[Federal Register Volume 59, Number 2 (Tuesday, January 4, 1994)]
[Proposed Rules]
[Pages 260-265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-56]


[[Page Unknown]]

[Federal Register: January 4, 1994]


                                                     VOL. 59, NO. 2

                                           Tuesday, January 4, 1994
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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1030, 1065, 1068, 1076, and 1079

[Docket Nos. AO-361-A31, etc.; DA-92-27]

 

Milk in the Chicago Regional and Other Marketing Areas; Notice of 
Hearing on Proposed Amendments to Tentative Marketing Agreements and 
Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Notice of public hearing on proposed rulemaking.

------------------------------------------------------------------------
        7 CFR Part                Marketing Area            AO Nos.     
------------------------------------------------------------------------
1030......................  Chicago Regional..........  AO-361-A31      
1065......................  Nebraska-Western Iowa.....  AO-86-A50       
1068......................  Upper Midwest.............  AO-178-A48      
1076......................  Eastern South Dakota......  AO-260-A32      
1079......................  Iowa......................  AO-295-A44      
------------------------------------------------------------------------



SUMMARY: This hearing is being held to consider proposals to amend five 
Federal milk marketing orders. The proposals would establish a multiple 
component pricing plan for pricing producer milk under the orders. 
Producer milk utilized in Class II and Class III would be priced to 
handlers on the basis of three components. The components priced would 
be butterfat, protein and solids-not-fat other than protein. Under some 
of the proposals, producer prices or protein prices would be adjusted 
for quality attributes of milk, such as somatic cell content. The 
hearing was requested by a dairy trade association and several 
cooperative associations that represent a substantial number of dairy 
farmers who supply these markets. A number of other dairy cooperative 
associations and dairy organizations submitted proposals to be 
considered at the hearing. The proponents maintain that the proposed 
payment plans would give producers a direct economic incentive to 
produce the components valued by the marketplace.

DATES: The hearing will convene at 9 a.m. local time on January 25, 
1994.

ADDRESSES: The hearing will be held at the Sheraton Inn Airport, 2500 
E. 79th Street, Bloomington, Minnesota 55425, telephone (612) 854-1771.

FOR FURTHER INFORMATION CONTACT: Constance M. Brenner, Marketing 
Specialist, USDA/AMS/Dairy Division, Order Formulation Branch, Room 
2971, South Building, P. O. Box 96456, Washington, DC 20090-6456, (202) 
720-7183.

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.
    Notice is hereby given of a public hearing to be held at the 
Sheraton Inn Airport, 2500 E. 79th Street, Bloomington, Minnesota 55425 
(telephone 612/854-1771), beginning at 9 a.m. on January 25, 1994, with 
respect to proposed amendments to the tentative marketing agreements 
and to the orders regulating the handling of milk in the aforesaid 
marketing areas.
    The hearing is called 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 governing the 
formulation of marketing agreements and marketing orders (7 CFR part 
900).
    The purpose of the hearing is to receive evidence with respect to 
the economic and marketing conditions which relate to the proposed 
amendments, hereinafter set forth, and any appropriate modifications 
thereof, to the tentative marketing agreements and to the orders.
    Actions under the Federal milk order programs are subject to the 
Regulatory Flexibility Act (Pub. L. 96-354). This Act seeks to ensure 
that, within the statutory authority of a program, the regulatory and 
information requirements are tailored to the size and nature of small 
businesses. For the purpose of the Act, a dairy farm is 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. Most parties subject to a milk order are considered 
as a small business. Accordingly, interested parties are invited to 
present evidence on the probable regulatory and informational impact of 
the hearing proposals on small businesses. Also, parties may suggest 
modifications of these proposals for the purpose of tailoring their 
applicability to small business.
    The amendments to the rules proposed herein have been reviewed 
under Executive Order 12778, Civil Justice Reform. They are not 
intended to have a retroactive effect. If adopted, the proposed 
amendments would not preempt any state or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with these 
rules.
    The Act 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 courts 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 date of the entry of the ruling.
    Interested parties who wish to introduce exhibits should provide 
the Presiding Officer at the hearing with 6 copies of such exhibits for 
the Official Record. Also, it would be helpful if additional copies are 
available for the use of other participants at the hearing.

