A-1

Note: The following appendices will not appear in the Code of

Federal Regulations

APPENDIX A: SUMMARY OF PRELIMINARY SUGGESTED ORDER

CONSOLIDATION REPORT

Ten marketing areas are suggested in the preliminary

consolidation report. As a means of determining where

interrelationships among the current marketing areas are

strongest, data relating to the receipts and distribution of fluid

milk products by distributing plants were gathered for all known

distributing plants located in the 47 contiguous States, not

including the State of California, for the month of October 1995. 

At this time, California is not included as a suggested order

area. The 1996 Farm Bill allows for the inclusion of a California

Federal milk order if California producers petition for and

approve an order. If a California order were included in the

suggested Federal order structure at a later time, it would

encompass the entire State and would include no area outside the

State of California. Although interest in a Federal order has

been expressed by some California producer groups, no definite

action has been taken.

An analysis of the distribution and procurement patterns of

the fluid processing plants, along with other factors, was used to

determine which order areas were most closely related. Proposals

submitted by the public were also taken into account. The primary

criteria used in determining which markets exhibit a sufficient

degree of association in terms of sales, procurement, and

structural relationships to warrant consolidation were:

1. Overlapping route disposition.

2. Overlapping areas of milk supply.

3. Number of handlers within a market.

4. Natural boundaries.

5. Cooperative association service areas.

6. Features common to existing orders, such as similar

multiple component pricing payment plans. 

7. Milk utilization in common dairy products.

The requirement to consolidate existing marketing areas does

not specify expansion of regulation to previously nonfederally

regulated areas where such expansion would have the effect of

regulating handlers not currently regulated. However, a number of

the current marketing areas enclose unregulated areas. These

“pockets” are included in the suggested merged marketing areas

only if their inclusion does not change the current regulatory

status of a plant. In the process of consolidating marketing
A-2

areas, some handlers who currently are partially regulated may

become fully regulated because their sales in a combined marketing

area will likely meet the pooling standards of a suggested

consolidated order. Further expansion of the marketing areas,

which would result in regulating additional handlers, is an issue

that should be addressed by the industry. Proposals to take such

action should be accompanied by supporting data, views, and

arguments concerning the need and basis for any such expansion.

The 10 suggested consolidated marketing areas and the major

reasons for consolidation are:

1. NORTHEAST - current marketing areas of the New England,

New York-New Jersey, and Middle Atlantic Federal milk orders. 

Reasons for consolidation include the existence of overlapping

sales and procurement areas between New England and New York-New

Jersey and between New York-New Jersey and Middle Atlantic. The

orders are also surrounded by nonfederally regulated territory. A

further measure of association is evident by industry efforts to

study and pursue consolidation of the three Federal orders, as

well as some of the nonfederally regulated territory, prior to the

1996 Farm Bill.

2. APPALACHIAN - current marketing areas of the Carolina and

Tennessee Valley Federal milk orders, and a portion of the

Louisville-Lexington-Evansville Federal milk order. Overlapping

sales and procurement areas between these marketing areas are

major factors for supporting such a consolidation.

3. FLORIDA - current marketing areas of the Upper Florida,

Tampa Bay, and Southeastern Florida Federal milk orders. Natural

boundary limitations and overlapping sales and procurement areas

among the three orders are major reasons for consolidation, as

well as a measure of association evidenced by cooperative

association proposals to consolidate these three marketing areas. 

Further, the cooperative associations in this area have worked

together for a number of years to accommodate needed movements of

milk between the three Florida Federal orders.

4. SOUTHEAST - current marketing area of the Southeast

Federal milk order, plus 1 county from the Louisville-LexingtonEvansville Federal milk order marketing area, 15 currently

unregulated Kentucky counties, and 2 currently unregulated

northeast Texas counties. Major reasons for this consolidation

include sales and procurement area overlaps between the Southeast

order and the Kentucky and Texas counties suggested for inclusion. 

There is minimal sales area overlap with handlers regulated under

other Federal orders.

