DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 1000, 1001, 1005, 1006, 1007, 1030, 1032, 1033, 1051, 1124, 1126, and
1131
[Doc. No. AMS-DA-23-0031]
Milk in the Northeast and Other Marketing Areas; Proposed Amendments to
Marketing Agreements and Orders
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
SUMMARY: This decision proposes to amend the pricing provisions in the 11 Federal
Milk Marketing Orders (FMMOs).
DATES: Written exceptions and comments to this proposed rule must be submitted on
or before [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE
FEDERAL REGISTER].
ADDRESSES: Written exceptions should be filed with the Office of the Hearing Clerk,
U.S. Department of Agriculture, 1400 Independence Ave., SW, Stop 9203, Room 1031,
Washington, DC 20250-9203; Fax: (844) 325-6940 or via the internet at
https://www.regulations.gov. All comments should reference the docket number and the
date and page number of this issue of the Federal Register. Comments will be made
available for public inspection in the Office of the Hearing Clerk during regular business
hours or can be viewed at https://www.regulations.gov. A plain-language summary of
this proposed rule is available at https://www.regulations.gov in the docket for this
rulemaking.
FOR FURTHER INFORMATION CONTACT: Erin Taylor, USDA/AMS/Dairy
Programs, Order Formulation and Enforcement Branch, STOP 0231-Room 2530, 1400

Independence Avenue, SW, Washington, DC 20250-0231, Telephone: (202) 720-7183,
E-mail address: Erin.Taylor@usda.gov.
SUPPLEMENTARY INFORMATION: This recommended decision proposes
amendments to five categories of milk pricing:
1. Milk Composition Factors. Update the factors to 3.3 percent true protein, 6
percent other solids, and 9.3 percent nonfat solids.
2. Surveyed Commodity Products. Remove 500-pound barrel cheddar cheese
prices from the Dairy Products Mandatory Reporting Program (DPMRP) survey and rely
solely on the 40-pound block cheddar cheese price to determine the monthly average
cheese price used in the formulas.
3. Class III and Class IV Formula Factors. Update the manufacturing allowances
to: Cheese: $0.2504; Butter: $0.2257; Nonfat Dry Milk (NFDM): $0.2268; and Dry
Whey: $0.2653. This decision also proposes updating the butterfat recovery factor to 91
percent.
4. Base Class I Skim Milk Price. Update the formula as follows: the base Class I
skim milk price would be the higher-of the advanced Class III or Class IV skim milk
prices for the month. In addition, adopt a Class I extended shelf life (ESL) adjustment
equating to a Class I price for all ESL products equal to the average-of mover, plus a 24month rolling average adjuster with a 12-month lag.
5. Class I and Class II differentials. Keep the $1.60 base differential and adopt
modified location specific Class I differential values.
In conjunction with this Recommended Decision, the Agricultural Marketing
Service (AMS) conducted a Regulatory Economic Impact Analysis to determine the
potential impact of amending FMMO pricing formulas on producer revenue and
marketwide pool values. AMS used a static analysis incorporating actual data reported
from January 2019 to December 2023 to determine the estimated price impacts of the

package of amendments included in this Recommended Decision. The full text of the
Regulatory Economic Impact Analysis may be accessed at https://www.regulations.gov
or https://www.ams.usda.gov/rules-regulations/moa/dairy/hearings/national-fmmopricing-hearing.
Prior documents in this proceeding
Notice of Hearing: Published July 24, 2023 (88 FR 47396).
Notice of Reconvened Hearing: Published November 6, 2023 (88 FR 76143).
Notice of Reconvened Hearing: Published December 29, 2023 (88 FR 90134).
This administrative action is governed by sections 556 and 557 of title 5 of the
United States Code and, therefore, is excluded from the requirements of Executive Orders
12866, 13563, and 13175.
The amendments to the rules proposed herein have been reviewed under
Executive Order 12988, Civil Justice Reform. They are not intended to have a retroactive
effect. If adopted, the proposed amendments would not preempt any state or local laws,
regulations, or policies, unless they present an irreconcilable conflict with this rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601–
674) (AMAA), provides that administrative proceedings must be exhausted before parties
may file suit in court. Under section 608c(15)(A) of the AMAA, any handler subject to
an order may request modification or exemption from such order by filing a petition with
the USDA stating that the order, any provision of the order, or any obligation imposed in
connection with the order is not in accordance with the law. A handler is afforded the
opportunity for a hearing on the petition. After a hearing, USDA would rule on the
petition. The AMAA provides that the district court of the United States in any district in
which the handler is an inhabitant, or has its principal place of business, has jurisdiction
in equity to review USDA's ruling on the petition, provided a bill in equity is filed not
later than 20 days after the date of the entry of the ruling.

