FR 2025-06939

The recent document from the Federal Register addresses the reauthorization of the Dairy Forward Pricing Program (DFPP) by the Agricultural Marketing Service, under the USDA. This program enables milk handlers to negotiate prices directly with producers rather than adhering to the federal minimum price for non-fluid milk classes until September 30, 2025. This reauthorization, part of the American Relief Act of 2025, extends the timeframe within which contracts can be entered and these contracts must conclude by September 30, 2028. Participation is voluntary, thereby offering dairy producers, cooperatives, and handlers a mechanism for potentially stabilizing profits amid market fluctuations.

General Summary

The DFPP aims to provide dairy producers and handlers with a tool to mitigate the risks associated with market price volatility. By allowing the negotiation of forward contracts, parties can agree on fixed prices for milk that shield them from sudden and potentially harmful price changes. This reauthorization reopens opportunities for such contracts in response to a temporary halt imposed after the program's expiration in 2024.

Significant Issues or Concerns

One notable issue is the document's succinct explanation for bypassing the usual notice and comment process dictated by the Administrative Procedure Act, which usually ensures stakeholder engagement before legal enactment. The agency cites urgency but does not fully elaborate on why this urgency necessitates overriding standard procedural processes. Additionally, there is minimal detailed information on how the reauthorized program will economically impact small businesses, even though assurances align with the Regulatory Flexibility Act.

Furthermore, the document implies benefits without quantifying potential impacts, leaving room for ambiguity about outcomes for dairy farms, especially smaller entities versus larger operators. Although it lists small business considerations, there is an absence of detailed data or studies to back these provisions. Lastly, the reliance on cross-referencing various public laws without thorough explanation can make the document less accessible to stakeholders or the general public who may not be familiar with these legal references.

Public Impact

For the general public, the reauthorization of the DFPP tangibly signifies efforts to stabilize dairy product prices and protect a major food supply chain component from excessive volatility. Consumers might not immediately see effects, but the continuity of dairy production stability underpins broader market dependability.

Impact on Stakeholders

For dairy producers and handlers, particularly those smaller in scale, the DFPP represents an opportunity to minimize financial risks by locking in prices. This is crucial given the typical market unpredictability that can heavily impact smaller operations with limited resources to buffer adverse fluctuations. Conversely, larger entities, with more robust financial infrastructures, may equally benefit but potentially hold greater negotiating power due to size and reach.

Handlers and producers have highlighted the importance of this program for risk mitigation. The prompt reauthorization indicates USDA responsiveness to stakeholders' needs for stability and predictable market conditions. However, the absence of extensive economic impact analysis raises concerns about unintended biases or impacts on competitiveness. Overall, while the reauthorization seems beneficial for stabilizing the market, its lack of exhaustive procedural transparency and comprehensive impact assessments may leave some stakeholders in uncertainty regarding long-term effects.

In the context of the reauthorization of the Dairy Forward Pricing Program (DFPP), financial references are evident, focusing primarily on the classification of small dairy farms based on revenue thresholds and production levels.

Classification of Small Dairy Farms

The document specifies that a small dairy farm, as per the Small Business Administration (SBA) guidelines, is defined by an annual gross revenue of $3.75 million or less. This financial benchmark is crucial because it determines the threshold for what constitutes a "small business" in this sector. Using this monetary limit, an annual milk marketing threshold has been established at 18.3 million pounds of milk. Such quantification attempts to categorize farms into "small" or "large" entities, affecting their eligibility for certain benefits and regulatory considerations.

Relation of Financial References to Identified Issues

One of the issues identified in the document is the lack of clarity regarding the specific economic impact on small entities, even though the Regulatory Flexibility Act is mentioned. The provided financial benchmarks help establish which farms fall into the small business category but do not offer detailed insight into how these farms will be affected economically by the rule changes.

Another issue is the absence of a detailed explanation for bypassing standard notice and comment procedures. While the urgency is hinted at, the document fails to connect this urgency to financial impacts or benefits that might necessitate such a procedural bypass, leaving stakeholders without a clear financial rationale.

Additionally, while the document mentions that the program allows contracts until specific dates, it does not justify why these endpoints are financially significant or how they might influence budgetary planning or market forecasting for the affected entities. Understanding why the cut-off for entering contracts is set to September 30, 2025, or why contracts must terminate by September 30, 2028, remains vague in terms of financial reasoning.

Lastly, there is no detailed account of how the program's benefits will be financially distributed among different stakeholders, such as small versus larger dairy operations. While these financial classifications are outlined, the full economic implications and advantages or potential pitfalls, especially regarding the broader economic landscape for small businesses, are not clearly addressed or quantified. This omission leads to an unclear understanding of the program's overall financial impact or benefit distribution.

In summary, the financial classifications provide a framework for understanding how small businesses are defined within the context of the DFPP, but they fall short of offering comprehensive insights into the program's economic impacts or justifying procedural hastiness from a financial perspective.