5. MIDEAST - current marketing areas of the Ohio Valley,

Eastern Ohio-Western Pennsylvania, Southern Michigan, and Indiana
A-3

Federal milk orders, plus most of the current marketing area of

the Louisville-Lexington-Evansville Federal milk order, Zone 2 of

the Michigan Upper Peninsula Federal milk order, and 12 counties

of the Southern Illinois-Eastern Missouri Federal milk order. 

Major criteria suggesting this consolidation include the overlap

of fluid sales in the Ohio Valley marketing area by handlers from

the other areas suggested to be consolidated. With the

consolidation, most route disposition by handlers located within

the suggested Mideast order would be within the marketing area. 

Also, nearly all milk produced within the area would be pooled

under the consolidated order. The portion of the Michigan Upper

Peninsula marketing area suggested to be included in the Mideast

consolidated area has sales and milk procurement areas in common

with the Southern Michigan area and has minimal association with

the western end of the current Michigan Upper Peninsula marketing

area.

6. UPPER MIDWEST - current marketing areas of the Chicago

Regional and Upper Midwest Federal milk orders, plus Zones I and

I(a) of the Michigan Upper Peninsula Federal milk order and seven

unregulated or partly unregulated Wisconsin counties. Major

consolidation criteria include an overlapping procurement area

between the Chicago Regional and Upper Midwest orders, overlapping

procurement and route disposition area between the western end of

the Michigan Upper Peninsula order and the Chicago Regional order,

natural boundary limitations, and the prevalence of cheese as a

major manufactured product for the substantial reserve milk

supplies that exceed fluid milk needs.

7. CENTRAL - current marketing areas of the Southern

Illinois-Eastern Missouri (less 12 counties included in the

suggested Mideast marketing area), Central Illinois, Greater

Kansas City, Nebraska-Western Iowa (less 11 currently-regulated

counties suggested to be unregulated), Eastern South Dakota, Iowa,

Southwest Plains, and Eastern Colorado Federal milk orders, plus

63 currently-unregulated counties in seven of the states. Major

criteria suggesting this consolidation include the overlapping

procurement and route disposition between the current orders. The

suggested consolidation would result in a concentration of both

the sales and supplies of milk within the consolidated marketing

area. The suggested consolidation would combine several relatively

small orders and provide for the release of market data without

revealing proprietary information. In addition, most of the

producers in these areas share membership in several common

cooperatives. 

8. SOUTHWEST - current marketing areas of the Texas, New

Mexico-West Texas, and Central Arizona Federal milk orders. Major
A-4

criteria suggesting consolidation include sales and procurement

area overlaps and common cooperative association membership

between the Texas and New Mexico-West Texas marketing areas, and

similar marketing concerns with respect to trade with Mexico for

all three orders. In addition, there is some route disposition by

Central Arizona handlers into the New Mexico-West Texas marketing

area, and the Central Arizona market contains a small number of

handlers.

9. WESTERN - current marketing areas of the Western

Colorado, Southwestern Idaho-Eastern Oregon, and Great Basin

Federal milk orders. Major criteria suggesting consolidation

include overlapping sales between Southwestern Idaho-Eastern

Oregon and Great Basin, as well as a significant overlap in

procurement for the two orders in five Idaho counties. The two

orders also share a similar multiple component pricing plan. The

Western Colorado order is included because it is a small market

where data cannot be released without revealing confidential

information unless combined with the adjacent Great Basin order.

 10. PACIFIC NORTHWEST - current marketing area of the Pacific

Northwest Federal milk order plus 1 currently-unregulated county

in Oregon. The degree of association with other marketing areas

is insufficient to warrant consolidation.

Following is a table summarizing relevant data for the

consolidated markets:

CONSOLIDATED MARKET SUMMARY

(Based on October 1995 data)

Consolidated Order

Total

Producer

Milk

(1,000 lbs.)

Number of Fully

Regulated

Distributing

Plants

Combined

Class I

Utilization

(percent)

Northeast 1,934,833 85 46.7

Appalachian 320,198 25 82.5

Florida 200,397 18 88.3

Southeast 443,921 38 84.3

Mideast 1,140,9521 68 57.8

Upper Midwest 1,046,5392 27 34.24

Central 932,9293 42 50.6
A-5

Southwest 861,307 31 48.3

Western 304,793 14 31.75

Pacific Northwest 501,257 23 36.3

TOTAL 7,687,126 371 n/a

1 Producer milk for F.O. 44 is included. Producer milk for a

F.O. 32 handler who would be pooled under the suggested Mideast

market is included in the Central consolidated market.

