Ian & Stuart's Australian Mac: Not for Sale/Another.not.for.sale (Australia).iso/Dr. Doyle/USDA.rules.for.milk

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<ARTICLE>
Date="02/02/93"
Citation="56 FR 6679"
Group="agriculture"
Type="RULE"
Department="DEPARTMENT OF AGRICULTURE"
Agency="AGRICULTURAL MARKETING SERVICE, USDA"
Subject="Milk in the Memphis, TN, and Paducah, KY, Marketing Areas; Reinstatement of the Orders"
<HEADER>
DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1097 and 1099

[DA-92-35]

Milk in the Memphis, TN, and Paducah, KY, Marketing Areas; Reinstatement
of the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule; suspension.
</HEADER>
DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1097 and 1099

[DA-92-35]

Milk in the Memphis, TN, and Paducah, KY, Marketing Areas; Reinstatement
of the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule; suspension.

------------------------------------------------------------
SUMMARY: This action suspends the order issued October 20, 1992,
and reinstates the orders regulating the handling of milk in
the Memphis, Tennessee, and Paducah, Kentucky, marketing areas.
This action is being taken to comply with a temporary restraining
order issued by the United States District Court for the Western
District of Tennessee on December 31, 1992.

EFFECTIVE DATE: December 1, 1992.

FOR FURTHER INFORMATION CONTACT: Clayton H. Plumb, Chief, USDA/AMS/Dairy
Division, Order Formulation Branch, room 2968, South Building,
P.O. Box 96456, Washington, DC 20090-6456, [phone].

SUPPLEMENTARY INFORMATION: Prior document in this proceeding:
Order Terminating the Orders: Issued October 20, 1992; published
October 26, 1992 (57 FR 48449).

   Pursuant to the provisions of the Agricultural Marketing
Agreement Act of 1937, as amended (7 U.S.C. 601 et seq.), an
order terminating the orders regulating the handling of milk
in the Memphis, Tennessee, and Paducah, Kentucky, marketing
areas was issued on October 20, 1992. Specifically 1097.2-
1097.95 of part 1097 were removed and 1099.2-1099.86 of part
1099 were removed, effective December 1, 1992 (57 FR 48449).
   The termination order removing all sections except 1097.1
and 1099.1 of parts 1097 and 1099 are hereby suspended and such
sections of parts 1097 and 1099 are hereby reinstated indefinitely
to comply with a temporary restraining order issued by the United
States District Court for the Western District of Tennessee
on December 31, 1992.

List of Subjects in 7 CFR Parts 1097 and 1099

   Milk marketing orders.
   1. The authority citation for 7 CFR parts 1097 and 1099 continues
to read as follows:

   Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C.
601-674.

PART 1097-MILK IN THE MEMPHIS, TENNESSEE MARKETING AREA

   2. Part 1097 is amended by reinstating 1097.2 through 1097.95
and their undesignated center headings to read as follows:

Definitions
1097.2 Memphis, Tennessee marketing area.
1097.3 Route disposition.
1097.7 Fluid milk plant.
1097.8 Nonfluid milk plant.
1097.9 Handler.
1097.10 Producer-handler.
1097.12 Producer.
1097.13 Producer milk.
1097.14 Other source milk.
1097.15 Fluid milk product.
1097.16 Fluid cream product.
1097.17 Filled milk.
1097.18 Cooperative association.
1097.19 [Reserved]
1097.20 Product prices.

Handler Reports
1097.30 Reports of receipts and utilization.
1097.31 Payroll reports.
1097.32 Other reports.

Classification of Milk
1097.40 Classes of utilization.
1097.41 Shrinkage.
1097.42 Classification of transfers and diversions.
1097.43 General classification rules.
1097.44 Classification of producer milk.
1097.45 Market administrator's reports concerning classification.

Class Prices
1097.50 Class prices.
1097.51 Basic formula price.
1097.51a Basic Class II formula price.
1097.52 Plant location adjustments for handlers.
1097.53 Announcement of class prices.
1097.54 Equivalent price.

Uniform Prices
1097.60 Handler's value of milk for computing uniform price.
1097.61 Computation of uniform price for each handler (including
    weighted average price and uniform price for base milk and
    excess milk).
1097.62 Announcement of uniform prices for each handler and
    butterfat differential.

Payments for Milk
1097.71 Payments to market administrator.
1097.72 Rate of partial payments.
1097.73 Payments to producers and to cooperative associations.
1097.74 Butterfat differential.
1097.75 Plant location adjustments for producers.
1097.77 Adjustment of accounts.
1097.78 Charges on overdue accounts.

Administrative Assessment and Marketing Service Deduction
1097.85 Assessment for order administration.
1097.86 Deduction for marketing services.

Base-Excess Plan
1097.90 Base milk.
1097.91 Excess milk.
1097.92 Computation of daily average base for each producer.
1097.93 Determination of monthly base for each producer.
1097.94 Base rules.
1097.95 Announcement of established bases.

Definitions


1097.2   Memphis, Tennessee marketing area.

   Memphis, Tennessee, marketing area means all the territory,
including incorporated municipalities and military reservations,
within the Tennessee counties of Fayette, Hardeman (except Civil
Districts 5 and 6), Haywood, Lauderdale, Madison (except Civil
Districts 4 and 9), Shelby and Tipton; the Mississippi counties
of De Soto, Tate, Panola (except the village of Crowder), Tunica,
Lafayette, and Marshall (exclusive of Beat 5); and the townships
of Mississippi and Proctor in Crittenden County, Arkansas.

1097.3   Route disposition.

   Route disposition means a delivery (including disposition
from a plant store or from a distribution point and distribution
by a vendor or vending machine) of any fluid milk product classified
as Class I milk to a retail or wholesale outlet other than a
delivery to a milk or filled milk plant. A delivery through
a distribution plant shall be attributed to the plant from which
the Class I milk is moved through a distribution point to wholesale
or retail outlets, without intermediate movement to another
milk or filled milk plant.

1097.7   Fluid milk plant.

   Except as provided in paragraph (c)  of this section, fluid
milk plant means:
   (a) Any milk processing or packaging plant from which a volume
of Class I milk, except filled milk, equal to an average of
1,000 pounds or more per day, or not less than 5.0 percent of
the Class I milk, except filled milk, of such plant, is disposed
of during the month as route disposition in the marketing area.
   (b) [Reserved]
   (c) The term fluid milk plant shall not apply to the following
plants:
   (1) A producer-handler plant;
   (2) A plant qualified pursuant to paragraph (a) or (b) of
this section which would be fully regulated pursuant to the
provisions of another order issued pursuant to the Act and from
which the market administrator determines that a greater volume
of fluid milk products, except filled milk, was disposed of
during the month from such plant as route disposition in the
marketing area regulated by the other order and as fluid milk
products transferred as Class I milk to plants fully regulated
by such other order than as route disposition in the Memphis,
Tenn., marketing area and as fluid milk products transferred
as Class I milk to other fluid milk plants: Provided, That a
plant which was a fluid milk plant pursuant to paragraph (a)
or (b) of this section in the immediately preceding month shall
continue to be subject to all of the provisions of this part
until the third consecutive month in which a greater proportion
of fluid milk products, except filled milk, is disposed of as
route disposition in such other marketing area or to plants
fully subject to such other order, unless the other order requires
regulation of the plant without regard to its qualifying as
a fluid milk plant for regulation under this order subject to
the proviso of this subparagraph; and
   (3) A plant qualified pursuant to paragraph (a) or (b) of
this section which meets the requirements for fully regulated
plants under another Federal order and from which the market
administrator determines a greater volume of fluid milk products,
except filled milk, is disposed of during the month as route
disposition in the Memphis, Tenn., marketing area and as fluid
milk products transferred as Class I milk to other fluid milk
plants than as route disposition in the other marketing area
and fluid milk products transferred as Class I milk to plants
fully regulated by such other order, and such other order which
fully regulates the plant does not contain provision to exempt
the plant from regulation under the particular circumstances
described herein of having greater route disposition under the
Memphis, Tenn., order.

1097.8  Nonfluid milk plant.

   Nonfluid milk plant means any milk or filled milk manufacturing,
processing, or packaging plant other than a fluid milk plant.
The following categories of nonfluid milk plants are further
defined as follows:
   (a) Other order plant means a plant that is fully subject
to the pricing and pooling provisions of another order issued
pursuant to the Act.
   (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued
pursuant to the Act.
   (c) Partially regulated distributing plant means a nonfluid
milk plant that is neither another order plant nor a producer-
handler plant, from which there is route disposition in consumer-
type packages or dispenser units in the marketing area during
the month.
   (d) Unregulated supply plant means a nonfluid milk plant
from which fluid milk products are moved during the month to
a fluid milk plant and which is not another order plant nor
a producer-handler plant.

1097.9   Handler.

   Handler means:
   (a) Any person in his capacity as the operator of one or
more fluid milk plants;
   (b) Any cooperative association with respect to milk of its
member producers diverted by it pursuant to 1097.12 for the
account of such cooperative association;
   (c) Any cooperative association with respect to the milk
of its member-producers which it causes to be delivered directly
from the farm to the fluid milk plant(s) of another handler
in a bulk tank truck owned and operated by, or under contract
to, or under control of such cooperative, if the cooperative
association notifies the market administrator and the handler
to whom the milk is delivered, in writing, that it wishes to
become the handler for such milk. The cooperative association
shall be considered the handler for such bulk tank milk, effective
the first day of the month following receipt of such notice,
and shall account for the actual receipts from each producer
as determined at the farm at prices applicable to receipts from
producers at plants to which the cooperative association delivers
the milk. The cooperative association, once it becomes the handler
for such bulk tank milk, shall remain the handler for such bulk
tank milk from month to month until the cooperative association
notifies the market administrator and handler that such status
is to be discontinued, effective the first day of the month
following receipt of such notice;
   (d) Any person who operates a partially regulated distributing
plant;
   (e) A producer-handler;
   (f) Any person who operates an other order plant described
in 1097.7(c); and
   (g) Any person in his capacity as the operator of an unregulated
supply plant.

1097.10  Producer-handler.

   Producer-handler means any person who operates an approved
plant from which Class I milk is disposed of in the marketing
area but who receives no milk from other dairy farmers.

1097.12  Producer.

   (a) Except as provided in paragraph (b) of this section,
producer means any person who produces milk in compliance with
Grade A inspection requirements of a duly constituted health
authority which milk is:
   (1) Received at a fluid milk plant; or
   (2) Diverted from a fluid milk plant; to a nonfluid milk
plant that is not a producer-handler plant for the account of
the handler. Milk so diverted shall be deemed to have been received
by the diverting handler at the location of the plant from which
it was diverted.
   (b) Producer shall not include:
   (1) A producer-handler as defined in any order (including
this part) issued pursuant to the Act;
   (2) Any person with respect to milk produced by him which
is diverted to a fluid milk plant from another order plant if
the other order designates such person as a producer under that
order and such milk is allocated to Class II or Class III utilization
pursuant to 1097.44(a)(8)(iii) and the corresponding step of
1097.44(b); and
   (3) Any person with respect to milk produced by him which
is reported as diverted to another order plant if any portion
of such person's milk so moved is assigned to Class I under
the provisions of such other order.

1097.13   Producer milk.

   Producer milk means only that skim milk and butterfat contained
in milk from producers (in an amount determined by weights and
measurements for individual producers, as taken at the farm
in the case of milk moved from the farm in a bulk tank truck)
which is:
   (a) Received directly from producers at a fluid milk plant;
   (b) Diverted pursuant to 1097.12; or
   (c) Received by a handler described in 1097.9(c).

1097.14   Other source milk.

   Other source milk means all skim milk and butterfat contained
in or represented by:
   (a) Receipts of fluid milk products and bulk products specified
in 1097.40(b)(1) from any source other than producers, handlers
described in 1097.9(c), or fluid milk plants;
   (b) Receipts in packaged form from other plants of products
specified in 1097.40(b)(1);
   (c) Products (other than fluid milk products, products specified
in 1097.40(b)(1), and products produced at the plant during
the same month) from any source which are reprocessed, converted
into, or combined with another product in the plant during the
month; and
   (d) Receipts of any milk product (other than a fluid milk
product or a product specified in 1097.40(b)(1)) for which
the handler fails to establish a disposition.

1097.15   Fluid milk product.

   (a) Except as provided in paragraph (b) of this section,
fluid milk product means any of the following products in fluid
or frozen form: Milk, skim milk, lowfat milk, milk drinks, buttermilk,
filled milk, and milkshake and ice milk containing less than
20 percent total solids, including any such products that are
flavored, cultured, modified with added nonfat milk solids,
concentrated (if in a consumer-type package), or reconstituted.
   (b) The term fluid milk product shall not include:
   (1) Evaporated or condensed milk (plain or sweetened), evaporated
or condensed skim milk (plain or sweetened), formulas especially
prepared for infant feeding or dietary use that are packaged
in hermetically sealed glass or all-metal containers, any product
that contains by weight less than 6.5 percent nonfat milk solids,
and whey; and
   (2) The quantity of skim milk in any modified product specified
in paragraph (a) of this section that is in excess of the quantity
of skim milk in an equal volume of an unmodified product of
the same nature and butterfat content.

1097.16  Fluid cream product.

   Fluid cream product means cream (other than plastic cream
or frozen cream), sour cream, or a mixture (including a cultured
mixture) of cream and milk or skim milk containing 9 percent
or more butterfat, with or without the addition of other ingredients.

1097.17  Filled milk.

   Filled milk means any combination of nonmilk fat (or oil)
with skim milk (whether fresh, cultured, reconstituted, or modified
by the addition of nonfat milk solids), with or without milkfat,
so that the product (including stabilizers, emulsifiers, or
flavoring) resembles milk or any other fluid milk product, and
contains less than 6 percent nonmilk fat (or oil).

1097.18  Cooperative association.

   Cooperative association means any cooperative marketing association
which the Secretary determines, after application by the association:
   (a) To be qualified under the provisions of the act of Congress
of February 18, 1922, as amended, known as the "Capper-Volstead
Act"; and
   (b) To have full authority in the sale of milk of its members
and to be engaged in making collective sales of or marketing
milk or its products for its members.

1097.19  [Reserved]

1097.20  Product prices.

   The following product prices shall be used in calculating
the basic Class II formula price pursuant to 1097.51a:
   (a) Butter price. Butter price means the simple average,
for the first 15 days of the month, of the daily prices per
pound of Grade A (92-score) butter. The prices used shall be
those of the Chicago Mercantile Exchange as reported and published
weekly by the Dairy Division, Agricultural Marketing Service.
The average shall be computed by the Director of the Dairy Division,
using the price reported each week as the daily price for that
day and for each following work-day until the next price is
reported. A work-day is each Monday through Friday, except national
holidays. For any week that the Exchange does not meet to establish
a price, the price for the following week shall be the last
price that was established.
   (b) Cheddar cheese price. Cheddar cheese price means the
simple average, for the first 15 days of the month, of the daily
prices per pound of cheddar cheese in 40-pound blocks. The prices
used shall be those of the National Cheese Exchange (Green Bay,
WI), as reported and published weekly by the Dairy Division,
Agricultural Marketing Service. The average shall be computed
by the Director of the Dairy Division, using the price reported
each week as the daily price for that day and for each following
work-day until the next price is reported. A work-day is each
Monday through Friday except national holidays. For any week
that the Exchange does not meet to establish a price, the price
for the following week shall be the last price that was established.
   (c) Nonfat dry milk price. Nonfat dry milk price means the
simple average, for the first 15 days of the month, of the daily
prices per pound of nonfat dry milk, which average shall be
computed by the Director of the Dairy Division as follows:
   (1) The prices used shall be the prices (using the midpoint
of any price range as one price) of high heat, low heat and
Grade A nonfat dry milk, respectively, for the Central States
production area, as reported and published weekly by the Dairy
Division, Agricultural Marketing Service.
   (2) For each week, determine the simple average of the prices
reported for the three types of nonfat dry milk. Such average
shall be the daily price for the day that such prices are reported
and for each preceding work-day until the day such prices were
previously reported. A work-day is each Monday through Friday
except national holidays.
   (3) Add the prices determined in paragraph (c)(2) of this
section for the first 15 days of the month and divide by the
number of days for which there is a daily price.
   (d) Edible whey price. Edible whey price means the simple
average, for the first 15 days of the month, of the daily prices
per pound of edible whey powder (nonhygroscopic). The prices
used shall be the prices (using the midpoint of any price range
as one price) of edible whey powder for the Central States production
area, as reported and published weekly by the Dairy Division,
Agricultural Marketing Service. The average shall be computed
by the Director of the Dairy Division, using the price reported
each week as the daily price for that day and for each preceding
work-day until the day such price was previously reported. A
work-day is each Monday through Friday except national holidays.

Handler Reports


1097.30  Reports of receipts and utilization.

   By mailing on or before the sixth day after the end of each
month or by delivery not later than the eighth day after the
end of such month, each handler shall report for such month
to the market administrator, in the detail and on the forms
prescribed by the market administrator, as follows:
   (a) Each handler, with respect to each of his fluid milk
plants, shall report the quantities of skim milk and butterfat
contained in or represented by:
   (1) Receipts of producer milk, including producer milk diverted
by the handler from the fluid milk plant to other plants;
   (2) Receipts of milk from handlers described in 1097.9(c);
   (3) Receipts of fluid milk products and bulk fluid cream
products from other fluid milk plants;
   (4) Receipts of other source milk;
   (5) Inventories at the beginning and end of the month of
fluid milk products and products specified in 1097.40(b)(1);
and
   (6) The utilization or disposition of all milk, filled milk,
and milk products required to be reported pursuant to this paragraph.
   (b) Each handler operating a partially regulated distributing
plant shall report with respect to such plant in the same manner
as prescribed for reports required by paragraph (a) of this
section. Receipts of milk that would have been producer milk
if the plant had been fully regulated shall be reported in lieu
of producer milk.
uy   (c) Each handler described in 1097.9 (b) and (c) shall report:
   (1) The quantities of all skim milk and butterfat contained
in receipts of milk from producers; and
   (2) The utilization or disposition of all such receipts.
   (d) Each handler not specified in paragraphs (a) through
(c) of this section shall report with respect to his receipts
and utilization of milk, filled milk, and milk products in such
manner as the market administrator may prescribe.