Civil Rights Impact Analysis
AMS has reviewed this rulemaking in accordance with USDA Departmental
Regulation 4300–004, Civil Rights Impact Analysis, to identify any major civil rights
impacts the rule might have on FMMO participants on the basis of race, color, national
origin, disability, sex, gender identity, political beliefs, age, marital, family/parental
status, religion, sexual orientation, reprisal, or because of an individuals’ income is
derived from any public assistance program. Based on the review and analysis of the rule
and all available data, issuance of this proposed rule is not likely to negatively impact low
and moderate-income populations, minority populations, women, Tribes or persons with
disabilities, by virtue of their age, race, color, national origin, sex, disability, or marital or
familial status. No major civil rights impact is likely to result from this proposed rule.
Regulatory Flexibility Act and Paperwork Reduction Act
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.),
the AMS has considered the economic impact of this action on small entities.
Accordingly, AMS has prepared this initial regulatory flexibility analysis. The purpose
of the RFA is to fit regulatory actions to the scale of businesses subject to such actions so
that small businesses will not be unduly or disproportionately burdened. Marketing
orders and amendments thereto are unique in that they are normally brought about
through group action of essentially small entities for their own benefit. A small dairy
farm as defined by the Small Business Administration (SBA) (13 CFR 121.201) is one
that has an annual gross revenue of $3.75 million or less, and a small dairy products
manufacturer is one that has no more than the number of employees listed in the chart
below:
NAICS
Code
311511
311512
NAICS U.S. industry title
Fluid Milk Manufacturing
Creamery Butter Manufacturing
Cheese Manufacturing

Size standards in
number of employees
1,150
750
1,250

311514

Dry, Condensed, and Evaporated Dairy
Product Manufacturing

1,000

To determine which dairy farms are "small businesses," the $3.75 million per year
income limit was used to establish an annual milk marketing threshold of 18.3 million
pounds. Although this threshold does not factor in additional monies that may be
received by dairy producers, it should be an accurate standard for most “small” dairy
farmers. Based on the U.S. 2023 average yield per cow and 2023 NASS average AllMilk price, a dairy farm with approximately 780 cows or fewer would meet the definition
of small business. In 2022, the most recent year with statistics available, there were
24,470 dairy farms with milk sales, of which approximately 19,576 had milk regulated on
an FMMO for at least one month of the year. Based on the 2022 Census of Agriculture,
Milk Cow Herd Size by Inventory and Sales, an estimated 89 percent of operations with
milk sales are likely to be small businesses.
To determine a handler’s size, if the plant is part of a larger company operating
multiple plants that collectively exceed the 750-employee limit for creamery butter
manufacturing; the 1,000-employee limit for dry, condensed, and evaporated dairy
product manufacturing; the 1,150-employee limit for fluid milk manufacturing; or the
1,250-employee limit for cheese manufacturing; the plant was considered a large business
even if the local plant does not exceed the 750, 1,000, 1,150, or 1,250-employee limit,
respectively.
In 2022, the following number of plants were regulated for at least one month of
the year in each FMMO: 66 plants on the Northeast, 19 plants on the Appalachian, 9
plants on the Florida, 20 plants on the Southeast, 58 plants on the Upper Midwest, 32
plants on the Central, 43 plants on the Mideast, 24 plants on California, 17 plants on the
Pacific Northwest, 26 plants on the Southwest, and 8 plants on Arizona. According to the
2022 Census of Agriculture, approximately 86 percent of fluid milk manufacturing