2 Producer milk for F.O. 30 and F.O. 68 only.

3 Producer milk for a F.O. 32 handler that would be in the

Mideast consolidated market is included.

4 A significant amount of producer milk was not pooled in October

1995. Estimated total producer milk would result in a 15.3%

combined Class I utilization.

5 A significant amount of producer milk was not pooled in October

1995. Estimated total producer milk would result in a 21.8%

combined Class I utilization.
B-1

APPENDIX B: SUMMARY OF PRICING OPTIONS 

Several options for modifying Class I pricing under the

Federal milk market order program, representing a spectrum of

views, are discussed in this summary report. The accompanying

technical report summarizes all of the comments and proposals

received by the Department related to Class I pricing under

Federal orders. 

Most Class I pricing concepts that were suggested would

continue to employ a market-driven basic formula price (BFP) with

an added differential. Differentials are a composite of one or

more of the following elements: (1) a fixed component, (2) a

location adjustment, (3) an adjustor relating to utilization, or

(4) the cost of balancing the market. Based on the pricing

concepts received, the following options were developed:

Option 1A: Location-Specific Differential -- $1.60 per

hundredweight fixed differential for three surplus regions (Upper

Midwest, West, and Southwest) within a nine-zone national price

surface, plus for the other six zones an added component that

reflects regional differences in the value of fluid and

manufacturing milk. 

Option 1B: Modified Location-Specific Differential Option

-- $1.00 per hundredweight fixed differential plus an added

component that reflects the cost of moving bulk milk to deficit

markets.

Option 2: Relative Use Differential -- $1.60 per

hundredweight fixed differential plus a formula-based differential

driven by the ratio of Class I milk to all other uses of milk. 

Option 3A: Flat Differential Option -- $1.60 per

hundredweight flat differential, uniformly applied across all

orders to generate an identical minimum Class I price.

Option 3B: Flat Differential Modified by Class I Use --

$2.00 per hundredweight differential in markets where Class I

utilization is less than 70 percent on an annual basis and a

differential equal to $2.00 + $0.075(Class I use % - 70%) in

markets where the Class I utilization is equal to or exceeds 70

percent.

Option 4: Demand-Based Differential -- $1.00 per

hundredweight fixed differential plus a transportation credit

based on location of reserve milk supplies.

Estimated Class I differentials are presented for each option

to provide a preliminary basis for determining impacts that may

occur. The report provides estimated differentials for the

suggested 10 consolidated orders and for the current 32 Federal

milk marketing orders. 
B-2

The report concludes by soliciting comments on the options

presented and poses a series of questions for the public to

address when submitting comments back to the Department on the

issue of Class I pricing. 
C-1

APPENDIX C: SUMMARY OF CLASSIFICATION REPORT

The Agricultural Marketing Agreement Act of 1937 provides

that all milk should be classified “in accordance with the form in

which or the purpose for which it is used.” This has resulted in

a system of uniform classification provisions that places milk

used for fluid purposes in the highest use class, Class I, and

other manufactured products in lower classes, Classes II, III, and

III-A.

Currently products packaged for fluid consumption such as

whole milk, skim milk, buttermilk, and flavored milk drinks are

classified as Class I products. Class II products include ice

cream, yogurt, cottage cheese, and cream. Class III and Class

III-A products include cheese, butter, and nonfat dry milk.

Among the changes in classification recommended in the

technical report are the following: 

C Eggnog would be reclassified from Class II to Class I.

C Any fluid beverage having less than 6.5 percent nonfat

milk solids would be reclassified from Class II to Class

I.

C Cream cheese would be reclassified from Class III to

Class II.

The technical report recommends changing the classification

of milk used in nonfat dry milk from Class III-A to Class III. 

