[Federal Register Volume 60, Number 219 (Tuesday, November 14, 1995)]
[Rules and Regulations]
[Pages 57148-57164]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26894]



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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; Order 
Amending the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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------------------------------------------------------------------------
 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 final rule implements changes in the Federal milk 
marketing orders for five north central marketing areas based on 
industry proposals considered at a public hearing. This rule adopts a 
plan for pricing milk on the basis of its protein and other nonfat 
solids, as well as butterfat, components. The plan includes adjustments 
per hundredweight based on the somatic cell count of producer milk used 
in Class II and Class III, and on payments to producers of all pooled 
milk. Each of the amended orders was approved by producers who were 
eligible to have their milk pooled during the representative month for 
voting purposes.

EFFECTIVE DATE: January 1, 1996.

FOR FURTHER INFORMATION CONTACT: Constance M. Brenner, Marketing 
Specialist, USDA/AMS/Dairy Division, Order Formulation Branch, Room 
2968, South Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 
720-4829.

SUPPLEMENTARY INFORMATION: This administrative rule 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 action 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.
    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This action 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) (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 court of the United 
States in any district in which the handler is an inhabitant, or is the 
handler's 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. 

[[Page 57149]]


Prior Documents in This Proceeding

    Notice of Hearing: Issued December 22, 1993; published January 4, 
1994 (59 FR 260).
    Extension of Time for Filing Briefs: Issued April 22, 1994; 
published April 29, 1994 (59 FR 22138).
    Recommended Decision: Issued October 25, 1994; published November 
2, 1994 (59 FR 54952).
    Extension of Time for Filing Exceptions: Issued December 2, 1994; 
published December 9, 1994 (59 FR 63733).
    Final Decision: Issued August 3, 1995; published August 14, 1995 
(60 FR 41833).

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the Chicago Regional 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.
    The following findings are hereby made with respect to each of the 
aforesaid orders:
    (a) Findings upon the basis of the hearing record. 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), 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 respective 
marketing areas.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof, for each of the specified orders, 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 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.
    (b) Determinations. It is hereby determined that:
    (1) The refusal or failure of handlers (excluding cooperative 
associations specified in section 8c(9) of the Act) of more than 50 
percent of the milk which is marketed within each of the specified 
marketing areas to sign a proposed marketing agreement tends to prevent 
the effectuation of the declared policy of the Act;
    (2) The issuance of this order amending each of the specified 
orders is the only practical means pursuant to the declared policy of 
the Act of advancing the interests of producers as defined in the 
respective orders as hereby amended; and
    (3) The issuance of the order amending each of the specified orders 
is approved or favored by at least two-thirds of the producers who 
during the determined representative period were engaged in the 
production of milk for sale in the respective marketing areas.

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

    Milk marketing orders.

Order Relative to Handling

    It is therefore ordered, that on and after the effective date 
hereof, the handling of milk in each of the aforesaid marketing areas 
shall be in conformity to and in compliance with the terms and 
conditions of the order, as amended, and as hereby further amended, as 
follows:

PART 1030--MILK IN THE CHICAGO REGIONAL MARKETING AREA

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

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

    1. Section 1030.30 is amended by removing paragraph (d) and 
revising paragraphs (a) and (c) to read as follows:


Sec. 1030.30  Reports of receipts and utilization.

* * * * *
    (a) Each handler described in Sec. 1030.9(a) shall report for each 
plant of the handler (except if a handler requests and the request is 
approved by the market administrator, a handler may file a consolidated 
report for supply plants and a consolidated report for distributing 
plants); and each handler described in Sec. 1030.9 (b) and (c) shall 
report the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), and the value of 
the somatic cell adjustment contained in or represented by:
    (i) Receipts of producer milk, including producer milk diverted by 
the handlers from the pool plant to other plants; and
    (ii) Receipts of milk from handlers described in Sec. 1030.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants, including a separate statement of the net receipts 
from each supply plant computed pursuant to Sec. 1030.7(b)(4);
    (ii) Receipts of fluid milk products not included in paragraph 
(a)(1) or (a)(2)(i) of this section and bulk fluid cream products from 
any source;
    (iii) Receipts of other source milk; and
    (iv) Inventories at the beginning and end of the month of fluid 
milk products and products specified in Sec. 1030.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell information, as the market administrator may 
prescribe.
* * * * *
    (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.
    2. Section 1030.31 is amended by revising paragraph (a) 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 the 
information specified in Sec. 1030.73(e).
* * * * *
    3. Section 1030.50 is amended by revising the section heading, 
introductory text and paragraph (a), and adding paragraphs (e) through 
(l) to read as follows:


Sec. 1030.50  Class and component prices.

    Subject to the provisions of Sec. 1030.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat 

[[Page 57150]]
and the component prices for the month shall be as follows:
    (a) Class I price. The Class I price for the month per 
hundredweight of milk containing 3.5 percent butterfat shall be the 
basic formula price for the second preceding month plus $1.40.
* * * * *
    (e) 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).
    (f) Class II differential price. The Class II differential price 
shall be the difference between the current month's Class II and Class 
III prices (this price may be negative).
    (g) Class III-A differential price. The Class III-A differential 
price shall be the difference between the current month's Class III and 
Class III-A prices (this price may be negative).
    (h) Skim milk price. The skim milk price per hundredweight, rounded 
to the nearest cent, shall be the Class III price less an amount 
computed by multiplying the butterfat differential by 35.
    (i) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the Class III price plus an amount 
computed by multiplying the butterfat differential by 965 and dividing 
the resulting amount by one hundred.
    (j) Protein price. The protein price per pound, rounded to the 
nearest one-hundredth cent, shall be 1.32 times the average monthly 
price per pound for 40-pound block Cheddar cheese on the National 
Cheese Exchange as reported by the Department.
    (k) Other solids price. Other solids are herein defined as solids-
not-fat other than protein. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the basic formula price at 
test less the average butterfat test of the basic formula price as 
reported by the Department times the butterfat price, less the average 
protein test of the basic formula price as reported by the Department 
for the month times the protein price, and dividing the resulting 
amount by the average other solids test of the basic formula price as 
reported by the Department. If the resulting price is less than zero, 
then the protein price will be reduced so that the other solids price 
equals zero.
    (l) Somatic cell adjustment.
    (1) The somatic cell adjustment rate per 1,000 somatic cells, 
rounded to five decimal places, shall be computed by multiplying .0005 
times the monthly cheddar cheese price as defined in paragraph (j) of 
this section; and
    (2) The somatic cell adjustment, per hundredweight, shall be 
determined by subtracting from 350 the somatic cell count (in 
thousands) of the milk, multiplying the difference by the somatic cell 
adjustment rate, and rounding to the nearest full cent.
    4. Section 1030.53 is revised to read as follows:


Sec. 1030.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III price for the preceding month;
    (d) The Class III-A price for the preceding month;
    (e) The skim milk price for the preceding month;
    (f) The butterfat price for the preceding month;
    (g) The protein price for the preceding month;
    (h) The other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
    5. The section heading in Sec. 1030.60 and the undesignated center 
heading preceding it, the introductory text, and paragraphs (a) and (f) 
are revised to read as follows:

Producer Price Differential


Sec. 1030.60  Handler's value of milk.

    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) Calculate the following values:
    (1) Multiply the total hundredweight of producer milk in Class I as 
determined pursuant to Sec. 1030.44(c) by the Class I differential 
price for the month;
    (2) Add an amount obtained by multiplying the total hundredweight 
of producer milk in Class II as determined pursuant to Sec. 1030.44(c) 
by the Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1030.44(a) by the skim 
milk price;
    (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, and multiplying the resulting pounds of protein by the protein 
price;
    (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;
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1030.30(a)(1) by the 
percentage of the total producer milk allocated pursuant to 
Sec. 1030.44(c) that is allocated to Class II and Class III; and
    (7) Add an amount obtained by multiplying the total hundredweight 
of producer milk eligible to be priced as Class III-A by the Class III-
A differential price for the month;
* * * * *
    (f) Add the amount obtained from multiplying the Class I 
differential price applicable at the location of the nearest 
unregulated supply plants from which an equivalent volume was received 
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;
* * * * *
    6. Section 1030.61 is amended by revising the section heading, 
introductory text, and paragraph (a) 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. 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 report of any handler who has not made the payments 
required pursuant to Sec. 1030.71 for the preceding month shall not be 
included in the computation of the producer price differential. The 
report of such handler shall not be included in the 

[[Page 57151]]
computation for succeeding months until the handler 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 into one total for all handlers:
    (1) The values computed pursuant to Sec. 1030.60 (a)(1), (a)(2), 
(a)(7), and (b) through (k) for all handlers; and
    (2) Add values computed pursuant to Sec. 1030.60 (a)(3), (a)(4), 
(a)(5) and (a)(6); and subtract the values obtained by multiplying the 
handlers' total pounds of protein and total pounds of other solids 
contained in such milk by their respective prices, and the total value 
of the somatic cell adjustment;
* * * * *
    7. Section 1030.62 is revised to read as follows:


Sec. 1030.62  Announcement of producer prices.