plants, approximately 96 percent of cheese plants, approximately 82 percent of dry
products plants, and approximately 78 percent of butter plants met the SBA definition of
small businesses.
How FMMO Pricing Provisions Currently Operate
The amendments recommended for adoption in this decision cover five milk
pricing subject areas: Milk Composition Factors, Surveyed Commodity Products, Class
III and Class IV Formula Factors, base Class I skim milk price (Class I mover), and Class
I and II Differentials. This decision proposes to amend provisions in all five pricing
subject areas. The amendments are intended to update formulas and factors in response to
industry changes over time, many of which have not been updated since the provisions
were adopted on January 1, 2000, to ensure USDA is carrying out the purposes of the
AMAA.
Milk Composition Factors. FMMO milk prices are based on three primary
components - protein, other solids, and nonfat solids. Skim milk composition factors in
the current price formulas codified in the FMMO regulations were adopted in 2000: 3.1
percent protein, 5.9 percent other solids, and 9 percent nonfat solids. The proposed
amendments would increase milk composition factors to 3.3 percent protein, 6.0 percent
other solids, and 9.3 percent nonfat solids. Actual component tests of skim milk have
increased since 2000, with more significant increases beginning in 2016. The
amendments are intended to more accurately represent component levels in milk
produced.
Surveyed Commodity Products. Milk prices under FMMOs are related to
wholesale prices for butter, cheese, nonfat dry milk, and dry whey. The formulas use
USDA-surveyed average wholesale prices to calculate milk component prices (butterfat,
protein, nonfat solids, and other solids) that are converted to Class III and IV milk prices.
The protein value in cheese is a component of the Class III price. Currently, the prices of

commodity cheddar cheese packaged in 40-lb blocks (“blocks”) and 500-lb barrels
(“barrels”) are collected weekly by AMS through the DPMRP survey. A monthly
average of those prices is used to represent commodity cheese in the Class III price
formula. The butterfat value in commodity salted butter is the driver of the butterfat price
used in all classified prices. The proposed amendments would eliminate 500-lb barrels
from the DPMRP survey and rely solely on the monthly average survey price for 40-lb
cheddar blocks. The amendment is intended to provide for more orderly marketing
through a survey of only one product.
Class III and IV Formulas Factors. Make allowances are a factor in the FMMO
pricing formulas representing the cost of converting raw milk into the four manufactured
dairy products surveyed by USDA (butter, cheese, nonfat dry milk, and dry whey). Make
allowances were last updated in 2008 following a rulemaking proceeding in 2007. The
proposed amendments would update the make allowances in the FMMO Class III and IV
formulas to the following: $0.2504 for cheese; $0.2257 for butter; $0.2268 for NFDM;
and $0.2653 for dry whey. The proposed amendments would also update the butterfat
recovery factor in the Class III formula to 91 percent. The amendments are intended to
update the formula factors to be more representative of current costs and butterfat
recovery observed in dairy product manufacturing.
Class I mover. The Class I mover is the base price for the skim milk portion of
raw milk used in the production of Class I products. The Agriculture Improvement Act
of 2018 (2018 Farm Bill) amended the Class I skim milk price mover from the “higher
of” Class III or Class IV skim prices to a simple average of the two classes plus $0.74,
referred to as the “average of” mover. The proposed amendments would return the base
Class I skim milk price calculation to the higher-of Class III or Class IV skim prices. The
proposed amendments would also adopt a rolling monthly Class I ESL adjustment
equating to a Class I price for all ESL products equal to the average-of the Class III and

Class IV advance prices, plus a 24-month rolling average adjuster, with a 12-month lag.
The monthly Class I ESL adjustment would be calculated as the average of the
differences between the higher-of and the average-of calculations for the prior 13 to 36
months. The amendments are intended to provide for more orderly marketing by
returning to the higher-of mover; while the Class I ESL adjustment would provide better
price equity for ESL products whose marketing characteristics are distinct from other
Class I products.
Class I and II Differentials. FMMO Class I prices are calculated as the average of
the advanced Class III and Class IV prices, plus $0.74, plus a location-specific
differential referred to as a Class I differential. As the value of milk varies by location,
Class I differentials have been determined for every county in the continental U.S.
Current Class I differential levels were implemented January 1, 2000, with updates to the
differentials in the three southeastern orders taking effect May 1, 2008. The proposed
amendments would retain the $1.60 base differential and adopt modified location-specific
Class I differential values. The amendments are intended to recognize the evolution of
the dairy industry since 2000 and the increased cost of servicing the Class I market given
current transportation costs and plant and producer locations.
This decision finds these amendments are necessary. The evidentiary record
reflected testimony from a broad range of stakeholder views that updates are necessary in
all five pricing subject areas to reflect current market conditions.
Impact on Small Businesses
An economic analysis has been performed on impacts the proposed amendments
will have on industry participants, including producers and handlers. It can be found on
the AMS Website at https://www.ams.usda.gov/rulesregulations/moa/dairy/hearings/national-fmmo-pricing-hearing. The proposed
amendments would be applied identically to all proprietary and cooperative handlers