The report recommends that if Class III-A pricing is not

eliminated, the following four alternatives be considered:

C Place a floor beneath the Class III-A price;

C Restrict III-A pricing to certain months or to certain

markets; 

C Provide an up-charge for nonfat dry milk used in highervalued products; or

C Provide for a combination of these options.

Maintaining the classification of milk used to make nonfat

dry milk in Class III-A is also an option, although not discussed

in the technical report.

The technical report addresses Class III-A pricing because of

industry concerns about the substitution of nonfat dry milk for

fluid milk in Class II and III uses when the Class III-A price is

substantially below the Class III price.
D-1

APPENDIX D: SUMMARY OF IDENTICAL PROVISIONS REPORT

Federal milk marketing orders contain numerous provisions

that establish the regulations for the operation of the orders. 

Over the years, the orders have been individualized to account for

specific situations associated with a given marketing area. 

However, there are several provisions within the orders that are

similar or that could be similar and still provide for efficient

and orderly marketing of milk.

The technical report does the following:

C Suggests a model for establishing the consolidated

orders and provides suggestions on the order language

that can be adopted uniformly throughout all orders. 

C Reviewed, simplified, modified, and eliminated

differences in order provisions that:

• Define various terms used in the orders

• Establish regulatory standards for plants and

handlers

• Provide for uniform reporting dates of milk receipts

and utilization

• Provide for uniform dates for payment of milk

• Provide for computation of a uniform price

C Reduces performance standards to make it easier for

producers to associate with a market.

At this time, it is impossible to determine if there would be

any financial impact on producers, handlers, or consumers as a

result of any of these suggested provision revisions. It is

projected that there will be little impact on the overall program

because the changes primarily provide for uniformity. There may

be minimal impact on selected individual producers, handlers, or

consumers, but this cannot be determined until more specific

information is developed regarding the orders (i.e., marketing

area and pricing). The suggested identical provisions will be

applied to each of the suggested consolidated orders and

determinations will be based on the marketing conditions of the

given region.

One suggested change in the report that may stimulate some

debate is the definition of a producer-handler. The technical

report suggests applying the most liberal standard to the

producer-handler definition to prevent any producer-handler from

becoming regulated as a result of milk order reform. Producerhandlers have been exempt from full regulation because they assume

the full risks associated with being a producer and a distributor

of milk produced with only occasional and small volumes of milk

being purchased from other dairy farmers. 
E-1

APPENDIX E: SUMMARY OF BASIC FORMULA PRICE REPORT

The basic formula price (BFP) is used to determine Federal

order prices for milk used in manufactured products and, with the

addition of differentials, to determine minimum Class I and II

prices for milk pooled under the Federal orders. The current BFP

is based on a survey of prices paid for manufacturing grade (Grade

B) milk by plants in Minnesota and Wisconsin, updated by month-tomonth changes in commodity prices (especially cheese). The

continuing decline in the volume of Grade B milk produced in the

upper Midwest and nationally is an indication that, in the near

future, the M-W price series may not be statistically reliable as

an indicator of the value of milk used in manufactured products.

The BFP Committee has received input provided during a public

BFP Forum held in Madison, Wisconsin, and from over 200 written

public comments, and conducted a survey of transaction prices for

manufactured dairy products. The Committee also has sponsored

analysis by a group of university researchers, and conducted

extensive study and analysis of its own. The BFP Committee

evaluated alternatives to the BFP against the criteria of

stability, predictability, simplicity, uniformity, transparency,

sound economics and reduced regulation. Options identified by the

Committee were grouped into the following categories:

Options Considered: Economic formulas

Product price and component formulas

Futures markets

California pricing

Cost of production

Informal rulemaking

Competitive pay price

Pooling differentials only

At this time, the Committee has identified four options for

further discussion and debate:

C A four-class, multiple component pricing plan to price

butterfat, protein and lactose used in cheese (Class

III), and butterfat and nonfat solids used in

butter/powder (Class IV).

C A three-class, multiple component pricing plan to price

protein used in cheese, butterfat used in butter, and

other nonfat solids used in powder (Class III - one

manufacturing class).