    On or before the 14th day after the end of each month, the market 
administrator shall announce the following prices and information:
    (a) The producer price differential;
    (b) The protein price;
    (c) The other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk; and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
    8. Section 1030.71 is amended by revising paragraph (a)(2) to read 
as follows:


Sec. 1030.71  Payments to the producer-settlement fund.

    (a) * * *
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk as determined pursuant to Sec. 1030.44(c) by the producer 
price differential as adjusted pursuant to 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;
    (iv) The total value of the somatic cell adjustment to producer 
milk; and
    (v) 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 pursuant to Sec. 1030.52 
for the location of the plant from which received.
* * * * *
    9. Section 1030.73 is amended by revising paragraphs (a), (c), and 
(d) and adding a new paragraph (e) to read as follows:


Sec. 1030.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for producer milk received 
from such producer and for which payment is not made to a cooperative 
association pursuant to paragraph (b) or (c) of this section as 
follows:
    (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 for milk of 3.5 percent butterfat for the preceding month, 
less proper deductions authorized in writing by such producer;
    (2) On or before the 18th day after the end of the month, payment 
for producer milk received during such month shall not be less than the 
sum of:
    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Secs. 1030.75 and 1030.86;
    (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) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (a) of this 
section; and
    (vii) Less proper deductions authorized in writing by such producer 
and plus or minus adjustments for errors in previous payments made to 
such producer; and
    (3) If by such date the handler has not received full payment from 
the market administrator pursuant to Sec. 1030.72 for such month, it 
may reduce pro rata its payment 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 
paragraph (a) of this section next following receipt of the balance due 
from the market administrator.
* * * * *
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from 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 for milk of 3.5 
percent butterfat for the preceding month; and
    (2) For milk received and classified 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 price 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 price for the month;
    (iii) The hundredweight of Class III-A milk received times the 
Class III-A differential price for the month;
    (iv) The pounds of butterfat received times the butterfat price for 
the month;
    (v) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (vi) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (vii) The hundredweight of Class II and Class III milk received 
times the somatic cell adjustment; and
    (viii) Less any payment made pursuant to paragraph (c)(1) of this 
section.
    (d) Each handler shall pay a cooperative association for milk 
received by the handler from 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 the milk was received at a rate 
per hundredweight not less than the Class III price 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 

[[Page 57152]]
    differential 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) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (d)(1) of this 
section; and
    (vii) Less proper authorized deductions.
    (e) In making payments for producer milk pursuant to paragraphs 
(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 which shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds 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 somatic cell count of the producer's milk;
    (7) The minimum rate or rates at which payment to the producer is 
required pursuant to this order;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum rate;
    (9) The amount, or the rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (10) The net amount of payment to such producer or cooperative.
    10. Sections 1030.74 and 1030.75 are revised to read as follows:


Sec. 1030.74  Butterfat differential.

    The butterfat differential, rounded to the nearest one-tenth cent, 
shall be 0.138 times the current month's butter price less 0.0028 times 
the preceding month's average pay price per hundredweight, at test, for 
manufacturing grade milk in Minnesota and Wisconsin, using the ``base 
month'' series, adjusted pursuant to Sec. 1030.51(a) through (e), as 
reported by the Department. The butter price means the simple average 
for the month of the Chicago Mercantile Exchange Grade A butter price 
as reported by the Department.


Sec. 1030.75  Plant location adjustments for producers and on nonpool 
milk.

    (a) The producer price differential for producer milk received at a 
plant shall be adjusted according to the location of the plant at the 
rates set forth in Sec. 1030.52(a).
    (b) The producer price differential applicable to other source milk 
shall be adjusted at the rates set forth in Sec. 1030.52(a), except 
that the adjusted producer differential price shall not be less than 
zero.
    11. Section 1030.76 is amended by removing the reference 
``Sec. 1030.71(a)(2)(ii)'' in paragraph (b)(1)(iii) and adding in its 
place ``Sec. 1030.71(a)(2)(v)'' and revising paragraph (a)(4) and the 
third sentence of paragraph (b)(1)(ii) to read as follows:


Sec. 1030.76  Payments by handler operating a partially regulated 
distributing plant.

* * * * *
    (a) * * *
    (4) Multiply the remaining pounds by the amount by which the Class 
I differential price exceeds the producer price differential, both 
prices to be applicable at the location of the partially regulated 
distributing plant; and
* * * * *
    (b) * * *
    (1) * * *
    (ii) * * * Any such transfers remaining after the above allocation 
which are classified in Class I and for which a value is computed for 
the handler operating the partially regulated distributing plant 
pursuant to Sec. 1030.60 shall be priced at the statistical uniform 
price (or at the weighted average price if such is provided) of the 
respective order regulating the handling of milk at the transferee-
plant, with such statistical uniform price adjusted to the location of 
the nonpool plant (but not to be less than the lowest class price of 
the respective order), except that transfers of reconstituted skim milk 
in filled milk shall be priced at the lowest class price of the 
respective order; and
* * * * *

PART 1065--MILK IN THE NEBRASKA-WESTERN IOWA MARKETING AREA

    1. Section 1065.30 is amended by removing paragraph (d) and 
revising paragraphs (a) and (c) to read as follows:


Sec. 1065.30  Reports of receipts and utilization.

* * * * *
    (a) Each handler described in Sec. 1065.9 (a), (b), and (c) shall 
report for each of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), and the value of 
the somatic cell adjustment contained in or represented by:
    (i) Receipts of producer milk, including producer milk diverted by 
the handler; and
    (ii) Receipts of milk from handlers described in Sec. 1065.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants;
    (ii) Receipts of fluid milk products not included in paragraph 
(a)(1) or (a)(2)(i) of this section and bulk fluid cream products from 
any source;
    (iii) Receipts of other source milk; and
    (iv) Inventories at the beginning and end of the month of fluid 
milk products and products specified in Sec. 1065.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell information, as the market administrator may 
prescribe.
* * * * *
    (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.
    2. Section 1065.31 is amended by revising paragraph (a) to read as 
follows:


Sec. 1065.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1065.9 (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 the 
information described in Sec. 1065.73(e).
* * * * *
    3. Section 1065.50 is amended by revising the section heading, 
introductory text and paragraph (a), and adding paragraphs (e) through 
(l) to read as follows:


Sec. 1065.50  Class and component prices.

    Subject to the provisions of Sec. 1065.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the 
component prices for the month shall be as follows:
    (a) Class I price. The Class I price for the month per 
hundredweight of milk containing 3.5 percent butterfat shall be 

[[Page 57153]]
the basic formula price for the second preceding month plus $1.75.
* * * * *
    (e) 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).
    (f) Class II differential price. The Class II differential price 
shall be the difference between the current month's Class II and Class 
III prices (this price may be negative).
    (g) Class III-A differential price. The Class III-A differential 
price shall be the difference between the current month's Class III and 
Class III-A prices (this price may be negative).
    (h) Skim milk price. The skim milk price per hundredweight, rounded 
to the nearest cent, shall be the Class III price less an amount 
computed by multiplying the butterfat differential by 35.
    (i) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the Class III price plus an amount 
computed by multiplying the butterfat differential by 965 and dividing 
the resulting amount by one hundred.
    (j) Protein price. The protein price per pound, rounded to the 
nearest one-hundredth cent, shall be 1.32 times the average monthly 
price per pound for 40-pound block Cheddar cheese on the National 
Cheese Exchange as reported by the Department.
    (k) Other solids price. Other solids are herein defined as solids 
not fat other than protein. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the basic formula price at 
test less the average butterfat test of the basic formula price as 
reported by the Department times the butterfat price, less the average 
protein test of the basic formula price as reported by the Department 
for the month times the protein price, and dividing the resulting 
amount by the average other solids test of the basic formula price as 
reported by the Department. If the resulting price is less than zero, 
then the protein price will be reduced so that the other solids price 
equals zero.
    (l) Somatic cell adjustment.
    (1) The somatic cell adjustment rate, per 1,000 somatic cells, 
rounded to five decimal places, shall be computed by multiplying .0005 
times the monthly cheddar cheese price as defined in paragraph (j) of 
this section; and
    (2) The somatic cell adjustment, per hundredweight, shall be 
determined by subtracting from 350 the somatic cell count (in 
thousands) of the milk, multiplying the difference by the somatic cell 
adjustment rate, and rounding to the nearest full cent.
    4. Section 1065.53 is revised to read as follows:


Sec. 1065.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III price for the preceding month;
    (d) The Class III-A price for the preceding month;
    (e) The skim milk price for the preceding month;
    (f) The butterfat price for the preceding month;
    (g) The protein price for the preceding month;
    (h) The other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
    5. The section heading in Sec. 1065.60 and the undesignated center 
heading preceding it, the introductory text, and paragraphs (a) and (f) 
are revised to read as follows:

Producer Price Differential


Sec. 1065.60  Handler's value of milk.