regulated by FMMOs, regardless of their size. The proposed amendments would
implement prices that more accurately reflect current market conditions, providing for
more orderly marketing for both small and large producers and handlers.
AMS considered alternatives to each of the recommended amendments. Over 49
days of hearing, dozens of witnesses from 9 industry stakeholder groups presented
testimony and evidence on 21 proposals in the 5 pricing subject areas. AMS considered
all evidence and testimony, including alternative proposals presented, in making its
recommendations.
A review of reporting requirements was completed under the Paperwork
Reduction Act of 1995 (44 U.S.C. Chapter 35). It was determined that these proposed
amendments would have no impact on reporting, recordkeeping, or other compliance
requirements because they would remain identical to the current requirements. No new
forms are proposed, and no additional reporting requirements would be necessary.
This proposed rule does not require additional information collection that requires
clearance by the Office of Management and Budget (OMB) beyond currently approved
information collection. The primary sources of data used to complete the forms are
routinely used in most business transactions. Forms require only a minimal amount of
information which can be supplied without data processing equipment or a trained
statistical staff. Thus, since the information is already provided, no new information
collection requirements are needed, and the current information collection and reporting
burden is relatively small. Requiring the same reports for all handlers does not
significantly disadvantage any handler that is smaller than the industry average.
AMS is committed to complying with the E-Government Act, to promote the use
of the Internet and other information technologies to provide increased opportunities for
citizen access to Government information and services, and for other purposes.

No other burdens are expected to fall on the dairy industry as a result of this
rulemaking. This rulemaking does not duplicate, overlap, or conflict with any existing
Federal rules.
Preliminary Statement
A public hearing was held upon proposed amendments to the marketing
agreement and the orders regulating the handling of milk in all 11 Federal milk marketing
areas. The hearing was held pursuant to the provisions of the AMAA, as amended (7
U.S.C. 601-674), and the applicable rules of practice and procedure governing the
formulation of marketing agreements and marketing orders (7 CFR part 900).
The proposed amendments set forth below are based on the record of a public
hearing held in Carmel, IN, from August 23 – October 11, 2023, November 27 December 8, 2023, January 16 - 19, 2024, and January 29 - 31, 2024, pursuant to a notice
of hearing published July 24, 2023 (88 FR 47396), a notice of reconvened hearing
published November 6, 2023 (88 FR 76143), and a second notice of reconvened hearing,
published December 29, 2023 (88 FR 90134).
The hearing was held to receive evidence on 21 proposals submitted by dairy
farmers, handlers, and other interested parties. A total of 165 witnesses testified over the
course of the 49-day hearing. Witnesses provided an overview of the complexity of the
U.S. dairy industry and submitted 511 exhibits containing supporting data, analyses, and
historical information.
The material issues, related to FMMO pricing formulas, presented on the record
of hearing are as follows:
1. Milk Composition Factors
2. Surveyed Commodity Products
3. Class III and Class IV Formula Factors
4. Base Class I Skim Milk Price

5. Class I and Class II differentials
Summary of Testimony
Milk Composition
Two proposals seeking to amend the milk composition standards are being
considered in this rulemaking. Proposal 1, submitted by the National Milk Producers
Federation (NMPF) seeks to increase the skim component factors, with a 12-month
implementation lag. The proposed standards are as follows: increase the nonfat solids
assumption from 9.0 to 9.41 per hundredweight (cwt) of Class IV skim milk; increase the
protein assumption from 3.1 to 3.39 per cwt of Class III skim milk; and increase the other
solids assumption from 5.9 to 6.02 per cwt of Class III skim milk. Proposal 1 also
contains an updating methodology that would automatically update the standards no more
than once every three years once the nonfat solids component for the prior three years
changes by at least .07 percentage points.
Proposal 2, submitted on behalf of National All-Jersey (NAJ), is identical to
Proposal 1, except for the automatic update methodology. The proposal would update
the standards annually using the previous year’s weighted averages, with a 12-month
implementation lag.
A witness from NMPF, a trade association representing dairy farmer-owned
cooperative marketing associations throughout the United States, testified in support of
updating the skim milk price milk component factors, as contained in Proposal 1. The
witness explained how the U.S. dairy industry has undergone dynamic structural change
since 2000, while FMMO product price formulas have generally remained static. The
witness stated dairy farmers have responded to component pricing by significantly
increasing the butterfat, protein, and other solid levels in their milking herds. According
to the USDA’s National Agricultural Statistics Service (NASS), said the witness, average
butterfat tests have increased 10.9 percent from 2000 to 2022, and USDA’s Economic

