[Federal Register Volume 59, Number 67 (Thursday, April 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8409]


  Federal Register / Vol. 59, No. 67 / Thursday, April 7, 1994 /
  
[[Page Unknown]]

[Federal Register: April 7, 1994]


                                                    VOL. 59, NO. 67

                                            Thursday, April 7, 1994
      

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1001 and 1002

[DA-94-09]

 

Milk in the New England and New York-New Jersey Marketing Areas; 
Termination of Certain Provisions of the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule terminates the seasonal production incentive plans 
for paying producers under the New England and New York-New Jersey 
Federal milk orders. This termination was requested by cooperative 
associations that represent producers who supply about one-half of the 
milk regulated under the orders. The seasonal incentive plans have been 
suspended during each of the last three years and are no longer 
effective in carrying out their intended purpose.

EFFECTIVE DATE: April 7, 1994.

FOR FURTHER INFORMATION CONTACT: Gino M. Tosi, Marketing Specialist, 
USDA/AMS/Dairy Division, Order Formulation Branch, room 2971, South 
Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1366.

SUPPLEMENTARY INFORMATION: Prior document in this proceeding:
    Notice of Proposed Termination or Suspension: Issued February 15, 
1994; published February 24, 1994 (59 FR 8873).
    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the 
Agency to examine the impact of a proposed rule on small entities. 
Pursuant to 5 U.S.C. 605(b), the Administrator of the Agricultural 
Marketing Service has certified that this rule will not have a 
significant economic impact on a substantial number of small entities. 
This rule lessens the regulatory impact of the orders on dairy farmers 
and will not affect milk handlers.
    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is not intended to have a retroactive 
effect. This rule will not preempt any state or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674), provides that administrative proceedings must be 
exhausted before parties may file suit in court. Under section 
608c(15)(A) of the Act, any handler subject to an order may file with 
the Secretary a petition stating that the order, any provisions of the 
order, or any obligation imposed in connection with the order is not in 
accordance with the law and requesting a modification of an order or to 
be exempted from the order. A handler is afforded the opportunity for a 
hearing on the petition. After a hearing, the Secretary would rule on 
the petition. The Act provides that the district court of the United 
States in any district in which the handler is an inhabitant, or has 
its principal place of business, has jurisdiction in equity to review 
the Secretary's ruling on the petition, provided a bill in equity is 
filed not later than 20 days after the date of the entry of the ruling.
    This order of termination is issued pursuant to the provisions of 
the Agricultural Marketing Agreement Act and of the orders regulating 
the handling of milk in the New England and New York-New Jersey 
marketing areas.
    Notice of proposed rulemaking was published in the Federal Register 
on February 24,1994 (59 FR 8873) concerning a proposed termination or 
suspension of certain provisions of the orders. Interested persons were 
afforded opportunity to file written data, views and arguments. 
Comments supporting the proposed termination were received from 
Dairylea Cooperative, Inc, and Agri-Mark, two of the cooperatives who 
proposed termination. One comment was received from a dairy farmer who 
opposed termination.
    After consideration of all relevant material, including the 
proposal in the notice, the comments received and other available 
information, it is hereby found and determined that the following 
provisions of the orders do not tend to effectuate the declared policy 
of the Act:

