read as follows:
Sec. 1046.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1049--MILK IN THE INDIANA MARKETING AREA
Sec. 1049.20 [Removed]
1. Section 1049.20 is removed.
2. Section 1049.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1049.50 Class and component prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1049.51a [Removed]
3. Section 1049.51a is removed.
4. Section 1049.53 is amended by revising the introductory text,
removing the introductory text of paragraph (a), redesignating
paragraph (a)(1) as paragraph (a), revising paragraph (b),
redesignating paragraph (a)(2) as paragraph (c), redesignating
paragraph (a)(3) as paragraph (d), redesignating paragraph (a)(4) as
paragraph (e) and redesignating paragraph (a)(5) as paragraph (f), to
read as follows:
Sec. 1049.53 Announcement of class and component prices.
The market administrator shall announce publicly on or before the
fifth day of each month, the following:
* * * * *
(b) The Class II price for the following month;
* * * * *
PART 1050--MILK IN THE CENTRAL ILLINOIS MARKETING AREA
Sec. 1050.20 [Removed]
1. Section 1050.20 is removed.
2. Section 1050.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1050.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1050.51a [Removed]
3. Section 1050.51a is removed.
4. Section 1050.53 is revised to read as follows:
Sec. 1050.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1064--MILK IN THE GREATER KANSAS CITY MARKETING AREA
Sec. 1064.20 [Removed]
1. Section 1064.20 is removed.
2. Section 1064.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1064.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1064.51a [Removed]
3. Section 1064.51a is removed.
4. Section 1064.53 is revised to read as follows:
Sec. 1064.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1065--MILK IN THE NEBRASKA-WESTERN IOWA MARKETING AREA
Sec. 1065.20 [Removed]
1. Section 1065.20 is removed.
2. Section 1065.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1065.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1065.51a [Removed]
3. Section 1065.51a is removed.
4. Section 1065.53 is revised to read as follows:
Sec. 1065.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1068--MILK IN THE UPPER MIDWEST MARKETING AREA
Sec. 1068.20 [Removed]
1. Section 1068.20 is removed.
2. Section 1068.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1068.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1068.51a [Removed]
3. Section 1068.51a is removed.
4. Section 1068.53 is revised to read as follows:
Sec. 1068.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1075--MILK IN THE BLACK HILLS, SOUTH DAKOTA MARKETING AREA
Sec. 1075.20 [Removed]
1. Section 1075.20 is removed.
2. Section 1075.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1075.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
3. Section 1075.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' without revising the text of
the paragraph, and by removing paragraph (b), to read as follows:
Sec. 1075.51 Basic formula price.
* * * * *
4. Section 1075.53 is revised to read as follows:
Sec. 1075.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1076--MILK IN THE EASTERN SOUTH DAKOTA MARKETING AREA
Sec. 1076.20 [Removed]
1. Section 1076.20 is removed.
2. Section 1076.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1076.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1076.51a [Removed]
3. Section 1076.51a is removed.
4. Section 1076.53 is revised to read as follows:
Sec. 1076.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1079--MILK IN THE IOWA MARKETING AREA
Sec. 1079.20 [Removed]
1. Section 1079.20 is removed.
2. Section 1079.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1079.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1079.51a [Removed]
3. Section 1079.51a is removed.
4. Section 1079.53 is revised to read as follows:
Sec. 1079.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1093--MILK IN THE ALABAMA-WEST FLORIDA MARKETING AREA
Sec. 1093.20 [Removed]
1. Section 1093.20 is removed.
2. Section 1093.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1093.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1093.51a [Removed]
3. Section 1093.51a is removed.
4. Section 1093.53 is revised to read as follows:
Sec. 1093.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A price for the
preceding month.
PART 1094--MILK IN THE NEW ORLEANS-MISSISSIPPI MARKETING AREA
Sec. 1094.20 [Removed]
1. Section 1094.20 is removed.
2. Section 1094.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1094.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1094.51a [Removed]
3. Section 1094.51a is removed.
4. Section 1094.53 is revised to read as follows:
Sec. 1094.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1096--MILK IN THE GREATER LOUISIANA MARKETING AREA
Sec. 1096.20 [Removed]
1. Section 1096.20 is removed.
2. Section 1096.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1096.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1096.51a [Removed]
3. Section 1096.51a is removed.
4. Section 1096.53 is revised to read as follows:
Sec. 1096.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1099--MILK IN THE PADUCAH, KENTUCKY MARKETING AREA
Sec. 1099.20 [Removed]
1. Section 1099.20 is removed.
2. Section 1099.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1099.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1099.51a [Removed]