1097.31   Payroll reports.

   (a) By mailing on or before the sixth day after the end of
the month, or by delivery not later than the eighth day after
the end of such month, each handler described in 1097.9 (a),
(b), and (c) shall report to the market administrator, in the
detail prescribed by the market administrator, the following
information showing for each producer:
   (1) His name and address;
   (2) The number of days on which milk was received from such
producer;
   (3) The total pounds of milk received from such producers;
   (4) The average butterfat content of such milk;
   (5) The location at which such milk was received; and
   (6) The amount of any deductions authorized in writing by
the producer to be made in making payments to such producer.
   (b) On or before the 21st day of each month, each handler
described in 1097.9 (a), (b), and (c) shall report to the market
administrator, in detail and on forms prescribed by him, the
name and address or appropriate identification of each producer
from whom milk was received during the first 15 days of such
month, the total pounds of milk received from each producer,
the location at which such milk was received, the amount of
any deductions authorized in writing by producers from whom
such handler received milk, the total pounds of milk received
from each handler described in 1097.9(c), and the name and
address of each such cooperative association.

1097.32   Other reports.

   (a) Each handler operating a partially regulated distributing
plant shall report on or before the seventh day after the end
of the month, the respective amounts of skim milk and butterfat
in route disposition in the marketing area.
   (b) [Reserved]
   (c) In addition to the reports required pursuant to 1097.30
and 1097.31 and paragraph (a) of this section, each handler
shall report such other information as the market administrator
deems necessary to verify or establish such handler's obligation
under the order.
   (d) On or before the second day prior to the reporting dates
specified in 1097.31, each cooperative association that operates
a fluid milk plant from which bulk fluid milk products were
transferred to fluid milk plants of other handlers within the
time periods described in 1097.31 shall report to each such
fluid milk plant operator and to the market administrator the
name and location of the transferor plant and the total pounds
and butterfat content of the bulk fluid milk products transferred
from the plant.

Classification of Milk


1097.40  Classes of utilization.

   Except as provided in 1097.42, all skim milk and butterfat
required to be reported by a handler pursuant to 1097.30 shall
be classified as follows:
   (a) Class I milk. Class I milk shall be all skim milk and
butterfat:
   (1) Disposed of in the form of a fluid milk product, except
as otherwise provided in paragraphs (b) and (c) of this section;
and
   (2) Not specifically accounted for as Class II or Class III
milk.
   (b) Class II milk. Class II milk shall be all skim milk and
butterfat:
   (1) Disposed of in the form of a fluid cream product, eggnog,
yogurt, and any product containing 6 percent or more nonmilk
fat (or oil) that resembles a fluid cream product, eggnog, or
yogurt, except as otherwise provided in paragraph (c) of this
section;
   (2) In packaged inventory at the end of the month of the
products specified in paragraph (b)(1) of this section;
   (3) In bulk fluid milk products and bulk fluid cream products
disposed of to any commercial food processing establishment
(other than a milk or filled milk plant) at which food products
(other than milk products and filled milk) are processed and
from which there is no disposition of fluid milk products or
fluid cream products other than those received in consumer-type
packages; and
   (4) Used to produce:
   (i) Cottage cheese, lowfat cottage cheese, and dry curd cottage
cheese;
   (ii) Milkshake and ice milk mixes (or bases) containing 20
percent or more total solids, frozen desserts, and frozen dessert
mixes;
   (iii) Any concentrated milk product in bulk, fluid form other
than that specified in paragraph (c)(1)(iv) of this section;
   (iv) Plastic cream, frozen cream, and anhydrous milkfat;
   (v) Custards, puddings, and pancake mixes; and
   (vi) Formulas especially prepared for infant feeding or dietary
use that are packaged in hermetically sealed glass or all-metal
containers.
   (c) Class III milk. Class III milk shall be all skim milk
and butterfat:
   (1) Used to produce:
   (i) Cheese (other than cottage cheese, lowfat cottage cheese,
and dry curd cottage cheese);
   (ii) Butter;
   (iii) Any milk product in dry form;
   (iv) Any concentrated milk product in bulk, fluid form that
is used to produce a Class III product;
   (v) Evaporated or condensed milk (plain or sweetened) in
a consumer-type package and evaporated or condensed skim milk
(plain or sweetened) in a consumer-type package; and
   (vi) Any product not otherwise specified in this section;
   (2) In inventory at the end of the month of fluid milk products
in bulk or packaged form and products specified in paragraph
(b)(1) of this section in bulk form;
   (3) In fluid milk products and products specified in paragraph
(b)(1) of this section that are disposed of by a handler for
animal feed;
   (4) In fluid milk products and products specified in paragraph
(b)(1) of this section that are dumped by a handler if the market
administrator is notified of such dumping in advance and is
given the opportunity to verify such disposition;
   (5) In skim milk in any modified fluid milk product that
is in excess of the quantity of skim milk in such product that
was included within the fluid milk product definition pursuant
to 1097.15; and
   (6) In shrinkage assigned pursuant to 1097.41(a) to the
receipts specified in 1097.41(a)(2) and in shrinkage specified
in 1079.41 (b) and (c).

1097.41   Shrinkage.

   For purposes of classifying all skim milk and butterfat to
be reported by a handler pursuant to 1097.30, the market administrator
shall determine the following:
   (a) The pro rata assignment of shrinkage of skim milk and
butterfat, respectively, at each fluid milk plant to the respective
quantities of skim milk and butterfat:
   (1) In the receipts specified in paragraphs (b) (1) through
(6) of this section on which shrinkage is allowed pursuant to
such paragraph; and
   (2) In other source milk not specified in paragraphs (b)
(1) through (6) of this section which was received in the form
of a bulk fluid milk product or a bulk fluid cream product;
   (b) The shrinkage of skim milk and butterfat, respectively,
assigned pursuant to paragraph (a) of this section to the receipts
specified in paragraph (a)(1) of this section that is not in
excess of:
   (1) Two percent of the skim milk and butterfat, respectively,
in producer milk (excluding milk diverted by the plant operator
to another plant);
   (2) Plus 1.5 percent of the skim milk and butterfat, respectively,
in milk received from a handler described in 1097.9(c), except
that if the operator of the plant to which the milk is delivered
purchases such milk on the basis of weights determined from
its measurement at the farm and butterfat tests determined from
farm bulk tank samples, the applicable percentage under this
subparagraph shall be 2 percent;
   (3) Plus 0.5 percent of the skim milk and butterfat, respectively,
in producer milk diverted from such plant by the plant operator
to another plant, except that if the operator of the plant to
which the milk is delivered purchases such milk on the basis
of weights determined from its measurement at the farm and butterfat
tests determined from farm bulk tank samples, the applicable
percentage under this subparagraph shall be zero;
   (4) Plus 1.5 percent of the skim milk and butterfat, respectively,
in bulk fluid milk products received by transfer from other
fluid milk plants;
   (5) Plus 1.5 percent of the skim milk and butterfat, respectively,
in bulk fluid milk products received by transfer from other
order plants, excluding the quantity for which Class II or Class
III classification is requested by the operators of both plants;
   (6) Plus 1.5 percent of the skim milk and butterfat, respectively,
in bulk fluid milk products received from unregulated supply
plants, excluding the quantity for which Class II or Class III
classification is requested by the handler; and
   (7) Less 1.5 percent of the skim milk and butterfat, respectively,
in bulk fluid milk products transferred to other plants that
is not in excess of the respective amounts of skim milk and
butterfat to which percentages are applied in paragraphs (b)
(1), (2), (4), (5), and (6) of this section; and
   (c) The quantity of skim milk and butterfat, respectively,
in shrinkage of milk from producers for which a cooperative
association is the handler pursuant to 1097.9 (b) or (c), but
not in excess of 0.5 percent of the skim milk and butterfat,
respectively, in such milk. If the operator of the plant to
which the milk is delivered purchases such milk on the basis
of weights determined from its measurement at the farm and butterfat
tests determined from farm bulk tank samples, the applicable
percentage under this paragraph for the cooperative association
shall be zero.

1097.42  Classification of transfers and diversions.

   (a) Transfers to fluid milk plants. Skim milk or butterfat
transferred in the form of a fluid milk product or a bulk fluid
cream product from a fluid milk plant to another fluid milk
plant shall be classified as Class I milk unless the operators
of both plants request the same classification in another class.
In either case, the classification of such transfers shall be
subject to the conditions set forth in paragraphs (a) (1), (2),
and (3) of this section. For purposes of this paragraph, skim
milk and butterfat transferred as bulk milk to the fluid milk
plant of another handler by a handler described in 1097.9(c)
shall be considered a receipt of producer milk in the transferee
plant.
   (1) The skim milk or butterfat classified in each class shall
be limited to the amount of skim milk and butterfat, respectively,
remaining in such class at the transferee-plant after the computations
pursuant to 1097.44(a)(12) and the corresponding step of 1097.44(b);
   (2) If the transferor-plant received during the month other
source milk to be allocated pursuant to 1097.44(a)(7) or the
corresponding step of 1097.44(b), the skim milk or butterfat
so transferred shall be classified so as to allocate the least
possible Class I utilization to such other source milk; and
   (3) If the transferor-handler received during the month other
source milk to be allocated pursuant to 1097.44(a) (11) or
(12) or the corresponding steps of 1097.44(b), the skim milk
or butterfat so transferred, up to the total of the skim milk
and butterfat, respectively, in such receipts of other source
milk, shall not be classified as Class I milk to a greater extent
than would be the case if the other source milk had been received
at the transferee-plant.
   (b) Transfers and diversions to other order plants. Skim
milk or butterfat transferred or diverted in the form of a fluid
milk product or a bulk fluid cream product from a fluid milk
plant to another order plant shall be classified in the following
manner. Such classification shall apply only to the skim milk
or butterfat that is in excess of any receipts at the fluid
milk plant from the other order plant of skim milk and butterfat,
respectively, in fluid milk products and bulk fluid cream products,
respectively, that are in the same category as described in
paragraph (b) (1), (2), or (3) of this section:
   (1) If transferred as packaged fluid milk products, classification
shall be in the classes to which allocated as a fluid milk product
under the other order;
   (2) If transferred in bulk form, classification shall be
in the classes to which allocated under the other order (including
allocation under the conditions set forth in paragraph (b)(3)
of this section);
   (3) If the operators of both plants so request in their reports
of receipts and utilization filed with their respective market
administrators, transfers or diversions in bulk form shall be
classified as Class II or Class III milk to the extent of such
utilization available for such classification pursuant to the
allocation provisions of the other order;
   (4) If information concerning the classes to which such transfers
or diversions were allocated under the other order is not available
to the market administrator for the purposes of establishing
classification under this paragraph, classification shall be
as Class I, subject to adjustment when such information is available;
   (5) For purposes of this paragraph, if the other order provides
for a different number of classes of utilization than is provided
for under this part, skim milk or butterfat allocated to a class
consisting primarily of fluid milk products shall be classified
as Class I milk, and skim milk or butterfat allocated to the
other classes shall be classified as Class III milk; and
   (6) If the form in which any fluid milk product that is transferred
to an other order plant is not defined as a fluid milk product
under such other order, classification under this paragraph
shall be in accordance with the provisions of 1097.40.
   (c) Transfers to producer-handlers. Skim milk or butterfat
transferred in the following forms from a fluid milk plant to
a producer-handler under this or any other Federal order shall
be classified:
   (1) As Class I milk, if transferred in the form of a fluid
milk product; and
   (2) In accordance with the utilization assigned to it by
the market administrator, if transferred in the form of a bulk
fluid cream product. For this purpose, the producer-handler's
utilization of skim milk and butterfat in each class, in series
beginning with Class III, shall be assigned to the extent possible
to his receipts of skim milk and butterfat, respectively, in
bulk fluid cream products, pro rata to each source.
   (d) Transfers and diversions to other nonfluid milk plants.
Skim milk or butterfat transferred or diverted in the following
forms from a fluid milk plant to a nonfluid milk plant that
is not an other order plant or a producer-handler plant shall
be classified:
   (1) As Class I milk, if transferred in the form of a packaged
fluid milk product; and
   (2) As Class I milk, if transferred or diverted in the form
of a bulk fluid milk product or a bulk fluid cream product,
unless the following conditions apply:
   (i) If the conditions described in paragraphs (d)(2)(i) (a)
and (b) of this section are met, transfers or diversions in
bulk form shall be classified on the basis of the assignment
of the nonfluid milk plant's utilization to its receipts as
set forth in paragraphs (d)(2) (ii) through (viii) of this section:
   (a) The transferor-handler or divertor-handler claims such
classification in his report of receipts and utilization filed
pursuant to 1097.30 for the month within which such transaction
occurred; and
   (b) The nonfluid milk plant operator maintains books and
records showing the utilization of all skim milk and butterfat
received at such plant which are made available for verification
purposes if requested by the market administrator:
   (ii) Route disposition in the marketing area of each Federal
milk order from the nonfluid milk plant and transfers of packaged
fluid milk products from such nonfluid milk plant to plants
fully regulated thereunder shall be assigned to the extent possible
in the following sequence:
   (a) Pro rata to receipts of packaged fluid milk products
at such nonfluid milk plant from fluid milk plants;
   (b) Pro rata to any remaining unassigned receipts of packaged
fluid milk products at such nonfluid milk plant from other order
plants;
   (c) Pro rata to receipts of bulk fluid milk products at such
nonfluid milk plant from fluid milk plants; and
   (d) Pro rata to any remaining unassigned receipts of bulk
fluid milk products at such nonfluid milk plant from other order
plants;
   (iii) Any remaining Class I disposition of packaged fluid
milk products from the nonfluid milk plant shall be assigned
to the extent possible pro rata to any remaining unassigned
receipts of packaged fluid milk products at such nonfluid milk
plant from fluid milk plants and other order plants;
   (iv) Transfers of bulk fluid milk products from the nonfluid
milk plant to a plant fully regulated under any Federal milk
order, to the extent that such transfers to the regulated plant
exceed receipts of fluid milk products from such plant and are
allocated to Class I at the transferee-plant, shall be assigned
to the extent possible in the following sequence:
   (a) Pro rata to receipts of fluid milk products at such nonfluid
milk plant from fluid milk plants; and
   (b) Pro rata to any remaining unassigned receipts of fluid
milk products at such nonfluid milk plant from other order plants;
   (v) Any remaining unassigned Class I disposition from the
nonfluid milk plant shall be assigned to the extent possible
in the following sequence:
   (a) To such nonfluid milk plant's receipts from dairy farmers
who the market administrator determines constitute regular sources
of Grade A milk for such nonfluid milk plant; and
   (b) To such nonfluid milk plant's receipts of Grade A milk
from plants not fully regulated under any Federal milk order
which the market administrator determines constitute regular
sources of Grade A milk for such nonfluid milk plant;
   (vi) Any remaining unassigned receipts of bulk fluid milk
products at the nonfluid milk plant from fluid milk plants and
other order plants shall be assigned, pro rata among such plants,
to the extent possible first to any remaining Class I utilization,
then to class III utilization, and then to Class II utilization
at such nonfluid milk plant;
   (vii) Receipts of bulk fluid cream products at the nonfluid
milk plant from fluid milk plants and other order plants shall
be assigned, pro rata among such plants, to the extent possible
first to any remaining Class III utilization, then to any remaining
Class II utilization, and then to Class I utilization at such
nonfluid milk plant; and
   (viii) In determining the nonfluid milk plant's utilization
for purposes of this subparagraph, and fluid milk products and
bulk fluid cream products transferred from such nonfluid milk
plant to a plant not fully regulated under any Federal milk
order shall be classified on the basis of the second plant's
utilization using the same assignment priorities at the second
plant that are set forth in this subparagraph.

1097.43   General classification rules.

   In determining the classification of producer milk pursuant
to 1097.44, the following rules shall apply:
   (a) Each month the market administrator shall correct for
mathematical and other obvious errors all reports filed pursuant
to 1097.30 and shall compute separately for each fluid milk
plant and for each cooperative association with respect to milk
for which it is the handler pursuant to 1097.9 (b) or (c) the
pounds of skim and butterfat, respectively, in each class in
accordance with 1097.40, 1097.41, and 1097.42;
   (b) If any of the water contained in the milk from which
a product is made is removed before the product is utilized
or disposed of by a handler, the pounds of skim milk in such
product that are to be considered under this part as used or
disposed of by the handler shall be an amount equivalent to
the nonfat milk solids contained in such product plus all of
the water originally associated with such solids; and
   (c) The classification of producer milk for which a cooperative
association is the handler pursuant to 1097.9 (b) or (c) shall
be determined separately from the operations of any fluid milk
plant operated by such cooperative association.