Research Service (ERS) reported average skim milk solids content of U.S. milk
production increased 0.31 percent during the same period. The witness said 2022 FMMO
average protein, other solids, and nonfat solids (NFS) in pooled milk were 3.39 percent,
6.02 percent, and 9.41 percent, respectively.
The NMPF witness asserted the static component levels contained in the formulas
result in underpayments to producers in all FMMO’s for the value of their Class I skim
milk. Therefore, NMPF proposes to increase the milk composition factors in skim milk
to 2022 levels. The NMPF witness analyzed 2013-2022 FMMO product prices and
concluded adoption of Proposal 1 would have increased the Class III skim price by $0.80
per cwt and the Class IV skim milk price by $0.41 per cwt. An increase from the 2022based skim milk component factors by the proposed 0.07 percentage point threshold
level, the witness added, would have increased the Class III and Class IV prices by $0.14
and $0.07 per cwt, respectively.
Another NMPF witness testified the announced FMMO Class III and Class IV
skim milk values do not reflect the current component levels of producer milk, resulting
in announced prices being lower than actual market values. The witness said this leads to
a misalignment of fluid and manufacturing milk, possibly leading to disorderly marketing
conditions. This occurs because the Class I Mover skim milk price is calculated based on
skim milk component levels based on 2000 levels, narrowing the difference between
Class I prices and manufacturing milk prices (Classes III and IV) and resulting in more
instances of price inversions and depooling.
Several NMPF dairy farmer witnesses testified in support of Proposal 1. The
witnesses stated improved genetics and feed quality have caused component levels in the
milk they market to increase. The witnesses stated component levels in the pricing
formulas should be updated to reflect the additional protein produced.

An NMPF witness testified regarding their work as a business consultant with
dairy farmers. The witness said dairy farming costs have been consistently increasing
due to higher feed prices, overall inflation, interest rate increases, and rising costs
associated with labor and environmental regulations. The witness estimated the average
margin per cwt of milk produced over the past decade was less than $1, or approximately
4 to 7 percent of the average milk price. It was the witness’s opinion that financially
sustainable margins are necessary to avoid further consolidation in the industry.
An NMPF dairy farmer witness testified that monthly pay price volatility has
increased since 2000. According to the witness, in 2000 their pay price varied $0.52,
from a high of $12.95 to a low of $12.43. In the 12 months prior to August 2023, the
witness said the variance was $7.46, ranging from $22.50 to $15.04, while costs
continued to rise, including the price of corn and soybean meal more than doubling. The
witness said that during the same 12-month period their milk output rose over 10,000
pounds. The witness attributed improvements in cow comfort, genetics, and feed quality
to the increases in milk output and component levels but opined low component
standards were depressing producer price differentials (PPDs) and discouraging milk
from supplying the Class I market.
NMPF, in their post-hearing brief, offered additional support for Proposal 1. The
brief credited significant advances related to animal genetics, farm management, and cow
nutrition as contributing to rising skim milk component levels. NMPF reiterated hearing
testimony regarding the static component levels in the formulas leading to a narrowing of
the difference between Class I and manufacturing milk prices resulting in more price
inversions, larger volumes of depooled milk, and resulting in disorderly marketing.
NMPF stated higher skim milk component levels have value in the competitive
manufacturing dairy market, which is the basis for determining Class I values. NMPF
stated that increasing the skim milk components in the formulas to reflect current levels