3. Section 1099.51a is removed.
4. Section 1099.53 is revised to read as follows:
Sec. 1099.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1106--MILK IN THE SOUTHWEST PLAINS MARKETING AREA
Sec. 1106.20 [Removed]
1. Section 1106.20 is removed.
2. Section 1106.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1106.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1106.51a [Removed]
3. Section 1106.51a is removed.
4. Section 1106.53 is revised to read as follows:
Sec. 1106.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1108--MILK IN THE CENTRAL ARKANSAS MARKETING AREA
Sec. 1108.20 [Removed]
1. Section 1108.20 is removed.
2. Section 1108.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1108.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1108.51a [Removed]
3. Section 1108.51a is removed.
4. Section 1108.53 is revised to read as follows:
Sec. 1108.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1124--MILK IN THE PACIFIC NORTHWEST MARKETING AREA
1. Section 1124.19 is revised to read as follows:
Sec. 1124.19 Butterfat differential.
The butterfat differential is the number that results from
subtracting the computation in paragraph (b) of this section from the
computation in paragraph (a) of this section and rounding to the
nearest one-tenth cent:
(a) Multiply 0.138 times the monthly average Chicago Mercantile
Exchange Grade A (92-score) butter price as reported by the Dairy
Division;
(b) Multiply 0.0028 times the average price per hundredweight, at
test, for manufacturing grade milk, f.o.b. plants in Minnesota and
Wisconsin, as reported by the Department for the month.
2. Section 1124.50 is amended by changing the references in
paragraphs (e) and (f)(2) from Sec. 1124.19(e) to Sec. 1124.19 and
revising paragraph (b) to read as follows:
Sec. 1124.50 Class and component prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
3. Section 1124.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' and changing the reference
in that paragraph from Sec. 1124.19(e) to Sec. 1124.19, and by removing
paragraph (b), to read as follows:
Sec. 1124.51 Basic formula price.
* * * * *
4. Section 1124.53 is amended by revising paragraph (a), removing
paragraph (b), and redesignating paragraph (c) as paragraph (b), to
read as follows:
Sec. 1124.53 Announcement of class and component prices.
* * * * *
(a) On or before the 5th day of each month, the Class I price and
the Class II price for the following month, and the Class III and Class
III-A price for the preceding month.
* * * * *
5. In Sec. 1124.75 (a)(2)(i), the reference to Sec. 1124.19(e) is
changed to read Sec. 1124.19.
PART 1126--MILK IN THE TEXAS MARKETING AREA
Sec. 1126.20 [Removed and Reserved]
1. Section 1126.20 is removed and reserved.
2. Section 1126.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1126.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1126.51a [Removed]
3. Section 1126.51a is removed.
4. Section 1126.53 is revised to read as follows:
Sec. 1126.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1131--MILK IN THE CENTRAL ARIZONA MARKETING AREA
Sec. 1131.20 [Removed and Reserved]
1. Section 1131.20 is removed and reserved.
2. Section 1131.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1131.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1131.51a [Removed]
3. Section 1131.51a is removed.
4. Section 1131.53 is revised to read as follows:
Sec. 1131.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A prices for the
preceding month.
PART 1134--MILK IN THE WESTERN COLORADO MARKETING AREA
Sec. 1134.19 [Removed and Reserved]
1. Section 1134.19 is removed and reserved.
2. Section 1134.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1134.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1134.51a [Removed]
3. Section 1134.51a is removed.
4. Section 1134.53 is revised to read as follows:
Sec. 1134.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1135--MILK IN THE SOUTHWESTERN IDAHO-EASTERN OREGON MARKETING
AREA
1. Section 1135.19 is revised to read as follows:
Sec. 1135.19 Butterfat differential.
The butterfat differential is the number that results from
subtracting the computation in paragraph (b) of this section from the
computation in paragraph (a) of this section and rounding to the
nearest one-tenth cent:
(a) Multiply 0.138 times the monthly average Chicago Mercantile
Exchange Grade A (92-score) butter price as reported by the Dairy
Division;
(b) Multiply 0.0028 times the average price per hundredweight, at
test, for manufacturing grade milk, f.o.b. plants in Minnesota and
Wisconsin, as reported by the Department for the month.
2. Section 1135.50 is amended by changing the references in
paragraphs (e) and (f)(2) from Sec. 1135.19(e) to Sec. 1135.19 and
revising paragraph (b) to read as follows:
Sec. 1135.50 Class and component prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
3. Section 1135.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' and changing the reference
in that paragraph from Sec. 1135.19(e) to Sec. 1135.19, and by removing
paragraph (b), to read as follows:
Sec. 1135.51 Basic formula price.