1097.44   Classification of producer milk.

   For each month the market administrator shall determine the
classification of producer milk of each handler described in
1097.9(a) for each of his fluid milk plants separately and
of each handler described in 1097.9 (b) and (c) by allocating
the handler's receipts of skim milk and butterfat to his utilization
as follows:
   (a) Skim milk shall be allocated in the following manner:
   (1) Subtract from the total pounds of skim milk in Class
III the pounds of skim milk in shrinkage specified in 1097.41(b);
   (2) Subtract from the total pounds of skim milk in Class
I the pounds of skim milk in receipts of packaged fluid milk
products from an unregulated supply plant to the extent that
an equivalent amount of skim milk disposed of to such plant
by handlers fully regulated under any Federal milk order is
classified and priced as Class I milk and is not used as an
offset for any payment obligation under any order;
   (3) Subtract from the pounds of skim milk remaining in each
class the pounds of skim milk in fluid milk products received
in packaged form from another order plant, as follows:
   (i) From Class III milk, the lesser of the pounds remaining
or 2 percent of such receipts; and
   (ii) From Class I milk, the remainder of such receipts;
   (4) Subtract from the pounds of skim milk in Class II the
pounds of skim milk in products specified in 1097.40(b)(1)
that were received in packaged form from other plants, but not
in excess of the pounds of skim milk remaining in Class II;
   (5) Subtract from the remaining pounds of skim milk in Class
II the pounds of skim milk in products specified in 1097.40(b)(1)
that were in inventory at the beginning of the month in packaged
form, but not in excess of the pounds of skim milk remaining
in Class II. This subparagraph shall apply only if the pool
plant was subject to the provisions of this subparagraph or
comparable provisions of another Federal milk order in the immediately
preceding month;
   (6) Subtract from the remaining pounds of skim milk in Class
II the pounds of skim milk in other source milk (except that
received in the form of a fluid milk product or a fluid cream
product) that is used to produce, or added to, any product specified
in 1097.40(b), but not in excess of the pounds of skim milk
remaining in Class II;
   (7) Subtract in the order specified below from the pounds
of skim milk remaining in each class, in series beginning with
Class III, the pounds of skim milk in each of the following:
   (i) Other source milk (except that received in the form of
a fluid milk product) and, if paragraphs (a)(5) of this section
applies, packaged inventory at the beginning of the month of
products specified in 1097.40(b)(1) that was not subtracted
pursuant to paragraphs (a) (4), (5), and (6) of this section;
   (ii) Receipts of fluid milk products (except filled milk)
for which Grade A certification is not established;
   (iii) Receipts of fluid milk products from unidentified sources;
   (iv) Receipts of fluid milk products from a producer-handler
as defined under this or any other Federal milk order; and
   (v) Receipts of reconstituted skim milk in filled milk from
an unregulated supply plant that were not subtracted pursuant
to paragraph (a)(2) of this section;
   (8) Subtract in the order specified below from the pounds
of skim milk remaining in Class II and Class III, in sequence
beginning with Class III:
   (i) The pounds of skim milk in receipts of fluid milk products
from an unregulated supply plant that were not subtracted pursuant
to paragraphs (a)(2) and (7)(v) of this section for which the
handler requests a classification other than Class I, but not
in excess of the pounds of skim milk remaining in Class II and
Class III combined;
   (ii) The pounds of skim milk in receipts of fluid milk products
from an unregulated supply plant that were not subtracted pursuant
to paragraphs (a)(2), (7)(v), and (8)(i) of this section which
are in excess of the pounds of skim milk determined pursuant
to paragraphs (a)(8)(ii) (a) through (c) of this section. Should
the pounds of skim milk to be subtracted from Class II and Class
III combined exceed the pounds of skim milk remaining in such
classes, the pounds of skim milk in Class II and Class III combined
shall be increased (increasing as necessary Class III and then
Class II to the extent of available utilization in such classes
at the nearest other fluid milk plant of the handler, and then
at each successively more distant fluid milk plant of the handler)
by an amount equal to such excess quantity to be subtracted,
and the pounds of skim milk in Class I shall be decreased by
a like amount. In such case, the pounds of skim milk remaining
in each class at this allocation step at the handler's other
fluid milk plants shall be adjusted in the reverse direction
by a like amount:
   (a) Multiply by 1.25 the sum of the pounds of skim milk remaining
in Class I at this allocation step at all fluid milk plants
of the handler (excluding any duplication of Class I utilization
resulting from reported Class I transfers between fluid milk
plants of the handler);
   (b) Subtract from the above result the sum of the pounds
of skim milk in receipts at all fluid milk plants of the handler
of producer milk, milk from a handler described in 1097.9(c),
fluid milk products from fluid milk plants of other handlers,
and bulk fluid milk products from other order plants; and
   (c) Multiply any plus quantity resulting above by the percentage
that the receipts of skim milk in fluid milk products from unregulated
supply plants that remain at this fluid milk plant is of all
such receipts remaining at this allocation step at all fluid
milk plants of the handler; and
   (iii) The pounds of skim milk in receipts of bulk fluid milk
products from an other order plant that are in excess of bulk
fluid milk products transferred or diverted to such plant, if
Class II or Class III classification is requested by the operator
of the other order plant and the handler, but not in excess
of the pounds of skim milk remaining in Class II and Class III
combined;
   (9) Subtract from the pounds of skim milk remaining in each
class, in series beginning with Class III, the pounds of skim
milk in fluid milk products and products specified in 1097.40(b)(1)
in inventory at the beginning of the month that were not subtracted
pursuant to paragraphs (a)(5) and (7)(i) of this section;
   (10) Add to the remaining pounds of skim milk in Class III
the pounds of skim milk subtracted pursuant to paragraph (a)(1)
of this section;
   (11) Subject to the provisions of paragraphs (a)(11) (i)
and (ii) of this section, subtract from the pounds of skim milk
remaining in each class at the plant, pro rata to the total
pounds of skim milk remaining in Class I and in Class II and
Class III combined at this allocation step at all fluid milk
plants of the handler (excluding any duplication of utilization
in each class resulting from transfers between fluid milk plants
of the handler), with the quantity prorated to Class II and
Class III combined being subtracted first from Class III and
then from Class II, the pounds of skim milk in receipts of fluid
milk products from an unregulated supply plant that were not
subtracted pursuant to paragraphs (a)(2), (7)(v), and (8) (i)
and (ii) of this section and that were not offset by transfers
or diversions of fluid milk products to the same unregulated
supply plant from which fluid milk products to be allocated
at this step were received:
   (i) Should the pounds of skim milk to be subtracted from
Class II and Class III combined pursuant to this subparagraph
exceed the pounds of skim milk remaining in such classes, the
pounds of skim milk in Class II and Class III combined shall
be increased (increasing as necessary Class III and then Class
II to the extent of available utilization in such classes at
the nearest other fluid milk plant of the handler, and then
at each successively more distant fluid milk plant of the handler)
by an amount equal to such excess quantity to be subtracted,
and the pounds of skim milk in Class I shall be decreased by
a like amount. In such case, the pounds of skim milk remaining
in each class at this allocation step at the handler's other
fluid milk plants shall be adjusted in the reverse direction
by a like amount; and
   (ii) Should the pounds of skim milk to be subtracted from
Class I pursuant to this paragraph exceed the pounds of skim
milk remaining in such class, the pounds of skim milk in Class
I shall be increased by an amount equal to such excess quantity
to be subtracted, and the pounds of skim milk in Class II and
Class III combined shall be decreased by a like amount (decreasing
as necessary Class III and then Class II). In such case, the
pounds of skim milk remaining in each class at this allocation
step at the handler's other fluid milk plants shall be adjusted
in the reverse direction by a like amount, beginning with the
nearest plant at which Class I utilization is available;
   (12) Subject to the provisions of paragraphs (a)(12) (i)
and (ii) of this section, subtract from the pounds of skim milk
remaining in each class at the plant, pro rata to the total
pounds of skim milk remaining in Class I and in Class II and
Class III combined at this allocation step at all fluid milk
plants of the handler (excluding any duplication of utilization
in each class resulting from transfers between fluid milk plants
of the handler), with the quantity prorated to Class II and
Class III combined being subtracted first from Class III and
then from Class II, the pounds of skim milk in receipts of bulk
fluid milk products from an other order plant that were not
subtracted pursuant to paragraph (a)(8)(iii) of this section
and that were not offset by transfers or diversions of bulk
fluid milk products to the same other order plant from which
fluid milk products to be allocated at this step were received:
   (i) Should the pounds of skim milk to be subtracted from
Class II and Class III combined pursuant to this paragraph exceed
the pounds of skim milk remaining in such classes, the pounds
of skim milk in Class II and Class III combined shall be increased
(increasing as necessary Class III and then Class II to the
extent of available utilization in such classes at the nearest
other fluid milk plant of the handler, and then at each successively
more distant fluid milk plant of the handler) by an amount equal
to such excess quantity to be subtracted, and the pounds of
skim milk in Class I shall be decreased by a like amount. In
such case, the pounds of skim milk remaining in each class at
this allocation step at the handler's other fluid milk plants
shall be adjusted in the reverse direction by a like amount;
and
   (ii) Should the pounds of skim milk to be subtracted from
Class I pursuant to this paragraph exceed the pounds of skim
milk remaining in such class, the pounds of skim milk in Class
I shall be increased by an amount equal to such excess quantity
to be subtracted, and the pounds of skim milk in Class II and
Class III combined shall be decreased by a like amount (decreasing
as necessary Class III and then Class II). In such case, the
pounds of skim milk remaining in each class at this allocation
step at the handler's other fluid milk plants shall be adjusted
in the reverse direction by a like amount, beginning with the
nearest plant at which Class I utilization is available;
   (13) Subtract from the pounds of skim milk remaining in each
class the pounds of skim milk in receipts of fluid milk products
and bulk fluid cream products from another fluid milk plant
according to the classification of such products pursuant to
1097.42(a); and
   (14) If the total pounds of skim milk remaining in all classes
exceed the pounds of skim milk in producer milk, subtract such
excess from the pounds of skim milk remaining in each class
in series beginning with Class III. Any amount so subtracted
shall be known as "overage";
   (b) Butterfat shall be allocated in accordance with the procedure
outlined for skim milk in paragraph (a) of this section; and
   (c) The quantity of producer milk in each class shall be
the combined pounds of skim milk and butterfat remaining in
each class after the computations pursuant to paragraph (a)(14)
of this section and the corresponding step of paragraph (b)
of this section.

1097.45  Market administrator's reports concerning classification.

   The market administrator shall make the following reports
concerning classification:
   (a) Report to the market administrator of the other order,
as soon as possible after the report of receipts and utilization
for the month is received from a handler who has received fluid
milk products or bulk fluid cream products from an other order
plant, the class to which such receipts are allocated pursuant
to 1097.44 on the basis of such report, and, thereafter, any
change in such allocation required to correct errors disclosed
in the verification of such report.
   (b) Furnish to each handler operating a fluid milk plant
who has shipped fluid milk products or bulk fluid cream products
to an other order plant the class to which such shipments were
allocated by the market administrator of the other order on
the basis of the report by the receiving handler, and, as necessary,
any changes in such allocation arising from the verification
of such report.
   (c) On or before the 11th day after the end of each month,
report to each cooperative association which so requests, the
percentage of milk delivered by such association or by its members
which was allocated to each class by each handler receiving
such milk.

Class Prices


1097.50  Class prices.

   Subject to the provisions of 1097.52, the class prices for
the month per hundredweight of milk containing 3.5 percent butterfat
shall be as follows:
   (a) Class I price. From the effective date hereof through
April 30, 1988, and thereafter until amended, the Class I price
shall be the basic formula price for the second preceding month
plus $2.77.
   (b) Class II price. The Class II price shall be computed
by the Director of the Diary Division and transmitted to the
market administrator on or before the 15th day of the preceding
month. The Class II price shall be the basic Class II formula
price computed pursuant to 1097.51a for the month plus the
amount that the value computed pursuant to paragraph (b)(1)
of this section exceeds the value computed pursuant to paragraph
(b)(2) of this section, plus any amount by which the basic Class
II formula price for the second preceding month, adjusted pursuant
to paragraphs (b)(1) and (b)(2) of this section, was less than
the Class III price for the second preceding month.
   (1) Determine for the most recent 12-month period the simple
average (rounded to the nearest cent) of the basic formula prices
computed pursuant to 1097.51 and add 10 cents; and
   (2) Determine for the same 12-month period as specified in
paragraph (b)(1) of this section the simple average (rounded
to the nearest cent) of the basic Class II formula prices computed
pursuant to 1097.51a.
   (c) Class III price. The Class III price shall be the basic
formula price for the month.

1097.51   Basic formula price.

   The "basic formula price" shall be the average price per
hundredweight for manufacturing grade milk, f.o.b. plants in
Minnesota and Wisconsin, as reported by the Department for the
month, adjusted to a 3.5 percent butterfat basis and rounded
to the nearest cent. For such adjustment, the butterfat differential
pursuant to 1097.74 shall be used.

1097.51a  Basic Class II formula price.

   The "basic Class II formula price" for the month shall be
the basic formula price determined pursuant to 1097.51 for
the second preceding month plus or minus the amount computed
pursuant to paragraphs (a) through (d) of this section:
   (a) The gross values per hundredweight of milk used to manufacture
cheddar cheese and butter-nonfat dry milk shall be computed,
using price data determined pursuant to 1097.20 and yield factors
in effect under the Dairy Price Support Program authorized by
the Agricultural Act of 1949, as amended, for the first 15 days
of the preceding month and, separately, for the first 15 days
of the second preceding month as follows:
   (1) The gross value of milk used to manufacture cheddar cheese
shall be the sum of the following computations:
   (i) Multiply the cheddar cheese price by the yield factor
used under the Price Support Program for cheddar cheese;
   (ii) Multiply the butter price by the yield factor used under
the Price Support Program for determining the butterfat component
of the whey value in the cheese price computation; and
   (iii) Subtract from the edible whey price the processing
cost used under the Price Support Program for edible whey and
multiply any positive difference by the yield factor used under
the Price Support Program for edible whey.
   (2) The gross value of milk used to manufacture butter-nonfat
dry milk shall be the sum of the following computations:
   (i) Multiply the butter price by the yield factor used under
the Price Support Program for butter; and
   (ii) Multiply the nonfat dry milk price by the yield factor
used under the Price Support Program for nonfat dry milk.
   (b) Determine the amounts by which the gross value per hundredweight
of milk used to manufacture cheddar cheese and the gross value
per hundredweight of milk used to manufacture butter-nonfat
dry milk for the first 15 days of the preceding month exceed
or are less than the respective gross values for the first 15
days of the second preceding month.
   (c) Compute weighting factors to be applied to the changes
in gross values determined pursuant to paragraph (b) of this
section by determining the relative proportion that the data
included in each of the following subparagraphs is of the total
of the data represented in paragraphs (c) (1) and (2) of this
section:
   (1) Combine the total American cheese production for the
States of Minnesota and Wisconsin, as reported by the Economics
and Statistics Service of the Department for the third preceding
month, and divide by the yield factor used under the Price Support
Program for cheddar cheese to determine the quantity of milk
used in the production of American cheddar cheese; and
   (2) Combine the total nonfat dry milk production for the
States of Minnesota and Wisconsin, as reported by the Economics
and Statistics Service of the Department for the third preceding
month, and divide by the yield factor used under the Price Support
Program for nonfat dry milk to determine the quantity of milk
used in the production of butter-nonfat dry milk.

   Note: The computation of the basic Class II formula price
is affected by a determination document published on September
6, 1984, 49 FR 35078.

   (d) Compute a weighted average of the changes in gross values
per hundredweight of milk determined pursuant to paragraph (b)
of this section in accordance with the relative proportions
of milk determined pursuant to paragraph (c) of this section.

1097.52   Plant location adjustments for handlers.

   (a) For milk received at a fluid milk plant from producers
or a handler described in 1097.9(c) and which is classified
as Class I milk without movement to another fluid milk plant,
the price specified in 1097/50(a) shall be adjusted by the
amount or at the rate specified in paragraphs (a) (1) through
(4) of this section for the location of such plant.
   (1) For a plant located in the State of Tennessee and more
than 50 miles from the City Hall in Memphis, Tennessee, the
adjustment shall be minus 25 cents.
   (2) For a plant located in the State of Mississippi, the
adjustment shall be as follows:
   (i) In the Mississippi counties of Itawamba, Lafayette, Lee,
Panola, Pontotoc, Prentiss, Tate, Tunica or Union, the adjustment
shall be plus 13 cents; and (ii) In any Mississippi county not
specified in paragraph (a)(2)(i) of this section and more than
50 miles from the City Hall in Memphis, Tennessee, the adjustment
shall be plus 2.1 cents for each 10 miles or fraction thereof
(rounded to the nearest cent) that such plant is located from
the City Hall in Memphis, Tennessee. (3) For a plant located
in the State of Arkansas, the adjustment shall be as follows:
   (i) In the Arkansas counties of Arkansas, Clark, Cleburne,
Cleveland, Conway, Crawford, Crittenden, Cross, Dallas, Desha,
Faulkner, Franklin, Garland, Grant, Hot Spring, Howard, Jefferson,
Johnson, Lee, Lincoln, Logan, Lonoke, Monroe, Montgomery, Perry,
Phillips, Pike, Polk, Pope, Prairie, Pulaski, Saline, Scott,
St. Francis, Sebastian, Sevier, Van Buren, White, Woodruff or
Yell, no adjustment shall apply;
   (ii) In any Arkansas county lying north of any county specified
in paragraph (a)(3)(i) of this section, the adjustment shall
be minus 22 cents; and
   (iii) In any Arkansas county lying south of any county specified
in paragraph (a)(3)(i) of this section, the adjustment shall
be plus 31 cents.
   (4) For a plant located outside the areas described in paragraphs
(a) (1), (2) and (3) of this section, the adjustment shall be
minus 2.1 cents for each 10 miles or fraction thereof (rounded
to the nearest cent) that such plant is located from the City
Hall in Memphis, Tennessee.
   (b) For fluid milk products transferred in bulk between fluid
milk plants and classified as Class I milk, such location adjustments
shall be assigned to the Class I disposition at the transferee-
plant in excess of the sum of receipts at such plant from producers
and from handlers described in 1097.9(c) times 1.05, and the
pounds assigned as Class I to receipts from other order plants
and unregulated supply plants, such assignment to be made in
sequence beginning with the transferor plant with the highest
Class I price.

1097.53   Announcement of class prices.

   The market administrator shall announce publicly on or before
the fifth day of each month the Class I price for the following
month, the Class III price for the preceding month, and on or
before the 15th day of each month the Class II price for the
following month computed pursuant to 1097.50(b).

1097.54  Equivalent price.

   If for any reason a price or pricing constituent required
by this part for computing class prices or for other purposes
is not available as prescribed in this part, the market administrator
shall use a price or pricing constituent determined by the Secretary
to be equivalent to the price or pricing constituent that is
required.