List of Subjects in 7 CFR Parts 1030, 1065, 1068, 1076, and 1079

    Milk marketing orders.

    The authority citation for 7 CFR parts 1030, 1065, 1068, 1076, and 
1079 continues to read as follows:


    Authority: Secs. 1-19, 48 Stat. 31 as amended; 7 U.S.C. 601-674.


    The proposed amendments, as set forth below, have not received the 
approval of the Secretary of Agriculture.
    Proposed by National All-Jersey, Inc., and supported by a number of 
cooperative associations and other dairy organizations:

Proposal No. 1

    For the Chicago Regional, Upper Midwest and Iowa Federal milk 
orders (Orders 30, 68 and 79), establish a multiple component pricing 
plan for producer milk by revising each of the orders to incorporate 
the pricing plan included in detail in this notice for part 1030, to 
include the following provisions:
    Change the introductory text and add paragraphs (e) and (f) to 
Sec. 1030.20, as follows:


Sec. 1030.20  Product prices.

    The following product prices shall be used in calculating the basic 
Class II formula price pursuant to Sec. 1030.51(b) and the component 
prices defined in Sec. 1030.50 as follows:
* * * * *
    (e) Monthly Cheddar Cheese Price. The Monthly Cheddar Cheese Price 
means the National Cheese Exchange (Green Bay) monthly average price 
for 40 pound blocks of cheddar cheese as calculated and reported each 
month by the Dairy Division, Agricultural Marketing Service in Dairy 
Market News.
    (f) Whey Protein Concentrate Price. The Whey Protein Concentrate 
Price means the monthly average whey protein concentrate price (central 
and western (f.o.b.) edible 34 percent protein) calculated and reported 
each month by the Dairy Division, Agricultural Marketing Service in 
Dairy Market News.
    Revise Sec. 1030.30 to read as follows:


Sec. 1030.30  Reports of receipts and utilization.

    On or before the 10th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator as follows:
    (a) Each handler described in Sec. 1030.9(a), (b) and (c) shall 
report for each plant of the handler (except if a handler requests and 
is approved by the market administrator, a handler may file a 
consolidated report for supply plants and/or a consolidated report for 
distributing plants) the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein and 
pounds of solids-not-fat other than protein contained in:
    (i) Receipts of producer milk, including producer milk diverted by 
the handler, and
    (ii) Receipts of milk from handlers described in Sec. 1030.9(c).
    (2) Product pounds of butterfat contained in:
    (i) Receipts of fluid milk products not included in (a)(1) above 
and bulk fluid cream products from any source;
    (ii) Receipts of other source milk;
    (iii) Inventories at the beginning and end of the month of fluid 
milk products and products specified in Sec. 1030.40(b)(1);
    (iv) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as 
prescribed for reports required by paragraph (a) of this section. 
Receipts of milk that would have been producer milk if the plant had 
been fully regulated shall be reported in lieu of producer milk. Such 
report shall show also the quantity of any reconstituted skim milk in 
route disposition in the marketing area.
    (c) Each handler not specified in paragraphs (a) and (b) of this 
section shall report with respect to its receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.
    Revise Sec. 1030.31 to read as follows:


Sec. 1030.31  Payroll reports.

    (a) On or before the 25th day after the end of each month, each 
handler described in Sec. 1030.9(a), (b), and (c) shall report to the 
market administrator its producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) Name and address;
    (2) The total pounds of milk received from such producer;
    (3) The pounds of butterfat contained in such milk;
    (4) The pounds of protein contained in such milk;
    (5) The pounds of solids-not-fat other than protein (Other Solids) 
contained in such milk;
    (6) The price per pound of butterfat, protein and Other Solids, the 
gross amount due, the amount and nature of any deductions, and the net 
amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1030.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required 
by paragraph (a) of this section.