would recognize the current average value of producer milk used for manufacturing dairy
products and result in a Class I price that properly reflects base milk values.
Additionally, NMPF argued delayed implementation of updated component level factors
is necessary because of dairy farmers’ use of risk management programs. Such a delay
would allow for the completion of most transactions placed prior to announcement of the
change.
A Dairy Farmers of America, Inc. (DFA) witness, appearing on behalf of NMPF,
testified the failure to delay an update in skim component standards would cause
financial harm to dairy farmers, milk plants, end users, and others who entered into riskmanagement transactions. DFA is a dairy farmer cooperative and owns and operates 14
manufacturing plants which produce liquid whey, Italian cheese, skim milk powder,
whole milk powder, American-style cheese, condensed milk, cream, nonfat dry milk,
milk protein concentrate (MPC), sweetened condensed milk, and dry whey. The witness
testified that failure to delay implementation would affect the basis, or the profit margin
for milk being hedged. The witness testified that 35 to 45 percent of the U.S. milk supply
was hedged by dairy farmers and there is a growing demand for risk management
services among larger-sized dairies.
A witness representing the American Farm Bureau Federation (AFBF), a farmer
advocacy organization with approximately 6 million members throughout the U.S.,
testified in support of Proposal 1. The witness estimated that raising the skim component
standards would increase the Class I price by an average of $0.70 per cwt, based on 2022
data. Consequently, raising the skim component standards would help bring the Class I,
III, and IV prices in alignment, reduce the frequency of negative PPDs, and reduce the
incentives for depooling, which the witness said undermines orderly marketing. The
witness stated that raising the value of the skim milk in the manufacturing classes for the
skim and butterfat markets would reduce the incentive of manufacturing plants in the

multiple component pricing (MCP) orders to pool milk, which would lower the
producer’s price and discourage milk from entering a milk deficit region. The witness
testified that updating component standards would address some price misalignment
issues and is preferred to prevent handlers from depooling.
AFBF offered support in their post-hearing brief stating Proposal 1 would more
accurately define the market value of skim milk pooled on FMMOs. The brief asserted
the resulting increase in Class I prices would reduce the incidences of price misalignment
with Class III and IV prices, reduce the size and frequency of negative PPDs, and reduce
depooling incentives. AFBF supported periodic adjustments to component levels, as
contained in Proposal 1, to account for the continuing increases in the component levels,
but specified these levels should only be changed in the positive direction. In AFBF’s
opinion, more frequent updates, as contained in Proposal 2, would be disruptive.
A witness representing NAJ, an organization representing the interests of Jersey
cattle breeders, testified in support of Proposal 2, which proposes the same milk
composition levels as Proposal 1, with automatic annual updates. The witness said many
factors have contributed to increased component levels, including improved genomics,
increased use of gender-selected semen, and volume-based programs such as base/excess
programs. The witness testified an annual update would provide improved accuracy
because of the recently accelerated pace of component increases and would have better
alignment with pricing between butterfat/skim and multiple component pricing FMMOs.
Additionally, the witness stated a 1-year lag on implementing these updates would allow
for greater risk management which is becoming increasingly more important to producers
and processors.
NAJ’s post-hearing brief reiterated their support for Proposal 2, arguing record
evidence shows protein and other solids levels in producer milk have progressively and
significantly increased since FMMO reform in the late 1990s. NAJ stated the trend of

higher solids components in skim milk was expected to continue due to economic signals
to producers from component values and improved production techniques. NAJ argued
amendments of standard skim milk composition factors is necessary to help avoid periods
of price inversions, depooling, undervaluing Class I milk, milk supply inefficiency, and
disincentives to supply milk for Class I use. NAJ stated a change to the skim milk
component levels should be announced at least 11 months in advance of implementation
due to risk management practices used by producers and processors. NAJ argued annual
updates better serve risk management practices because it would lead to smaller
incremental changes and less adverse impact on risk management contracts with more
than 12-months open interest at the time component changes are announced.
A witness representing Edge Dairy Farmer Cooperative (Edge), a Wisconsinbased dairy milk test verification cooperative, testified in support of Proposals 1 and 2.
The witness recommended increasing the implementation lag to 15.5 months to support
longer contract hedging. The witness was of the opinion the standard butterfat test also
should be updated from 3.5 percent to 4.06 percent, the 2022 average butterfat for all
markets combined as published by the USDA’s AMS. According to the witness, this
would more accurately reflect current butterfat levels and better align the butterfat to
protein ratio used in the formula, ensuring more effective risk management tools, as
farmers’ ability to manage their gross pay price risk would improve.
Edge, in their post-hearing brief, reiterated hearing testimony that failure to adjust
the butterfat level when updating skim component levels would cause disorderly milk
marketing, as it undermines effective risk-management tools for dairy farmers. Edge
argued that without the corresponding change, producers hedging milk revenue using risk
management products based on Class III milk or Class IV milk prices, will tend to be
under protected against the decline in butterfat prices. Edge added that changing the