Uniform Prices


1097.60  Handler's value of milk for computing uniform price.

   For the purpose of computing the uniform price, the market
administrator shall determine for each month the value of milk
of each handler as follows:
   (a) Multiply the pounds of producer milk in each class as
determined pursuant to 1097.44 by the applicable class prices
and add the resulting amounts;
   (b) Add the amounts obtained from multiplying the pounds
of overage subtracted from each class pursuant to 1097.44(a)(14)
and the corresponding step of 1097.44(b) by the respective
class prices, as adjusted by the butterfat differential specified
in 1097.74, that are applicable at the location of the fluid
milk plant;
   (c) Add the following:
   (1) The amount obtained from multiplying the difference between
the Class III price for the preceding month and the Class I
price applicable at the location of the fluid milk plant for
the current month by the hundredweight of skim milk and butterfat
subtracted from Class I pursuant to 1097.44(a)(9) and the corresponding
step of 1097.44(b); and
   (2) The amount obtained from multiplying the difference between
the Class III price for the preceding month and the Class II
price for the current month by the lesser of:
   (i) The hundredweight of skim milk and butterfat subtracted
from Class II pursuant to 1097.44(a)(9) and the corresponding
step of 1097.44(b) for the current month; or
   (ii) The hundredweight of skim milk and butterfat remaining
in Class III (exclusive of shrinkage) after the computations
pursuant to 1097.44(a)(11) and the corresponding step of 1097.44(b)
for the preceding month, less the hundredweight of skim milk
and butterfat specified in paragraph (c)(1) of this section;
   (d) Add or subtract, as the case may be, an amount necessary
to correct errors discovered by the market administrator in
the verification of reports of such handler of his receipts
and utilization of skim milk and butterfat for previous months;
and
   (e) In computing, for the purposes of 1097.61, the value
of milk of a handler described in 1097.9(c), the value of milk
received by fluid milk plants of other handlers shall be the
sum of the amounts assigned pursuant to 1097.61(a)(2) with
respect to such milk as adjusted pursuant to 1097.75 for the
location of the fluid milk plant to which delivered.

1097.61  Computation of uniform price for each handler (including
weighted average price and uniform price for base milk and excess
milk).

   (a) The market administrator shall compute for each handler
a "weighted average price" for each month and for each of the
months of August through February a "uniform price" per hundredweight
for milk of 3.5 percent butterfat content received from producers
as follows:
   (1) Adjust the amount computed pursuant to 1097.60 by adding
or subtracting, as the case may be, the total of the location
adjustments applicable pursuant to 1097.75;
   (2) For each handler operating a fluid milk plant receiving
milk from a handler described in 1097.9(c), prorate the resulting
amount between such milk and producer milk;
   (3) Add the amount represented by any deductions made for
eliminating fractions of a cent in computing the uniform prices
for the preceding month;
   (4) Divide the resulting amount by the total hundredweight
of producer milk received by the handler and deduct any fraction
of a cent per hundredweight. The result shall be the "weighted
average price."
   (5) For each of the months of August through February, the
weighted average price shall be such handler's "uniform price"
for milk received from producers.
   (b) For each of the months of March through July, the market
administrator shall compute for each handler with respect to
producer milk, a uniform price for base milk and for excess
milk, each of 3.5 percent butterfat content, as follows:
   (1) Follow the computations and adjustments provided in paragraphs
(a) (1) through (3) of this section;
   (2) Compute the value of excess milk received by such handler
as producer milk and bulk milk from a handler described in 1097.9(c)
as follows:
   (i) Multiply the quantity of such milk, not in excess of
the total Class III milk included in these computations, by
the Class III price;
   (ii) Multiply the remaining quantity of such milk, not in
excess of the total Class II milk included in these computations,
by the Class II price;
   (iii) Multiply the remaining quantity of excess milk by the
Class I price; and
   (iv) Add together the resulting amounts;
   (3) Divide the total value of excess milk obtained in paragraph
(b)(2) of this section by the total hundredweight of such excess
milk and reduce to the nearest cent. The resulting figure shall
be the uniform price for such handler for excess milk;
   (4) Subtract, for each handler, the total value of such handler's
excess milk obtained in paragraph (b)(2)(iv) of this section
from the value of all milk obtained for such handler pursuant
to paragraph (b)(1) of this section; and
   (5) Divide the amount obtained in paragraph (b)(4) of this
section by the total hundredweight of base milk received by
such handler and deduct any fraction of a cent per hundredweight.
The result, shall be the uniform price for such handler for
base milk.

1097.62  Announcement of uniform prices for each handler and
butterfat differential.

   The market administrator shall announce publicly on or before:
   (a) The fifth day after the end of each month the butterfat
differential for such month; and
   (b) The 11th day after the end of each month the applicable
uniform prices for each handler pursuant to 1097.61 for such
month.

Payments for Milk


1097.71  Payments to market administrator.

   (a) Subject to paragraphs (d) and (e) of this section, each
handler shall pay to the market administrator on or before the
2nd day prior to the last day of each month an amount determined
by multiplying the handler's receipts during the first 15 days
of such month of producer milk (excluding the milk of any producer
who had discontinued shipping milk to such handler before the
25th of the month and, in the case of a handler described in
1097.9(c), producer milk delivered to fluid milk plant) and
milk from a handler described in 1097.9(c) by the applicable
partial payment rate less proper deductions authorized in writing
by producers from whom the handler received milk, provided that
the amount deducted for each producer does not exceed the value
of the milk received from the producers during the partial payment
period and the handler has paid such deductions to assignees
by the date payment is otherwise due the producer.
   (b) Subject to paragraphs (d) and (e) of this section, each
handler shall pay to the market administrator on or before the
14th day after the end of each month an amount equal to such
handler's value of milk for such month determined pursuant to
1097.60(a), as adjusted by the butterfat differential specified
in 1097.74 and pursuant to 1097.60 (b), (c) and (d), less:
   (1) Payments made by the handler pursuant to paragraph (a)
of this section for such month; and
   (2) Proper deductions that were authorized in writing by
producers from whom the handler received milk, provided that
the amount deducted for each producer does not exceed the value
of the milk received during the final payment period and provided
that the handler has paid such deductions to assignees by the
date payment is otherwise due the producer;
   (c) Each handler who received bulk fluid milk and bulk fluid
cream products from a fluid milk plant operated by a cooperative
association shall pay the following amounts for such products
to the market administrator, who in turn shall transmit such
money to the cooperative association.
   (1) On or before the 2nd day prior to the last day of each
month, an amount determined by multiplying such receipts during
the first 15 days of the month by the applicable partial payment
rate. If the handler so elects, such prices may be adjusted
by the butterfat differential specified in 1097.74 for the
preceding month.
   (2) On or before the 14th day after the end of each month,
an amount determined by multiplying the quantity of such receipts
during the month that was classified in each class pursuant
to 1097.42(a) by the applicable class price, as adjusted by
the butterfat differential specified in 1097.74, plus the applicable
administrative assessment, less any payments made by the handler
pursuant to paragraph (c)(1) of this section. For the purpose
of such computation, the applicable Class I price shall be the
Class I price applicable at the transferee plant plus the applicable
administrative assessment rate.
   (d) The following conditions shall apply with respect to
the payments prescribed in paragraphs (a), (b) and (c) of this
section:
   (1) Payment to the market administrator shall be deemed not
to have been made until such payments have been received by
the market administrator; and
   (2) If the date by which payments must be received by the
market administrator falls on a Saturday or Sunday or anyday
that is a national holiday, payments shall not be due until
the next day on which the market administrator's office is open
for public business.
   (e) Payments due the market administrator from a cooperative
association handler may be offset by payments determined by
the market administrator to be due the cooperative association
pursuant to 1097.73(c).

1097.72  Rate of partial payments.

   Partial payment rates shall be computed as follows:
   (a) During the months of March through July, the previous
month's Class III price.
   (b) for the months of August through February, the previous
month's Class III price plus $1.00, and further adjusted by
the zone or location adjustment applicable at the receiving
plant.

1097.73  Payments to producers and to cooperative associations.

   (a) Subject to paragraphs (c) through (e) of this section,
the market administrator shall pay each producer on or before
the last day of each month for milk which was received during
the first 15 days of each month; provided, payment pursuant
to 1097.71 (a) has been received by the market administrator.
Such payment shall be uniform to all suppliers of each plant
at a rate per hundredweight equal to that received by the market
administrator less the deductions authorized by each producer
pursuant to 1097.71 (a).
   (b) Subject to paragraphs (c) through (e) of this section,
the market administrator shall pay each producer on or before
the 16th day after the end of each month for milk for which
payment pursuant to 1097.71 (b) has been received by the market
administrator. Such payment shall be at the uniform price(s)
computed pursuant to 1097.61 for the month, subject to the
following adjustments:
   (1) Any applicable adjustments pursuant to 1097.74 and
1097.75;
   (2) Less the payment described in paragraph (a) of this section;
   (3) Less deductions for marketing services pursuant to 1097.86;
   (4) Less the authorized deductions specified in 1097.71
(a) and (b)(2); and
   (5) Any adjustments for errors in calculating payments to
an individual producer for past months.
   (c) In making payments to producers pursuant to paragraphs
(a) and (b) of this section, the market administrator, on or
before the day prior to the dates specified in such paragraphs,
shall pay to each cooperative association that so requests with
respect to those producers for whom it markets milk and who
are certified to the market administrator by the cooperative
association as having authorized the cooperative association
to receive such payment an amount equal to the sum of the individual
payments otherwise due such producers pursuant to paragraphs
(a) and (b) of this section.
   (d) The following conditions shall apply with respect to
the payments prescribed in paragraphs (a) through (c) of this
section:
   (1) If the date by which such payments are to be made falls
on a Saturday, or Sunday or on any day that is a national holiday,
such payments need not be made until the next day on which the
market administrator's office is open for public business; and
   (2) If the application of 1097.71(c)(2) or paragraph (e)(1)
of this section results in a delay in the partial or final payments
by handlers to the market administrator, the corresponding partial
or final payments prescribed in paragraphs (a) through (c) of
this section may be delayed by the same number of days.
   (e) If the market administrator does not receive the full
payment required of a handler pursuant to 1097.71 he shall
reduce uniformly per hundredweight the payments due producers
and cooperative associations for their milk received by such
handler by a total amount not in excess of the amount due from
such handler. The market administrator shall complete such payments
on or before the next date for making payment pursuant to this
section following the date on which the remaining payment is
received from such handler.

1097.74  Butterfat differential.

   For milk containing more or less than 3.5 percent butterfat,
the uniform prices shall be increased or decreased, respectively,
for each one-tenth percent butterfat variation from 3.5 percent
by a butterfat differential, rounded to the nearest one-tenth
cent, which shall be 0.138 times the butter price less 0.0028
times the average price per hundredweight, at test, for manufacturing
grade milk, f.o.b. plants in Minnesota and Wisconsin, as reported
by the Department for the month. The butter price means the
simple average for the month of the daily prices per pound of
Grade A (92-score) butter. The prices used shall be those of
the Chicago Mercantile Exchange as reported and published weekly
by the Dairy Division, Agricultural Marketing Service. The average
shall be computed by the Director of the Dairy Division, using
the price reported each week as the daily price for that day
and for each following day until the next price is reported.

1097.75  Plant location adjustments for producers.

   In making payment pursuant to 1097.73, the applicable uniform
prices for all milk received shall be adjusted according to
the location of the fluid milk plant where such milk was received
at the rate provided pursuant to 1097.52.

1097.77  Adjustment of accounts.

   Whenever audit by the market administrator of any handler's
reports, books, records, or accounts discloses errors resulting
in money due the market administrator from such handler, or
due such handler from the market administrator, the market administrator
shall promptly notify such handler of any amount so due and
payment thereof shall be made on or before the next date for
making payments set forth in the provisions under which such
error occurred.

1097.78   Charges on overdue accounts.

   (a) Any unpaid obligation of a handler pursuant to 1097.71,
1097.73, 1097.77, and 1097.85 shall be increased one percent
beginning on the first day after the due date, and on each date
of subsequent months following the day on which such type of
obligation is normally due, subject to the following conditions:
   (1) The amounts payable pursuant to this section shall be
computed monthly on each unpaid obligation, which shall include
any unpaid overdue charges previously computed pursuant to this
section; and
   (2) For the purpose of this section, any obligation that
was determined at a date later than that prescribed by the order
because of a handler's failure to submit a report to the market
administrator when due shall be considered to have been payable
by the date it would have been due if the report had been filed
when due.
   (b) All charges on overdue accounts shall be paid to the
administrative assessment fund maintained by the market administrator.

Administrative Assessment and Marketing Service Deduction

1097.85   Assessment for order administration.

   As his pro rata share of the expense of administration of
the order, each handler shall pay to the market administrator
on or before the 15th day after the end of the month six cents
per hundredweight or such lesser amount as the Secretary may
prescribe, with respect to:
   (a) Receipts of milk at fluid milk plants from producers
(including receipts from a handler described in 1097.9(c) and
such handler's own production);
   (b) Other source milk allocated to Class I pursuant to 1097.44(a)(7)
and (11) and the corresponding steps of 1097.44(b);
   (c) Receipts of milk by a handler described in 1097.9(c)
in excess of that specified in paragraph (a) of this section;
and
   (d) Receipts of milk by a handler described in 1097.9(b).

1097.86   Deduction for marketing services.

   (a) The market administrator in making payments to producers
pursuant to 1097.73 shall:
   (1) Deduct 7 cents per hundredweight or such amount not exceeding
7 cents per hundredweight as may be prescribed by the Secretary,
with respect to milk (other than milk of a handler's own production)
of those producers for whom the marketing services set forth
in paragraph (b) of this section are not being performed by
a cooperative association; or
   (2) If so requested in writing by a cooperative association,
deduct such amount as may be authorized by the member producers
of such association from the payment to be made to such producers
for whom the cooperative is performing the services specified
in paragraph (b) of this section and pay such amounts to the
cooperative association on or before the date for making payment
to producers.
   (b) The monies received by the market administrator pursuant
to paragraph (a)(1) of this section shall be used by the market
administrator to provide market information and to check the
accuracy of the testing and weighing of their milk for producers
who are not receiving such service from a cooperative association.

Base-Excess Plan


1097.90   Base milk.

   Base milk means milk received by a handler from a producer
during any of the months of March through July, which is not
in excess of such producer's base computed pursuant to 1097.93,
except that for the months of March 1985 through July 1985 base
milk shall be determined by the producer's base multiplied by
the number of days in the month times the percentage of the
producer's production pooled pursuant to 1097.13.

1097.91   Excess milk.

   Excess milk means milk received by a handler from a producer
during any of the months of March through July, which is in
excess of the base milk of such producer for such month, and
shall include all milk from a producer for whom no base can
be computed pursuant to 1097.93.

1097.92   Computation of daily average base for each producer.

   The daily average base for each producer shall be determined
by the market administrator as follows: Divide the total pounds
of milk received from such producer by handlers fully regulated
under the terms of the respective orders regulating the handling
of milk in the Memphis, Tenn.; Fort Smith, Ark.; and Central
Arkansas marketing areas (this Part 1097 and Parts 1102 and
1108, respectively, of this chapter) during the immediately
preceding period of September through January, by the total
number of days in such period beginning with the first day on
which milk is received from such producer by a handler regulated
under any one of the aforesaid orders, but not less than 120.
In the case of producers delivering milk to a handler's plant
which first became a fluid milk plant during or after the end
of the base-forming period, the daily average base for each
producer shall be that which would have been calculated for
such producer for the entire base-forming period if the handler's
plant had been a fluid milk plant during such period. For producer
bases to be calculated on or before February 25, 1985, and subject
to 1097.94, the base to be calculated for each producer shall
be an amount obtained by dividing the total pounds of his producer
milk (as defined under the respective orders) received from
the producer by all handlers fully regulated under the terms
of the respective orders regulating the handling of milk in
the Georgia; Tennessee Valley; Louisville-Lexington-Evansville;
Alabama-West Florida; Memphis, Tennessee, Nashville, Tennessee;
Fort Smith, Arkansas; and Central Arkansas marketing areas (parts
1007, 1011, 1046, 1093, 1097, 1098, 1102, and 1108, respectively,
of this chapter) during the immediately preceding months of
September 1984 through January 1985 by the total number of days
in such period beginning with the first day on which milk is
received from such producer by a handler regulated under any
one of the aforesaid orders, but not less than 120. In the case
of producers delivering milk to a handler's plant which first
became a fluid milk plant or a pool plant under any of the above
orders during or after the end of the base-forming period, the
daily average base for each producer shall be that which would
have been calculated for such producer for the entire base-forming
period if the handler's plant had been a fluid milk plant or
a pool plant during such period.

1097.93   Determination of monthly base for each producer.

   Subject to the rules set forth in 1097.94, the market administrator
shall calculate a monthly base for each producer for each of
the months of March through July, as follows:
   (a) If milk is received by a handler as producer milk during
the month, multiply such producer's daily average base computed
pursuant to 1097.92 by the number of days in such month.
   (b) If milk is received as producer milk from the same farm
by more than one handler and/or by handlers fully regulated
under the terms of the Central Arkansas (part 1108 of this chapter)
or Fort Smith, Ark. (part 1102 of this chapter), orders during
the month, multiply such producer's daily average base computed
pursuant to 1097.92 by the number of days in such month and
multiply the result by the percentages of the total pounds of
milk received from such producer by handlers fully regulated
under the terms of the three orders specified in 1097.92 which
were received by each handler to determine the amount of base
milk received from such producer by each handler.

1097.94   Base rules.

   The following rules shall apply in connection with the establishment
of bases for each producer computed pursuant to 1097.92:
   (a) An entire base or share of a joint holder shall be transferred
from a person holding such base to other persons as of the end
of the month during which an application for the transfer of
such base is received by the market administrator, such application
to be on forms approved by the market administrator and signed
by the base holder(s) or by the heirs and by the person to whom
such base is to be transferred subject to the following conditions:
   (1) If a base is held jointly and such joint holding is terminated,
the entire base may be transferred to one of the joint holders;
   (2) The share of a joint base holder may be transferred to
a person other than a joint holder of the base only if all shares
of the entire base are at the same time transferred to the same
or other persons; and
   (3) If one of more bases are transferred to a producer already
holding a base, a new base shall be computed by adding together
the total eligible deliveries during the period of September
through January of all persons in whose names such bases were
earned and dividing the total by the total number of days in
such period beginning with the first day on which milk was received
during the months of September through January from any of such
persons but not less than 120 days.