* * * * *
4. Section 1135.53 is amended by revising paragraph (a), removing
paragraph (b), and redesignating paragraph (c) as paragraph (b), to
read as follows:
Sec. 1135.53 Announcement of class and component prices.
* * * * *
(a) On or before the 5th day of each month, the Class I price and
the Class II price for the following month, and the Class III and Class
III-A prices for the preceding month.
* * * * *
5. In Sec. 1135.74(b)(2) (i) and (ii), the references to
Sec. 1135.19(e) are changed to read Sec. 1135.19.
PART 1137--MILK IN THE EASTERN COLORADO MARKETING AREA
Sec. 1137.19 [Removed and Reserved]
1. Section 1137.19 is removed and reserved.
2. Section 1137.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1137.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1137.51a [Removed]
3. Section 1137.51a is removed.
4. Section 1137.53 is revised to read as follows:
Sec. 1137.53 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III price for the preceding month.
PART 1138--MILK IN THE NEW MEXICO-WEST TEXAS MARKETING AREA
Sec. 1138.20 [Removed and Reserved]
1. Section 1138.20 is removed and reserved.
2. Section 1138.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1138.50 Class prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
Sec. 1138.52 [Removed and Reserved]
3. Section 1138.52 is removed and reserved.
4. Section 1138.54 is revised to read as follows:
Sec. 1138.54 Announcement of class prices.
The market administrator shall announce publicly on or before the
fifth day of each month the Class I price and the Class II price for
the following month, and the Class III and Class III-A price for the
preceding month.
PART 1139--MILK IN THE GREAT BASIN MARKETING AREA
Sec. 1139.19 [Removed and Reserved]
1. Section 1139.19 is removed and reserved.
2. Section 1139.50 is amended by revising paragraph (b) to read as
follows:
Sec. 1139.50 Class prices and component prices.
* * * * *
(b) Class II price. The Class II price shall be the basic formula
price for the second preceding month plus $0.30.
* * * * *
3. Section 1139.51 is amended by revising the section heading,
removing the paragraph designation ``(a)'' without revising the text of
the paragraph, and by removing paragraph (b), to read as follows:
Sec. 1139.51 Basic formula price.
* * * * *
4. Section 1139.53 is amended by revising paragraph (a), removing
paragraph (b), and redesignating paragraph (c) as paragraph (b), to
read as follows:
Sec. 1139.53 Announcement of class and component prices.
* * * * *
(a) The 5th day of each month, the Class I price and the Class II
price for the following month.
* * * * *
Marketing Agreement Regulating the Handling of Milk in Certain
Marketing Areas
Note: This marketing agreement will not appear in the Code of
Federal Regulations.
The parties hereto, in order to effectuate the declared policy
of the Act, and in accordance with the rules of practice and
procedure effective thereunder (7 CFR Part 900), desire to enter
into this marketing agreement and do hereby agree that the
provisions referred to in paragraph I hereof as augmented by the
provisions specified in paragraph II hereof, shall be and are the
provisions of this marketing agreement as if set out in full herein.
I. The findings and determinations, order relative to handling,
and the provisions of Secs. ________________\1\ to ________________,
all inclusive, of the order regulating the handling of milk in
(____________ Name of order ____________) marketing area (7 CFR Part
________\2\) which is annexed hereto; and
---------------------------------------------------------------------------
\1\First and last sections of order.
\2\Appropriate Part number.
---------------------------------------------------------------------------
II. The following provisions: Sec. ____________\3\ Record of
milk handled and authorization to correct typographical errors.
(a) Record of milk handled. The undersigned certifies that he/
she handled during the month of ________\4\, hundredweight of milk
covered by this marketing agreement.
---------------------------------------------------------------------------
\3\Next consecutive section number.
---------------------------------------------------------------------------
(b) Authorization to correct typographical errors. The
undersigned hereby authorizes the Director, or Acting Director,
Dairy Division, Agricultural Marketing Service, to correct any
typographical errors which may have been made in this marketing
agreement.
Sec. ____________\3\ Effective date. This marketing agreement
shall become effective upon the execution of a counterpart hereof by
the Secretary in accordance with Section 900.14(a) of the aforesaid
rules of practice and procedure.
---------------------------------------------------------------------------
\4\Appropriate representative period for the order.
---------------------------------------------------------------------------
In Witness Whereof, The contracting handlers, acting under the
provisions of the Act, for the purposes and subject to the
limitations herein contained and not otherwise, have hereunto set
their respective hands and seals.
Signature By (Name)----------------------------------------------------
(Title)----------------------------------------------------------------
(Address)--------------------------------------------------------------
(Seal)
Attest
[FR Doc. 94-30368 Filed 12-13-94; 8:45 am]
BILLING CODE 3410-02-P
