3744 Staunton Road • Edwardsville, IL 62025 • Phone: 618-659-5700 • www.prairiefarms.com 

December 19, 2022 

Via email to: amsdairycomments@usda.gov 

dana.coale@usda.gov 

Nierman@malouisville.com 

erin.taylor@usda.gov 

Ms. Dana Coale, Deputy Administrator 

Agricultural Marketing Service 

United States Department of Agriculture 

USDA-AMS-1400 Independence Avenue, SW 

Washington, D.C. 20250-0225 

Re: Invitation to Submit Proposals for Possible Hearing 

Dear Ms. Coale, 

Prairie Farms Dairy, Inc. is submitting proposals for consideration at a possible hearing for Orders 5, 

6, and 7. 

Prairie Farms is a Capper-Volstead cooperative with members located in the Federal Order 5 and 7 

Marketing Areas. Prairie Farms and its subsidiaries also operate nine pool distributing plants in the 

Federal Order 5 and 7 areas. Common characteristics of these Marketing Areas is the decreasing raw 

milk supply and the growing population. With the increased population, there is an increased demand 

for dairy products. 

The per capita milk production in the southeastern part of the United States is a relatively simple 

and direct analysis of both the milk supply and population growth. The Federal Order 32 Market 

Administrator has prepared a per capita milk production data series for many years. This information is 

published in their February monthly newsletter and available on the Order 32 website. The 1997 per 

capita milk production data and the 2021 per capita milk production data for the southeastern United 

States is summarized in the table below. 
Changes in Per Capita Production in the Southeast U.S. 

1997 2021 pounds 

change 

% change 

Alabama 97 8 -89 -92% 

Arkansas 254 20 -234 -92% 

Florida 169 100 -69 -41% 

Georgia 199 167 -32 -16% 

Kentucky 464 201 -263 -57% 

Louisiana 183 27 -156 -85% 

Mississippi 232 36 -196 -84% 

North Carolina 170 87 -83 -49% 

Missouri 438 164 -274 -63% 

South Carolina 104 31 -73 -70% 

Tennessee 297 73 -224 -75% 

Virginia 276 170 -106 -38% 

West Virginia 147 42 -105 -71% 

Data from Federal Order 32 MarketAdministrator 

With the decreased milk production in the Orders 5, 6, and 7 area, there are longer routes and 

increased miles to deliver the milk from the remaining producers to fluid milk plants. The balancing of 

the daily and weekly needs of the marketplace often results in the movement of milk to fluid plants that 

are not the plant closest to the producer. The routes become even longer with more miles. The delivery 

costs continue to increase. Producers or the cooperatives are compelled to absorb these costs. 

Transportation credits for out-of-area milk has been part of the solution. There has not been a similar 

solution for producer milk inside the marketing area. The proposals listed below will apply the proposed 

assembly performance credit and the expanded transportation credit to all milk--both the in-area and 

out-of-area milk. 

Proposals A, B, and C- Assembly Performance Credits for Orders S, 6, and 7 

The purpose of the Assembly Performance Credit is to provide assistance for the assembly, 

dispatch, and delivery of producer milk to fluid plants. Balancing the day-to-day variations in fluid plants' 

milk requirements is also included as part of the milk assembly, dispatch, and delivery. The Assembly 

Performance Credit will be uniformly shared with all producer milk delivered to a pool distributing plant 

regulated by the specific Order. 

The distributing plants would contribute to the Assembly Performance Credit Fund (APCF) on their 

Class I volume. The per hundredweight payment from the fund would be the same for every pound of 

milk that delivered to the fluid plants. There would be no distinction made based on in-area or out-ofarea milk. This uniform sharing is fair and equitable. 
There may be a future need to increase or decrease the fluid plant contribution to the APCF. 

Language is included that provides a method for the contribution amount to be changed without the 

need to have a Federal Order hearing. 

Proposals D and E- Changes to Transportation Credits for Order 5 and Order 7 

The current Order language makes a producer located inside the marketing area boundaries 

ineligible for transportation credits. The regulations also do not allow a producer located outside the 

marketing area to be eligible for transportation credits if more than 50% of the producer's milk in the 

March-May period delivered to an Order pool distributing plant or if more than 45 days of that 

producer's milk delivered to an Order pool distributing plant. Proposals D and E would remove these 

restrictions. 