1097.95  Announcement of established bases.

   On or before February 25 of each year, the market administrator
shall notify each producer of the daily average base established
by such producer, or shall notify the cooperative association
of which such producer is a member of such daily average base.

PART 1099-MILK IN PADUCAH, KENTUCKY MARKETING AREA

   3. Part 1099 is amended by reinstating 1099.2 through 1099.86
to read as follows:

Definitions
Sec.
1099.2 Paducah, Kentucky marketing area.
1099.3 Route disposition.
1099.5 Distributing plant.
1099.6 Supply plant.
1099.7 Pool plant.
1099.8 Nonpool plant.
1099.9 Handler.
1099.10 Producer-handler.
1099.12 Producer.
1099.13 Producer milk.
1099.14 Other source milk.
1099.15 Fluid milk product.
1099.16 Fluid cream product.
1099.17 Filled milk.
1099.18 Cooperative association.
1099.19 [Reserved]
1099.20 Product prices.

Handler Reports
1099.30 Reports of receipts and utilization.
1099.31 Payroll reports.
1099.32 Other reports.

Classification of Milk
1099.40 Classes of utilization.
1099.41 Shrinkage.
1099.42 Classification of transfers and diversions.
1099.43 General classification rules.
1099.44 Classification of producer milk.
1099.45 Market administrator's reports and announcements concerning
    classification.

Class Prices
1099.50 Class prices.
1099.51 Basic formula price.
1099.51a Basic Class II formula price.
1099.52 Plant location adjustments for handlers.
1099.53 Announcement of class prices.

Uniform Price
1099.60 Handler's value of milk for computing uniform price.
1099.61 Computation of uniform price (including weighted average
    price).
1099.62 Announcement of uniform price and butterfat differential.

Payments for Milk
1099.70 Producer-settlement fund.
1099.71 Payments to the producer-settlement fund.
1099.72 Payments from the producer-settlement fund.
1099.73 Payments to producers and to cooperative associations.
1099.74 Butterfat differential.
1099.75 Plant location adjustments for producers and on nonpool
    milk.
1099.76 Payments by handler operating a partially regulated
    distributing plant.
1099.77 Adjustment of accounts.

Administrative Assessment and Marketing Service Deduction
1099.85 Assessment for order administration.
1099.86 Deduction for marketing services.

Definitions


1099.2   Paducah, Kentucky marketing area.

   The Paducah, Ky. marketing area, hereinafter called the marketing
area, means all the territory within the counties listed below
(except that portion of any of these counties contained in the
Fort Campbell military reservation):

Kentucky Counties

   Ballard, Caldwell, Calloway, Carlisle, Christian, Fulton,
Graves, Hickman, Livingston, Lyon, Marshall, McCracken, Todd,
Trigg.

Missouri Counties

   Mississippi, New Madrid, Pemiscot, Scott.

1099.3   Route disposition.

   Route disposition means a delivery (including disposition
from a plant store or from a distribution point and distribution
by a vendor or vending machine) of any fluid milk product classified
as Class I milk to a retail or wholesale outlet other than a
milk or filled milk plant. A delivery through a distribution
point shall be attributed to the plant from which the Class
I milk is moved through a distribution point to wholesale or
retail outlets.

1099.5   Distributing plant.

   Distributing plant means a plant in which milk is processed
and packaged and from which there is route disposition during
the month in the marketing area.

1099.6   Supply plant.

   Supply plant means a plant (except a distributing plant)
which is qualified as a pool plant pursuant to the proviso in
1099.7(b) or a plant from which milk or skim milk which may
be distributed in the marketing area under a Grade A label is
supplied during the month to a plant qualified pursuant to 1099.7(a).

1099.7   Pool plant.

   Except as provided in paragraph (c) of this section, pool
plant means:
   (a) A distributing plant from which there is total route
disposition, except filled milk, in an amount equal to 45 percent
or more of its receipts of milk from dairy farmers producing
milk under a Grade A dairy farm permit or rating issued by a
duly constituted health authority (including milk of such dairy
farmer diverted by the plant operator), from handlers described
in 1099.9(c), and fluid milk products, except filled milk,
from other plants during the month and from which there is route
disposition, except filled milk, in the marketing area in an
amount equal to a daily average of 3,000 pounds or more per
day, or 10 percent or more of such receipts, whichever is less:
Provided, That a plant which qualifies as a pool plant by complying
with the foregoing requirements during any month shall be a
pool plant during the following month.
   (b) A distributing plant or supply plant from which the volume
of milk and skim milk shipped to pool plants qualified pursuant
to paragraph (a) of this section, or disposed of as route disposition
(excluding filled milk) is equal to not less than 50 percent
of the receipts of milk from dairy farmers producing milk under
a Grade A dairy farm permit or rating issued by a duly constituted
health authority (including milk of such dairy farmers diverted
by the plant operator), from handlers described in 1099.9(c),
and fluid milk products, except filled milk, received from other
plants: Provided, That if a supply plant ships to pool plants
qualified pursuant to paragraph (a) of this section, milk and
skim milk equal to at least 75 percent of its receipts of milk
from such dairy farmers and handlers described in 1099.9(c)
in October and November and 35 percent of such milk in three
additional months during the period from August through January,
such plant shall, upon written application to the market administrator
on or before the end of such period, be designated as a pool
plant until the end of any month during the succeeding August
through January period in which the milk of such plant is disposed
of in such a way that it becomes impossible for the plant to
reestablish its qualification under the term of this proviso,
And provided further, That in the case of a supply plant operated
by a cooperative association which supplies to other pool plants
at least two-thirds of the producer milk of its producer members
(including both the milk delivered directly from the farms of
member producers and that delivered from the plant of the association)
delivered to all plants during the current month or during the
immediately preceding 12-month period, the milk which such association
causes to be delivered to the pool plants of other handlers
in its capacity as a handler described in 1099.9(c), shall
be considered as having been received first at the plant of
such cooperative association for the purpose of qualifying such
plant as a pool plant pursuant to this paragraph.
   (c) The term pool plant shall not apply to the following
plants:
   (1) A producer-handler plant;
   (2) A distributing plant qualified pursuant to paragraph
(a) or (b) of this section which meets the requirements of a
fully regulated plant pursuant to the provisions of another
order issued pursuant to the Act and from which a greater quantity
of fluid milk products, except filled milk, is disposed of during
the month from such plant as route disposition in the marketing
area regulated by the other order than in the Paducah, KY, marketing
area: Provided, That such a distributing plant which was a pool
plant under this order in the immediately preceding month shall
continue to be subject to all of the provisions of this part
until the third consecutive month in which a greater proportion
of such route disposition is made in such other marketing area,
unless the other order requires regulation of the plant without
regard to its qualifying as a pool plant under this order subject
to the proviso of this subparagraph: And provided further, on
the basis of a written application made either by the plant
operator or by the cooperative association supplying milk to
such operator's plant, at least 15 days prior to the date for
which a determination of the Secretary is to be effective, the
Secretary may determine that the route dispositions in the respective
marketing areas to be used for purposes of this subparagraph
shall exclude (for a specified period of time) route disposition
made under limited-term contracts to governmental bases and
institutions;
   (3) A distributing plant qualified pursuant to paragraph
(a) or (b) of this section which meets the requirements of a
fully regulated plant pursuant to the provisions of another
Federal order and from which a greater quantity of Class I milk,
except filled milk, is disposed of during the month as route
disposition in the Paducah marketing area than in the other
marketing area, and such other order which fully regulates the
plant does not contain provisions to exempt the plant from regulation
even though such plant has greater route disposition in the
marketing area of the Paducah, KY, order; and
   (4) Any supply plant which would be subject to the classification
and pricing provisions of another order issued pursuant to the
Act unless such plant qualified as a pool plant pursuant to
the proviso of paragraph (b) of this section during the preceding
August through January period.

1099.8  Nonpool plant.

   Nonpool plant means any milk or filled milk receiving, manufacturing,
or processing plant other than a pool plant. The following categories
of nonpool plants are further defined as follows:
   (a) Other order plant means a plant that is fully subject
to the pricing and pooling provisions of another order issued
pursuant to the Act.
   (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued
pursuant to the Act.
   (c) Partially regulated distributing plant means a nonpool
plant that is neither an other order plant nor a producer-handler
plant, from which there is route disposition in consumer-type
packages or dispenser units in the marketing area during the
month.
   (d) Unregulated supply plant means a nonpool plant (other
than a producer-handler plant or an other order plant) from
which fluid milk products are shipped to a pool plant.

1099.9  Handler.

   Handler means:
   (a) Any person in his capacity as the operator of a pool
plant;
   (b) A cooperative association qualified pursuant to 1099.18
with respect to milk of producers diverted pursuant to 1099.13
for the account of such association;
   (c) A cooperative association which chooses to report as
a handler with respect to milk which is delivered from the farm
to a pool plant(s) of another handler in a tank truck owned
or operated by, or under contract to, such cooperative association
for the account of such cooperative association. The milk so
delivered shall be considered to have been received by such
cooperative association at a pool plant at the location of the
pool plant to which it is delivered;
   (d) Any person who operates a partially regulated distributing
plant;
   (e) A producer-handler; or
   (f) Any person who operates an other order plant described
in 1099.7(c).

1099.10  Producer-handler.

   Producer-handler means any person who operates a dairy farm
and a distributing plant, from which there is route disposition
within the marketing area but which receives no other source
milk or milk from other dairy farmers.

1099.12   Producer.

   (a) Except as provided in paragraph (b) of this section,
producer means any person who produces milk under a Grade A
dairy farm permit or rating issued by a duly constituted health
authority, which milk is received at a pool plant or by a handler
described in 1099.9(c).
   (b) Producer shall not include:
   (1) A producer-handler as defined in any order (including
this part) issued pursuant to the Act;
   (2) Any person with respect to milk produced by him which
is diverted to a pool plant from another order plant if the
other order designates such person as a producer under that
order and such milk is allocated to Class II or Class III utilization
pursuant to 1099.44(a)(8)(iii) and the corresponding step of
1099.44(b); and
   (3) Any person with respect to milk produced by him which
is reported as diverted to an other order plant if any portion
of such person's milk so moved is assigned to Class I under
the provisions of such other order.

1099.13  Producer milk.

   Producer milk means all skim milk and butterfat contained
in milk produced by a producer which is:
   (a) Received during the month at a pool plant from producers
or from a handler described in 1099.9(c);
   (b) Received by a handler described in 1099.9(c) but which
is not delivered to a pool plant of another handler and constitutes
shrinkage pursuant to 1099.41(c) or Class I shrinkage; or
   (c) Diverted by the operator of a pool pant or by a handler
described in 1099.9(b) to a nonpool plant that is not a producer-
handler plant, subject to the following conditions:
   (1) Not less than 5 days' production of any producer whose
milk is diverted is physically received at a pool plant;
   (2) If diverted by a cooperative association for its account
as milk of its members to nonpool plants which does not exceed
33 percent of the milk physically received from member producers
of such cooperative association at pool plants during the month
in any of the months of April through August and December and
25 percent in other months, except that if milk of members is
diverted by the cooperative association in excess of the specified
percentages, no milk diverted by the cooperative association
during the month shall be producer milk unless the cooperative
association designates the dairy farmers whose milk is not producer
milk;
   (3) If diverted by a handler in his capacity as the operator
of a pool plant, as milk of a producer who is not a member of
a cooperative association diverting milk pursuant to paragraph
(c)(2) of this section, which does not exceed 33 percent of
the aggregate quantity of milk received at such plant from such
nonmember producers during the month in any of the months of
April through August and December and 25 percent in other months,
except that if milk of nonmember producers is diverted by the
handler in excess of the specified percentages, no milk diverted
by the handler during the month shall be producer milk unless
the handler designates the dairy farmers whose milk is not producer
milk; and
   (4) Such milk shall be accounted for as received by the diverting
handler at the location of the nonpool plant to which diverted.

   Effective Date Note: At 53 FR 44854, Nov. 7, 1988, in 1099.13,
the provisions of paragraphs (c)(2) were suspended and in paragraph
(c)(3) the words "in his capacity as the operator of a pool
plant", "milk of a", "who is not a member of a cooperative association
diverting", "pursuant to paragraph (c)(2) of this section",
"at such plant", "such nonmember", "in any of the months of
April through August and December and 25 percent in other months"
and "nonmember" are suspended indefinitely, pending a hearing
to amend the order.

1099.14  Other source milk.

   Other source milk means all skim milk and butterfat contained
in or represented by:
   (a) Receipts of fluid milk products and bulk products specified
in 1099.40(b)(1) from any source other than producers, handlers
described in 1099.9(c), or pool plants;
   (b) Receipts in packaged form from other plants of products
specified in 1099.40(b)(1);
   (c) Products (other than fluid milk products, products specified
in 1099.40(b)(1), and products produced at the plant during
the same month) from any source which are reprocessed, converted
into, or combined with another product in the plant during the
month; and
   (d) Receipts of any milk product (other than a fluid milk
product or a product specified in 1099.40(b)(1)) for which
the handler fails to establish a disposition.

1099.15  Fluid milk product.

   (a) Except as provided in paragraph (b) of this section,
fluid milk product means any of the following products in fluid
or frozen form: Milk, skim milk, lowfat milk, milk drinks, buttermilk,
filled milk, and milkshake and ice milk mixes containing less
than 20 percent total solids, including any such products that
are flavored, cultured, modified with added nonfat milk solids,
concentrated (if in a consumer-type package), or reconstituted.
   (b) The term fluid milk product shall not include:
   (1) Evaporated or condensed milk (plain or sweetened), evaporated
or condensed skim milk (plain or sweetened), formulas especially
prepared for infant feeding or dietary use that are packaged
in hermetically sealed glass or all-metal containers, any product
that contains by weight less than 6.5 percent nonfat milk solids,
and whey; and
   (2) The quantity of skim milk in any modified product specified
in paragraph (a) of this section that is in excess of the quantity
of skim milk in an equal volume of an unmodified product of
the same nature and butterfat content.

1099.16  Fluid cream product.

   Fluid cream product means cream (other than plastic cream
or frozen cream), sour cream, or a mixture (including a cultured
mixture) of cream and milk or skim milk containing 9 percent
or more butterfat, with or without the addition of other ingredients.

1099.17  Filled milk.

   Filled milk means any combination of nonmilk fat (or oil)
with skim milk (whether fresh, cultured, reconstituted, or modified
by the addition of nonfat milk solids), with or without milkfat,
so that the product (including stabilizers, emulsifiers, or
flavoring) resembles milk or any other fluid product, and contains
less than 6 percent nonmilk fat (or oil).

1099.18  Cooperative association.

   Cooperative association means any cooperative marketing association
which the Secretary determines, after application by the association:
   (a) To be qualified under the provisions of the Act of Congress
of February 18, 1922, as amended, known as the "Capper-Volstead
Act"; and
   (b) To have full authority in the sale of milk of its members
and to be engaged in making collective sales of or marketing
milk or its products for its members.

1099.19  [Reserved]

1099.20  Product prices.

   The following product prices shall be used in calculating
the basic Class II formula price pursuant to 1099.51a:
   (a) Butter price. Butter price means the simple average,
for the first 15 days of the month, of the daily prices per
pound of Grade A (92-score) butter. The prices used shall be
those of the Chicago Mercantile Exchange as reported and published
weekly by the Dairy Division, Agricultural Marketing Service.
The average shall be computed by the Director of the Dairy Division,
using the price reported each week as the daily price for that
day and for each following work-day until the next price is
reported. A work-day is each Monday through Friday, except national
holidays. For any week that the Exchange does not meet to establish
a price, the price for the following week shall be the last
price that was established.
   (b) Cheddar cheese price. Cheddar cheese price means the
simple average, for the first 15 days of the month, of the daily
prices per pound of cheddar cheese in 40-pound blocks. The prices
used shall be those of the National Cheese Exchange (Green Bay,
WI), as reported and published weekly by the Dairy Division,
Agricultural Marketing Service. The average shall be computed
by the Director of the Dairy Division, using the price reported
each week as the daily price for that day and for each following
work-day until the next price is reported. A work-day is each
Monday through Friday, except national holidays. For any week
that the Exchange does not meet to establish a price, the price
for the following week shall be the last price that was established.
   (c) Nonfat dry milk price. Nonfat dry milk price means the
simple average, for the first 15 days of the month, of the daily
prices per pound of nonfat dry milk, which average shall be
computed by the Director of the Dairy Division as follows:
   (1) The prices used shall be the prices (using the midpoint
of any price range as one price) of high heat, low heat and
Grade A nonfat dry milk, respectively, for the Central States
production area, as reported and published weekly by the Dairy
Division, Agricultural Marketing Service.
   (2) For each week, determine the simple average of the prices
reported for the three types of nonfat dry milk. Such average
shall be the daily price for the day that such prices are reported
and for each preceding work-day until the day such prices were
previously reported. A work-day is each Monday through Friday
except national holidays.
   (3) Add the prices determined in paragraph (c)(2) of this
section for the first 15 days of the month and divide the number
of days for which there is a daily price.
   (d) Edible whey price. Edible whey price means the simple
average, for the first 15 days of the month, of the daily prices
per pound of edible whey powder (nonhygroscopic). The prices
used shall be the prices (using the midpoint of any price range
as one price) of edible whey powder for the Central States production
area, as reported and published weekly by the Dairy Division,
Agricultural Marketing Service. The average shall be computed
by the Director of the Dairy Division, using the price reported
each week as the daily price for that day and for each preceding
work-day until the day such price was previously reported. A
work-day is each Monday through Friday, except national holidays.