C A product price formula computed from the butter, powder

and cheese shares of U.S. production, using seasonal

product yields and a California cost-based make

allowance; and
E-2

C A competitive pay price series using a national weighted

average price paid for Grade A milk used in manufactured

products, updated by a product price formula. The price

series would contain an adjuster to attempt to remove

the effect of current regulation and to reduce it to a

level more comparable to the current BFP.

As a basis for Class I prices, the BFP could be made more

stable by using an economic formula or using a moving average of a

manufacturing price. Class II prices could be based on components

or continue to include a differential from the manufacturing price

level.

The BFP Committee is continuing to study and analyze

alternatives in response to public comments.
F-1

APPENDIX F: SUMMARY OF REVISED PRELIMINARY SUGGESTED ORDER

CONSOLIDATION REPORT

The ten marketing areas suggested in the initial preliminary

consolidation report have increased to eleven and been modified to

some extent in this revised preliminary report. Several of the

initially suggested marketing areas were the subjects of numerous

comments containing information that indicated that the boundaries

of those areas should be re-evaluated. In addition, shifts in

regulation and distributing plant distribution areas were known to

have occurred. As a result, more detailed and updated (January

1997) data was obtained relating to the receipts of producer milk

and distribution of fluid milk products by distributing plants in

a number of the initially-suggested order marketing areas. As a

result, changes were made in the suggested marketing areas of the

Northeast, Appalachian, Southeast, Mideast, Upper Midwest,

Central, Southwest, and Western regions, and a new Arizona-Las

Vegas area was added.

An analysis of the distribution and procurement patterns of

the fluid processing plants, along with other factors, was used to

determine which order areas were most closely related. Proposals

submitted by the public were also taken into account. The primary

criteria used in determining which markets exhibit a sufficient

degree of association in terms of sales, procurement, and

structural relationships to warrant consolidation continued to be:

1. Overlapping route disposition.

2. Overlapping areas of milk supply.

3. Number of handlers within a market.

4. Natural boundaries.

5. Cooperative association service areas.

6. Features common to existing orders, such as similar

multiple component pricing plans.

7. Milk utilization in common dairy products.

In the initial preliminary report, it was observed that the

Farm Bill requirement to consolidate existing marketing areas does

not specify expansion of regulation to previously non-Federally

regulated areas where such expansion would have the effect of

regulating handlers not currently regulated. This revised

preliminary report suggests that some currently non-Federally

regulated area be added on the basis of comments supported by

data, views and arguments filed by interested persons. 

Specifically, unregulated areas contiguous to the initial

suggested consolidated Northeast and Mideast marketing areas are

suggested for inclusion in those suggested order areas. Some

handlers currently not subject to full Federal order regulation
F-2

would become pool plants if the suggested areas are added. 

Handlers who would be affected will be notified of the possible

change in their status, and encouraged to comment.

As in the initial preliminary report, "pockets" of

unregulated areas enclosed in the current marketing areas are

included in the suggested consolidated marketing areas if their

inclusion does not change the current regulatory status of a

plant. However, in the process of consolidating marketing areas,

some handlers who currently are partially regulated may become

fully regulated because their sales in a combined marketing area

will meet the pooling standards of a suggested consolidated order

area. As a result, this report suggests that some unregulated

areas contiguous to currently-regulated areas be added to Federal

order areas where additional handlers would be affected.

The 11 modified suggested marketing areas (with those

modified from the initial preliminary report, and the

modifications, marked by *) and the major reasons for

consolidation are:

*1. NORTHEAST - current marketing areas of the New England,

New York-New Jersey, and Middle Atlantic Federal milk orders,

*with the addition of: contiguous unregulated areas of New

Hampshire, Vermont and New York; the western non-Federally

regulated portion of Massachusetts, the Western New York State

order area, and Pennsylvania Milk Marketing Board Areas 2 and 3 in

northeastern Pennsylvania. 

