[Federal Register Volume 60, Number 164 (Thursday, August 24, 1995)]
[Proposed Rules]
[Pages 43994-43995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20969]




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DEPARTMENT OF AGRICULTURE
7 CFR Part 1046

[DA-95-18]


Milk in the Louisville-Lexington-Evansville Marketing Area; 
Termination of Proceeding on Proposed Suspension/Termination of Base-
Excess Plan

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Termination of proceeding of proposed suspension/termination of 
rule.

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SUMMARY: This document terminates the proceeding that was initiated to 
consider a proposal to suspend or terminate the base-excess plan of the 
Louisville-Lexington-Evansville Federal milk marketing order effective 
September 1, 1995.

FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist, 
USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South 
Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1932.

SUPPLEMENTARY INFORMATION: Prior document in this proceeding: Proposed 
Suspension/Termination: Issued June 9, 1995; published June 15, 1995 
(60 FR 31418).

    This termination of proceeding is issued pursuant to the provisions 
of the Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674). This proceeding was initiated by a notice of 
rulemaking published in the Federal Register on June 15, 1995 (60 FR 
31418), concerning a proposed suspension/termination of certain 
provisions of the order regulating the handling of milk in the 
Louisville-Lexington-Evansville marketing area. The proposal would have 
suspended or terminated the base-excess plan provisions of Order 46. 
Interested parties were invited to comment on the proposal in writing 
by July 17, 1995. Four comments supporting and two comments opposing 
the proposed suspension/termination were received.

Statement of Consideration

    This document terminates the proceeding initiated to suspend/
terminate the base-excess plan under the Louisville-Lexington-
Evansville Federal milk marketing order (Order 46). Holland Dairies, 
Inc. (Holland), a fully regulated distributing plant under Order 46, 
proposed the suspension/termination of the plan effective September 1, 
1995.

    Holland stated that the Order's base-excess plan had created 
significant milk procurement problems in the area in recent years and 
claimed that the plan limited its ability to obtain milk from new 
producers because these producers had no base. As a result, the handler 
concluded that it was forced to purchase supplemental milk during the 
summer months from producers located outside the region at an 
additional cost.

    According to Holland, the cooperatives in the southern Indiana area 
which compete with it for producers do not pay their member-producers 
base and excess prices. Additionally, Holland stated that the Indiana 
and Ohio Valley Federal milk orders, which border Order 46 to the 
north, do not contain a producer base-excess plan. Holland contends 
that both of these factors place it at a competitive disadvantage in 
procuring milk and are unreasonable and detrimental to its long-term 
ability to retain nonmember producers.

    Armour Food Ingredients Company (Armour) and three dairy farmers 
filed comment letters in support of the proposed suspension/termination 
of the Order 46 base-excess plan. Armour states that Order 46 no longer 
exhibits the highly seasonal changes in supply and demand which a base-
excess plan is intended to curtail and, therefore, concludes that the 
suspension or termination of the plan would not have a detrimental 
impact on the market's seasonal supply-demand balance. Armour also 
contends the plan discourages new producers from starting a dairy 
operation. Three Indiana dairy farmers who filed comments stated that 
they favor the suspension or termination of the base-excess plan 
because the plan lowers the price they receive for their milk.

    Milk Marketing Inc. (MMI), and Mid-America Dairymen, Inc. (Mid-Am), 
filed comments in opposition to the proposed suspension/termination of 
the Order 46 base-excess plan. MMI, a regional cooperative representing 
approximately 400 dairy farmers and 23 million pounds of milk per month 
pooled by handlers regulated under Order 46, states that a base-excess 
plan is designed to balance monthly production with consumption. MMI 
contends that producers have invested time and money and have adopted 
management 

[[Page 43995]]
techniques to meet the needs of the marketplace. It argues that the 
suspension/termination would discourage producers from adopting 
production patterns that are needed to improve marketing efficiencies.
    Mid-Am, a cooperative representing 451 producers who deliver milk 
to plants regulated under Order 46, contends Holland's claim that ``the 
base-excess plan limits its ability to obtain milk from new producers 
because these producers have no base,'' is no basis to suspend or 
terminate the base-excess plan under Order 46. Mid-Am states that the 
volume of milk that would become available during the base-paying 
months would be an insignificant amount and that there is no need for 
Holland to procure supplemental milk from producers located outside the 
region during the base-paying months because there is more than an 
adequate supply of local milk available.
    Mid-Am also points out that many cooperative member-producers in 
the southern Indiana area are being paid on the basis of a base-excess 
plan. During March through June 1995, Mid-Am indicated, over one-third 
of its member-producers with milk pooled on Order 46 were paid base and 
excess prices. The cooperative states that all of its member-producers 
will be paid on the basis of a base-excess plan during 1996. Finally, 
it argues that the plan helps to limit a handler's ability to shift 
milk between orders during the base-paying months of March through June 
when additional milk is not needed by handlers regulated under Order 
46.
    The comments submitted in response to the proposed suspension/
termination reveal that there is overwhelming support for the 
continuation of the Order 46 base-excess plan by producers whose milk 
is pooled under the order. The comments indicate that there is an 
adequate supply of local milk available to Holland which should prevent 
Holland from having to purchase supplemental supplies of milk from 
producers located outside the region. In this regard, market data 
indicate that for the past two years Class I utilization under Order 46 
has generally been between 65 and 75 percent during the base-paying 
months of March through June. The comments also reveal that the base-
excess plan under Order 46 is currently used to pay many cooperative 
association member-producers now and will be used to pay many more next 
year. Therefore, the proceeding to suspend or terminate the plan is 
terminated.

List of Subjects in 7 CFR Part 1046

    Milk marketing orders.

    The authority citation for 7 CFR part 1046 continues to read as 
follows:

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

    Dated: August 17, 1995.
Patricia Jensen,
Acting Assistant, Secretary Marketing and Regulatory Programs.
[FR Doc. 95-20969 Filed 8-23-95; 8:45 am]
BILLING CODE 3410-02-P