Handler Reports


1099.30  Reports of receipts and utilization.

   On or before the 6th day after the end of each month, each
handler shall report for such month to the market administrator,
in the detail and on the forms prescribed by the market administrator,
as follows:
   (a) Each handler, with respect to each of his pool plants,
shall report the quantities of skim milk and butterfat contained
in or represented by:
   (1) Receipts of producer milk, including producer milk diverted
by the handler from the pool plant to other plants;
   (2) Receipts of milk from handlers described in 1099.9(c);
   (3) Receipts of fluid milk products and bulk fluid cream
products from other pool plants;
   (4) Receipts of other source milk;
   (5) Inventories at the beginning and end of the month of
fluid milk products and products specified in 1099.40(b)(1);
and
   (6) The utilization or disposition of all milk, filled milk,
and milk products required to be reported pursuant to this paragraph.
   (b) Each handler operating a partially regulated distributing
plant shall report with respect to such plant in the same manner
as prescribed for reports required by paragraph (a) of this
section. Receipts of milk that would have been producer milk
if the plant had been fully regulated shall be reported in lieu
of producer milk. Such report shall show also the quantity of
any reconstituted skim milk in route disposition in the marketing
area.
   (c) Each handler described in 1099.9 (b) and (c) shall report:
   (1) The quantities of all skim milk and butterfat contained
in receipts of milk from producers; and
   (2) The utilization or disposition of all such receipts.
   (d) Each handler not specified in paragraphs (a) through
(c) of this section shall report with respect to his receipts
and utilization of milk, filled milk, and milk products in such
manner as the market administrator may prescribe.

1099.31  Payroll reports.

   (a) On or before the 20th day after the end of each month,
each handler described in 1099.9 (a), (b), and (c) shall report
to the market administrator his producer payroll for such month,
in the detail prescribed by the market administrator, showing
for each producer:
   (1) His name and address;
   (2) The total pounds of milk received from such producer;
   (3) The average butterfat content of such milk; and
   (4) The price per hundredweight, the gross amount due, the
amount and nature of any deductions, and the net amount paid.
   (b) Each handler operating a partially regulated distributing
plant who elects to make payment pursuant to 1099.76(b) shall
report for each dairy farmer who would have been a producer
if the plant had been fully regulated in the same manner as
prescribed for reports required by paragraph (a) of this section.

1099.32  Other reports.

   (a) On or before the 6th day after the end of each month,
each handler shall report to the market administrator, in the
detail and on forms prescribed by the market administrator,
as follows:
   (1) The name and address of each producer from whom milk
was not received during the previous months and the date on
which milk was first received from such producer; and
   (2) The name and address of each producer who discontinues
deliveries of milk and the date on which milk was last received
from such producer.
   (b) In addition to the reports required pursuant to paragraph
(a) of this section and 1099.30 and 1099.31, each handler
shall report such other information as the market administrator
deems necessary to verify or establish such handler's obligation
under the order.

Classification of Milk


1099.40  Classes of utilization.

   Except as provided in 1099.42, all skim milk and butterfat
required to be reported by a handler pursuant to 1099.30 shall
be classified as follows:
   (a) Class I milk. Class I milk shall be all skim milk and
butterfat:
   (1) Disposed of in the form of a fluid milk product, except
as otherwise provided in paragraphs (b) and (c) of this section;
and
   (2) Not specifically accounted for as Class II or Class III
milk.
   (b) Class II milk. Class II milk shall be all skim milk and
butterfat:
   (1) Disposed of in the form of a fluid cream product, eggnog,
yogurt, and any product containing 6 percent or more nonmilk
fat (or oil) that resembles a fluid cream product, eggnog, or
yogurt, except as otherwise provided in paragraph (c) of this
section;
   (2) In packaged inventory at the end of the month of the
products specified in paragraph (b)(1) of this section;
   (3) In bulk fluid milk products and bulk fluid cream products
disposed of to any commercial food processing establishment
(other than a milk or filled milk plant) at which food products
(other than milk products and filled milk) are processed and
from which there is no disposition of fluid milk products or
fluid cream products other than those received in consumer-type
packages; and
   (4) Used to produce:
   (i) Cottage cheese, lowfat cottage cheese, and dry curd cottage
cheese;
   (ii) Milkshake and ice milk mixes (or bases) containing 20
percent or more total solids, frozen desserts, and frozen dessert
mixes;
   (iii) Any concentrated milk product in bulk, fluid form other
than that specified in paragraph (c)(1)(iv) of this section;
   (iv) Plastic cream, frozen cream, and anhydrous milkfat;
   (v) Custards, puddings, and pancake mixes; and
   (vi) Formulas especially prepared for infant feeding or dietary
use that are packaged in hermetically sealed glass or all-metal
containers.
   (c) Class III milk. Class III milk shall be all skim milk
and butterfat:
   (1) Used to produce:
   (i) Cheese (other than cottage cheese, lowfat cottage cheese,
and dry curd cottage cheese);
   (ii) Butter;
   (iii) Any milk product in dry form;
   (iv) any concentrated milk product in bulk, fluid form that
is used to produce a Class III product;
   (v) Evaporated or condensed milk (plain or sweetened) in
a consumer-type package and evaporated or condensed skim milk
(plain or sweetened) in a consumer-type package; and
   (vi) Any product not otherwise specified in this section;
   (2) In inventory at the end of the month of fluid milk products
in bulk or packaged form and products specified in paragraph
(b)(1) of this section in bulk form;
   (3) In fluid milk products and products specified in paragraph
(b)(1) of this section that are disposed of by a handler for
animal feed;
   (4) In fluid milk products and products specified in paragraph
(b)(1) of this section that are dumped by a handler if the market
administrator is notified of such dumping in advance and is
given the opportunity to verify such disposition;
   (5) In skim milk in any modified fluid milk product that
is in excess of the quantity of skim milk in such product that
was included within the fluid milk product definition pursuant
to 1099.15; and
   (6) In shrinkage assigned pursuant to 1099.41(a) to the
receipts specified in 1099.41(a)(2) and in shrinkage specified
in 1099.41 (b) and (c).

1099.41   Shrinkage.

   For purposes of classifying all skim milk and butterfat to
be reported by a handler pursuant to 1099.30, the market administrator
shall determine the following:
   (a) The pro rata assignment of shrinkage of skim milk and
butterfat, respectively, at each pool plant to the respective
quantities of skim milk and butterfat:
   (1) In the receipts specified in paragraphs (b) (1) through
(6) of this section on which shrinkage is allowed pursuant to
such paragraph; and
   (2) In other source milk not specified in paragraphs (b)
(1) through (6) of this section which was received in the form
of a bulk fluid milk product or a bulk fluid cream product;
   (b) The shrinkage of skim milk and butterfat, respectively,
assigned pursuant to paragraph (a) of this section to the receipts
specified in paragraph (a)(1) of this section that is not in
excess of:
   (1) Two percent of the skim milk and butterfat, respectively,
in producer milk (excluding milk diverted by the plant operator
to another plant and milk received from a handler described
in 1099.9(c));
   (2) Plus 1.5 percent of the skim milk and butterfat, respectively,
in milk received from a handler described in 1099.9(c), except
that if the operator of the plant to which the milk is delivered
purchases such milk on the basis of weights determined from
its measurement at the farm and butterfat tests determined from
farm bulk tank samples, the applicable percentage under this
subparagraph shall be 2 percent;
   (3) Plus 0.5 percent of the skim milk and butterfat, respectively,
in producer milk diverted from such plant by the plant operator
to another plant, except that if the operator of the plant to
which the milk is delivered purchases such milk on the basis
of weights determined from its measurement at the farm and butterfat
tests determined from farm bulk tank samples, the applicable
percentage under this subparagraph shall be zero;
   (4) Plus 1.5 percent of the skim milk and butterfat, respectively,
in bulk fluid milk products received by transfer from other
pool plants;
   (5) Plus 1.5 percent of the skim milk and butterfat, respectively,
in bulk fluid milk products received by transfer from other
order plants, excluding the quantity for which Class II or Class
III classification is requested by the operators of both plants;
   (6) Plus 1.5 percent of the skim milk and butterfat, respectively,
in bulk fluid milk products received from unregulated supply
plants, excluding the quality for which Class II or Class III
classification is requested by the handler; and
   (7) Less 1.5 percent of the skim milk and butterfat, respectively,
in bulk fluid milk products transferred to other plants that
is not in excess of the respective amounts of skim milk and
butterfat to which percentages are applied in paragraphs (b)
(1), (2), (4), (5), and (6) of this section; and
   (c) The quantity of skim milk and butterfat, respectively,
in shrinkage of milk from producers for which a cooperative
association is the handler pursuant to 1099.9 (b) or (c), but
not in excess of 0.5 percent of the skim milk and butterfat,
respectively, in such milk. If the operator of the plant to
which the milk is delivered purchases such milk on the basis
of weights determined from its measurement at the farm and butterfat
tests determined from farm bulk tank samples, the applicable
percentage under this paragraph for the cooperative association
shall be zero.

1099.42   Classification of transfers and diversions.

   (a) Transfers to pool plants. Skim milk or butterfat transferred
in the form of a fluid milk product or a bulk fluid cream product
from a pool plant to another pool plant shall be classified
as Class I milk unless the operators of both plants request
the same classification in another class. In either case, the
classification of such transfers shall be subject to the following
conditions:
   (1) The skim milk or butterfat classified in each class shall
be limited to the amount of skim milk and butterfat, respectively,
remaining in such class at the transferee-plant after the computations
pursuant to 1099.44(a)(12) and the corresponding step of 1099.44(b);
   (2) If the transferor-plant received during the month other
source milk to be allocated pursuant to 1099.44(a)(7) or the
corresponding step of 1099.44(b), the skim milk or butterfat
so transferred shall be classified so as to allocate the least
possible Class I utilization to such other source milk; and
   (3) If the transferor-handler received during the month other
source milk to be allocated pursuant to 1099.44(a) (11) or
(12) or the corresponding steps of 1099.44(b), the skim milk
or butterfat so transferred, up to the total of the skim milk
and butterfat, respectively, in such receipts of other source
milk, shall not be classified as Class I milk to a greater extent
than would be the case if the other source milk had been received
at the transferee-plant.
   (b) Transfers and diversions to other order plants. Skim
milk or butterfat transferred or diverted in the form of a fluid
milk product or a bulk fluid cream product from a pool plant
to another order plant shall be classified in the following
manner. Such classification shall apply only to the skim milk
or butterfat that is in excess of any receipts at the pool plant
from the other order plant of skim milk and butterfat, respectively,
in fluid milk products and bulk fluid cream products, respectively,
that are in the same category as described in paragraph (b)
(1), (2), or (3) of this section:
   (1) If transferred as packaged fluid milk products, classification
shall be in the classes to which allocated as a fluid milk product
under the other order:
   (2) If transferred in bulk form, classification shall be
in the classes to which allocated under the other order (including
allocation under the conditions set forth in paragraph (b)(3)
of this section);
   (3) If the operators of both plants so request in their reports
of receipts and utilization filed with their respective market
administrators, transfers or diversions in bulk form shall be
classified as Class II or Class III milk to the extent of such
utilization available for such classification pursuant to the
allocation provisions of the other order;
   (4) If information concerning the classes to which such transfers
or diversions were allocated under the other order is not available
to the market administrator for the purpose of establishing
classification under this paragraph, classification shall be
as Class I, subject to adjustment when such information is available;
   (5) For purposes of this paragraph, if the other order provides
for a different number of classes of utilization than is provided
for under this part, skim milk or butterfat allocated to a class
consisting primarily of fluid milk products shall be classified
as Class I milk, and skim milk or butterfat allocated to the
other classes shall be classified as Class III milk; and
   (6) If the form in which any fluid milk product that is transferred
to an other order plant is not defined as a fluid milk product
under such other order, classification under this paragraph
shall be in accordance with the provisions of 1099.40.
   (c) Transfers to producer-handlers. Skim milk or butterfat
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
   (1) As Class I milk, if transferred in the form of a fluid
milk product; and
   (2) In accordance with the utilization assigned to it by
the market administrator, if transferred in the form of a bulk
fluid cream product. For this purpose, the producer-handler's
utilization of skim milk and butterfat in each class, in series
beginning with Class III, shall be assigned to the extent possible
to his receipts of skim milk and butterfat, respectively, in
bulk fluid cream products, pro rata to each source.
   (d) Transfers and diversions to other nonpool plants. Skim
milk or butterfat transferred or diverted in the following forms
from a pool plant to a nonpool plant that is not an other order
plant or a producer-handler plant shall be classified:
   (1) As Class I milk, if transferred in the form of a packaged
fluid milk product; and
   (2) As Class I milk, if transferred or diverted in the form
of a bulk fluid milk product or a bulk fluid cream product,
unless the following conditions apply:
   (i) If the conditions described in paragraphs (d)(2)(i) (a)
and (b) of this section are met, transfers or diversions in
bulk form shall be classified on the basis of the assignment
of the nonpool plant's utilization to its receipts as set forth
in paragraphs (d)(2) (ii) through (viii) of this section:
   (a) The transferor-handler or divertor-handler claims such
classification in his report of receipts and utilization filed
pursuant to 1099.30 for the month within which such transaction
occurred; and
   (b) The nonpool plant operator maintains books and records
showing the utilization of all skim milk and butterfat received
at such plant which are made available for verification purposes
if requested by the market administrator;
   (ii) Route disposition in the marketing area of each Federal
milk order from the nonpool plant and transfers of packaged
fluid milk products from such nonpool plant to plants fully
regulated thereunder shall be assigned to the extent possible
in the following sequence:
   (a) Pro rata to receipts of packaged fluid milk products
at such nonpool plant from pool plants;
   (b) Pro rata to any remaining unassigned receipts of packaged
fluid milk products at such nonpool plant from other order plants;
   (c) Pro rata to receipts of bulk fluid milk products at such
nonpool plant from pool plants; and
   (d) Pro rata to any remaining unassigned receipts of bulk
fluid milk products at such nonpool plant from other order plants;
   (iii) Any remaining Class I disposition of packaged fluid
milk products from the nonpool plant shall be assigned to the
extent possible pro rata to any remaining unassigned receipts
of packaged fluid milk products at such nonpool plant from pool
plants and other order plants;
   (iv) Transfers of bulk fluid milk products from the nonpool
plant to a plant fully regulated under any Federal milk order,
to the extent that such transfers to the regulated plant exceed
receipts of fluid milk products from such plant and are allocated
to Class I at the transferee-plant, shall be assigned to the
extent possible in the following sequence;
   (a) Pro rata to receipts of fluid milk products at such nonpool
plant from pool plants; and
   (b) Pro rata to any remaining unassigned receipts of fluid
milk products at such nonpool plant from other order plants;
   (v) Any remaining unassigned Class I disposition from the
nonpool plant shall be assigned to the extent possible in the
following sequence:
   (a) To such nonpool plant's receipts from dairy farmers who
the market administrator determines constitute regular sources
of Grade A milk for such nonpool plant; and
   (b) To such nonpool plant's receipts of Grade A milk from
plants not fully regulated under any Federal milk order which
the market administrator determines constitute regular sources
of Grade A milk for such nonpool plant;
   (vi) Any remaining unassigned receipts of bulk fluid milk
products at the nonpool plant from pool plants and other order
plants shall be assigned, pro rata among such plants, to the
extent possible first to any remaining Class I utilization,
then to Class III utilization, and then to Class II utilization
at such nonpool plant;
   (vii) Receipts of bulk fluid cream products at the nonpool
plant from pool plants and other order plants shall be assigned,
pro rata among such plants, to the extent possible first to
any remaining Class III utilization, then to any remaining Class
II utilization, and then to Class I utilization at such nonpool
plant; and
   (viii) In determining the nonpool plant's utilization for
purposes of this subparagraph, any fluid milk products and bulk
fluid cream products transferred from such nonpool plant to
a plant not fully regulated under any Federal milk order shall
be classified on the basis of the second plant's utilization
using the same assignment priorities at the second plant that
are set forth in this subparagraph.

1099.43  General classification rules.

   In determining the classification of producer milk pursuant
to 1099.44, the following rules shall apply:
   (a) Each month the market administrator shall correct for
mathematical and other obvious errors all reports filed pursuant
to 1099.30 and shall compute separately for each pool plant
and for each cooperative association with respect to milk for
which it is the handler pursuant to 1099.9(b) or (c) the pounds
of skim milk and butterfat, respectively, in each class in accordance
with 1099.40, 1099.41, and 1099.42;
   (b) If any of the water contained in the milk from which
a product is made is removed before the product is utilized
or disposed of by a handler, the pounds of skim milk in such
product that are to be considered under this part as used or
disposed of by the handler shall be an amount equivalent to
the nonfat milk solids contained in such product plus all of
the water originally associated with such solids; and
   (c) The classification of producer milk for which a cooperative
association is the handler pursuant to 1099.9 (b) or (c) shall
be determined separately from the operations of any pool plant
operated by such cooperative association.