butterfat level would not affect handler obligations to the producer settlement fund,
PPDs, or uniform producer prices.
A witness representing the International Dairy Foods Association (IDFA) testified
in opposition to Proposals 1 and 2, stating that updating the component standards would
increase the Class I skim price by $0.60 per cwt, a value that cannot be recovered in the
marketplace. IDFA is a trade organization representing dairy manufacturers of milk,
cheese, ice cream, yogurt, cultured products, and dairy ingredients. The IDFA witness
testified consumers choose finished Class I products based on desired fat level, freshness,
and price, not higher nonfat solids levels. The witness estimated that updating
component levels in the formulas would result in manufacturing handlers in
butterfat/skim FMMOs paying an additional $0.40 to $0.80 per cwt, even though the
component levels of milk delivered to those plants was less than those proposed. The
witness cited National Dairy Herd Information Association (DHI) data showing 2020 to
2022 average skim protein levels in butterfat/skim FMMOs below the levels contained in
Proposals 1 and 2. The witness attributed the lower observed component levels to the
fact that producer payments in these orders are made on the basis of the fat and skim
content of their milk, leaving no financial incentive to produce higher component milk.
A witness from Saputo Cheese USA (Saputo), appearing on behalf of IDFA, also
testified in opposition of Proposals 1 and 2. Saputo is a dairy processor and manufacturer
operating 29 plants throughout the U.S. The witness said Saputo operates three plants
located in the skim/fat orders, and in 2022 the average NFS level of milk received at
those plants was 9.1070 percent, which is less than what is proposed in Proposals 1 and 2.
The witness explained Saputo purchases skim solids to add to its skim milk in order to
ensure the Class II products it manufactures contain the skim solids necessary to meet
standard of identity requirements for those products. Updating the component levels in

the formula would only result in Saputo paying for skim solids not received, but it would
not lower the amount of skim solids Saputo must purchase, explained the witness.
A post-hearing brief submitted by IDFA reiterated its opposition to Proposals 1
and 2, arguing that increased component levels have no financial benefit or economic
value to Class I handlers who would be the primary entities impacted by adoption of
these proposals. IDFA stated the current FMMO system of pricing Class I milk on a
skim/fat basis versus Classes II, III, and IV milk on a component basis does not create
disorderly marketing.
The Milk Innovation Group (MIG) is a group of fluid milk processors and
producers that market value added dairy based products. MIG’s members include
Anderson Erickson Dairy (AE), Aurora Organic Dairy (Aurora), Crystal Creamery,
Danone North America (Danone), fairlife, HP Hood LLC (HP Hood), Organic
Valley/CROPP Cooperative (Organic Valley), Shamrock Foods Company (Shamrock),
Shehadey Family Foods LLC (Shehadey), and Turner Dairy Farms (Turner Dairy).
Crystal Creamery is a California fluid milk processor producing Class I, II, and IV
conventional and organic milk products. Danone is a food and beverage company
operating seven plants in the U.S. Fairlife is a fluid milk processor of ultra-filtered
lactose free milk, and other high protein products. Organic Valley is a dairy farmerowned organic cooperative producing more than 30 percent of the organic milk sold in
the U.S.
Seven witnesses representing MIG, including witnesses from HP Hood,
Shehadey, Saputo, Shamrock, AE, Turner Dairy, and Aurora, testified in opposition to
Proposals 1 and 2. HP Hood is a fluid milk processor operating five ESL plants and four
high-temperature, short-time (HTST) plants in the Northeast and California. Shehadey
operates four manufacturing plants in California, Nevada, and Oregon, producing Class I
and Class II products. Shamrock is a fluid milk processor of HTST and ESL products