Reasons for consolidation include the existence of

overlapping sales and procurement areas between New England and

New York-New Jersey and between New York-New Jersey and Middle

Atlantic. In several cases, handlers who would become regulated

because their total sales in the combined areas would meet pooling

standards are located in areas where they compete with handlers

who would not be similarly regulated. Handler equity suggests

that these handlers, too, should become regulated. Another

important measure of association is evidenced by industry efforts

to study and pursue consolidation of the three Federal orders, as

well as some of the nonfederally regulated territory, prior to the

1996 Farm Bill.

Sixteen additional distributing plants would be pooled as a

result of the expansion of the consolidated area. Nine of these

plants currently are partially regulated.

*2. APPALACHIAN - current marketing areas of the Carolina

and Tennessee Valley Federal milk orders, *with the addition of: 

all of the Louisville-Lexington-Evansville Federal order area

(except one county - in the suggested Southeast area) and 26

currently-unregulated counties in Indiana and Kentucky.
F-3

More detailed and updated data showing overlapping sales and

procurement areas between these marketing areas are major factors

for supporting such a consolidation.

3. FLORIDA - current marketing areas of the Upper Florida,

Tampa Bay, and Southeastern Florida Federal milk orders.

Natural boundary limitations and overlapping sales and

procurement areas among the three orders are major reasons for

consolidation, as well as a measure of association evidenced by

cooperative association proposals to consolidate these three

marketing areas. Further, the cooperative associations in this

area have worked together for a number of years to accommodate

needed movements of milk between the three Florida Federal orders.

*4. SOUTHEAST - current marketing area of the Southeast

Federal milk order, plus 1 county from the Louisville-LexingtonEvansville Federal milk order marketing area, plus 15 currentlyunregulated Kentucky counties, *minus 2 currently-unregulated

counties in northeast Texas (in the suggested Southwest area).

Major reasons for this consolidation include sales and

procurement area overlaps between the Southeast order and this

county. There is minimal sales area overlap with handlers

regulated under other Federal orders. Collection of additional

data showed greater disposition in the two Texas counties from

Texas handlers than from Southeast handlers. There are no

handlers in these two counties that would be affected.

*5. MIDEAST - current marketing areas of the Ohio Valley,

Eastern Ohio-Western Pennsylvania, Southern Michigan, and Indiana

Federal milk orders, plus Zone 2 of the Michigan Upper Peninsula

Federal milk order, and currently-unregulated counties in

Michigan, Indiana, and Ohio *with the addition of: Pennsylvania

Milk Marketing Board Area 6 (in western/central Pennsylvania) and

2 currently-unregulated counties in New York, and *minus the

Louisville-Lexington-Evansville order area, 12 counties in

Illinois, and unregulated counties in Indiana and Kentucky that

are being suggested for inclusion in the Appalachian area.

Major criteria suggesting this consolidation include the

overlap of fluid sales in the Ohio Valley marketing area by

handlers from the other areas suggested to be consolidated. With

the consolidation, most route disposition by handlers located

within the suggested Mideast order would be within the marketing

area. Also, nearly all milk produced within the area would be

pooled under the consolidated order. The portion of the Michigan

Upper Peninsula marketing area suggested to be included in the

Mideast consolidated area has sales and milk procurement areas in

common with the Southern Michigan area and has minimal association
F-4

with the western end of the current Michigan Upper Peninsula

marketing area.

Collection of additional data and recent changes in marketing

patterns indicate that the relationship between the LouisvilleLexington-Evansville (L-L-E) area and the order areas initially

included in the suggested Appalachian area is closer than

relationship between L-L-E and the Mideast area.

Seven distributing plants that would not have been pool

plants as a result of the initially-suggested consolidation would

become pool plants due to the suggested expansion of the

consolidated area into Pennsylvania and New York. The number of

pool plants also is affected by a shift of pool plants from one

consolidated area to another because of the shift of territory

from the initially-suggested Mideast area to the revised suggested

Appalachian area.

*6. UPPER MIDWEST - current marketing areas of the Chicago

Regional, Upper Midwest, Zones I and I(a) of the Michigan Upper

Peninsula Federal milk orders, and unregulated portions of

Wisconsin, *with the addition of: the Iowa, Eastern South Dakota,

and most of the Nebraska-Western Iowa Federal order areas, plus

currently-unregulated counties in Iowa and Nebraska.