1099.44  Classification of producer milk.

   For each month the market administrator shall determine the
classification of producer milk of each handler described in
1099.9(a) for each of his pool plants separately and of each
handler described in 1099.9 (b) and (c) by allocating the handler's
receipts of skim milk and butterfat to his utilization as follows:
   (a) Skim milk shall be allocated in the following manner:
   (1) Subtract from the total pounds of skim milk in Class
III the pounds of skim milk in shrinkage specified in 1099.41(b);
   (2) Subtract from the total pounds of skim milk in Class
I the pounds of skim milk in receipts of packaged fluid milk
products from an unregulated supply plant to the extent that
an equivalent amount of skim milk disposed of to such plant
by handlers fully regulated under any Federal milk order is
classified and priced as Class I milk and is not used as an
offset for any other payment obligation under any order;
   (3) Subtract from the pounds of skim milk remaining in each
class the pounds of skim milk in fluid milk products received
in packaged form from another order plant, except that to be
subtracted pursuant to paragraph (a)(7)(vi) of this section,
as follows:
   (i) From Class III milk, the lesser of the pounds remaining
or 2 percent of such receipts; and
   (ii) From Class I milk, the remainder of such receipts;
   (4) Subtract from the pounds of skim milk in Class II the
pounds of skim milk in products specified in 1099.40(b)(1)
that were received in packaged form from other plants, but not
in excess of the pounds of skim milk remaining in Class II;
   (5) Subtract from the remaining pounds of skim milk in Class
II the pounds of skim milk in products specified in 1099.40(b)(1)
that were in inventory at the beginning of the month in packaged
form, but not in excess of the pounds of skim milk remaining
in Class II. This subparagraph shall apply only if the pool
plant was subject to the provisions of this subparagraph or
comparable provisions of another Federal milk order in the immediately
preceding month;
   (6) Subtract from the remaining pounds of skim milk in Class
II the pounds of skim milk in other source milk (except that
received in the form of a fluid milk product or a fluid cream
product) that is used to produce, or added to, any product specified
in 1099.40(b), but not in excess of the pounds of skim milk
remaining in Class II;
   (7) Subtract in the order specified below from the pounds
of skim milk remaining in each class, in series beginning with
Class III, the pounds of skim milk in each of the following:
   (i) Other source milk (except that received in the form of
a fluid milk product) and, if paragraph (a)(5) of this section
applies, packaged inventory at the beginning of the month of
products specified in 1099.40(b)(1) that was not subtracted
pursuant to paragraphs (a) (4), (5), and (6) of this section;
   (ii) Receipts of fluid milk products (except filled milk)
for which Grade A certification is not established;
   (iii) Receipts of fluid milk products from unidentified sources;
   (iv) Receipts of fluid milk products from a producer-handler
as defined under this or any other Federal milk order;
   (v) Receipts of reconstituted skim milk in filled milk from
an unregulated supply plant that were not subtracted pursuant
to paragraph (a)(2) of this section; and
   (vi) Receipts of reconstituted skim milk in filled milk from
an other order plant that is regulated under any Federal milk
order providing for individual-handler pooling, to the extent
that reconstituted skim milk is allocated to Class I at the
transferor-plant;
   (8) Subtract in the order specified below from the pounds
of skim milk remaining in Class II and Class III, in sequence
beginning with Class III:
   (i) The pounds of skim milk in receipts of fluid milk products
from an unregulated supply plant that were not subtracted pursuant
to paragraphs (a)(2) and (7)(v) of this section for which the
handler requests a classification other than Class I, but not
in excess of the pounds of skim milk remaining in Class II and
Class III combined;
   (ii) The pounds of skim milk in receipts of fluid milk products
from an unregulated supply plant that were not subtracted pursuant
to paragraphs (a)(2), (7)(v), and (8)(i) of this section which
are in excess of the pounds of skim milk determined pursuant
to paragraphs (a)(8)(ii) (a) through (c) of this section. Should
the pounds of skim milk to be subtracted from Class II and Class
III combined exceed the pounds of skim milk remaining in such
classes, the pounds of skim milk in Class II and Class III combined
shall be increased (increasing as necessary Class III and then
Class II to the extent of available utilization in such classes
at the nearest other pool plant of the handler, and then at
each successively more distant pool plant of the handler) by
an amount equal to such excess quantity to be subtracted, and
the pounds of skim milk in Class I shall be decreased by a like
amount. In such case, the pounds of skim milk remaining in each
class at this allocation step at the handler's other pool plants
shall be adjusted in the reverse direction by a like amount:
   (a) Multiply by 1.25 the sum of the pounds of skim milk remaining
in Class I at this allocation step at all pool plants of the
handler (excluding any duplication of Class I utilization resulting
from reported Class I transfers between pool plants of the handler);
   (b) Subtract from the above result the sum of the pounds
of skim milk in receipts at all pool plants of the handler of
producer milk, fluid milk products from pool plants of other
handlers, and bulk fluid milk products from other order plants
that were not subtracted pursuant to paragraph (a)(7)(vi) of
this section; and
   (c) Multiply any plus quantity resulting above by the percentage
that the receipts of skim milk in fluid milk products from unregulated
supply plants that remain at this pool plant is of all such
receipts remaining at this allocation step at all pool plants
of the handler; and
   (iii) The pounds of skim milk in receipts of bulk fluid milk
products from an other order plant that are in excess of bulk
fluid milk products transferred or diverted to such plant and
that were not subtracted pursuant to paragraph (a)(7)(vi) of
this section, if Class II or Class III classification is requested
by the operator of the other order plant and the handler, but
not in excess of the pounds of skim milk remaining in Class
II and Class III combined;
   (9) Subtract from the pounds of skim milk remaining in each
class, in series beginning with Class III, the pounds of skim
milk in Class III the pounds of skim milk in fluid milk products
and products specified in 1099.40(b)(1) in inventory at the
beginning of the month that were not subtracted pursuant to
paragraphs (a)(5) and (7)(i) of this section;
   (10) Add to the remaining pounds of milk subtracted pursuant
to paragraph (a)(1) of this section:
   (11) Subject to the provisions of paragraphs (a)(11)(i) and
(ii) of this section, subtract from the pounds of skim milk
remaining in each class at the plant, pro rata to the total
pounds of skim milk remaining in Class I and in Class II and
Class III combined at this allocation step at all pool plants
of the handler (excluding any duplication of utilization in
each class resulting from transfers between pool plants of the
handler), with the quantity prorated to Class II and Class III
combined being subtracted first from Class III and then from
Class II, the pounds of skim milk in receipts of fluid milk
products from an unregulated supply plant that were not subtracted
pursuant to paragraphs (a)(2), (7)(v), and (8)(i) and (ii) of
this section and that were not offset by transfers or diversions
of fluid milk products to the same unregulated supply plant
from which fluid milk products to be allocated at this step
were received:
   (i) Should the pounds of skim milk to be subtracted from
Class II and Class III combined pursuant to this subparagraph
exceed the pounds of skim milk remaining in such classes, the
pounds of skim milk in Class II and Class III combined shall
be increased (increasing as necessary Class III and then Class
II to the extent of available utilization in such classes at
the nearest other pool plant of the handler, and then at each
successively more distant pool plant of the handler) by an amount
equal to such excess quantity to be subtracted, and the pounds
of skim milk in Class I shall be decreased by a like amount.
In such case, the pounds of skim milk remaining in each class
at this allocation step at the handler's other pool plants shall
be adjusted in the reverse direction by a like amount; and
   (ii) Should the pounds of skim milk to be subtracted from
Class I pursuant to this subparagraph exceed the pounds of skim
milk remaining in such class, the pounds of skim milk in Class
I shall be increased by an amount equal to such excess quantity
to be subtracted, and the pounds of skim milk in Class II and
Class III combined shall be decreased by a like amount (decreasing
as necessary Class III and then Class II). In such case, the
pounds of skim milk remaining in each class at this allocation
step at the handler's other pool plants shall be adjusted in
the reverse direction by a like amount, beginning with the nearest
plant at which Class I utilization is available.
   (12) Subtract in the manner specified below from the pounds
of skim milk remaining in each class the pounds of skim milk
in receipts of bulk fluid milk products from another order plant
that are in excess of bulk fluid milk products transferred or
diverted to such plant and that were not subtracted pursuant
to paragraphs (a)(7)(vi) and (8)(iii) of this section:
   (i) Subject to the provisions of paragraphs (a)(12) (ii),
(iii), and (iv) of this section, such subtraction shall be pro
rata to the pounds of skim milk in Class I and in Class II and
Class III combined, with the quantity prorated to Class II and
Class III combined being subtracted first from Class III and
then from Class II, with respect to whichever of the following
quantities represents the lower proportion of Class I milk:
   (a) The estimated utilization of skim milk of all handlers
in each class as announced for the month pursuant to 1099.45(a);
or
   (b) The total pounds of skim milk remaining in each class
at this allocation step at all pool plants of the handler (excluding
any duplication of utilization in each class resulting from
transfers between pool plants of the handler);
   (ii) Should the proration pursuant to paragraph (a)(12)(i)
of this section result in the total pounds of skim milk at all
pool plants of the handler that are to be subtracted at this
allocation step from Class II and Class III combined exceeding
the pounds of skim milk remaining in Class II and Class III
at all such plants, the pounds of such excess shall be subtracted
from the pounds of skim milk remaining in Class I after such
proration at the pool plants at which such other source milk
was received;
   (iii) Except as provided in paragraph (a)(12)(ii) of this
section, should the computations pursuant to paragraph (a)(12)
(i) or (ii) of this section result in a quantity of skim milk
to be subtracted from Class II and Class III combined that exceeds
the pounds of skim milk remaining in such classes, the pounds
of skim milk in Class II and Class III combined shall be increased
(increasing as necessary Class III and then Class II to the
extent of available utilization in such classes at the nearest
other pool plant of the handler, and then at each successively
more distant pool plant of the handler) by an amount equal to
such excess quantity to be subtracted, and the pounds of skim
milk in Class I shall be decreased by a like amount. In such
case, the pounds of skim milk remaining in each class at this
allocation step at the handler's other pool plants shall be
adjusted in the reverse direction by a like amount; and
   (iv) Except as provided in paragraph (a)(12)(ii) of this
section, should the computations pursuant to paragraph (a)(12)
(i) or (ii) of this section result in a quantity of skim milk
to be subtracted from Class I that exceeds the pounds of skim
milk remaining in such class, the pounds of skim milk in Class
I shall be increased by an amount equal to such excess quantity
to be subtracted, and the pounds of skim milk in Class II and
Class III combined shall be decreased by a like amount (decreasing
as necessary Class III and then Class II). In such case, the
pounds of skim milk remaining in each class at this allocation
step at the handler's other pool plants shall be adjusted in
the reverse direction by a like amount beginning with the nearest
plant at which Class I utilization is available;
   (13) Subtract from the pounds of skim milk remaining in each
class the pounds of skim milk in receipts of fluid milk products
and bulk fluid cream products from another pool plant according
to the classification of such products pursuant to 1099.42(a);
and
   (14) If the total pounds of skim milk remaining in all classes
exceed the pounds of skim milk in producer milk, subtract such
excess from the pounds of skim milk remaining in each class
in series beginning with Class III. Any amount so subtracted
shall be known as "overage";
   (b) Butterfat shall be allocated in accordance with the procedure
outlined for skim milk in paragraph (a) of this section; and
   (c) The quantity of producer milk in each class shall be
the combined pounds of skim milk and butterfat remaining in
each class after the computations pursuant to paragraph (a)(14)
of this section and the corresponding step of paragraph (b)
of this section.

1099.45  Market administrator's reports and announcements concerning
classification.

   The market administrator shall make the following reports
and announcements concerning classification:
   (a) Whenever required for the purpose of allocating receipts
from other order plants pursuant to 1099.44(a)(12) and the
corresponding step of 1099.44(b), estimate and publicly announce
the utilization (to the nearest whole percentage) in each class
during the month of skim milk and butterfat, respectively, in
producer milk of all handlers. Such estimate shall be based
upon the most current available data and shall be final for
such purpose.
   (b) Report to the market administrator of the other order,
as soon as possible after the report of receipts and utilization
for the month is received from a handler who has received fluid
milk products or bulk fluid cream products from an other order
plant, the class to which such receipts are allocated pursuant
to 1099.44 on the basis of such report, and, thereafter, any
change in such allocation required to correct errors disclosed
in the verification of such report.
   (c) Furnish to each handler operating a pool plant who has
shipped fluid milk products or bulk fluid cream products to
an other order plant the class to which such shipments were
allocated by the market administrator of the other order on
the basis of the report by the receiving handler, and, as necessary,
any changes in such allocation arising from the verification
of such report.
   (d) Upon request, report, on or before the 25th day after
the end of each month, to each cooperative association described
in 1099.86(b) the percentage of milk which was caused to be
delivered by such association or by its members and which was
used in each class by each handler receiving any such milk.
For the purpose of this report the milk so received shall be
prorated to each class in the proportion that the total receipts
of milk from producers by such handler were used in each class.

Class Prices


1099.50  Class prices.

   Subject to the provisions of 1099.52, the class prices for
the month per hundredweight of milk containing 3.5 percent butterfat
shall be as follows:
   (a) Class I price. From the effective date hereof through
April 30, 1988, and thereafter until amended, the Class I price
shall be the basic formula price for the second preceding month
plus $2.39.
   (b) Class II price. The Class II price shall be computed
by the Director of the Dairy Division and transmitted to the
market administrator on or before the 15th day of the preceding
month. The Class II price shall be the basic Class II formula
price computed pursuant to 1099.51a for the month plus the
amount that the value computed pursuant to paragraph (b)(1)
of this section exceeds the value computed pursuant to paragraph
(b)(2) of this section, plus any amount by which the basic Class
II formula price for the second preceding month, adjusted pursuant
to paragraphs (b)(1) and (b)(2) of this section, was less than
the Class III price for the second preceding month.
   (1) Determine for the most recent 12-month period the simple
average (rounded to the nearest cent) of the basic formula prices
computed pursuant to 1099.51 and add 10 cents; and
   (2) Determine for the same 12-month period as specified in
paragraph (b)(1) of this section the simple average (rounded
to the nearest cent) of the basic Class II formula prices computed
pursuant to 1099.51a.
   (c) Class III price. The Class III price shall be the basic
formula price for the month.

1099.51  Basic formula price.

   The basic formula price shall be the average price per hundredweight
for manufacturing grade milk, f.o.b. plants in Minnesota and
Wisconsin, as reported by the Department for the month, adjusted
to a 3.5 percent butter-fat basis and rounded to the nearest
cent. For such adjustment, the butterfat differential pursuant
to 1099.74 shall be used.

1099.51a  Basic Class II formula price.

   The basic Class II formula price for the month shall be the
basic formula price determined pursuant to 1099.51 for the
second preceding month plus or minus the amount computed pursuant
to paragraphs (a) through (d) of this section:
   (a) The gross values per hundredweight of milk used to manufacture
cheddar cheese and butter-nonfat dry milk shall be computed,
using price data determined pursuant to 1099.20 and yield factors
in effect under the Diary Price Support Program authorized by
the Agricultural Act of 1949, as amended, for the first 15 days
of the preceding month and, separately, for the first 15 days
of the second preceding month as follows:
   (1) The gross value of milk used to manufacture cheddar cheese
shall be the sum of the following computations:
   (i) Multiply the cheddar cheese price by the yield factor
used under the Price Support Program for cheddar cheese;
   (ii) Multiply the butter price by the yield factor used under
the Price Support Program for determining the butterfat component
of the whey value in the cheese price computation; and
   (iii) Subtract from the edible whey price the processing
cost used under the Price Support Program for edible whey and
multiply any positive difference by the yield factor under the
Price Support Program for edible whey.
   (2) The gross value of milk used to manufacture butter-nonfat
dry milk shall be the sum of the following computations:
   (i) Multiply the butter price by the yield factor used under
the Price Support Program for butter; and
   (ii) Multiply the nonfat dry milk price by the yield factor
used under the Price Support Program for nonfat dry milk.
   (b) Determine the amounts by which the gross value per hundredweight
of milk used to manufacture cheddar cheese and the gross value
per hundredweight of milk used to manufacture butter-nonfat
dry milk for the first 15 days of the preceding month exceed
or are less than the respective gross values for the first 15
days of the second preceding month.
   (c) Compute weighting factors to be applied to the changes
in gross values determined pursuant to paragraph (b) of this
section by determining the relative proportion that the data
included in each of the following subparagraphs is of the total
of the data represented in paragraphs (c) (1) and (2) of this
section:
   (1) Combine the total American cheese production for the
States of Minnesota and Wisconsin, as reported by the Economics
and Statistics Service of the Department for the third preceding
month, and divide by the yield factor used under the Price Support
Program for cheddar cheese to determine the quantity of milk
used in the production of American cheddar cheese; and
   (2) Combine the total nonfat dry milk production for the
States of Minnesota and Wisconsin, as reported by the Economics
and Statistics Service of the Department for the third preceding
month, and divide by the yield factor used under the Price Support
Program for nonfat dry milk to determine the quantity of milk
used in the production of butter-nonfat dry milk.

   Note: The computation of the basic Class II formula price
is affected by a determination document published on September
6, 1984, 49 FR 35078.

   (d) Compute a weighted average of the changes in gross values
per hundredweight of milk determined pursuant to paragraph (b)
of this section in accordance with the relative proportions
of milk determined pursuant to paragraph (c) of this section.

1099.52  Plant location adjustments for handlers.

   (a) For milk received from producers at a plant located outside
the State of Kentucky and north of an east-west line running
through the southern boundary of the State of Kentucky and more
than 40 miles by shortest highway distance as measured by the
market administrator, from the nearest County Courthouse in
any of the counties included in the marketing area and disposed
of as Class I milk or assigned Class I location adjustment credit
pursuant to paragraph (b) of this section, the price computed
pursuant to 1099.50(a) shall be reduced by 12.5 cents, plus
2.5 cents for each 10 miles or fraction thereof that such distance
exceeds 50 miles.
   (b) For purposes of calculating such adjustment, transfers
between pool plants shall be assigned Class I disposition at
the transferee-plant, in excess of the sum of 95 percent of
the receipts at such plant from producers and handlers described
in 1099.9(c), and the volume assigned as Class I to receipts
from other order plants (and unregulated supply plants) such
assignment to be made first to transferor-plants at which no
location adjustment credit is applicable and then in sequence
beginning with the plant at which the least location adjustment
would apply.
   (c) The Class I price applicable to other source milk shall
be adjusted at the rates set forth in paragraph (a) of this
section, except that the adjusted Class I price shall not be
less than the Class III price.

1099.53   Announcement of class prices.

   The market administrator shall announce publicly on or before
the fifth day of each month the Class I price for the following
month, the Class III price for the preceding month, and on or
before the 15th day of each month the Class II price for the
following month computed pursuant to 1099.50(b).

