Forward Pricing Pilot Program Fact Sheet and Disclosure Statement

Agricultural Marketing Service, U.S. Department of Agriculture

1. The Forward Pricing Pilot Program is a voluntary program that allows dairy farmers and handlers

buying their milk to enter into forward contracts for that portion of milk that the handler uses for

nonfluid milk products. Dairy farmers are under no obligation to participate in this program and may

continue to have their milk priced under the order’s minimum payment provisions. If a handler

pressures a dairy farmer to sign a forward contract, this should be reported to the market administrator

immediately.

2. By entering into a forward contract with a handler, a dairy farmer gives up the right to receive the

minimum Federal order prices for the amount of their milk under contract.

3. The first forward contract involving a dairy farmer or cooperative association that is participating in

the pilot program for the first time is restricted to 12 months. Thereafter, subsequent contracts may be

of unlimited duration provided that they do not extend beyond the pilot program termination date,

December 31, 2004.

4. Dairy farmers entering into a forward contract should understand all of the terms of the contract,

including how their milk will be priced, the length of the contract, and any charges or deductions that

will made. If a formula will be used to price your milk, you should understand how the formula works

and what factors affect its movement. You should understand what will happen if you cannot fulfill the

terms of the contract. What may you be liable for? You should also understand what remedies are

available to you if the processor defaults on the contract. 

5. The terms and conditions of a contract must be in writing. If you and the handler to whom you

deliver your milk renegotiate or modify any terms of the contract, the changes must be put in writing as

an amendment to the contract and submitted to the market administrator. The contract should contain a

clause explaining how disagreements will be settled. 

6. Market administrators will continue to be responsible for verifying the accuracy of the weights and

tests of your milk on the same basis as if your milk was subject to Federal order pricing. If you should

choose to price components of your milk that are not tested for and priced under the order in which

your milk is pooled, you will have to arrange for private testing of your milk to verify the buying

handler’s weights and tests. 

7. The following disclosure statement must be signed by each dairy farmer that enters into a forward

contract with a handler under the pilot program. The disclosure statement must be attached to each

contract submitted to the market administrator. Contracts that are submitted without the disclosure

statement will be considered to be invalid for the purpose of exempting a handler from an order’s

minimum pricing provisions. Forward contracts must be signed by the producer and handler prior to

the first day of the month for which they are effective and must be in the possession of the market

administrator by the 15th day of that month.
Disclosure Statement 

I am voluntarily entering into a forward contract with ___________ (handler’s name). I

have been given a copy of the contract and I have received the USDA’s Pilot Program Fact

Sheet to which this disclosure statement was attached. By signing this form, I understand

that I am forfeiting my right to receive the order’s minimum prices for that portion of my

milk that is under contract for the duration of the contract. I also understand that my milk

will be priced in accordance with the terms and conditions of the contract. 

Printed Name: ____________________

Signature: ____________________

Date: ____________________

Address: ____________________

Producer No. ____________________