Milk in the Nebraska-Western Iowa Marketing Area; Termination of Proceeding on Proposed Suspension

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1065

[DA-99-01]

Milk in the Nebraska-Western Iowa Marketing Area; Termination of

Proceeding on Proposed Suspension

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Termination of Proceeding.

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SUMMARY: This document terminates the proceeding that was initiated to

consider a proposal to suspend portions of the supply plant shipping

requirements for the Nebraska-Western Iowa order for the months of

March through September 1999.

FOR FURTHER INFORMATION CONTACT: Constance M. Brenner, Marketing

Specialist, USDA/AMS/Dairy Programs, Order Formulation Branch, Room

2971, South Building, PO Box 96456, Washington, DC 20090-6456, (202)

720-2357, e-mail address: [email protected].

SUPPLEMENTARY INFORMATION: Prior document in this proceeding: Notice of

Proposed Suspension of Rule: Issued March 11, 1999; published March 17,

1999 (64 FR 13125).

Small Business Consideration

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.), the Agricultural Marketing Service considered the economic

impact of this rulemaking action on small entities and has certified

that this termination of proceeding will not have a significant

economic impact on a substantial number of small entities. For the

purpose of the Regulatory Flexibility Act, a dairy farm is considered a

``small business'' if it has an annual gross revenue of less than

$500,000, and a dairy products manufacturer is a ``small business'' if

it has fewer than 500 employees. For the purposes of determining which

dairy farms are ``small businesses,'' the $500,000 per year criterion

was used to establish a production guideline of 326,000 pounds per

month. Although this guideline does not factor in additional monies

that may be received by dairy producers, it should be an inclusive

standard for most ``small'' dairy farmers. For purposes of determining

a handler's size, if the plant is part of a larger company operating

multiple plants that collectively exceed the 500-employee limit, the

plant will be considered a large business even if the local plant has

fewer than 500 employees.

[[Page 30257]]

For the month of January 1999, 1,248 dairy farmers were producers

under the Nebraska-Western Iowa order. Of these producers, 1,176

producers (i.e., 94 percent) were considered small businesses having

monthly milk production under 326,000 pounds. A further breakdown of

the monthly milk production of the producers on the order during

January 1999 is as follows: 753 produced less than 100,000 pounds of

milk; 322 produced between 100,000 and 200,000; 101 produced between

200,000 and 326,000; and 72 produced over 326,000 pounds. During the

same month, 5 handlers were pooled under the order. None are considered

small businesses.

Because this termination of the proceedings concerning the proposed

suspension results in no change in regulation it does not change

reporting, record keeping or other compliance requirements. Based on

comments received from an organization representing producers who

supply the Order 65 market with over 40 percent of the monthly average

volume of milk pooled under the order, and on our analysis of other

relevant information connected with this rulemaking, we have determined

that the suspension request should not be granted. While suspension of

the supply plant shipping requirements may have served the economic

interests of one sector of the producers supplying Order 65, it would

have most likely resulted in a significant loss of blend price income

to a substantial number of other producers under the Order.

Preliminary Statement

This termination of proceedings is issued pursuant to the

provisions of the Agricultural Marketing Agreement Act and of the order

regulating the handling of milk in the Nebraska-Western Iowa marketing

area.

Notice was published in the Federal Register on March 17, 1999 (64

FR 13125) concerning a proposed suspension of certain sections of the

order. Interested persons were afforded opportunity to file written

data, views and arguments thereon.

One comment opposing the proposed termination was received.

Statement of Consideration

This document terminates the proceeding initiated to suspend

portions of the supply plant shipping requirements for the Nebraska-

Western Iowa order (Order 65) for the months of March through September

1999. The proposed suspension was requested by North Central Associated

Milk Producers, Inc. (AMPI), a cooperative association that supplies

milk for the market's fluid needs. AMPI requested that language be

suspended from the Order 65 pool supply plant definition for the

purpose of allowing producers who had historically supplied the fluid

needs of Order 65 distributing plants to maintain their pool status.

AMPI contended that because a fluid milk plant operator reduced its

purchase of fluid milk from AMPI by more than half, AMPI would not be

able to pool milk historically associated with Order 65 for March 1999,

and thus would not qualify its supply plant for the automatic pooling

qualification months of April through August.

AMPI maintained that through discussions with other handlers in the

order, it was certain that no additional milk was needed at that time.

Thus, AMPI contended that it was appropriate to suspend the supply

plant shipping standards for the months of March through September

1999.

Dairy Farmers of America (DFA) filed a comment opposing the

proposal to suspend portions of the supply plant shipping requirements

for Order 65. DFA reported that its members produce and market over 40

percent of the monthly average volume of milk pooled under the order.

DFA contended that the suspension would enhance AMPI's ability to

pool additional supplies on the market, and DFA members would be

disadvantaged because the blend price would be lower. In addition, DFA

asserted that Federal order language is routinely suspended to

accommodate the pooling of milk as a result of general production

increases relative to Class I milk sales, natural disasters, or plant

closures. DFA stated that the reasons for these types of suspensions

are generally beyond the control of any of the handlers regulated by

the order and argued that changes in supplier relationships do not fall

into the category of ``beyond control of the party.'' DFA therefore

opposed the request.

After consideration of all relevant material, including the

proposal in the notice, the comment received, and other available

information, it is hereby found and determined that the proposed

suspension action be terminated. AMPI's loss of 50 percent of its

customary sales to a pool distributing plant will not preclude AMPI

from pooling its supply plant and some of its members' milk on Order

65. While AMPI may not be able to pool as much milk under Order 65

during March 1999 as it has in prior periods, its supply plant and

associated milk may be pooled under the order as long as some milk is

sold by the supply plant to pool distributing plants.

Furthermore, the sole requirement for gaining automatic supply

plant pooling status (with no percentage shipping standards for pool

supply plants) for the months of April through August is for the supply

plant to qualify as a pool plant for the months of September through

March. If AMPI is able to pool its supply plant, even with a lesser

volume of milk than it desires, the supply plant still would qualify

for automatic pooling status for the period April through August.

Suspension of the order's pool supply plant shipping standard for

the month of March 1999 would allow AMPI to pool a much greater volume

of milk under the order than that associated with its sales to the

fluid market and most likely would result in a significant loss of

blend price income to all other producers whose milk is pooled under

the order.

List of Subjects in 7 CFR Part 1065

Milk marketing orders.

The authority citation for 7 CFR part 1065 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

Dated: June 1, 1999.

Richard M. McKee,

Deputy Administrator, Dairy Programs.

[FR Doc. 99-14312 Filed 6-4-99; 8:45 am]

BILLING CODE 3410-02-P