Uniform Price


1099.60  Handler's value of milk for computing uniform price.

   For the purpose of computing the uniform price, the market
administrator shall determine for each month the value of milk
of each handler with respect to each of his pool plants and
of each handler described in 1099.9 (b) and (c) as follows:
   (a) Multiply the pounds of producer milk in each class as
determined pursuant to 1099.44 by the applicable class prices
and add the resulting amounts;
   (b) Add the amounts obtained from multiplying the pounds
of overage subtracted from each class pursuant to 1099.44(a)(14)
and the corresponding step of 1099.44(b) by the respective
class prices, as adjusted by the butterfat differential specified
in 1099.74, that are applicable at the location of the pool
plant;
   (c) Add the amount obtained from multiplying the difference
between the Class III price for the preceding month and the
Class I price applicable at the location of the pool plant or
the Class II price, as the case may be, for the current month
by the hundredweight of skim milk and butterfat subtracted from
Class I and Class II pursuant to 1099.44(a)(9) and the corresponding
step of 1099.44(b);
   (d) Add the amount obtained from multiplying the difference
between the Class I price applicable at the location of the
pool plant and the Class III price by the hundredweight of skim
milk and butterfat subtracted from Class I pursuant to 1099.44(a)(7)
(i) through (iv) and the corresponding step of 1099.44(b),
excluding receipts of bulk fluid cream products from another
order plant;
   (e) Add the amount obtained from multiplying the difference
between the Class I price applicable at the location of the
transferor-plant and the Class III price by the hundredweight
of skim milk and butterfat subtracted from Class I pursuant
to 1099.44(a)(7) (v) and (vi) and the corresponding step of
1099.44(b); and
   (f) Add the amount obtained from multiplying the Class I
price applicable at the location of the nearest unregulated
supply plants from which an equivalent volume was received by
the pounds of skim milk and butterfat subtracted from Class
I pursuant to 1099.44(a)(11) and the corresponding step of
1099.44(b), excluding such skim milk and butterfat in receipts
of bulk fluid milk products from an unregulated supply plant
to the extent that an equivalent amount of skim milk or butterfat
disposed of to such plant by handlers fully regulated under
any Federal milk order is classified and priced as Class I milk
and is not used as an offset for any other payment obligation
under any order.
   (g) With respect to milk marketed on and after the effective
date hereof, through February 1985, subtract the amount obtained
by multiplying the pounds of bulk fluid milk products that were
transferred to the handler's pool plant from another order plant
and allocated to Class I milk, by a rate equal to 3.3 cents
per hundredweight for each 10 miles or fraction thereof, less
any difference (positive only) between the Class I differential
applicable at the receiving plant less the Class I differential
applicable at the shipping plant.

1099.61   Computation of uniform price (including weighted
average price).

   For each month, the market administrator shall compute the
uniform price per hundredweight of milk of 3.5 percent butterfat
content, f.o.b. market, received from producers as follows:
   (a) Combine into one total the values computed pursuant to
1099.60 for all handlers who filed the reports prescribed by
1099.30 for the month and who made the payments pursuant to
1099.71 and 1099.73 for the preceding month;
   (b) Add an amount equivalent to the sum of the net deductions
(reductions less increases) for location adjustments to be made
from producer payments pursuant to 1099.75;
   (c) Add an amount equivalent to one-half the unobligated
balance in the producer-settlement fund;
   (d) Divide the resulting amount by the sum of the following
for all handlers included in these computations:
   (1) The total hundredweight of producer milk; and
   (2) The total hundredweight for which a value is computed
pursuant to 1099.60(f);
   (e) Subtract not less than 4 cents nor more than 5 cents
from the amount computed pursuant to paragraph (d) of this section.
The resulting figure shall be the "weighted average price,"
and, the "uniform price" for milk received from producers.

1099.62   Announcement of uniform price and butterfat differential.

   The market administrator shall announce publicly on or before:
   (a) The fifth day after the end of each month the butterfat
differential for such month; and
   (b) The 10th day after the end of each month the uniform
price for such month.

Payments for Milk


1099.70   Producer-settlement fund.

   The market administrator shall establish and maintain a separate
fund, known as the "producer-settlement fund", which shall function
as follows:
   (a) All payments made by handlers, pursuant to 1099.71
1099.76, and 1099.77 shall be deposited in this fund, and all
payments made pursuant to 1099.72 and 1099.77 shall be made
from this fund: Provided, That payments due to any handler shall
be offset by payments due from such handler.

1099.71   Payments to the producer-settlement fund.

   (a) On or before the 12th day after the end of the month,
each handler shall pay to the market administrator the amount,
if any, by which the amount specified in paragraph (a)(1) of
this section exceeds the amount specified in paragraph (a)(2)
of this section:
   (1) The total value of milk of the handler for such month
as determined pursuant to 1099.60.
   (2) The sum of:
   (i) The value at the uniform price, as adjusted pursuant
to 1099.75, of such handler's receipts of producer milk; and
   (ii) The value at the weighted average price applicable at
the location of the plant from which received of other source
milk for which a value is computed pursuant to 1099.60(f).
   (b) On or before the 25th day after the end of the month
each person who operated an other order plant that was regulated
during such month under an order providing for individual-handler
pooling shall pay to the market administrator an amount computed
as follows:
   (1) Determine the quantity of reconstituted skim milk in
filled milk in route disposition from such plant in the marketing
area which was allocated to Class I at such plant. If there
is such route disposition from such plant in marketing areas
regulated by two or more marketwide pool orders, the reconstituted
skim milk allocated to Class I shall be prorated to each order
according to such route disposition in each marketing area;
and
   (2) Compute the value of the reconstituted skim milk assigned
in paragraph (b)(1) of this section to route disposition in
this marketing area by multiplying the quantity of such skim
milk by the difference between the Class I price under this
part that is applicable at the location of the other order plant
(but not to be less than the Class III price) and the Class
III price.

1099.72   Payments from the producer-settlement fund.

   On or before the 13th day after the end of each month the
market administrator shall pay to each handler the amount, if
any, by which the amount computed pursuant to 1099.71(a)(2)
exceeds the amount computed pursuant to 1099.71(a)(1). If at
such time the balance in the producer-settlement fund is insufficient
to make all payments pursuant to this section, the market administrator
shall reduce uniformly such payments and shall complete such
payments as soon as the appropriate funds are available.

1099.73   Payments to producers and to cooperative associations.

   (a) Except as provided in paragraph (b) of this section,
each handler operating a pool plant shall make payment to each
producer from whom milk is received during the month as follows:
   (1) On or before the last day of each month to each such
producer who did not discontinue shipping milk to such handler
before the 25th day of the month, an amount equal to not less
than the Class III price for the preceding month multiplied
by the hundredweight of milk received from such producer during
the first 15 days of the month, less proper deductions authorized
by such producer to be made from payments due pursuant to this
subparagraph;
   (2) On or before the 17th day of the following month, an
amount equal to not less than the uniform price, as adjusted
pursuant to 1099.74 and 1099.75, multiplied by the hundredweight
of milk received from such producer during the month, subject
to the following adjustments: (i) Less payments made to such
producer pursuant to paragraph (a)(1) of this section, (ii)
less deductions for marketing services made pursuant to 1099.86,
(iii) plus or minus adjustments for errors made in previous
payments made to such producer, and (iv) less proper deductions
authorized in writing by such producer: Provided, That if by
such date such handler has not received full payment pursuant
to 1099.72 from the market administrator for such month, he
may reduce pro rata his payments to producers by not more than
the amount of such underpayment. Payments to producers shall
be completed thereafter not later than the date for making payments
pursuant to this paragraph next following after the receipt
of the balance due from the market administrator;
   (b) In the case of a cooperative association qualified pursuant
to 1099.18 which has so requested any handler in writing, such
handler shall on or before the third day prior to the date on
which payments are due individual producers pursuant to paragraph
(a) of this section pay the cooperative association for milk
received during the month from the producer members of such
association an amount equal to not less than the amount due
such producer members pursuant to paragraph (a) of this section:
Provided, That the proper deductions referred to in paragraphs
(a)(1) and (2)(iv) of this section shall be valid in the case
of cooperative members only if authorized in writing by such
cooperative;
   (c) Each handler shall also make payment to a cooperative
association delivering milk to such handler pursuant to 1099.9(c)
for milk so delivered as follows:
   (1) On or before the 25th day of the month an amount equal
to not less than the Class III price for the preceding month
multiplied by the hundredweight of milk so received from such
cooperative association during the first 15 days of the month,
less proper deductions authorized in writing by the cooperative
association;
   (2) On or before the 14th day of the following month not
less than the uniform price, as adjusted pursuant to 1099.74
and 1099.75, multiplied by the hundredweight of milk so received
from the cooperative association during the month, subject to
the following adjustments: (i) Less payments made to such cooperative
association pursuant to paragraph (c)(1) of this section, and
(ii) Less proper deductions authorized in writing by such cooperative
association: Provided, That if by such date the handler has
not received full payment pursuant to 1099.72 from the market
administrator for such month, he may reduce pro rata his payments
on such milk as in the case of payments to producers pursuant
to paragraph (a) of this section, and payments hereunder shall
be completed not later than the date for making payments pursuant
to this subparagraph next following the receipt of the balance
due from the market administrator;
   (d) On or before the 14th day of the following month each
handler shall pay to a cooperative association, with respect
to such milk as was received from the association in its capacity
as a handler operating a pool plant during the month not less
than the value of such milk at the class prices, as adjusted
by the butterfat differential specified in 1099.74, that are
applicable at the location of the handler's pool plant; and
   (e) Each handler who receives producer milk for which payment
is to be made to a cooperative association pursuant to paragraph
(b) of this section shall report to such cooperative association
with respect to each such producer as follows:
   (1) On or before the 28th day of the month, the total pounds
of milk received during the first 15 days of such month; and
   (2) On or before the 7th day of the following month (i) the
pounds of milk received each day and the total for the month
together with the butterfat content of such milk, (ii) the amount
or rate and nature of any deductions, and (iii) the amount and
nature of payments due pursuant to 1099.77.

1099.74  Butterfat differential.

   For milk containing more or less than 3.5 percent butterfat,
the uniform price shall be increased or decreased, respectively,
for each one-tenth percent butterfat variation from 3.5 percent
by a butterfat differential, rounded to the nearest one-tenth
cent, which shall be 0.138 times the butter price less 0.0028
times the average price per hundredweight, at test, for manufacturing
grade milk, f.o.b. plants in Minnesota and Wisconsin, as reported
by the Department for the month. The butter price means the
simple average for the month of the daily prices per pound of
Grade A (92-score) butter. The prices used shall be those of
the Chicago Mercantile Exchange as reported and published weekly
by the Dairy Division, Agricultural Marketing Service. The average
shall be computed by the Director of the Dairy Division, using
the price reported each week as the daily price for that day
and for each following day until the next price is reported.

1099.75  Plant location adjustments for producers and on nonpool
milk.

   (a) The uniform price for producer milk shall be reduced
according to the location of the plant at which the milk was
physically received, at the rate set forth in 1099.52; and
   (b) For purposes of computations pursuant to 1099.71 and
1099.72 the weighted average price shall be adjusted at the
rates set forth in 1099.52 applicable at the location of the
nonpool plant from which the milk was received, except that
the adjusted weighted average price shall not be less than the
Class III price.

1099.76  Payments by handler operating a partially regulated
distributing plant.

   Each handler who operates a partially regulated distributing
plant shall pay on or before the 25th day after the end of the
month to the market administrator for the producer-settlement
fund the amount computed pursuant to paragraph (a) of this section.
If the handler submits pursuant to 1099.30(b) and 1099.31(b)
the information necessary for making the computations, such
handler may elect to pay in lieu of such payment the amount
computed pursuant to paragraph (b) of this section:
   (a) The payment under this paragraph shall be the amount
resulting from the following computations:
   (1) Determine the pounds of route disposition in the marketing
area from the partially regulated distributing plant;
   (2) Subtract the pounds of fluid milk products received at
the partially regulated distributing plant:
   (i) As Class I milk from pool plants and other order plants,
except that subtracted under a similar provision of another
Federal milk order; and
   (ii) From another nonpool plant that is not an other order
plant to the extent that an equivalent amount of fluid milk
products disposed of to such nonpool plant by handlers fully
regulated under any Federal milk order is classified and priced
as Class I milk and is not used as an offset for any other payment
obligation under any order;
   (3) Subtract the pounds of reconstituted skim milk in route
disposition in the marketing area from the partially regulated
distributing plant;
   (4) Multiply the remaining pounds by the difference between
the Class I price and the weighted average price, both prices
to be applicable at the location of the partially regulated
distributing plant (but not to be less than the Class III price);
and
   (5) Add the amount obtained from multiplying the pounds of
reconstituted skim milk specified in paragraph (a)(3) of this
section by the difference between the Class I price applicable
at the location of the partially regulated distributing plant
(but not to be less than the Class III price) and the Class
III price.
   (b) The payment under this paragraph shall be the amount
resulting from the following computations:
   (1) Determine the value that would have been computed pursuant
to 1099.60 for the partially regulated distributing plant if
the plant had been a pool plant, subject to the following modifications:
   (i) Fluid milk products and bulk fluid cream products received
at the partially regulated distributing plant from a pool plant
or an other order plant shall be allocated at the partially
regulated distributing plant to the same class in which such
products were classified at the fully regulated plant;
   (ii) Fluid milk products and bulk fluid cream products transferred
from the partially regulated distributing plant to a pool plant
or an other order plant shall be classified at the partially
regulated distributing plant in the class to which allocated
at the fully regulated plant. Such transfers shall be allocated
to the extent possible to those receipts at the partially regulated
distributing plant from pool plants and other order plants that
are classified in the corresponding class pursuant to paragraph
(b)(1)(i) of this section. Any such transfers remaining after
the above allocation which are classified in Class I and for
which a value is computed for the handler operating the partially
regulated distributing plant pursuant to 1099.60 shall be priced
at the uniform price (or at the weighted average price if such
is provided) of the respective order regulating the handling
of milk at the transferee-plant, with such uniform price adjusted
to the location of the nonpool plant (but not to be less than
the lowest class price of the respective order), except that
transfers of reconstituted skim milk in filled milk shall be
priced at the lowest class price of the respective order; and
   (iii) If the operator of the partially regulated distributing
plant so requests, the value of milk determined pursuant to
1099.60 for such handler shall include, in lieu of the value
of other source milk specified in 1099.60(f) less the value
of such other source milk specified in 1099.71(a)(2)(ii), a
value of milk determined pursuant to 1099.60 for each nonpool
plant that is not an other order plant which serves as a supply
plant for such partially regulated distributing plant by making
shipments to the partially regulated distributing plant during
the month equivalent to the requirements of 1099.7(b), subject
to the following conditions:
   (a) The operator of the partially regulated distributing
plant submits with his reports filed pursuant to 1099.30(b)
and 1099.31(b) similar reports for each such nonpool supply
plant;
   (b) The operator of such nonpool supply plant maintains books
and records showing the utilization of all skim milk and butterfat
received at such plant which are made available if requested
by the market administrator for verification purposes; and
   (c) The value of milk determined pursuant to 1099.60 for
such nonpool supply plant shall be determined in the same manner
prescribed for computing the obligation of such partially regulated
distributing plant; and
   (2) From the partially regulated distributing plant's value
of milk computed pursuant to paragraph (b)(1) of this section,
subtract:
   (i) The gross payments by the operator of such partially
regulated distributing plant, adjusted to a 3.5 percent butterfat
basis by the butterfat differential specified in 1099.74, for
milk received at the plant during the month that would have
been producer milk if the plant had been fully regulated;
   (ii) If paragraph (b)(1)(iii) of this section applies, the
gross payments by the operator of such nonpool supply plant,
adjusted to a 3.5 percent butterfat basis by the butterfat differential
specified in 1099.74, for milk received at the plant during
the month that would have been producer milk if the plant had
been fully regulated; and
   (iii) The payments by the operator of the partially regulated
distributing plant to the producer-settlement fund of another
order under which such plant is also a partially regulated distributing
plant and like payments by the operator of the nonpool supply
plant if paragraph (b)(1)(iii) of this section applies.

1099.77  Adjustment of accounts.

   Whenever verification by the market administrator of payments
by any handler discloses errors made in payments to the producer-
settlement fund, the market administrator shall promptly bill
such handler for any unpaid amount and such handler shall, within
15 days, make payment to the market administrator of the amount
so billed. Whenever verification discloses that payment is due
from the market administrator to any handler, the market administrator
shall, within 15 days, make such payment to such handler. Whenever
verification by the market administrator of the payment by a
handler to any producer or cooperative association for milk
received by such handler discloses payment of less than is required
by 1099.73, the handler shall make up the difference of such
payment not later than the next time for making payments as
set forth in the provisions relating to payments which were
in error.

Administrative Assessment and Marketing Service Deduction

1099.85   Assessment for order administration.

   As his pro rata share of the expense of administration of
the order, each handler shall pay to the market administrator
on or before the 15th day after the end of the month five cents
per hundredweight, or such lesser amount as the Secretary may
prescribe, with respect to:
   (a) Producer milk (including such handler's own production)
and milk received from a handler described in 1099.9(c);
   (b) Other source milk allocated to Class I pursuant to 1099.44(a)
(7) and (11) and the corresponding steps of 1099.44(b), except
such other source milk that is excluded from the computations
pursuant to 1099.60 (d) and (f); and
   (c) Route disposition in the marketing area from a partially
regulated distributing plant that exceeds the skim milk and
butterfat subtracted pursuant to 1099.76(a)(2).

1099.86   Deduction for marketing services.

   (a) Deductions for marketing services. Except as set forth
in paragraph (b) of this section, each handler in making payments
to producers pursuant to 1099.73 with respect to milk received
from producers (excluding such handler's own farm production),
shall deduct 6 cents per hundredweight, or such lesser amount
as the Secretary may prescribe; and, on or before the 20th day
after the end of the month, shall pay such deductions to the
market administrator. Such moneys shall be expended by the market
administrator to verify weights, samples, and tests of the milk
of such producers and to provide such producers with market
information. Such services shall be performed in whole or in
part by the market administrator or by an agent engaged by and
responsible to him.
   (b) Cooperative associations. In the case of producers who
are members of a cooperative association, which the Secretary
has determined is actually performing the services set forth
in paragraph (a) of this section and which is not receiving
payment for its producer members, each handler shall make, in
lieu of the deductions specified in paragraph (a) of this section,
such deductions from the payments to be made to such producers
pursuant to 1099.73(b) as may be authorized by the membership
agreement or marketing contract between such cooperative association
and such producers, and on or before the 20th day after the
end of each month, pay over such deductions to the association
rendering such services.

   Dated: January 19, 1993.

Jo Ann R. Smith,
Assistant Secretary, Marketing and Inspection Services.

[FR Doc. 93-1755 Filed 2-1-93; 8:45 am]
BILLING CODE 3410-02-M
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