Class and Component Prices

    In Sec. 1030.50, change the introductory sentence and add four 
component prices following the existing three paragraphs for Class 
prices as follows:


Sec. 1030.50  Class prices and component prices.

    The Class prices for the month per hundredweight of milk containing 
3.5 percent butterfat subject to the provisions of Sec. 1030.52, and 
the component prices for the month shall be as follows:
* * * * *
    (d) Skim Milk Price. The skim milk price per hundredweight, rounded 
to the nearest one-hundredth cent shall be the Class III price less an 
amount computed by multiplying the butterfat differential computed 
pursuant to Sec. 1030.74 by 35.
    (e) Butterfat Price. The butterfat price per pound rounded to the 
nearest one-hundredth cent, shall be the sum of (1) the skim milk price 
per hundredweight for the month computed pursuant to paragraph (d) of 
this section, divided by 100 and (2) the butterfat differential for the 
month, computed pursuant to Sec. 1030.74 multiplied by 10.
    (f) Protein Price. The protein price per pound, rounded to the 
nearest one-hundredth cent, shall be 1.32 times the monthly cheddar 
cheese price pursuant to Sec. 1030.20(e) plus .735 times the whey 
protein concentrate price pursuant to Sec. 1030.20(f) and subject to 
(g) of this section.
    (g) Other Solids Price. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the basic formula price 
pursuant to Sec. 1030.52(a) less the sum of (1) 3.5 times the butterfat 
price pursuant to Sec. 1030.50(e) and (2) the average protein content 
of the milk on which the basic formula price is based for the previous 
month as reported by the Department and adjusted for the current month 
by the Dairy Division times the protein price pursuant to 
Sec. 1030.50(f), and dividing the resulting price by the difference 
between (i) the average solids-not-fat content of the milk on which the 
basic formula price is based for the previous month as reported by the 
Department, and adjusted for the current month by the Dairy Division 
and (ii) the average protein content of the milk on which the basic 
formula price is based for the previous month as reported by the 
Department and adjusted for the current month by the Dairy Division. If 
the resulting price is less than zero, then the protein value shall be 
adjusted so that the other solids price equals zero.
    (h) Class I Differential Price. The Class I differential price 
shall be the difference between the current month's Class I and Class 
III prices (this price may be negative).
    (i) Class II Differential Price. The Class II differential price 
shall be the difference between the current month's Class II and III 
prices (this price may be negative).
    Revise Sec. 1030.51 to read as follows:


Sec. 1030.51  Basic formula prices.

    (a) Basic Formula Price.
    Include all material now contained in Sec. 1030.51 without change.
    (b) Basic Class II Formula Price.
    Include all material now contained in Sec. 1030.51a without change.
    Revise Sec. 1030.53 to read as follows:


Sec. 1030.53  Announcement of class and component prices.

    (a) On or before the 5th of the month, the market administrator 
shall announce the following prices and any other prices deemed 
appropriate:
    (1) The Class I price for the following month;
    (2) The Class III price for the preceding month;
    (3) The skim milk price for the preceding month;
    (4) The butterfat price for the preceding month;
    (5) The protein price for the preceding month;
    (6) The other solids price for the preceding month.
    (7) The butterfat differential for the preceding month.
    (b) On or before the 15th day of the month, the market 
administrator shall announce the Class II price for the following month 
computed pursuant to Sec. 1030.50(b)

Handler Obligations and Producer Prices

    In Sec. 1030.60, revise paragraphs (a) and (f) to read as follows:


Sec. 1030.60  Handler's obligation and producer prices.