    For the purpose of computing a handler's obligation for milk the 
market administrator shall determine for each month the value of milk 
of each handler described in Sec. 1065.9(a) with respect to each of its 
pool plants and each handler described in Sec. 1065.9 (b) and (c).
    (a) The handler's obligation for producer milk shall be computed as 
follows:
    (1) Multiply the total hundredweight of milk in Class I as 
determined pursuant to Sec. 1065.44(c) by the Class I differential 
price for the month;
    (2) Add an amount obtained by multiplying the total hundredweight 
of milk in Class II as determined pursuant to Sec. 1065.44(c) by the 
Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1065.44(a) by the skim 
milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1065.44(a) by 
the average protein content of producer skim milk received by the 
handler, and multiplying the resulting pounds of protein by the protein 
price;
    (5) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1065.44(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;
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1065.30(a)(1) by the 
percentage of the total producer milk allocated pursuant to 
Sec. 1065.44(c) that is allocated to Class II and Class III; and
    (7) Add an amount obtained by multiplying the total hundredweight 
of producer milk eligible to be priced as Class III-A by the Class III-
A differential price for the month;
* * * * *
    (f) Add the amount obtained from multiplying the Class I 
differential price applicable at the location of the nearest 
unregulated supply plants from which an equivalent volume was received 
by the pounds of skim milk and butterfat in receipts of concentrated 
fluid milk products assigned to Class I pursuant to Sec. 1065.43(d) and 
Sec. 1065.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1065.44(a)(11) and the 
corresponding steps of Sec. 1065.44(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;
* * * * *
    6. Section 1065.61 is amended by revising the section heading, 
introductory text, and paragraphs (a) and (f) to read as follows:


Sec. 1065.61  Producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight of milk received from producers, 
as follows:
    (a) Combine into one total for all handlers:
    (1) The values computed pursuant to Sec. 1065.60 (a)(1), (a)(2), 
(a)(7) and (b) through (i) for all handlers; and
    (2) Add values computed pursuant to Sec. 1065.60 (a)(3), (a)(4), 
(a)(5) and (a)(6); and subtract the values obtained by multiplying the 
handlers' total pounds of protein and total pounds of other solids 
contained in such milk by their 

[[Page 57154]]
respective prices, and the total value of the somatic cell adjustment;
* * * * *
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be the ``producer price differential.''
    7. Section 1065.62 is revised to read as follows:


Sec. 1065.62   Announcement of producer prices.

    On or before the 12th day after the end of each month, the market 
administrator shall announce the following prices and information:
    (a) The producer price differential;
    (b) The protein price;
    (c) The other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk; and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
    8. Section 1065.71 is amended by revising paragraph (a)(2) to read 
as follows:


Sec. 1065.71   Payments to the producer-settlement fund.

    (a) * * *
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk determined pursuant to Sec. 1065.44(c) by the producer 
price differential as adjusted pursuant to Sec. 1065.75;
    (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;
    (iv) The total value of the somatic cell adjustment to producer 
milk; and
    (v) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1065.60(f) by 
the producer price differential as adjusted pursuant to Sec. 1065.52 
for the location of the plant from which received.
* * * * *
    9. Section 1065.73 is amended by revising paragraphs (a), (c), (d) 
and (e) to read as follows:


Sec. 1065.73   Payments to producers and to cooperative associations.

    (a) Each handler shall pay for milk received from producers for 
which payment is not made to a cooperative association pursuant to 
paragraph (b) or (c) of this section as follows:
    (1) On or before the 27th day of the 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 statistical uniform 
price computed pursuant to Sec. 1065.62(g) 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 the month, payment 
for producer milk received during such month shall not be less than the 
sum of:
    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Sec. 1065.75;
    (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) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (a)(1) of this 
section;
    (vii) Less proper deductions authorized in writing by such producer 
and plus or minus adjustments for errors in previous payments made to 
such producer;
    (viii) Less deductions for marketing services pursuant to 1065.86 
and for advertising and promotion pursuant to Sec. 1065.107; and
    (ix) If by such date the handler has not received full payment from 
the market administrator pursuant to Sec. 1065.72 for such month, it 
may reduce pro rata its payment 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 
paragraph (a) of this section next following receipt of the balance due 
from the market administrator.
* * * * *
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from a cooperative association acting as a 
handler described in Sec. 1065.9(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 26th day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price computed 
pursuant to Sec. 1065.62(g) for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 17th 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 applicable at the location of the receiving handler's 
plant;
    (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) The hundredweight of milk received times the somatic cell 
adjustment for the month; and
    (vi) Less any payment made pursuant to paragraph (c)(1) of this 
section.
    (d) Each handler shall pay a cooperative association for fluid milk 
products received by transfer or diversion from a pool plant operated 
by the 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 26th day 
of the month during which the milk was received at a rate per 
hundredweight not less than the Class III price for the preceding 
month; and
    (2) For milk received and classified during the month the handler 
shall pay the cooperative association on or before the 17th 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 price for the month applicable at the transferee plant, 
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 price for the month;
    (iii) The hundredweight of Class III-A milk received times the 
Class III-A differential price for the month;
    (iv) The pounds of butterfat received times the butterfat price for 
the month;
    (v) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (vi) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;

[[Page 57155]]

    (vii) The hundredweight of Class II and Class III milk received 
times the somatic cell adjustment; and
    (viii) Less any payment made pursuant to paragraph (d)(1) of this 
section.
    (e) In making payments for producer milk pursuant to paragraphs 
(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 which shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds 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 somatic cell count of the producer's milk;
    (7) The minimum rate or rates which payment to the producer is 
required pursuant to this order;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum rate;
    (9) The amount, or the rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (10) The net amount of payment to such producer or cooperative.
* * * * *
    10. Sections 1065.74 and 1065.75 are revised to read as follows:


Sec. 1065.74   Butterfat differential.

    The butterfat differential, rounded to the nearest one-tenth cent, 
shall be 0.138 times the current month's butter price less 0.0028 times 
the preceding month's average pay price per hundredweight, at test, for 
manufacturing grade milk in Minnesota and Wisconsin, using the ``base 
month'' series, adjusted pursuant to Sec. 1065.51 (a) through (e), as 
reported by the Department. The butter price means the simple average 
for the month of the Chicago Mercantile Exchange Grade A butter price 
as reported by the Department.


Sec. 1065.75   Plant location adjustments for producers and on nonpool 
milk.

    (a) The producer price differential for producer milk shall be 
adjusted according to the location of the plant of actual receipt at 
the rates set forth in Sec. 1065.52.
    (b) For purposes of computations pursuant to Secs. 1065.71 and 
1065.72, the producer price differential shall be adjusted at the rates 
set forth in Sec. 1065.52 applicable at the location of the nonpool 
plant from which the milk was received, except that the adjusted 
producer price differential shall not be less than zero.
    11. Section 1065.76 is amended by removing the reference 
``Sec. 1065.71(a)(2)(ii)'' in paragraph (b)(1)(iii) and adding in its 
place ``Sec. 1065.71(a)(2)(v)'' and revising paragraph (a)(4) and the 
third sentence of paragraph (b)(1)(ii) to read as follows:


Sec. 1065.76  Payments by handler operating a partially regulated 
distributing plant.