Major consolidation criteria include an overlapping

procurement area between the Chicago Regional and Upper Midwest

orders and overlapping procurement and route disposition area

between the western end of the Michigan Upper Peninsula order and

the Chicago Regional order. More-detailed and updated information

revealed more significant overlapping procurement and route

disposition areas between the Iowa, Eastern South Dakota and

Nebraska-Western orders and Chicago Regional and Upper Midwest

orders than had been observed in the initial study. In addition,

a common pricing plan for producers, natural boundary limitations,

and the prevalence of cheese as a major manufactured product for

the substantial reserve milk supplies that exceed fluid milk needs

exist in these orders. Some of the western Nebraska area is more

closely associated with the Eastern Colorado area, however, and is

suggested to remain with the Central consolidated area.

Eleven additional handlers that would have been pooled under

the consolidated Central order in the initial Preliminary Report

would be pooled under a consolidated Upper Midwest order under

this revised report.

*7. CENTRAL - current marketing areas of the Southern

Illinois-Eastern Missouri, Central Illinois, Greater Kansas City,

Southwest Plains, and Eastern Colorado Federal milk orders, 10

counties currently in the Nebraska-Western Iowa Federal order

area, plus 55 currently-unregulated counties in Kansas, Missouri,
F-5

Illinois, Nebraska and Colorado, *plus the 12 counties in the

current Southern Illinois-Eastern Missouri area that initially

were suggested as part of the consolidated Mideast area, *minus

the Eastern South Dakota, Iowa and most of the Nebraska-Western

Iowa Federal order marketing areas.

Major criteria suggesting this consolidation include the

overlapping procurement and route disposition between the current

orders. The suggested consolidation would result in a

concentration of both the sales and supplies of milk within the

consolidated marketing area. The suggested consolidation would

combine several relatively small orders and provide for the

release of market data without revealing proprietary information. 

In addition, most of the producers in these areas share membership

in several common cooperatives.

*8. SOUTHWEST - current marketing areas of Texas and New

Mexico-West Texas Federal milk orders, *with the addition of: two

northeast Texas counties previously suggested to be added to the

Southeast marketing area, and 47 currently-unregulated counties in

southwest Texas, and *minus the Central Arizona marketing area.

Major criteria suggesting consolidation include sales and

procurement area overlaps and common cooperative association

membership between the Texas and New Mexico-West Texas marketing

areas, and similar marketing concerns with respect to trade with

Mexico for both orders. Addition of the currently-unregulated

Texas counties will result in the regulation of no additional

handlers, and will reduce handlers’ recordkeeping and reporting

burden and the market administrator’s administrative costs. In

the initial consolidation report, the Central Arizona area was

found to have a minimal association with the New Mexico-West Texas

and Texas order areas. Further analysis showed that it has a much

more significant degree of association with the Clark County,

Nevada, portion of the current Great Basin order area.

The revised suggested consolidated Southwest area would

include 4 fewer fully regulated pool plants as a result of the

removal of the Central Arizona area.

*9. ARIZONA-LAS VEGAS - *an eleventh marketing area composed

of the current marketing area of the Central Arizona order and the

Clark County, Nevada, portion of the current Great Basin marketing

area, plus eight currently-unregulated Arizona counties.

The major criterion suggesting consolidation is sales overlap

between the sole Las Vegas, Nevada, handler and handlers regulated

under the Central Arizona order in both Clark County, Nevada, and

unregulated portions of northern Arizona. In addition, both areas

exchange significant volumes of bulk and packaged milk with

Southern California.
F-6

The suggested Arizona-Las Vegas marketing area would include

five fully regulated handlers, with no additional handlers

regulated because of the addition of the currently-unregulated

northern Arizona area.

*10. WESTERN - current marketing areas of the Western

Colorado, Southwestern Idaho-Eastern Oregon, and Great Basin

Federal milk orders, *minus Clark County, Nevada. Major criteria

suggesting consolidation include overlapping sales between

Southwestern Idaho-Eastern Oregon and Great Basin, as well as a

significant overlap in procurement for the two orders in five

Idaho counties. The two orders also share a similar multiple

component pricing plan. The Western Colorado order is included

because it is a small market where data cannot be released without

revealing confidential information unless combined with the

adjacent Great Basin order.