    For the purpose of computing a handler's obligation for producer 
milk, the market administrator shall determine for each month the value 
of milk of each handler described in Sec. 1030.9 (a), (b), and (c) as 
follows:
    (a) The handler's obligation for producer milk shall be computed as 
follows:
    (1) Multiply the total hundredweight of producer milk in Class I as 
determined by Sec. 1030.44 by an amount equal to the Class I 
differential price pursuant to Sec. 1030.50(h) for the month (this 
amount may be negative);
    (2) Add an amount obtained by multiplying the total hundredweight 
of producer milk in Class II as determined by Sec. 1030.44 by an amount 
equal to the Class II differential price pursuant to Sec. 1130.50(i) 
for the month (this amount may be negative);
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1030.44 by the skim milk 
price pursuant to Sec. 1030.50(d);
    (4) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1030.44(a) by 
the average protein content of producer skim milk received by the 
handler (reported pursuant to Sec. 1030.30(e)), and multiplying the 
resulting pounds of protein by the protein price specified in 
Sec. 1030.50(f);
    (5) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1030.44(a) by 
the average other solids content of producer skim milk received by the 
handler and multiplying the resulting pounds of other solids by the 
other solids price specified in Sec. 1030.50(g);
* * * * *
    (f) Add the amount obtained from multiplying the Class I price 
applicable at the location of the nearest unregulated supply plants 
from which an equivalent volume was received less the Class III price 
by the pounds of skim milk and butterfat in receipts of concentrated 
fluid milk products assigned to Class I pursuant to Sec. 1030.43(d) and 
Sec. 1030.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1030.44(a)(11) and the 
corresponding steps of Sec. 1030.44(b), excluding such skim milk and 
butterfat in receipts of bulk fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk or 
butterfat disposed of to such plant by handlers fully regulated under 
any Federal milk order is classified and priced as Class I milk and is 
not used as an offset for any other payment obligation under any order;
    In Sec. 1030.61, redesignate paragraphs (b), (c), (d), and (e) as 
(c), (d), (e) and (f); revise the introductory language and paragraph 
(a), add a new paragraph (b), and revise redesignated paragraph (e) to 
read as follows:


Sec. 1030.61  Producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight for Zone 1 (this price may be 
negative). If the unreserved cash balance in the producer settlement 
fund to be included in the computation is less than 2 cents per 
hundredweight of producer milk on all reports, the payments required 
pursuant to Sec. 1030.71 for the preceding month shall not be included 
in the computation of the uniform price. The report of such handler 
shall not be included in the computation of the uniform price. The 
report of such handler shall not be included in the computation for 
succeeding months until he has made full payment of outstanding monthly 
obligations. Subject to the aforementioned conditions, the market 
administrator shall compute the producer price differential in the 
following manner:
    (a) Combine the values computed pursuant to Sec. 1030.60 (a)(1), 
(a)(2), and (b) through (k) for all handlers;
    (b) Add the values computed pursuant to Sec. 1030.60 (a)(3), 
(a)(4), and (a)(5) and subtract the value obtained by multiplying the 
protein price by the handlers' total pounds of protein and by 
multiplying the other solids price by the handlers' total pounds of 
other solids.
* * * * *
    (e) Divide the resulting amount by the sum of (1) the total 
hundredweight of producer milk and (2) the total hundredweight of skim 
milk and butterfat for which a value was computed pursuant to 
Sec. 1030.60(f); and
* * * * *
    Revise Sec. 1030.62 to read as follows:


Sec. 1030.62  Statistical uniform price.

    The statistical uniform price is the sum of the basic formula price 
and the producer price differential pursuant to Sec. 1030.61.
    Add a new Sec. 1030.63 to read as follows:


Sec. 1030.63  Announcement of producer prices.