These restrictions promote inefficient milk movement and increased transportation costs. During 

the spring and early summer the fluid plants are supplied with milk from within the marketing area first, 

then milk from outside the marketing area. The milk coming from outside the marketing area is usually 

the milk closest to the marketing order boundaries to the extent possible. There are no transportation 

credits during this time. In July when the transportation credit period starts there is a shift in milk 

supplies and where they come from - a shift to milk supplies that are eligible for a transportation credit. 

The shifting of milk supply delivery patterns is illustrated in the example. 

EXAMPLE: Producer(s) in Eastern Texas supply milk to an Order 7 fluid plant during March through June 

when Transportation Credits are not in effect. This milk is a relatively low cost source of supplemental 

milk for Order 7. In July-February when the Transportation Credits are in effect, these producer(s) are 

not eligible. In July, the East Texas milk is shifted to Order 126 plants, and replaced at the Order 7 

distributing plant with more distant milk from Central and West Texas. The Central and West Texas milk 

is then eligible for a Transportation credit that the eastern Texas milk would not be eligible for. 

The net effect of Proposals D & E will be to reduce transportation costs through reduced miles travelled. 

Summary 

The Proposals A through E, working in conjunction with each other, will result in more efficient milk 

movement. The combination of Performance Assembly Credits on a year around basis and 

Transportation Credits applied on an unrestricted basis during the heavy demand fall months will help 

attract milk supplies to the Order 5 and 7 area that are closer to the market than some of the current 

more distant milk. All producers will benefit through reduced transportation costs. Distributing plants 

will obtain fresher milk through efficient milk transportation. 

at]£ 

Chris Hoeger 

Vice President of Procurement 

Prairie Farms Dairy Inc. 
PROPOSAL A 

MARKETWIDE SERVICE PAYMENTS 

§ 1005.84 Assembly performance credit fund. 

The market administrator shall maintain a separate fund known as the Assembly Performance 

Credit Fund into which shall be deposited the payments made by handlers pursuant to§ 1005.85 and 

out of which shall be made the payments due handlers pursuant to§ 1005.86. Payments due a handler 

shall be offset against payments due from the handler. 

§ 1005.85 Payments to the assembly performance credit fund. 

{a) On or before the 12th day after the end of the month {except as provided in§ 1000.90), each 

handler operating a pool plant and each handler specified in §1000.9{c) shall pay to the market 

administrator a transportation credit balancing fund assessment determined by multiplying the 

pounds of Class I producer milk assigned pursuant to §1005.44 by $0.50 per hundredweight 

{b) The market administrator may increase or decrease by up to $.20 the payment rate specified in 

paragraph {a) of this section if the market administrator finds that such revision is necessary to 

assure orderly marketing and efficient handling of milk in the marketing area. Before making 

such a finding, the market administrator shall investigate the need for the revision either on 

the market administrator's own initiative or at the request of interested persons. If the 

investigation shows that a revision might be appropriate, the market administrator shall issue a 

notice stating that the revision is being considered and inviting written data, views, and 

arguments. Any decision to revise an applicable percentage must be issued in writing at least 

fifteen days before the effective date. 

§ 1005.86 Payments from the assembly performance credit fund. 

{a) Payments from the assembly performance credit fund to handlers and cooperative associations 

shall be made as follows: 

{l) On or before the 13th day {except as provided in §1000.90), the market administrator shall pay 

to each handler that received milk directly from producers' farms as specified in paragraph {b) of this 

section 

(2) The market administrator shall distribute the balance available in the assembly performance 

credit fund to all producer milk delivered to pool distributing plants on a pro rata basis using the rate 

derived by dividing the balance in the fund by the total producer milk delivered to pool distributing 

plants regulated under the Order. 

