[Federal Register Volume 63, Number 177 (Monday, September 14, 1998)]
[Proposed Rules]
[Pages 49042-49043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24534]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 63, No. 177 / Monday, September 14, 1998 / 
Proposed Rules  

[[Page 49042]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1079

[DA-98-07]


Milk in the Iowa Marketing Area; Termination of Proceeding on 
Proposed Temporary Revision of Pool Supply Plant Shipping Percentage

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Termination of proceeding on proposed temporary revision of 
rule.

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SUMMARY: This action terminates a proceeding that was initiated to 
consider a proposal to reduce temporarily the pooling standards for 
supply plants regulated by the Iowa Federal milk order. The proposal, 
which would reduce the shipping requirement for the months of September 
through November 1998 from 35 percent to 25 percent, was made by the 
operator of a pool supply plant. A fluid milk handler and a cooperative 
association representing a substantial number of the producers on the 
market submitted views and arguments opposing the temporary revision. 
In addition, the fluid milk handler suggested that the shipping 
requirements be increased by 5 percentage points for the same period. 
The Department has concluded that it will not temporarily reduce the 
shipping requirement for supply plants as proposed.

FOR FURTHER INFORMATION CONTACT: Constance M. Brenner, Marketing 
Specialist, USDA/AMS/Dairy Programs, Order Formulation Branch, Room 
2971, South Building, P.O. Box 96456, Washington, DC 20090-6456 (202) 
720-2357, e-mail address: [email protected].

SUPPLEMENTARY INFORMATION: Prior document in this proceeding:
    Notice of Proposed Temporary Revision: Issued July 21, 1998; 
published July 27, 1998 (63 FR 40068).
    This termination of proceeding is issued pursuant to the provisions 
of the Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674). This proceeding was initiated by a notice of 
rulemaking published in the Federal Register on July 27, 1998 (63 FR 
40068) concerning a proposed relaxation in the shipping requirement for 
pool supply plants for the months of September through November 1998. 
Interested parties were afforded 30 days in which to comment on the 
proposal by submitting written data, views, or arguments. Comments were 
received from three interested parties.

Small Business Consideration

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities. For the purpose of the 
Regulatory Flexibility Act, a dairy farm is considered a ``small 
business'' if it has an annual gross revenue of less than $500,000, and 
a dairy products manufacturer is a ``small business'' if it has fewer 
than 500 employees. For the purposes of determining which dairy farms 
are ``small businesses,'' the $500,000 per year criterion was used to 
establish a production guideline of 326,000 pounds per month. Although 
this guideline does not factor in additional monies that may be 
received by dairy producers, it should be an inclusive standard for 
most ``small'' dairy farmers. For purposes of determining a handler's 
size, if the plant is part of a larger company operating multiple 
plants that collectively exceed the 500-employee limit, the plant will 
be considered a large business even if the local plant has fewer than 
500 employees.
    For the month of March 1998, 3,768 dairy farmers were producers 
under the Iowa Order. Of these, all but 68 would be considered small 
businesses, having under 326,000 pounds of production for the month. Of 
the dairy farmers in the small business category, 2,682 produced under 
100,000 pounds of milk, 876 produced between 100,000 and 200,000, and 
142 produced between 200,000 and 326,000 pounds during March 1998.
    Generally, the reports filed on behalf of the slightly more than 20 
milk plants pooled, or regulated, under the Iowa Order in March 1998 
were filed for establishments that would meet the SBA definition of a 
small business on an individual basis, having less than 500 employees. 
However, all but four of the milk handlers represented in the market 
are part of larger businesses that operate multiple plants at which 
their collective size exceeds the SBA definition of a small business 
entity.
    Interested parties were invited to submit comments on the probable 
regulatory and informational impact of the proposed temporary revision 
on small entities, or to suggest modifications of the proposal for the 
purpose of tailoring their applicability to small businesses. No 
comments addressing the potential impact of the proposed action on 
small entities were received.
    The reduction of the required supply plant shipping percentage for 
the months of September through November 1998 was proposed to allow the 
milk of producers traditionally associated with the Iowa market to 
continue to be pooled and priced under the order. A temporary revision 
was intended to lessen the likelihood that more milk shipments to pool 
plants might be required under the order than are actually needed to 
supply the fluid milk needs of the market, resulting in savings in 
hauling costs for handlers and producers.
    However, based upon comments received, there are indications that 
the temporary revision could make it more difficult for handlers to 
obtain supplies of milk needed to supply the fluid needs of the market. 
It is not clear that the current supply plant shipping percentage will 
cause uneconomic shipments of milk. The Department has concluded that 
it will not temporarily reduce the shipping requirement for supply 
plants as proposed.