* * * * *
    (a) * * *
    (4) Multiply the remaining pounds by the amount by which the Class 
I differential price exceeds the producer price differential, both 
prices to be applicable at the location of the partially regulated 
distributing plant, with the difference to be not less than zero; and
* * * * *
    (b) * * *
    (1) * * *
    (ii) * * * Any such transfers remaining after the above allocation 
which are classified in Class I and for which a value is computed for 
the handler operating the partially regulated distributing plant 
pursuant to Sec. 1065.60 shall be priced at the statistical uniform 
price (or at the weighted average price if such is provided) of the 
respective order regulating the handling of milk at the transferee-
plant, with such statistical uniform price adjusted to the location of 
the nonpool plant (but not to be less than the lowest class price of 
the respective order), except that transfers of reconstituted skim milk 
in filled milk shall be priced at the lowest class price of the 
respective order; and
* * * * *

PART 1068--MILK IN THE UPPER MIDWEST MARKETING AREA

    1. Section 1068.30 is amended by removing paragraph (d) and 
revising paragraphs (a) and (c) to read as follows:


Sec. 1068.30  Reports of receipts and utilization.

* * * * *
    (a) Each handler described in Sec. 1068.9 (a), (b), and (c) shall 
report for each of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), and the value of 
the somatic cell adjustment contained in or represented by:
    (i) Receipts of producer milk, including producer milk diverted by 
the handler; and
    (ii) Receipts of milk from handlers described in Sec. 1068.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants;
    (ii) Receipts of fluid milk products not included in paragraph 
(a)(1) or (a)(2)(i) of this section and bulk fluid cream products from 
any source;
    (iii) Receipts of other source milk; and
    (iv) Inventories at the beginning and end of the month of fluid 
milk products and products specified in Sec. 1068.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell information, as the market administrator may 
prescribe.
* * * * *
    (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.
    2. Section 1068.31 is amended by revising paragraph (a) to read as 
follows:


Sec. 1068.31  Payroll reports.

    (a) On or before the 22nd day of each month, each handler described 
in Sec. 1068.9 (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 the 
information described in Sec. 1068.73(f).
* * * * *
    3. Section 1068.50 is amended by revising the section heading, 
introductory text and paragraph (a), and adding paragraphs (e) through 
(l) to read as follows:


Sec. 1068.50  Class and component prices.

    Subject to the provisions of Sec. 1068.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the 
component prices for the month shall be as follows:
    (a) Class I price. The Class I price shall be the basic formula 
price for the second preceding month plus $1.20.
* * * * *
    (e) 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).
    (f) Class II differential price. The Class II differential price 
shall be the 

[[Page 57156]]
difference between the current month's Class II and Class III prices 
(this price may be negative).
    (g) Class III-A differential price. The Class III-A differential 
price shall be the difference between the current month's Class III and 
Class III-A prices (this price may be negative).
    (h) Skim milk price. The skim milk price per hundredweight, rounded 
to the nearest cent, shall be the Class III price less an amount 
computed by multiplying the butterfat differential by 35.
    (i) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the Class III price plus an amount 
computed by multiplying the butterfat differential by 965 and dividing 
the resulting amount by one hundred.
    (j) Protein price. The protein price per pound, rounded to the 
nearest one-hundredth cent, shall be 1.32 times the average monthly 
price per pound for 40-pound block Cheddar cheese on the National 
Cheese Exchange as reported by the Department.
    (k) Other solids price. Other solids are herein defined as solids-
not-fat other than protein. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the basic formula price at 
test less the average butterfat test of the basic formula price as 
reported by the Department times the butterfat price, less the average 
protein test of the basic formula price as reported by the Department 
for the month times the protein price, and dividing the resulting 
amount by the average other solids test of the basic formula price as 
reported by the Department. If the resulting price is less than zero, 
then the protein price will be reduced so that the other solids price 
equals zero.
    (l) Somatic cell adjustment. (1) The somatic cell adjustment rate, 
per 1,000 somatic cells, rounded to five decimal places, shall be 
computed by multiplying .0005 times the monthly cheddar cheese price as 
defined in paragraph (j) of this section; and
    (2) The somatic cell adjustment per hundredweight shall be 
determined by subtracting from 350 the somatic cell count (in 
thousands) of the milk, multiplying the difference by the somatic cell 
adjustment rate, and rounding to the nearest full cent.
    4. Section 1068.53 is revised to read as follows:


Sec. 1068.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III price for the preceding month;
    (d) The Class III-A price for the preceding month;
    (e) The skim milk price for the preceding month;
    (f) The butterfat price for the preceding month;
    (g) The protein price for the preceding month;
    (h) The other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
    5. The section heading in Sec. 1068.60 and the undesignated center 
heading preceding it, the introductory text, and paragraphs (a), (f), 
and (g) are revised to read as follows:

Producer Price Differential


Sec. 1068.60  Handler's value of milk.

    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. 1068.9 (a), (b), and (c).
    (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 pursuant to Sec. 1068.43(a) and Sec. 1068.44(c) by the Class 
I differential price for the month;
    (2) Add an amount obtained by multiplying the total hundredweight 
of producer milk in Class II as determined pursuant to Sec. 1068.43(a) 
and Sec. 1068.44(c) by the Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1068.43(a) and 
Sec. 1068.44(a) by the skim milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1068.43(a) and 
Sec. 1068.44(a) by the average protein content of producer skim milk 
received by the handler, and multiplying the resulting pounds of 
protein by the protein price;
    (5) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1068.43(a) and 
Sec. 1068.44(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;
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1068.30(a)(1) by the 
percentage of the total producer milk assigned to Class II and Class 
III pursuant to Secs. 1068.43(a) and 1068.44(c); and
    (7) Add an amount obtained by multiplying the total hundredweight 
of producer milk eligible to be priced as Class III-A by the Class III-
A differential price for the month;
* * * * *
    (f) Add the amount obtained from multiplying the Class I 
differential price applicable at the location of the nearest 
unregulated supply plants from which an equivalent volume was received 
by the pounds of skim milk and butterfat in receipts of concentrated 
fluid milk products assigned to Class I pursuant to Sec. 1068.43(e) and 
Sec. 1068.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1068.44(a)(11) and the 
corresponding steps of Sec. 1068.44(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;
    (g) Subtract, for a handler described in Sec. 1068.9(c), the amount 
charged the preceding month for the skim milk and butterfat contained 
in inventory at the beginning of the month that was delivered to a pool 
plant during the month;
* * * * *
    6. Section 1068.61 is amended by revising the section heading, 
introductory text, and paragraphs (a) and (e) to read as follows:


Sec. 1068.61  Producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight of milk as follows:
    (a) Combine into one total for all handlers:
    (1) The estimated values computed pursuant to Sec. 1068.60 (a)(1), 
(a)(2), (a)(7), and (b) through (j) for all handlers; and
    (2) Add the estimated values computed pursuant to Sec. 1068.60 
(a)(3), (a)(4), (a)(5), and (a)(6); and subtract the values obtained by 
multiplying the handlers' total pounds of protein and 

[[Page 57157]]
total pounds of other solids contained in such milk by their respective 
prices, and the total value of the somatic cell adjustment;
* * * * *
    (e) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (d) of this section. The result 
shall be the ``producer price differential'' for milk received from 
producers.
    7. Section 1068.62 is revised to read as follows:


Sec. 1068.62  Announcement of producer prices.

    On or before the 12th day after the end of each month, the market 
administrator shall announce the following prices and information:
    (a) The producer price differential;
    (b) The protein price;
    (c) The other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk; and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
    8. Section 1068.71 is amended by revising paragraph (a) to read as 
follows:


Sec. 1068.71  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 exceeds 
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. 1068.60.
    (2) The sum of:
    (i) The value of such handler's receipts of producer milk and milk 
received from a handler described in Sec. 1068.9(c). In the case of a 
handler described in Sec. 1068.9(c), less the amount due from other 
handlers pursuant to Sec. 1068.73(d). The value of producer milk shall 
be computed as follows:
    (A) An amount obtained by multiplying the total hundredweight of 
producer milk by the producer price differential as adjusted pursuant 
to Sec. 1068.75;
    (B) An amount obtained by multiplying the total pounds of protein 
contained in producer milk by the protein price;
    (C) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk by the other solids price; and
    (D) The total value of the somatic cell adjustment to producer 
milk; and
    (ii) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1068.60(f) by 
the producer price differential as adjusted pursuant to Sec. 1068.52 
for the location of the plant from which received.
* * * * *
    9. Sections 1068.73, 1068.74, and 1068.75 are revised to read as 
follows:


Sec. 1068.73  Payments to producers and to cooperative associations.