{3) In the event that a qualified cooperative association is the responsible party for whose account 

such milk is received and written documentation of this fact is provided to the market administrator 

pursuant to§ 1005.30{c){3) prior to the date payment is due, the assembly performance credits for such 

milk computed pursuant to this section shall be made to such cooperative association rather than to the 

operator of the pool plant at which the milk was received. 

{b) Assembly performance credits shall apply to bulk milk received directly from the farms of dairy 

farmers at pool distributing plants 
PROPOSALS 

MARKETWIDE SERVICE PAYMENTS 

§ 1006.84 Assembly performance credit fund. 

The market administrator shall maintain a separate fund known as the Assembly Performance 

Credit Fund into which shall be deposited the payments made by handlers pursuant to§ 1006.85 and 

out of which shall be made the payments due handlers pursuant to§ 1006.86. Payments due a handler 

shall be offset against payments due from the handler. 

§ 1006.85 Payments to the assembly performance credit fund. 

(a) On or before the 12th day after the end of the month (except as provided in§ 1000.90), each 

handler operating a pool plant and each handler specified in §1000.9(c) shall pay to the market 

administrator a transportation credit balancing fund assessment determined by multiplying the 

pounds of Class I producer milk assigned pursuant to §1006.44 by $0.50 per hundredweight 

(b) The market administrator may increase or decrease by up to $.20 the payment rate specified in 

paragraph (a)) of this section if the market administrator finds that such revision is necessary to 

assure orderly marketing and efficient handling of milk in the marketing area. Before making 

such a finding, the market administrator shall investigate the need for the revision either on 

the market administrator's own initiative or at the request of interested persons. If the 

investigation shows that a revision might be appropriate, the market administrator shall issue a 

notice stating that the revision is being considered and inviting written data, views, and 

arguments. Any decision to revise an applicable percentage must be issued in writing at least 

fifteen days before the effective date. 

§ 1006.86 Payments from the assembly performance credit fund. 

(a) Payments from the assembly performance credit fund to handlers and cooperative associations 

shall be made as follows: 

(1) On or before the 13th day (except as provided in §1000.90), the market administrator shall pay 

to each handler that received milk directly from producers' farms as specified in paragraph (b) of this 

section 

(2) The market administrator shall distribute the balance available in the assembly performance 

credit fund to all producer milk delivered to pool distributing plants on a pro rata basis using the rate 

derived by dividing the balance in the fund by the total producer milk delivered to pool distributing 

plants regulated under the Order. 

(3) In the event that a qualified cooperative association is the responsible party for whose account 

such milk is received and written documentation of this fact is provided to the market administrator 

pursuant to§ 1006.30(c)(3) prior to the date payment is due, the assembly performance credits for such 

milk computed pursuant to this section shall be made to such cooperative association rather than to the 

operator of the pool plant at which the milk was received. 

(b) Assembly performance credits shall apply to bulk milk received directly from the farms of dairy 

farmers at pool distributing plants 
PROPOSALC 

MARKETWIDE SERVICE PAYMENTS 

§ 1007.84 Assembly performance credit fund. 

The market administrator shall maintain a separate fund known as the Assembly Performance 

Credit Fund into which shall be deposited the payments made by handlers pursuant to§ 1007.85 and 

out of which shall be made the payments due handlers pursuant to§ 1007.86. Payments due a handler 

shall be offset against payments due from the handler. 

§ 1007.85 Payments to the assembly performance credit fund. 

{a) On or before the 12th day after the end of the month (except as provided in§ 1000.90), each 

handler operating a pool plant and each handler specified in §1000.9{c) shall pay to the market 

administrator a transportation credit balancing fund assessment determined by multiplying the 

pounds of Class I producer milk assigned pursuant to §1007.44 by $0.50 per hundredweight 

(b) The market administrator may increase or decrease by up to $.20 the payment rate specified in 

paragraph (a)) of this section if the market administrator finds that such revision is necessary to 

assure orderly marketing and efficient handling of milk in the marketing area. Before making 

such a finding, the market administrator shall investigate the need for the revision either on 

the market administrator's own initiative or at the request of interested persons. If the 

investigation shows that a revision might be appropriate, the market administrator shall issue a 

notice stating that the revision is being considered and inviting written data, views, and 

arguments. Any decision to revise an applicable percentage must be issued in writing at least 

fifteen days before the effective date. 

