FR 2025-00563

The document in question is a final rule issued by the Agricultural Marketing Service (AMS) under the United States Department of Agriculture (USDA). The rule amends pricing provisions related to milk in the 11 Federal Milk Marketing Orders (FMMOs). These amendments were supported by a two-thirds majority vote from dairy producers in each of the affected areas and are aligned with the Agricultural Marketing Agreement Act of 1937.

General Summary

The rule brings updates to various aspects of the milk pricing formulas used across different regions of the United States. Significant changes include altering milk composition factors to better align with current production realities, adjusting surveyed commodity products that inform price calculations, and modifying price formulas for different classes of milk products. These changes aim to create a more accurate and fair pricing system that reflects the current market conditions.

Significant Issues and Concerns

One of the major issues is the document's complexity and technical language, which could pose challenges for readers without in-depth knowledge of dairy pricing or regulatory frameworks. The document is filled with legal terms and specific jargon related to milk marketing orders, making it less accessible to the average reader. Additionally, while the document notes an analysis under the Regulatory Flexibility Act, it lacks clear articulation on how these changes will uniquely impact small businesses as opposed to larger entities.

Moreover, the civil rights impact analysis section comes across as broad, mentioning no specific metrics or detailed assessments. This could raise concerns about the depth of the analysis and whether all potential impacts on diverse groups have been thoroughly considered.

Impact on the Public

Broadly, the public may not experience direct impacts from these amendments in day-to-day life, since these pricing systems operate more in the background of the milk market structure. However, these regulations could indirectly influence the retail price of milk and dairy products as local producers and handlers adapt to the new pricing formulas.

Impact on Specific Stakeholders

For those directly involved in milk production and marketing, such as dairy farmers and milk handlers, the changes could have substantial implications. The revised pricing structures might lead to different revenues based on updated production and transportation costs. For small dairy farmers, understanding these changes and adapting their operations to align with the new regulations might require more effort, especially given the heavy reliance on the new data points provided by AMS. Larger companies that have more resources to navigate through regulatory changes might adapt more easily.

Conclusion

While these amendments aim to create a more fair and representative milk pricing system, the interplay of complex regulations and a variety of stakeholders means that some will face challenges in adapting. The USDA has attempted to address the needs of diverse groups within the dairy industry, but transparency and clarity in communication remain critical to ensure all affected can understand and engage with these changes effectively.

The document outlines a series of amendments to the pricing provisions in the 11 Federal Milk Marketing Orders (FMMOs). The amendments include updates to the formulas used to calculate milk prices, which directly affects financial aspects of milk production and marketing.

One key financial aspect of the amendments is the update to the make allowances in the FMMO Class III and IV formulas. Make allowances are part of the cost structure for converting raw milk into dairy products. The updated allowances are set at $0.2519 for cheese, $0.2272 for butter, $0.2393 for nonfat dry milk (NFDM), and $0.2668 for dry whey. These figures represent financial allocations within the formula that impact the cost recovery for dairy product production.

Another financial reference is the base differential for Class I milk, set at $1.60. This base differential is a key component in calculating the Class I price, which is further modified based on location-specific factors. Class I milk prices also incorporate a $0.74 multiplier, which is added to the average of the Class III and Class IV prices. These financial adjustments play a critical role in determining the price received by producers, thus impacting their revenue.

The document also outlines financial criteria to define small dairy operations. According to the Small Business Administration's guidelines, a small dairy farm is one with an annual gross revenue of $3.75 million or less. This threshold is used to establish an annual milk marketing limit of 18.3 million pounds, influencing how small dairy farms are categorized and potentially how they might interact with these regulations.

Despite these detailed financial allocations, the document does not clearly explain the specific impacts on small versus large businesses. Although it references the Regulatory Flexibility Act, an entirely separate analysis may be necessary to clarify whether these financial changes disproportionately affect smaller operations compared to their larger counterparts.

Finally, the document states that the Class II butterfat price includes a specific adjustment of $0.007 per pound above the standard butterfat price. This signifies a minor adjustment in the pricing formula that could cumulatively influence the pricing dynamics in the dairy market.

In summary, the document contains several crucial financial references, including updated allowances and base differentials, that form the backbone of the milk pricing amendments. However, the impacts of these financial allocations on different sizes of businesses, particularly small entities, are not explicitly delineated, raising questions about the equitable financial impact across the industry.