1. In Sec. 1001.62, paragraphs (c) and (d); and
2. In Sec. 1002.61, paragraphs (d) and (e).

Statement of Consideration

    This rule terminates the seasonal plans for paying producers under 
the New England and New York-New Jersey Federal orders. These seasonal 
payment plans provide for making deductions from prices paid to 
producers during the normal flush-production months of March through 
June and returning to producers the deducted amounts during the normal 
short-production months of August through November. The plans are 
intended to provide an incentive for dairy farmers to level out their 
production during the year.
    The termination of the payment plans was requested by cooperative 
associations that represent dairy farmers who supply handlers regulated 
under the orders. Collectively, these cooperatives represent about 51 
percent of the producers associated with the New England marketing area 
and about 48 percent of the producers associated with the New York-New 
Jersey marketing area. The cooperative associations proposing the 
terminations are Agri-Mark, Inc.; Allied Federated Cooperatives, Inc.; 
Atlantic Dairy Cooperative, Inc.; Dairylea Cooperative, Inc., and its 
members cooperatives: Cortland Bulk Milk Producers Cooperative, Oneida-
Madison Milk Producers Cooperative Association, Inc., and Steamburg 
Milk Producers Cooperative Association, Inc., and its affiliated 
cooperatives: Deer River Bulk Milk Cooperative, Inc., and Jefferson 
Bulk Milk Cooperative, Inc.; Eastern Milk Producers Cooperative 
Association, Inc., and its affiliated cooperatives: Chateaugay Co-
operative Marketing Association, Inc., Konhokton Milk Producers Co-
operative Association, Inc., Middlebury Milk Producers Cooperative 
Association, Inc., and Sullivan County Co-operative Dairy Association, 
Inc.; and Upstate Milk Cooperatives, Inc.
    Proponents contend that the ``Louisville'' seasonal payment plans 
are no longer effective or necessary to reduce the seasonal spring-to-
fall swings in milk production as was intended when they were first 
provided for in these orders some 25 years ago. Proponents indicated 
that the seasonal payment plans are largely ineffective because of a 
general lack of awareness about the plans in the dairy farming 
community. They also contend that the price differentials are too low 
relative to milk prices to provide an incentive for dairy farmers to 
modify their seasonal production patterns. The proponents further 
indicated concern about the impact of reducing returns to producers 
during the spring months when producer milk prices are already 
generally lower than during other times of the year.
    In addition, it has been noted that the seasonal incentive payment 
plans are no longer necessary or effective since they have been 
suspended for the past three years. The proponents point out that these 
past suspension actions were supported by the need for dairy farmers to 
have additional monies available during the spring months during which 
prices to producers decline precipitously. Proponents expect that milk 
prices will decline in the spring months of 1994 and in the spring 
months of future years. They also maintain that retaining the payment 
plans will continue to put cash flow pressures on dairy farmers during 
a time of increased cash needs for spring planting.
    In the comments, Agri-Mark reiterated its support for the 
termination of the seasonal payment plans. The cooperative's primary 
support for termination involves the volatility of milk prices at low 
levels for the past several years. Agri-Mark maintains that if the 
Louisville seasonal payment plan had been in effect, about $20 million 
would have been removed from producer payments in the spring planting 
months and would have resulted in cash flow difficulties for many 
farms. Agri-Mark said that even those farmers who have contra-seasonal 
milk production would have reduced income during the spring and summer 
months.
    In further support for the termination of the seasonal payment 
plans, Agri-Mark indicated that actual seasonal price movements in the 
marketplace, to some extent, accomplished the fall price incentives 
originally intended by the Louisville payment plan. The cooperative 
noted that during the past three years, while the Louisville plans were 
suspended, the blend price in the August-November period averaged 
slightly more that $1.00 above the March-June period in both the New 
England and New York-New Jersey orders. Agri-Mark expects this pattern 
to generally continue.
    One comment in opposition to this termination was received from a 
dairy farmer who supplies the New York-New Jersey marketing area. This 
farmer expressed the view that the Louisville payment plan is still 
effective in reducing the variability of milk production even though 
the Louisville plan differential levels are too low to be as meaningful 
as they were in earlier years when the differential level represented a 
greater percentage of the price of milk. The farmer also expressed the 
view that withholding money from a producer's milk check in the spring 
months when cash is needed for meeting spring planting costs was not 
particularly burdensome.
    The ``Louisville'' seasonal incentive payment plan has been in 
effect in the New England and New York-New Jersey orders since the late 
1960's when there was significant variability between milk production 
in the spring and fall months. Market statistics reveal that this 
variability was as much as 30 percent when the plans were first 
implemented in the orders, and there was considerable institutional and 
economic pressure to reduce this seasonality of production because of 
the high costs of marketing seasonal surpluses of milk. It is 
reasonable to conclude from a review of current-day statistics that the 
plans have played a role in reducing this variability, as commented 
upon by the producer in opposition to the termination action. However, 
the seasonality of milk production has not changed much since 1980, and 
there are certainly a number of other reasons for this in addition to 
the ``small'' Louisville differentials relative to the per 
hundredweight price of milk from the 1960's and 1970's versus today. 
Without question, it is also reasonable to attribute, in part, the 
narrowing of production seasonality to advances in production 
practices, including improvement in feeding programs, breeding and 
other management practices.
    One of the most important consideration in this termination action 
is the fact that the plans have not been operational for the last three 
years and thus have had no impact on the seasonality of milk 
production. The prior suspension actions, as well as this request to 
terminate the payment plans, were supported by a significant number of 
producers who were concerned about their prices being reduced any more 
than what would normally occur because of seasonally lower prices in 
the spring. The seasonal variability in the basic formula price for 
milk (the M-W price) in today's marketplace already provides an 
incentive for producers to make their own individual production 
decisions in response to the seasonal price changes. Since the payment 
plans have not been operational or effective, they should be 
terminated.
    Therefore, the seasonal incentive payment plans of the two markets 
are hereby terminated.
    It is hereby found and determined that thirty days' notice of the 
effective date hereof is impractical, unnecessary and contrary to the 
public interest in that:
    (a) The termination is necessary to reflect current marketing 
conditions and to assure orderly marketing conditions in the marketing 
area;
    (b) This termination does not require of persons affected 
substantial or extensive preparation prior to the effective date; and
    (c) Notice of proposed rulemaking was given interested parties and 
they were afforded opportunity to file written data, views or arguments 
concerning this suspension.
    Therefore, good cause exists for making this order effective upon 
publication in the Federal Register.

List of Subjects in 7 CFR Parts 1001 and 1002

    Milk marketing orders.

    For the reasons set forth in the preamble, the following provisions 
in title 7, parts 1001 and 1002, are amended as follows:
    1. The authority citation for 7 CFR parts 1001 and 1002 continues 
to read as follows:

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

PART 1001--MILK IN THE NEW ENGLAND MARKETING AREA


Sec. 1001.62  [Amended]

    2. In Sec. 1001.62, paragraphs (c) and (d) are removed and 
reserved.

PART 1002--MILK IN THE NEW YORK-NEW JERSEY MARKETING AREA


Sec. 1002.61  [Amended]

    3. In Sec. 1002.61, paragraphs (d) and (e) are removed and 
reserved.

    Dated: April 4, 1994.
Patricia Jensen,
Acting Assistant Secretary, Marketing and Inspection Services.
[FR Doc. 94-8409 Filed 4-6-94; 8:45 am]
BILLING CODE 3410-02-P