Statement of Consideration

    This document terminates the proceeding initiated to temporarily 
reduce the pool supply plant shipping standards of the Iowa Federal 
milk order. Beatrice Cheese, Inc. (Beatrice), which operates a supply 
plant regulated under the Iowa milk order, requested a temporary 
reduction in the supply plant shipping requirement of 10 percentage 
points. Beatrice stated that a decrease was warranted due to a surplus 
of raw milk supplies available for fluid use over the needs of the 
fluid milk plants regulated under the Iowa order. Beatrice stated that 
if the pool supply shipping percentages remain unchanged, Beatrice 
would be forced to move milk

[[Page 49043]]

uneconomically or unfairly depool some milk produced by Iowa dairymen, 
denying them participation in the Order 79 pool.
    Another proprietary cheese plant operator submitted comments 
supporting the proposed temporary revision, citing conditions requiring 
uneconomic shipments of milk or the need to depool milk to meet order 
requirements in 1996 when the shipping percentage was also at 35 
percent.
    Comments filed on behalf of Anderson-Erickson Dairy Company of Des 
Moines, Iowa (Anderson-Erickson), opposed the proposed temporary 
revision on the basis that, although there appears to be a sufficient 
supply of milk in the marketing area, that supply is not being made 
available as needed by fluid processing plants. Anderson-Erickson 
stated that it had requested additional fluid milk supplies from 
Beatrice for the fall season of traditionally high Class I use and been 
refused. Anderson-Erickson stated that the dairy has diligently pursued 
a substitute milk supply by contacting other sources of milk in and 
around Iowa. While its efforts succeeded to some extent in 
supplementing Anderson-Erickson's milk supply, the fluid milk handler 
stated that it would still fall short of its raw milk needs by nearly 
2.5 million pounds per month beginning September 1998.
    Anderson-Erickson requested that, since milk supplies appear to be 
limited for fluid use, USDA consider increasing the Iowa pool supply 
plant shipping percentage for the months of September through November 
1998 by 5 percentage points instead of reducing them by 10 percentage 
points.
    Associated Milk Producers, Inc., North Central AMPI (AMPI), filed a 
comment stating that current marketing conditions make it extremely 
difficult to determine Class I needs relative to available milk supply 
in the market. However, the cooperative association stated that its 
customer, Anderson-Erickson, is requesting more milk than it was a year 
earlier. The cooperative concluded that a reduction in shipping 
requirements does not appear to be appropriate at present.
    There are no indications that milk supplies in the Iowa marketing 
area are any more plentiful for the fall months of 1998 than they were 
for the same months of 1997. As noted in the AMPI comment, current 
pricing relationships, the pooling of some milk supplies under other 
orders, and the failure of handlers to pool their full milk supplies 
make it very difficult to form any definitive conclusions about the 
supply and demand of producer milk for fluid use. However, the 
difficulty of a fluid milk handler in assuring an adequate supply of 
milk for its bottling needs, even with the procurement of additional 
sources, would indicate that the percentage shipping standards required 
for pooling should not be reduced. It is not clear that the current 
supply plant shipping percentage will cause uneconomic shipments of 
milk.
    In view of the above circumstances, it is concluded that the supply 
plant shipping requirement should not be revised for the months of 
September through November 1998. Accordingly, the proceeding begun on 
this matter on July 21, 1998, is hereby terminated.

List of Subjects in 7 CFR Part 1079

    Milk marketing orders.

    The authority citation for 7 CFR Part 1079 continues to read as 
follows:

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

    Signed at Washington, DC, on September 8, 1998.
Richard M. McKee,
Deputy Administrator, Dairy Programs.
[FR Doc. 98-24534 Filed 9-11-98; 8:45 am]
BILLING CODE 3410-02-P