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Reg WeekSM: CRE Regulatory Action of the Week

Agriculture Department Issues Tentative Decision on Milk Pricing Formulas

The decision would decrease slightly the wholesale prices of butter, nonfat dry milk, and cheese.

  • Click to view full notice in the Federal Register.
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    Agriculture Department Issues Tentative Decision on Milk Pricing Formulas

    This tentative decision is issued in response to a Congressional mandate to reconsider the Class III and Class IV pricing formulas included in the final rule for the consolidation and reform of Federal milk orders. The mandate was included in the Consolidated Appropriations Act, 2000. Proposals to change the formulas were submitted by the industry at a hearing held from May 8 to 12, 2000 in Alexandria, Virginia.

    The material issues of the hearing relate to the elements of the Class III and Class IV pricing formulas, including: commodity prices, manufacturing (make) allowances, factors related to productivity yield, the role of producer costs of production, and the issue of whether to omit a recommended decision.

    The biggest change issued in the decision and that which has generated the most responses from industry officials has been the development of a separate butterfat price for Class III pricing formulas based on the value of butterfat in cheese as opposed to the value of butterfat in butter. Another big change has been the decision to take the butterfat adjustment that had been in the protein price formula out of the Class III pricing formula.

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