[Federal Register Volume 63, Number 37 (Wednesday, February 25, 1998)]
[Proposed Rules]
[Pages 9689-9690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X98-20225]



  Federal Register / Vol. 63, No. 37 / Wednesday, February 25, 1998 / 
Proposed Rules  

[[Page 9689]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1000, 1001, 1002, 1004, 1005, 1006, 1007, 1012, 1013, 
1030, 1032, 1033, 1036, 1040, 1044, 1046, 1049, 1050, 1064, 1065, 
1068, 1076, 1079, 1106, 1124, 1126, 1131, 1134, 1135, 1137, 1138 
and 1139

[DA-97-12]


Milk in the New England and Other Marketing Areas; Proposed Rule 
and Opportunity to File Comments, Including Written Exceptions, on 
Proposed Amendments to Marketing Agreements and Orders

Correction

    In proposed rule document 98-1758, beginning on page 4802 in the 
issue of Friday, January 30, 1998, page 4954 was inadvertently omitted. 
The online version is correct. Page 4954 should read as follows:
* * * * *

[[Page 9690]]

administrators be given the authority to adjust shipping requirements 
in all orders.
    A number of comments addressed the issue of where a plant should be 
regulated and whether there should be a ``lock-in'' provision which 
would keep a distributing plant regulated under the order where it is 
located rather than where it may have the most sales. SDFA supports the 
adoption of lock-in provisions in the consolidated southeast orders. 
Prairie Farms Dairy, Inc. states that pool distributing plants should 
be regulated where located rather than where route disposition occurs. 
Another cooperative association, Milk Marketing Inc. (MMI), states that 
competition for local milk supply and a competitive pay price with 
neighboring plants is much more important to both producers and 
processors than a price that is competitive with other plants that 
compete for sales in a given area. Therefore, MMI recommends regulating 
a distributing plant in the market where it is located rather than on 
the location of its sales. MMI contends that the Federal milk order 
program should be concerned with attracting milk to a plant, not the 
retail location. The cooperative states that plants in unregulated 
areas should continue to be regulated based on sales areas.
    Some comments received addressed supply plant requirements. SDFA 
recommends that for the southeastern orders the supply plant shipping 
requirement be 60% of a plant's receipts during July through November 
and 40% during December through June. However, SDFA also acknowledges 
that specific exceptions to this principle may be necessary to 
accommodate specific needs and should be considered on a case by case 
basis.
    SDFA states that supply plant performance requirements should not 
be changed in an effort to allow all Grade A milk to be included in a 
marketwide pool. Such a change, it contends, would result in disorderly 
marketing and jeopardize the viability of local supplies. SDFA 
requested year-round shipping requirements for supply plants under 
Orders 5, 6, and 7.
    SDFA also states that automatic pooling should be provided for 
manufacturing or receiving plants located in the marketing area if the 
plant is operated by a cooperative association, but only if the 
cooperative has a substantial association with the market.
    MMI maintains that southeastern orders would be well-served by 
provisions which allow reserve supply plants in the North and West to 
participate in higher blend prices throughout the year, in exchange for 
greater assurance of a milk supply in the short production months when 
additional milk is needed. Land O'Lakes (LOL) recommended the 
elimination of shipping requirements for supply plants, but suggested 
that supply plant operators make a commitment to supply the market when 
additional milk is needed. LOL also supports the adoption of a ``call'' 
provision in each order that would allow the market administrator to 
require supply plant shipments on an as-needed basis.
    Another cooperative operating in the Southeast wrote that reserve 
supply plant qualification should be based on total cooperative 
performance but that such plants should not be required to be located 
in the marketing area. This cooperative contends that if a cooperative 
is performing a balancing function for the market, it should not be 
discriminated against just because its plant is not located in the 
marketing area.
    Suggestions were also received concerning certain specialty plants 
that are located in the Southeast. SDFA recommended amending the route 
disposition definition to accommodate a specialty fluid milk plant in 
Jacksonville that disposes of long shelf life dairy products. SDFA 
states that although a large portion of its fluid supply is disposed 
for Class I use, because of the nature of its business, it is likely 
that the plant would not meet the 50% route disposition requirement for 
pool status.
    Proposal: The Secretary proposes that the pool plant provisions for 
the Appalachian, Florida, and Southeast orders under consideration 
should closely follow the provisions now contained in the southeast 
orders. The performance standards proposed are appropriate for the 
needs of these seasonally-deficit markets.
    Section 7(a) of each Federal milk order describes the pooling 
standards for a distributing plant. To qualify for pooling under each 
of the 3 orders, a distributing plant must dispose of 50 percent of the 
total fluid milk products received at the plant as route disposition. 
In addition, at least 10 percent of the plant's receipts must be 
disposed of as route disposition in the marketing area. These standards 
would indicate that a distributing plant is closely associated with the 
fluid market and, therefore, should be part of the marketwide pool.
    Paragraph (b) of Section 7 would accommodate the pooling of plants 
that specialize in aseptically-packaged products. There are at least 
two such plants in the southeast markets: the Ryan Foods Company plants 
in Jacksonville, Florida and Murray, Kentucky.
    Unlike a typical distributing plant, a plant specializing in 
aseptically packaged products may have a more erratic processing 
schedule, reflecting the longer shelf life of the products packaged at 
the plant. Consequently, a plant's Class I utilization may vary 
considerably from month to month. In the past, such variability has 
resulted in shifting pool status for some of these plants from one 
order to another. In some months, the plant may have been partially 
regulated, even though all of the milk received at the plant was priced 
under the order. This type of regulatory instability is not conducive 
to orderly marketing. To guarantee greater regulatory stability for 
these plants, they should be fully regulated pool plants if they are 
located in the marketing area and have route disposition in the 
marketing area. However, if the plant has no route disposition in the 
marketing area during the month, the plant operator may request nonpool 
status for the plant.
    The Secretary proposes that each of the three orders also should 
specify pooling standards for a supply plant. For the Appalachian and 
Southeast orders, a supply plant must ship at least 50 percent of the 
milk physically received during the month from dairy farmers and 
cooperative bulk tank handlers. In the case of the Florida order, the 
shipping percentage should be slightly higher at 60 percent.
    Unlike supply plant provisions in other orders, the supply plant 
provisions in the three southeast orders should not recognize shipments 
directly from producers' farms as qualifying shipments for a supply 
plant. At the present time, there are no plants qualifying as ``pool 
supply plants'' under any of the southeast orders.
    Almost all of the plants that balance the fluid needs of the 
Southeast are operated by cooperative associations. These ``balancing 
plants'' qualify for pooling based upon the performance of the 
cooperative association and not based upon shipments from the plant 
alone. The Secretary proposes that balancing plant provisions should be 
maintained for the three southeast orders.
    A balancing plant may qualify based upon shipments directly from 
producers' farms as well as shipments from the plant. To qualify as a 
balancing plant, the plant must be located within the order's marketing 
area. This requirement ensures that milk pooled through the balancing 
plant is economically available to processors of fluid milk if needed. 
However, in the
BILLING CODE 1505-01-D