    (a) On or before the 5th day after the end of each month, the 
market administrator shall announce the butterfat differential pursuant 
to Sec. 1130.74 for such month.
    (b) On or before the 14th day after the end of each month, the 
market administrator shall announce the following prices:
    (1) The statistical uniform price for milk containing 3.5 percent 
butterfat and the average protein and other solids content of producer 
milk;
    (2) The producer price differential;
    (3) The butterfat price;
    (4) The protein price;
    (5) The other solids price; and
    (6) The butterfat differential.

Payments for Milk

    Revise paragraph (a) of Sec. 1030.71 to read as follows:


Sec. 1030.71  Payments to the producer-settlement fund.

    (a) On or before the 16th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeded 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1030.60.
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk as determined pursuant to Sec. 1030.44 by the producer 
price differential calculated pursuant to Sec. 1030.61 as adjusted by 
Sec. 1030.75;
    (ii) An amount obtained by multiplying the total pounds of protein 
contained in producer milk by the protein price;
    (iii) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk by the other solids price; and
    (iv) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1030.60(f) by 
the producer price differential as adjusted for plant location by 
Sec. 1030.52.
* * * * *
    In Sec. 1030.73, paragraphs (a), (c) and (d) are revised, and a new 
paragraph (e) is added, to read as follows:


Sec. 1030.73  Payments to producers and to cooperative associations.

    (a) * * *
    (1) On or before the 3rd day after the end of each month, to each 
producer who has not discontinued shipping milk to such handler before 
the end of the month, for producer milk received during the first 15 
days of the month at a rate per hundredweight not less than the Class 
III price under the order for milk of 3.5 percent butterfat for the 
preceding month, less proper deductions authorized in writing by such 
producer; and
    (2) On or before the 18th day after the end of each month, for 
producer milk received during such month, an amount not less than the 
sum of:
    (i) The pounds of milk received from the producer times the 
producer price differential for the month pursuant to Sec. 1030.61, 
adjusted pursuant to Sec. 1030.75 and Sec. 1030.86;
    (ii) The pounds of butterfat received from the producer times the 
butterfat price for the month,
    (iii) The pounds of protein received from the producer times the 
protein price for the month;
    (iv) The pounds of other solids received from the producer times 
the other solids price for the month;
    (v) Less any payments made pursuant to paragraph (a) of this 
section; and
    (vi) Less proper deductions authorized in writing by such producer 
and plus or minus adjustments for errors in previous payments made to 
such producer.
    (vii) If by such date the handler has not received full payment 
from the market administrator pursuant to Sec. 1030.72 for such month, 
he may reduce pro rata his payments to producers by not more than the 
amount of such underpayment. Payment to producers shall be completed 
thereafter not later than the date for making payments pursuant to this 
paragraph next following receipt of the balance due from the market 
administrator.
    (b) * * *
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from a pool plant(s) operated by a cooperative 
association as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the 1st day 
after the end of the month during which the milk was received at a rate 
per hundredweight not less than the Class III price under the order for 
milk of 3.5 percent butterfat for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 16th day after the end of the 
month during which the milk was received as follows:
    (i) The hundredweight of Class I milk received times the Class I 
differential for the month plus the pounds of Class I skim milk times 
the skim milk price for the month;
    (ii) The hundredweight of Class II milk received times the Class II 
differential for the month;
    (iii) The pounds of butterfat received times the butterfat price 
for the month;
    (iv) The pounds of protein received in Class II and III times the 
protein price for the month;
    (v) The pounds of other solids received in Class II and III times 
the other solids price for the month,
    (vi) Less any payment made pursuant to paragraph (c)(1) of this 
section; and
    (vii) Less proper authorized deductions.
    (d) Each handler shall pay a cooperative association acting as a 
handler described under Sec. 1030.9(c) as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the 1st day 
after the end of the month during which milk was received at a rate per 
hundredweight not less than the Class III price under the order for 
milk of 3.5 percent butterfat for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 16th day after the end of the 
month during which the milk was received as follows:
    (i) The hundredweight of milk received times the producer price 
differential for the month as adjusted pursuant to Sec. 1030.75;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for 
the month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) Less any payment made pursuant to paragraph (d)(1) of this 
section; and
    (vi) Less proper authorized deductions.
    (e) In making payments for producer milk pursuant to paragraph 
(a)(2) or (b)(2) of this section, each handler shall furnish each 
producer or cooperative association to whom such payment is made a 
supporting statement in such form that it may be retained by the 
recipient. Such statement shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds of milk for each producer;
    (3) The total pounds of butterfat contained in the producer's milk;
    (4) The total pounds of protein contained in the producer's milk;
    (5) The total pounds of other solids contained in the producer's 
milk;
    (6) The minimum rate or rates (for total pounds and components) at 
which payment to the producer is required pursuant to the order;
    (7) The rate that is used in making the payment if such rate is 
other than the applicable minimum rate;
    (8) The amount, or the rate per hundredweight, or rate per pound of 
component, and nature of each deduction claimed by the handler; and
    (9) The net amount of payment to such producer or cooperative 
association.
    Revise Sec. 1030.74 to read as follows:


Sec. 1030.74  Butterfat differential.

    The butterfat differential shall be .138 times the butter price 
less .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. The butter price means the 
simple average for the month of the daily prices per pound of Grade A 
(92 score) butter. The prices used shall be those of the Chicago 
Mercantile Exchange as reported and published weekly by the Dairy 
Division, Agricultural Marketing Service. The average shall be computed 
by the Director of the Dairy Division, using the price reported each 
week as the daily price for that day and for each following day until 
the next price is reported.

    Proposed by Land O' Lakes, Inc.:

Proposal No. 2

    Adopt Proposal Number 1 for the Nebraska-Western Iowa and Eastern 
South Dakota Federal milk orders (Orders 65 and 76) in addition to the 
three orders included in Proposal No. 1.

Proposal No. 3

    In Sec. 1030.73, add a new paragraph (e) to read as follows:


Sec. 1030.73  Payments to producers and to cooperative associations.

* * * * *
    (e) In making payments to producers, deductions may be made to 
individual producers for variations in quality or volume of milk 
relative to an announced norm of up to 10 percent, provided that such 
deductions are offset by premiums paid to other individual producers of 
equal or greater value.

    Proposed by Central Milk Producers Cooperative and supported by 
Mid-America Dairymen, Inc., and Associated Milk Producers, Inc.:

Proposal No. 4

    Adopt Proposal No. 2 with the following modifications:
    a. Compute the protein price by multiplying the barrel cheddar 
cheese price, instead of the cheddar cheese price for 40-pound blocks, 
by 1.32, and eliminate the plus adjustment based on the whey protein 
concentrate price.
    b. Include an adjustment for the somatic cell count of producer 
milk and for milk used in Classes II, III, and III-A. Class I milk 
would not have a somatic cell adjustment. The adjustment for somatic 
cells would be on a hundredweight basis and would be a positive 
adjustment beginning with a somatic cell count of 500,000, increasing 
as the somatic cell count approaches zero. No adjustment would be 
applied for somatic cell counts greater than 500,000. The somatic cell 
adjustment would be computed by subtracting the actual somatic cell 
count (in thousands) from 500 and multiplying by .0005 times the barrel 
cheese price.
    Formula:

Somatic cell adjustment=(500-SCC) x (.0005 x CP)
SCC=actual somatic cell count in thousands
CP-National Cheese Exchange monthly average barrel cheese price.

    Proposed by Kraft General Foods:

Proposal No. 5

    Adjust the protein or other component price on the basis of somatic 
cell content (and any other relevant quality characteristic) of 
producer milk.

    Proposed by Wagner's Weyauwega Milk Products, Inc.:

Proposal No. 6

    Modify Proposal No. 4 to include negative somatic cell adjustments 
for somatic cell levels between 500,000 and 750,000.