Collection of more-detailed data indicates that the strength

of earlier relationships between the former Great Basin and Lake

Mead orders that justified their 1988 merger have dwindled

significantly, with the Las Vegas area now more closely related to

southern California and competing most heavily with Central

Arizona handlers.

11. PACIFIC NORTHWEST - current marketing area of the

Pacific Northwest Federal milk order plus 1 currently-unregulated

county in Oregon. The degree of association with other marketing

areas is insufficient to warrant consolidation.

Following is a table summarizing relevant data for the

consolidated markets.
CONSOLIDATED MARKET SUMMARY

(BASED ON OCTOBER 1995 DATA)

Consolidated

Order

Number of Fully

Regulated Distributing

Plants

Total Producer Milk

(1000 lbs.)

Combined Class I Use

(Percent)

Weighted Average

Utilization Value

Initial

Report

Revised

Report

Initial

Report

Revised

Report1

Initial

Report

Revised

Report

Initial

Report

Revised

Report

Northeast 85 92 1,934,833 2,102,620 46.7 49.0 $13.44 $13.49

Appalachian 25 29 320,198 412,8132 82.5 81.5 $14.11 $13.94

Florida 18 16 200,3973 204,541 88.3 88.3 $15.05 $15.05

Southeast 38 40 443,9214 442,705 84.3 84.3 $14.26 $14.25

Mideast 68 68 1,140,9525 1,103,366 57.8 57.2 $12.96 $12.94

Upper

Midwest

27 39 1,046,5396 1,354,209 34.27 37.68 $12.59 $12.62

Central 42 30 932,9299 599,334 50.6 53.5 $13.15 $13.21

Southwest 31 26 861,307 680,232 48.3 48.1 $13.36 $13.39

Arizona - 

Las Vegas

N/A 7 N/A 181,07510 N/A 48.9 N/A $13.26

Western 14 11 304,793 293,714 31.711 29.612 $12.79 $12.78

Pacific

Northwest

23 21 501,257 493,207 36.3 35.6 $12.45 $12.44

TOTAL 371 379 7,687,126 7,867,816 N/A N/A N/A N/A
F-9

CONSOLIDATED MARKET SUMMARY TABLE FOOTNOTES

1 Initial report producer deliveries, adjusted to include only those handlers

who would be fully regulated (i.e. Status = 1) in the revised suggested

marketing area, unless otherwise noted. When applicable, producer deliveries

for currently non-Federally regulated plants which would be fully regulated in

a revised suggested consolidated order are included in the appropriate

suggested consolidated order. 

2 Includes producer milk for one currently fully regulated plant which would be

exempt (i.e. Status = 3B) in the Appalachian market in the revised preliminary

report.

3 Excludes producer milk for one currently fully regulated F.O. 7 plant which

would be regulated in the Florida market in the initial preliminary report.

4 Includes producer milk for one currently fully regulated F.O. 7 plant which

would be regulated in the Florida market in the initial preliminary report.

5 Producer milk for F.O. 44 is included. Producer milk for a F.O. 32 handler

who would be pooled under the initially-suggested Mideast market is included

in the initially-suggested Central market.

6 Producer milk for F.O. 30 and F.O. 68 only.

7 A significant amount of producer milk was not pooled in October 1995. 

Estimated total producer milk would result in a 15.3% combined Class I

utilization.

8 A significant amount of producer milk was not pooled in October 1995. 

Estimated total producer milk would result in a 19.7% combined Class I

utilization.

9 Includes producer milk for a F.O. 32 handler that would be in the initiallysuggested Mideast market.

10 Excludes producer milk for one currently fully regulated F.O. 139 plant and

one currently unregulated plant which would be regulated in the Arizona-Las

Vegas market in the revised preliminary report.

11 A significant amount of producer milk was not pooled in October 1995. 

Estimated total producer milk would result in a 21.8% combined Class I

utilization.

12 A significant amount of producer milk was not pooled in October 1995. 

Estimated total producer milk would result in a 21.6% combined Class I

utilization.