    Each handler shall pay for milk received from producers or 
cooperative associations as follows:
    (a) On or before the 25th day of the month, each handler shall pay 
for skim milk and butterfat received during the first 15 days of the 
month from a cooperative association:
    (1) That is a handler pursuant to Sec. 1068.9(a), at not less than 
the Class I price for the month at the location of the transferee or 
transferor plant, whichever is higher, adjusted by the butterfat 
differential for the preceding month;
    (2) That is a handler pursuant to Sec. 1068.9(c), at not less than 
the statistical uniform price at its plant location for the preceding 
month, adjusted by the butterfat differential for the preceding month; 
and
    (3) That is not a handler but which is authorized to collect 
payment on behalf of its member producers and has requested that 
payment be made to it in aggregate, at not less than the statistical 
uniform price at its plant location for the preceding month, adjusted 
by the butterfat differential for the preceding month.
    (b) On or before the 4th day after the end of the month, each 
handler shall pay for skim milk and butterfat received during the first 
15 days of the month from a producer for whom payment is not being made 
pursuant to paragraph (a) of this section and who has not discontinued 
shipping to such handler, at not less than the statistical uniform 
price at its plant location for the preceding month, adjusted by the 
butterfat differential for the preceding month.
    (c) On or before the 11th day after the end of the month, each 
handler shall pay for milk received and classified during the month 
from a cooperative association which is a handler pursuant to 
Sec. 1068.9(a) adjusted at the location of the transferee or transferor 
plant, whichever is higher, payment shall be determined as follows:
    (1) The hundredweight of Class I milk received times the Class I 
differential price for the month plus the pounds of Class I skim milk 
times the skim milk price for the month;
    (2) The hundredweight of Class II milk received times the Class II 
differential price for the month;
    (3) The hundredweight of Class III-A milk received times the Class 
III-A differential price for the month;
    (4) The pounds of butterfat received times the butterfat price for 
the month;
    (5) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (6) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (7) The hundredweight of Class II and Class III milk received times 
the somatic cell adjustment; and
    (8) Less any payment made pursuant to paragraph (a)(1) of this 
section.
    (d) On or before the 18th day after the end of the month, each 
handler shall make payment as described in paragraph (d)(4) of this 
section to:
    (1) A cooperative association that is a handler pursuant to 
Sec. 1068.9(c);
    (2) A cooperative association that is not a handler but which is 
authorized to collect payment on behalf of its member producers and has 
requested that payment be made to it in aggregate;
    (3) A producer for whom payment is not being made pursuant to 
paragraphs (d) (1) and (2) of this section; and
    (4) Payment shall be determined by:
    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Sec. 1068.75;
    (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) The hundredweight of milk received times the somatic cell 
adjustment for the month; and
    (vi) Less any payment made pursuant to paragraph (a) or (b) of this 
section.
    (e) In making payments pursuant to paragraphs (a) (2) and (3), (b) 
and (d) of this section, deductions may be made for marketing services 
pursuant to Sec. 1068.86 and for any proper deductions authorized by 
the producer. In the event a handler has not received full payment from 
the market administrator pursuant to Sec. 1068.72 by the 18th day of 
the month, the handler may reduce pro rata its payments to producers 
pursuant to paragraph (d) of this section by not more than the amount 
of such underpayment. Following receipt of the balance due from the 
market administrator, the 

[[Page 57158]]
handler shall complete payments to producers not later than the next 
payment date provided under this section.
    (f) In making payment to individual producers as required by this 
section, each handler shall furnish each producer from whom it received 
milk a supporting statement, in such form that it may be retained by 
the producer, which shall show:
    (1) The month and the identity of the handler and producer;
    (2) The total pounds of milk received from the 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 somatic cell count of the producer's milk;
    (7) The minimum rate or rates at which payment to the producer is 
required pursuant to this section;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum;
    (9) The amount, or the rate per hundredweight, or rate per pound of 
component, of each deduction claimed by the handler, including any 
deduction claimed under Sec. 1068.86, together with a description of 
the respective deductions; and
    (10) The net amount of the payment to the producer.


Sec. 1068.74  Butterfat differential.

    The butterfat differential, rounded to the nearest one-tenth cent, 
shall be 0.138 times the current month's butter price less 0.0028 times 
the preceding month's average pay price per hundredweight, at test, for 
manufacturing grade milk in Minnesota and Wisconsin, using the ``base 
month'' series, adjusted pursuant to Sec. 1068.51 (a) through (e), as 
reported by the Department. The butter price means the simple average 
for the month of the Chicago Mercantile Exchange Grade A butter price 
as reported by the Department.


Sec. 1068.75  Plant location adjustments for producers and on nonpool 
milk.

    (a) The producer price differential for producer milk received at a 
pool plant or delivered to a nonpool plant shall be adjusted according 
to the location of the plant of actual receipt at the rates set forth 
in Sec. 1068.52.
    (b) The producer price differential applicable to other source milk 
shall be adjusted at the rates set forth in Sec. 1068.52, except that 
the adjusted producer price differential shall not be less than zero.
    10. Section 1068.76 is amended by revising paragraph (a)(4) and the 
third sentence of paragraph (b)(1)(ii) to read as follows:


Sec. 1068.76  Payments by handler operating a partially regulated 
distributing plant.

* * * * *
    (a) * * *
    (4) Multiply the remaining pounds by the amount by which the Class 
I differential price exceeds the producer price differential, both 
prices to be applicable at the location of the partially regulated 
distributing plant, with the difference to be not less than zero; and
* * * * *
    (b) * * *
    (1) * * *
    (ii) * * * Any such transfers remaining after the above allocation 
which are classified in Class I and for which a value is computed for 
the handler operating the partially regulated distributing plant 
pursuant to Sec. 1068.60 shall be priced at the statistical uniform 
price (or at the weighted average price if such is provided) of the 
respective order regulating the handling of milk at the transferee-
plant, with such statistical uniform price adjusted to the location of 
the nonpool plant (but not to be less than the lowest class price of 
the respective order), except that transfers of reconstituted skim milk 
in filled milk shall be priced at the lowest class price of the 
respective order; and
* * * * *


Sec. 1068.85  [Amended]

    11. Section 1068.85 is amended by removing the word ``15th'' in the 
introductory text and adding in its place ``16th''.


Sec. 1068.86  [Amended]

    12. Section 1068.86 is amended by removing the word ``15th'' in 
paragraphs (a) and (b) and adding in its place ``16th''.

PART 1076--MILK IN THE EASTERN SOUTH DAKOTA MARKETING AREA

    1. Section 1076.30 is amended by removing paragraph (d) and 
revising paragraphs (a) and (c) to read as follows:


Sec. 1076.30  Reports of receipts and utilization.

 * * * * *
    (a) Each handler described in Sec. 1076.9(a), (b), and (c) shall 
report for each of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), and the value of 
the somatic cell adjustment contained in or represented by:
    (i) Receipts of producer milk, including producer milk diverted by 
the handler; and
    (ii) Receipts of milk from handlers described in Sec. 1076.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants;
    (ii) Receipts of fluid milk products not included in paragraph 
(a)(1) or (a)(2)(i) of this section and bulk fluid cream products from 
any source;
    (iii) Receipts of other source milk; and
    (iv) Inventories at the beginning and end of the month of fluid 
milk products and products specified in Sec. 1076.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell information, as the market administrator may 
prescribe.
* * * * *
    (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.
    2. Section 1076.31 is amended by revising paragraph (a) to read as 
follows:


Sec. 1076.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1076.9(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 the 
information described in Sec. 1076.73(e).
* * * * *
    3. Section 1076.50 is amended by revising the section heading, 
introductory text and paragraph (a), adding and reserving paragraph 
(d), and adding paragraphs (e) through (l):


Sec. 1076.50  Class and component prices.