§ 1007.86 Payments from the assembly performance credit fund. 

{a) Payments from the assembly performance credit fund to handlers and cooperative associations 

shall be made as follows: 

(1) On or before the 13th day (except as provided in §1000.90), the market administrator shall pay 

to each handler that received milk directly from producers' farms as specified in paragraph (b) of this 

section 

{2) The market administrator shall distribute the balance available in the assembly performance 

credit fund to all producer milk delivered to pool distributing plants on a pro rata basis using the rate 

derived by dividing the balance in the fund by the total producer milk delivered to pool distributing 

plants regulated under the Order. 

{3) In the event that a qualified cooperative association is the responsible party for whose account 

such milk is received and written documentation of this fact is provided to the market administrator 

pursuant to§ 1007.30{c){3) prior to the date payment is due, the assembly performance credits for such 

milk computed pursuant to this section shall be made to such cooperative association rather than to the 

operator of the pool plant at which the milk was received. 

(b) Assembly performance credits shall apply to bulk milk received directly from the farms of dairy 

farmers at pool distributing plants 
PROPOSALD 

TRANSPORTATION CREDITS 

§1005.82 Payments from the transportation credit balancing fund 

(c) Transportation credits shall apply to the following milk: 

(1) Bulk milk received at a pool distributing plant from a plant regulated under another Federal order, 

except Federal Order 1007; and 

(2) Bulk milk received directly from the farms of dairy farmers at pool distributing plants sub-ject to the 

follo'11ing conelitions: 

(i) The dairy farmer was not a "producer" under this order for more than q5 days during the 

immediately preceding months of March through May, or not more than SO percent of the production 

of the dairy farmer during those 3 months, in aggregate, was recei,..ed as producer milk under this order 

during those 3 months; and 

(ii) The farm on which the milk was produced is not located v.iithin the specified marketing area 

of the order in this part or the marketing area of Federal Order 1007. 

(iii) The market administrator may increase or decrease the milk production standard specified 

in paragraph (c)(2)(i) of this section if the marlEet administrator finds that such re,..ision is necessary to 

assure orderly marketing and efficient handling of milk in the marketing area. Before making such a 

finding, the market administrator shall investigate the need for the re,..ision either on the market 

administrator's own initiati,..e or at the request of interested persons. If the investigation shows that a 

re>1ision might be appropriate, the marlEet administrator shall issue a notice stating that the re,,ision is 

being considered and in,..iting written data, views, and arguments. Any decision to revise an applicable 

percentage must be issued in writing at least one day before the effecti,..e elate. 
PROPOSALE 

TRANSPORTATION CREDITS 

§ 1007.82 Payments from the transportation credit balancing fund 

(c) Transportation credits shall apply to the following milk: 

(1) Bulk milk received at a pool distributing plant from a plant regulated under another Federal order, 

except Federal Order 1005; and 

(2) Bulk milk received directly from the farms of dairy farmers at pool distributing plants subject to the 

follo•Ning conditions: 

(i) The dairy farmer was not a "producer" under this order for more than 45 days during the 

immediately preceding months of March through May, or not more than 50 percent of the production 

of the dairy farmer during those 3 months, in aggregate, v.•as recei•,ed as producer milk under this order 

during those 3 months; and 

(ii) The farm on v.ihich the milk •Nas produced is not located within the specified marketing area 

of the order in this part or the marketing area of Federal Order 1005. 

(iii) The market administrator may increase or decrease the milk production standard specified 

in paragraph (c)(2)(i) of this section if the market administrator finds that such revision is necessary to 

assure orderly marketing and efficient handling of milk in the marketing area. Before making such a 

finding, the market administrator shall investigate the need for the revision either on the market 

administrator's o•Nn initiati•,e or at the request of interested persons. If the investigation shows that a 

revision might be appropriate, the market administrator shall issue a notice stating that the revision is 

being considered and inviting written data, views, and arguments. Any decision to revise an applicable 

percentage must be issued in \\'Fiting at least one day before the effecti>.ie date.