FR 2024-27228

The document in review is a proposed rule from the Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture. It recommends changes to the pricing methods used in 11 Federal Milk Marketing Orders (FMMOs). These changes are designed to bring the pricing system up to date with current market conditions by modifying certain formulas and allowances, such as milk composition factors and the pricing of surveyed commodity products.

General Summary

The proposal outlines amendments intended to enhance the accuracy and fairness of milk pricing to better reflect the modern dairy market. Specifically, it addresses milk composition factors, commodity products surveyed, and the framework for determining milk prices across various classes. The aim is to implement adjustments that ensure a more equitable pricing system for milk producers and handlers throughout various marketing areas in the United States. Furthermore, the AMS plans to seek approval from milk producers before these changes can take effect.

Significant Issues and Concerns

The document contains intricate and specialized terminology, like make allowances and Class I differentials, which might be challenging for a layperson to fully grasp. This could hinder public understanding and engagement in the rulemaking process. Additionally, there is a lack of clarity regarding how specific financial figures, such as make allowances, were determined. This might lead to questions about the fairness of these proposed amounts.

Another area of concern is the economic analysis related to the proposed changes. While the document mentions a Regulatory Economic Impact Analysis, it doesn't delve into how small businesses will be specifically affected, which raises questions about the thoroughness of the impact evaluation for these entities. Similarly, the Civil Rights Impact Analysis, while acknowledged, might not sufficiently cover the potential impact on minorities or persons with disabilities.

Public Impact

For the general public, especially those not directly involved in the dairy industry, the implications of these amendments may be somewhat indirect. However, these changes can potentially affect milk prices, which could eventually influence consumer costs. A more equitable and accurate pricing system could, in theory, stabilize market prices over time, benefiting consumers.

Impact on Specific Stakeholders

Dairy producers and milk handlers are the most directly affected stakeholders. The proposed rule aims to balance the interests of both large and small producers by reflecting current costs in the pricing models. Small dairy farms could face either beneficial or adverse effects. On one hand, if the adjustments better represent current market conditions, it could lead to more predictable revenues. On the other hand, changes in pricing formulas might introduce new operational challenges or financial burdens, particularly if producers and handlers need to adapt quickly to new rules.

In summary, while the proposed rule seeks to modernize the dairy pricing mechanism and address outdated components, it is crucial for AMS to ensure transparency and clarity around how these changes will impact producers, handlers, and small businesses. Ensuring that stakeholders understand the rationale behind and implications of the amendments is vital for garnering necessary support and moving the proposals forward effectively.

The Federal Register document under review discusses proposed amendments to the pricing provisions in the 11 Federal Milk Marketing Orders. This involves multiple financial references that provide insights into the financial structure and impacts of these amendments.

Financial Allocations and Changes Proposed

The document outlines several key changes in financial terms relating to milk pricing. One significant financial reference is the update in manufacturing allowances. These are specified as $0.2519 for cheese, $0.2272 for butter, $0.2393 for nonfat dry milk (NFDM), and $0.2668 for dry whey. These allowances are intended to reflect the costs of converting raw milk into dairy products. The proposed increases aim to align the costs more closely with recent market conditions and production costs, although the methodology and rationale behind these specific figures are not expounded upon.

Additionally, the document retains the $1.60 base differential. This base differential represents costs consisting of maintaining Grade A farm status, marketing costs, and competitive factors. While these values have been sustained, the document suggests adjustments to location-specific Class I differentials without fully detailing the economic analyses behind these specific figures.

Economic Rationale and Impacts on Small Businesses

Financial references in the document suggest an intention to update formulas to match the evolving economic landscape of the dairy industry. However, there is a noted absence of detailed economic rationale explaining how each specific financial figure was calculated. This lack of clarity can raise concerns about the fairness and accuracy of these figures, which might be particularly important for stakeholders such as small businesses. The document refers to a Regulatory Economic Impact Analysis intended to assess these impacts, yet does not detail how small businesses might be uniquely affected by the changes.

Civil Rights and Economic Impact Concerns

Though the document includes a Civil Rights Impact Analysis, it does not thoroughly address how these economic revisions might impact various minority groups or individuals with disabilities. Given the financial references, it would be prudent to recognize how any cost changes, such as those related to the pricing of Class I and Class II products, might disproportionately affect these groups. For instance, changes in the Class I skim milk price, involving complex calculations that consider either the "higher of" or "average of" mover with respect to Class III and Class IV prices, potentially drive costs that could reverberate through to consumers, which might affect disadvantaged populations more acutely.

Administrative and Typographical Considerations

Finally, the document includes administrative details to correct typographical errors related to these financial figures. While this ensures accuracy in financial reporting, the formal nature of these procedures may seem excessively rigid, although necessary for maintaining consistency in the financial documentation throughout the Federal Register.

In summary, while the document discusses various financial allocations intended to update the milk pricing framework, it lacks detailed economic justifications for these figures. It remains crucial that any final rules clearly articulate these financial impacts, especially concerning small dairy operations and minority groups, to ensure equitable and transparent policy implementation.