    Subject to the provisions of Sec. 1076.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the 
component prices for the month shall be as follows:
    (a) Class I price. The Class I price for the month per 
hundredweight of milk containing 3.5 percent butterfat shall be 

[[Page 57159]]
the basic formula price for the second preceding month plus $1.50.
* * * * *
    (d) [Reserved].
    (e) Class I differential price. The Class I differential price 
shall be the difference between the current month Class I and Class III 
prices (this price may be negative).
    (f) Class II differential price. The Class II differential price 
shall be the difference between the current month Class II and Class 
III prices (this price may be negative).
    (g) [Reserved].
    (h) Skim milk price. The skim milk price per hundredweight, rounded 
to the nearest cent, shall be the Class III price less an amount 
computed by multiplying the butterfat differential by 35.
    (i) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the Class III price plus an amount 
computed by multiplying the butterfat differential by 965 and dividing 
the resulting amount by one hundred.
    (j) Protein price. The protein price per pound, rounded to the 
nearest one-hundredth cent, shall be 1.32 times the average monthly 
price per pound for 40-pound block Cheddar cheese on the National 
Cheese Exchange as reported by the Department.
    (k) Other solids price. Other solids are herein defined as solids-
not-fat other than protein. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the basic formula price at 
test less the average butterfat test of the basic formula price as 
reported by the Department times the butterfat price, less the average 
protein test of the basic formula price as reported by the Department 
for the month times the protein price, and dividing the resulting 
amount by the average other solids test of the basic formula price as 
reported by the Department. If the resulting price is less than zero, 
then the protein price will be reduced so that the other solids price 
equals zero.
    (l) Somatic cell adjustment. (1) The somatic cell adjustment rate, 
per 1,000 somatic cells, rounded to five decimal places, shall be 
computed by multiplying .0005 times the monthly Cheddar cheese price as 
defined in paragraph (j) of this section; and
    (2) The somatic cell adjustment, per hundredweight, shall be 
determined by subtracting from 350 the somatic cell count (in 
thousands) of the milk, multiplying the difference by the somatic cell 
adjustment rate, and rounding to the nearest full cent.
    4. Section 1076.53 is revised to read as follows:


Sec. 1076.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III price for the preceding month;
    (d) [Reserved];
    (e) The skim milk price for the preceding month;
    (f) The butterfat price for the preceding month;
    (g) The protein price for the preceding month;
    (h) The other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
    5. The section heading in Sec. 1076.60 and the undesignated center 
heading preceding it, the introductory text, and paragraphs (a) and (f) 
are revised to read as follows:

Producer Price Differential


Sec. 1076.60  Handler's value of milk.

    For the purpose of computing a handler's obligation for milk, the 
market administrator shall determine for each month the value of milk 
of each handler described in Sec. 1076.9(a) with respect to each of its 
pool plants and each handler described in Sec. 1076.9 (b) and (c).
    (a) The handler's obligation for producer milk and milk received 
from a handler described in Sec. 1076.9(c) shall be computed as 
follows:
    (1) Multiply the total hundredweight of milk in Class I as 
determined pursuant to Sec. 1076.43(a) and Sec. 1076.44(c) by the Class 
I differential price for the month;
    (2) Add an amount obtained by multiplying the total hundredweight 
of milk in Class II as determined pursuant to Sec. 1076.43(a) and 
Sec. 1076.44(c) by the Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1076.43(a) and 
Sec. 1076.44(a) by the skim milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1076.43(a) and 
Sec. 1076.44(a) by the average protein content of the skim milk 
received by the handler, and multiplying the resulting pounds of 
protein by the protein price;
    (5) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1076.43(a) and 
Sec. 1076.44(a) by the average other solids content of the skim milk 
received by the handler, and multiplying the resulting pounds of other 
solids by the other solids price; and
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1076.30(a)(1) by the 
percentage of the total producer milk assigned to Class II and Class 
III pursuant to Secs. 1076.43(a) and 1076.44(c);
* * * * *
    (f) Add the amount obtained from multiplying the Class I 
differential price applicable at the location of the nearest 
unregulated supply plants from which an equivalent volume was received 
by the pounds of skim milk and butterfat in receipts of concentrated 
fluid milk products assigned to Class I pursuant to Sec. 1076.43(d) and 
Sec. 1076.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1076.44(a)(11) and the 
corresponding steps of Sec. 1076.44(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;
* * * * *
    6. Section 1076.61 is amended by revising the section heading, 
introductory text, and paragraphs (a) and (e) to read as follows:


Sec. 1076.61  Producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight of milk received from producers as 
follows:
    (a) Combine into one total for all handlers:
    (1) The values computed pursuant to Sec. 1076.60 (a)(1), (a)(2), 
and (b) through (i) for all handlers; and
    (2) Add values computed pursuant to Sec. 1076.60(a)(3), (a)(4), 
(a)(5) and (a)(6); and subtract the values obtained by multiplying the 
handlers' total pounds of protein and total pounds of other solids 
contained in such milk by their respective prices, and the total value 
of the somatic cell adjustment;
* * * * *
    (e) Subtract not less than 4 cents nor more than 5 cents from the 
price 

[[Page 57160]]
computed pursuant to paragraph (d) of this section. The result shall be 
the ``producer price differential.''
    7. Section 1076.62 is revised to read as follows:


Sec. 1076.62  Announcement of producer prices.

    On or before the 12th day after the end of each month, the market 
administrator shall announce the following prices and information:
    (a) The producer price differential;
    (b) The protein price;
    (c) The other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk and milk received from a handler described in 
Sec. 1076.9(c); and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
    8. Section 1076.71 is amended by revising paragraph (a)(2) to read 
as follows:


Sec. 1076.71  Payments to the producer-settlement fund.

    (a) * * *
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk and milk received from a handler described in 
Sec. 1076.9(c) by the producer price differential as adjusted pursuant 
to Sec. 1076.75;
    (ii) An amount obtained by multiplying the total pounds of protein 
contained in producer milk and milk received from a handler described 
in Sec. 1076.9(c) by the protein price;
    (iii) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk and milk received from a handler 
described in Sec. 1076.9(c) by the other solids price;
    (iv) The total value of the somatic cell adjustment to producer 
milk and milk received from handlers described in Sec. 1076.9(c); and
    (v) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1076.60(f) by 
the producer price differential as adjusted pursuant to Sec. 1076.52 
for the location of the plant from which received.
* * * * *


Sec. 1076.72  [Amended]

    9. Section 1076.72 is amended by removing the last sentence.
    10. Section 1076.73 is amended by revising paragraphs (a), (c), (d) 
and (e) to read as follows:


Sec. 1076.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for milk received from 
producers for which payment is not made to a cooperative association 
pursuant to paragraph (b) or (c) of this section as follows:
    (1) On or before the last day of each 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 for the preceding 
month; and
    (2) On or before the 18th day after the end of the month, payment 
for producer milk received during such month shall not be less than the 
sum of:
    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Sec. 1076.75;
    (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) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (a)(1) of this 
section;
    (vii) Less proper deductions authorized in writing by such producer 
and plus or minus adjustments for errors in previous payments made to 
such producer;
    (viii) Less deductions for marketing services pursuant to 
Sec. 1076.86; and
    (ix) If by such date the handler has not received full payment from 
the market administrator pursuant to Sec. 1076.72 for such month, it 
may reduce pro rata its payment 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 
paragraph (a) of this section next following receipt of the balance due 
from the market administrator.
* * * * *
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from a cooperative association acting as a 
handler described in Sec. 1076.9(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 28th day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price computed 
pursuant to Sec. 1076.62(g) for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 15th 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 applicable at the location of the receiving handler's 
plant;
    (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) The hundredweight of milk received times the somatic cell 
adjustment for the month; and
    (vi) Less any payment made pursuant to paragraph (c)(1) of this 
section.
    (d) Each handler shall pay a cooperative association for fluid milk 
products received by transfer from pool plant(s) operated by the 
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 28th day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price computed 
pursuant to Sec. 1076.62(g) adjusted by the butterfat differential, 
both for the preceding month; and
    (2) For milk received and classified during the month the handler 
shall pay the cooperative association on or before the 15th 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 price for the month applicable at the transferee plant, 
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 price for the month;
    (iii) [Reserved];
    (iv) The pounds of butterfat received times the butterfat price for 
the month;
    (v) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (vi) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (vii) The hundredweight of Class II and Class III milk received 
times the somatic cell adjustment; and
    (viii) Less any payment made pursuant to paragraph (d)(1) of this 
section.
    (e) In making payments for producer milk pursuant to paragraphs 
(a)(2) or 

[[Page 57161]]
(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 which 
shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds 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 somatic cell count of the producer's milk;
    (7) The minimum rate or rates which payment to the producer is 
required pursuant to this order;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum rate;
    (9) The amount, or the rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (10) The net amount of payment to such producer or cooperative.
    11. Sections 1076.74 and 1076.75 are revised to read as follows:


Sec. 1076.74  Butterfat differential.