    Proposed by the Wisconsin Cheese Makers Association:

Proposal No. 7

    Adopt Proposal No. 4 with the following modifications:
    a. Apply the somatic cell adjustment contained in Proposal No. 4 to 
all milk, including Class I.
    b. Apply the somatic cell adjustment to producers' protein price, 
rather than on a hundredweight basis.
    c. In calculating the protein price, subtract an appropriate make 
allowance per pound of barrel cheddar cheese from the cheese price 
before multiplying by 1.32. This modification may require creation of a 
separate residual ``component'' in addition to the butterfat, protein 
and other solids components, which would require a formula to determine 
the value of other milk solids (not protein).

    Proposed by the National Cheese Institute:

Proposal No. 8

    Adopt Proposal No. 4 with the following modifications:
    a. Calculate a ``residual fluid price'' instead of an ``other 
solids price'' by subtracting the values of butterfat and protein from 
the Minnesota-Wisconsin price.
    b. Instead of including in the order a somatic cell price per 
hundredweight, allow handlers to submit a plan for the market 
administrator's approval to pay premiums or make deductions based on 
somatic cell count or other quality considerations so long as the total 
payment to all producers reflects the monthly minimum pay price under 
the Order.
    c. Payouts to producers should be made on the basis of the same 
factors as determine the cost of milk to handlers.

    Proposed by the Trade Association of Proprietary Plants, Inc.:

Proposal No. 9

    Adopt a multiple component pricing plan that closely resembles 
Proposal No. 4, modified in the following ways:
    a. Protein value per hundredweight to be expressed as a protein 
differential.
    b. Protein value per hundredweight to be adjusted by a positive 
somatic cell adjustment of approximately 1 cent per 15,000 somatic 
cells as somatic cell counts decline below 300,000, and a negative 
adjustment of approximately 1 cent per 15,000 somatic cells as somatic 
cell counts increase above 350,000, up to a maximum adjustment of plus 
or minus 10 cents to the value of protein per hundredweight of milk.
    c. Sweetened condensed milk to be reclassified as Class III or 
exempted from the protein pool obligation.

    Proposed by the Galloway Company:

Proposal No. 10

    Milk used for the manufacture of ice cream, ice cream mixes, and 
various Class II sweetened condensed milks shall continue to be priced 
as under the current regulations and shall not be priced using multiple 
component pricing.

    Proposed by Dairy Division, Agricultural Marketing Service:

Proposal No. 11

    Make such changes as may be necessary to make the entire marketing 
agreement and order conform with any amendments thereto that may result 
from this hearing.
    Copies of this notice of hearing and the orders may be procured 
from the Market Administrator of each of the aforesaid marketing areas, 
or from the Hearing Clerk, room 1083, South Building, United States 
Department of Agriculture, Washington, DC 20250, or may be inspected 
there.
    Copies of the transcript of testimony taken at the hearing will not 
be available for distribution through the Hearing Clerk's Office. If 
you wish to purchase a copy, arrangements may be made with the reporter 
at the hearing.
    From the time that a hearing notice is issued and until the 
issuance of a final decision in a proceeding, Department employees 
involved in the decisional process are prohibited from discussing the 
merits of the hearing issues on an ex parte basis with any person 
having an interest in the proceeding. For this particular proceeding, 
the prohibition applies to employees in the following organizational 
units:

Office of the Secretary of Agriculture
Office of the Administrator, Agricultural Marketing Service
Office of the General Counsel
Dairy Division, Agricultural Marketing Service (Washington office 
only)
Office of the Market Administrator, Chicago Regional, Nebraska-
Western Iowa, Upper Midwest, Eastern South Dakota and Iowa Marketing 
Areas

    Procedural matters are not subject to the above prohibition and may 
be discussed at any time.

    Dated: December 22, 1993.
Kenneth C. Clayton,
Deputy Administrator for Marketing Programs.
[FR Doc. 94-56 Filed 1-3-94; 8:45 am]
BILLING CODE 3410-02-P