    The butterfat differential, rounded to the nearest one-tenth cent, 
shall be 0.138 times the current month's butter price less 0.0028 times 
the preceding month's average pay price per hundredweight, at test, for 
manufacturing grade milk in Minnesota and Wisconsin, using the ``base 
month'' series, adjusted pursuant to Sec. 1076.51 (a) through (e), as 
reported by the Department. The butter price means the simple average 
for the month of the Chicago Mercantile Exchange Grade A butter price 
as reported by the Department.


Sec. 1076.75  Plant location adjustments for producers and on nonpool 
milk.

    (a) The producer price differential for producer milk shall be 
adjusted according to the location of the plant of actual receipt at 
the rates set forth in Sec. 1076.52; and
    (b) For the purpose of computations pursuant to Secs. 1076.71 and 
1076.72 the producer price differential shall be adjusted at the rates 
set forth in Sec. 1076.52 applicable at the location of the nonpool 
plant from which the milk was received, except that the adjusted 
producer price differential shall not be less than zero.
    12. Section 1076.76 is amended by removing the reference 
``Sec. 1076.71(a)(2)(ii)'' in paragraph (b)(1)(iii) and adding in its 
place ``Sec. 1076.71(a)(2)(v)'' and revising paragraphs (a)(4) and the 
last sentence of (b)(1)(ii) to read as follows:


Sec. 1076.76  Payments by handler operating a partially regulated 
distributing plant.

* * * * *
    (a) * * *
    (4) Multiply the remaining pounds by the amount by which the Class 
I differential price exceeds the producer price differential, both 
price to be applicable at the location of the partially regulated 
distributing plant, with the difference to be not less than zero; and
* * * * *
    (b) * * *
    (1) * * *
    (ii) * * * Any such transfers remaining after the above allocation 
which are classified in Class I and for which a value is computed for 
the handler operating the partially regulated distributing plant 
pursuant to Sec. 1076.60 shall be priced at the statistical uniform 
price (or at the weighted average price if such is provided) of the 
respective order regulating the handling of milk at the transferee-
plant, with such statistical uniform price adjusted to the location of 
the nonpool plant (but not to be less than the lowest class price of 
the respective order), except that transfers of reconstituted skim milk 
in filled milk shall be priced at the lowest class price of the 
respective order; and
* * * * *

PART 1079--MILK IN THE IOWA MARKETING AREA

    1. Section 1079.30 is amended by removing paragraph (d) and 
revising paragraphs (a) and (c) to read as follows:


Sec. 1079.30  Reports of receipts and utilization.

* * * * *
    (a) Each handler described in Sec. 1079.9 (a), (b), and (c) shall 
report for each of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), and the value of 
the somatic cell adjustment contained in or represented by:
    (i) Receipts of producer milk, including producer milk diverted by 
the handler; and
    (ii) Receipts of milk from handlers described in Sec. 1079.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants;
    (ii) Receipts of fluid milk products not included in paragraph 
(a)(1) or (a)(2)(i) of this section and bulk fluid cream products from 
any source;
    (iii) Receipts of other source milk; and
    (iv) Inventories at the beginning and end of the month of fluid 
milk products and products specified in Sec. 1079.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell information, as the market administrator may 
prescribe.
* * * * *
    (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.
    2. Section 1079.31 is amended by revising paragraph (a) to read as 
follows:


Sec. 1079.31  Payroll reports.

    (a) On or before the 22nd day after the end of each month, each 
handler described in Sec. 1079.9 (a), (b), or (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 the 
information described in Sec. 1079.73(e).
* * * * *
    3. Section 1079.50 is amended by revising the section heading, 
introductory text and paragraph (a), and adding paragraphs (e) through 
(l) to read as follows:


Sec. 1079.50  Class and component prices.

    Subject to the provisions of Sec. 1079.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the 
component prices for the month shall be as follows:
    (a) Class I price. The Class I price for the month per 
hundredweight of milk containing 3.5 percent butterfat shall be the 
basic formula price for the second preceding month plus $1.55.
* * * * *
    (e) Class I differential price. The Class I differential price 
shall be the difference between the current month Class I and Class III 
prices (this price may be negative).
    (f) Class II differential price. The Class II differential price 
shall be the difference between the current month Class II and Class 
III prices (this price may be negative).
    (g) Class III-A differential price. The Class III-A differential 
price shall be the 

[[Page 57162]]
difference between the current month's Class III and Class III-A prices 
(this price may be negative).
    (h) Skim milk price. The skim milk price per hundredweight, rounded 
to the nearest cent, shall be the Class III price less an amount 
computed by multiplying the butterfat differential by 35.
    (i) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the Class III price plus an amount 
computed by multiplying the butterfat differential by 965 and dividing 
the resulting amount by one hundred.
    (j) Protein price. The protein price per pound, rounded to the 
nearest one-hundredth cent, shall be 1.32 times the average monthly 
price per pound for 40-pound block Cheddar cheese on the National 
Cheese Exchange as reported by the Department.
    (k) Other solids price. Other solids are herein defined as solids 
not fat other than protein. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the basic formula price at 
test less the average butterfat test of the basic formula price as 
reported by the Department times the butterfat price, less the average 
protein test of the basic formula price as reported by the Department 
for the month times the protein price, and dividing the resulting 
amount by the average other solids test of the basic formula price as 
reported by the Department. If the resulting price is less than zero, 
then the protein price will be reduced so that the other solids price 
equals zero.
    (l) Somatic cell adjustment. (1) The somatic cell adjustment rate, 
per 1,000 somatic cells, rounded to five decimal places, shall be 
computed by multiplying .0005 times the monthly cheddar cheese price as 
defined in paragraph (j) of this section; and
    (2) The somatic cell adjustment, per hundredweight, shall be 
determined by subtracting from 350 the somatic cell count (in 
thousands) of the milk, multiplying the difference by the somatic cell 
adjustment rate, and rounding to the nearest full cent.
    4. Section 1079.53 is revised to read as follows:


Sec. 1079.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III price for the preceding month;
    (d) The Class III-A price for the preceding month;
    (e) The skim milk price for the preceding month;
    (f) The butterfat price for the preceding month;
    (g) The protein price for the preceding month;
    (h) The other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
    5. The section heading in Sec. 1079.60 and the undesignated center 
heading preceding it, the introductory text, and paragraphs (a), (f), 
and (g) are revised to read as follows:

Producer Price Differential


Sec. 1079.60  Handler's value of milk.

    For the purpose of computing a handler's obligation for milk the 
market administrator shall determine for each month the value of milk 
of each handler described in Sec. 1079.9(a) with respect to each of its 
pool plants, and each handler described in Sec. 1079.9 (b) and (c).
    (a) The handler's obligation for producer milk and milk received 
from a handler described in Sec. 1079.9(c) shall be computed as 
follows:
    (1) Multiply the total hundredweight of milk in Class I as 
determined pursuant to Sec. 1079.43(a) and Sec. 1079.44(c) by the Class 
I differential price for the month;
    (2) Add an amount obtained by multiplying the total hundredweight 
of milk in Class II as determined pursuant to Sec. 1079.43(a) and 
Sec. 1079.44(c) by the Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1079.43(a) and 
Sec. 1079.44(a) by the skim milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1079.43(a) and 
Sec. 1079.44(a) by the average protein content of the skim milk 
received by the handler, and multiplying the resulting pounds of 
protein by the protein price;
    (5) Add an amount obtained by multiplying the pounds of skim milk 
in Class II and Class III as determined pursuant to Sec. 1079.43(a) and 
Sec. 1079.44(a) by the average other solids content of the skim milk 
received by the handler, and multiplying the resulting pounds of other 
solids by the other solids price;
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1079.30(a)(1) by the 
percentage of the total producer milk assigned to Class II and Class 
III pursuant to Secs. 1079.43(a) and 1079.44(c); and
    (7) Add an amount obtained by multiplying the total hundredweight 
of producer milk eligible to be priced as Class III-A by the Class III-
A differential price for the month;
* * * * *
    (f) Add the amount obtained from multiplying the Class I 
differential price applicable at the location of the nearest 
unregulated supply plants from which an equivalent volume was received 
by the pounds of skim milk and butterfat in receipts of concentrated 
fluid milk products assigned to Class I pursuant to Sec. 1079.43(d) and 
Sec. 1079.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1079.44(a)(11) and the 
corresponding steps of Sec. 1079.44(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;
    (g) Subtract for a handler described in Sec. 1079.9(c) the amount 
charged the preceding month for the skim milk and butterfat contained 
in inventory at the beginning of the month that was delivered to a pool 
plant during the month;
* * * * *
    6. Section 1079.61 is amended by revising the section heading, 
introductory text, and paragraphs (a) and (e) to read as follows:


Sec. 1079.61  Producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight for Zone 1. 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 report of any handler who has not made the payments 
required pursuant to Sec. 1079.71 for the preceding month shall not be 
included in the computation of the producer price differential. The 
report of such handler shall not be included in the computation for 
succeeding months until the handler 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:

[[Page 57163]]

    (a) Combine into one total for all handlers:
    (1) The values computed pursuant to Sec. 1079.60 (a)(1), (a)(2), 
(a)(7), and (b) through (j) for all handlers; and
    (2) Add values computed pursuant to Sec. 1079.60 (a)(3), (a)(4), 
(a)(5) and (a)(6); and subtract the values obtained by multiplying the 
handlers' total pounds of protein and total pounds of other solids 
contained in such milk by their respective prices, and the total value 
of somatic cell adjustments;
* * * * *
    (e) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (d) of this section. The result 
shall be known as the ``producer price differential.''
    7. Section 1079.62 is revised to read as follows:


Sec. 1079.62  Announcement of producer prices.

    On or before the 12th day after the end of each month, the market 
administrator shall announce the following prices and information:
    (a) The producer price differential;
    (b) The protein price;
    (c) The other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk and milk received from a handler described in 
Sec. 1079.9(c); and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
    8. Section 1079.71 is amended by revising paragraph (a)(2) and 
adding and reserving paragraph (b) to read as follows:


Sec. 1079.71  Payments to the producer-settlement fund.

    (a) * * *
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk and milk received from a handler described in 
Sec. 1079.9(c) by the producer price differential as adjusted by 
Sec. 1079.75. In the case of a handler described in Sec. 1079.9(c), 
less the amount due from handlers pursuant to Sec. 1079.73;
    (ii) An amount obtained by multiplying the total pounds of protein 
contained in producer milk and milk received from a handler described 
in Sec. 1079.9(c) by the protein price;
    (iii) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk and milk received from a handler 
described in Sec. 1079.9(c) by the other solids price;
    (iv) The total value of the somatic cell adjustment to producer 
milk and milk received from handlers described in Sec. 1079.9(c); and
    (v) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1079.60(f) by 
the producer price differential as adjusted pursuant to Sec. 1079.52 
for the location of the plant from which received.
    (b) [Reserved].
    9. Sections 1079.73, 1079.74 and 1079.75 are revised to read as 
follows:


Sec. 1079.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay for milk received from producers for 
which payment is not made to a cooperative association pursuant to 
paragraph (b) or (c) of this section as follows:
    (1) On or before the last day 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 statistical uniform 
price computed pursuant to Sec. 1079.62(g) for the preceding month and 
adjusted pursuant to Sec. 1079.75, less proper deductions authorized in 
writing by such producer; and
    (2) On or before the 18th day after the end of the month, payment 
for producer milk received during such month shall not be less than the 
sum of:
    (i) The hundredweight of producer milk received times the producer 
price differential adjusted pursuant to Sec. 1079.75;
    (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) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (a)(1) of this 
section;
    (vii) Less proper authorized deductions authorized in writing by 
such producer and plus or minus adjustments for errors in previous 
payments made to such producer;
    (viii) Less deductions for marketing services pursuant to 
Sec. 1079.86; and
    (ix) If by such date the handler has not received full payment from 
the market administrator pursuant to Sec. 1079.72 for such month, it 
may reduce pro rata its payment 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 
paragraph (a) of this section next following receipt of the balance due 
from the market administrator.
    (b) Each handler shall pay a cooperative association as follows for 
milk received from producers if the cooperative association has filed a 
written request for payment with the handler and if the market 
administrator has determined that such cooperative association is 
authorized to collect payment:
    (1) On or before the last day of the month, an amount not less than 
the sum of the individual payments otherwise payable to producers 
pursuant to paragraph (a)(1) of this section, less any deductions 
authorized in writing by such cooperative association; and
    (2) On or before the 18th day after the end of each month an amount 
not less than the sum of the individual payments otherwise payable to 
producers pursuant to paragraph (a)(2) of this section, less proper 
deductions authorized in writing by such cooperative association.
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from a cooperative association acting as a 
handler described in Sec. 1079.9(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 last day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price computed 
pursuant to Sec. 1079.62(g), applicable at the location of the 
receiving handler's plant, for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 18th 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 applicable at the location of the receiving handler's 
plant;
    (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) The hundredweight of milk received times the somatic cell 
adjustment for the month; and
    (vi) Less any payment made pursuant to paragraph (c)(1) of this 
section.

[[Page 57164]]

    (d) Each handler shall pay a cooperative association for fluid milk 
products received by transfer from 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 last day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price applicable at 
the transferee plant as computed pursuant to Sec. 1079.62(g) and 
adjusted by the butterfat differential, both for the preceding month; 
and
    (2) For milk received and classified during the month the handler 
shall pay the cooperative association on or before the 18th 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 price for the month applicable at the transferee plant, 
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 price for the month;
    (iii) The hundredweight of Class III-A milk received times the 
Class III-A differential price for the month;
    (iv) The pounds of butterfat received times the butterfat price for 
the month;
    (v) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (vi) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (vii) The hundredweight of Class II and Class III milk received 
times the somatic cell adjustment; and
    (viii) Less any payment made pursuant to paragraph (d)(1) of this 
section.
    (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 which shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds 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 somatic cell count of the producer's milk;
    (7) The minimum rate or rates at which payment to the producer is 
required pursuant to this order;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum rate;
    (9) The amount, rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (10) The net amount of payment to such producer or cooperative.


Sec. 1079.74  Butterfat differential.

    The butterfat differential, rounded to the nearest one-tenth cent, 
shall be 0.138 times the current month's butter price less 0.0028 times 
the preceding month's average pay price per hundredweight, at test, for 
manufacturing grade milk in Minnesota and Wisconsin, using the ``base 
month'' series, adjusted pursuant to Sec. 1079.51 (a) through (e), as 
reported by the Department. The butter price means the simple average 
for the month of the Chicago Mercantile Exchange Grade A butter price 
as reported by the Department.


Sec. 1079.75  Plant location adjustments for producers and on nonpool 
milk.

    (a) The producer price differential for producer milk pursuant to 
Sec. 1079.61 received at a pool plant or diverted from a pool plant 
shall be reduced according to the location of the plant of actual 
receipt at the rates set forth in Sec. 1079.52.
    (b) For purposes of computations pursuant to Secs. 1079.71 and 
1079.72 the producer price differential shall be adjusted at the rates 
set forth in Sec. 1079.52 applicable at the location of the nonpool 
plant from which the milk was received, except that the adjusted 
producer price differential shall not be less than zero.
    10. Section 1079.76 is amended by removing the reference 
``Sec. 1079.71(a)(2)(ii)'' in paragraph (b)(1)(iii) and adding in its 
place ``Sec. 1079.71(a)(2)(v)'' and revising paragraph (a)(4) and the 
last sentence of paragraph (b)(1)(ii) to read as follows:


Sec. 1079.76  Payments by handler operating a partially regulated 
distributing plant.

* * * * *
    (a) * * *
    (4) Multiply the remaining pounds by the amount by which the Class 
I differential price exceeds the producer price differential, both 
prices to be applicable at the location of the partially regulated 
distributing plant, with the difference to be not less than zero; and
* * * * *
    (b) * * *
    (1) * * *
    (ii) * * * Any such transfers remaining after the above allocation 
which are classified in Class I and for which a value is computed for 
the handler operating the partially regulated distributing plant 
pursuant to Sec. 1079.60 shall be priced at the statistical uniform 
price (or at the weighted average price if such is provided) of the 
respective order regulating the handling of milk at the transferee-
plant, with such statistical uniform price adjusted to the location of 
the nonpool plant (but not to be less than the lowest class price of 
the respective order), except that transfers of reconstituted skim milk 
in filled milk shall be priced at the lowest class price of the 
respective order; and
* * * * *
    Dated: October 23, 1995.
Shirley R. Watkins,
Acting Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 95-26894 Filed 11-13-95; 8:45 am]
BILLING CODE 3410-02-P