with processing facilities in Arizona and Virginia, and a 20,000-head dairy farm located
in Arizona. AE is an Iowa fluid milk processor producing both Class I and II products.
Aurora is a vertically integrated organic milk supplier with four organic dairy farms
located in Colorado and Texas. Turner Dairy is a small fluid milk processor with full or
partial ownership of two fluid milk plants, as well as a standalone Class II plant, all
located in western Pennsylvania.
Six witnesses testified their plants regularly receive milk with components below
the proposed levels. One witness offered that component levels received ranged from
3.09 to 3.63 percent protein, 5.83 to 6.10 percent other solids, and 8.92 to 9.65 percent
NFS. MIG members testified that increasing the component levels in the formulas would
increase their raw milk costs, requiring them to pay for milk components not received.
One witness stated that adoption of Proposals 1 and 2 would increase costs between
$0.60 and $0.75 per cwt. All MIG witnesses claimed that fluid milk processors, even if
they did receive higher component milk, are unable to convert those higher components
into additional market revenue as Class I products are sold on a volume, not component
basis.
Another MIG witness testified on a survey conducted of MIG members plus two
additional large grocery retailers who own their own fluid milk processing plants.
According to the witness, using component data from 32 out of the 36 plants surveyed,
these plants frequently received milk with components below the proposed levels. As
data was confidential, no specific data was provided. The witness also noted the data
showed component levels changed due to seasonality and geographics, demonstrating
inconsistent levels received by plants. The witness testified the adoption of Proposals 1
or 2 would raise Class I prices and make it more challenging for these plants to recover
costs. Should USDA decide to change the standard component levels in the pricing

formulas, the witness testified component minimums should be used instead of averages
because FMMOs are meant to provide minimum prices.
A post-hearing brief filed on behalf of MIG argued it would be disorderly for
Class I fluid milk processors, the only mandatory participant of FMMOs, to be forced to
pay for component levels regardless of what is actually received. MIG opined consumers
do not value additional skim component levels in fluid milk products, therefore Class I
processors are unable to recoup additional revenue out of the market. MIG was of the
opinion no record evidence was provided at the hearing that the current skim component
formula factors are causing disorderly marketing and added that although they oppose
Proposals 1 and 2, if any part of these proposals are adopted there should be a 12-month
implementation delay.
A witness representing the CME Group (CME) testified to explain various dairy
risk management tools offered through the exchange, including futures and options
contracts. The witness explained the CME is a derivatives marketplace offering a range
of futures exchanges to meet private risk management needs. The witness explained a
futures contract is a legally binding agreement to buy or sell a standardized asset on a
specific date or during a specific month. An option on a futures contract is the right, but
not the obligation, to buy or sell the underlying futures contract at a predetermined price
on or before a given date in the future. The witness stated 97.43 percent of contracts in
the futures and options market are for 12-month periods, and in a previous change to
futures contracts there was an 18-month lag on implementation to be beyond open
interest. The witness testified that Dairy Revenue Protection (DRP) is one of many
programs that rely on CME markets and advocated USDA to consider futures and options
markets when establishing implementation plans.
In its post-hearing brief, CME reiterated its neutrality on all proposals under
consideration. They stated any change modifying the current Class III and Class IV

formulas would be considered a material change affecting current contracts. CME
stressed the importance of sufficient and transparent notice of any changes.
A post-hearing brief was submitted on behalf of Select Milk Producers (Select), a
dairy-farmer owned cooperative which owns and operates eight processing plants in
Texas, New Mexico, and Michigan, manufacturing ESL fluid milk products and a variety
of cheese, butter, and NFDM products. Select offered support for Proposal 1 and took
exception to the assertion there is no value in higher protein levels in Class I products, as
it is belied by the success of specialty fluid milk products such as fairlife, and the higher
milk solids required for California fluid milk. Although Select supported adoption of
Proposal 1, they do not support a delay in implementation, nor the annual update as
contained in Proposal 2.
Lamers Dairy Inc. (Lamers), a Wisconsin based HTST fluid milk processor,
submitted a post-hearing brief in opposition to Proposals 1 and 2. Lamers stated
component levels can vary both regionally and from farm to farm. Lamers opined that
USDA is statutorily required to conduct a study of component levels before any change
could be made and argued adoption of Proposals 1 and 2 should not be considered.
New Dairy OPCO LLC (New Dairy), a fluid milk processor operating four fully
regulated distributing plants (three of which are located in the southeastern U.S.),
submitted a post-hearing brief in opposition to Proposals 1 and 2. New Dairy offered
support for arguments made by IDFA and MIG that fluid milk processors would be
unable to recoup the additional cost of components should Proposals 1 or 2 be adopted.
They purport that charging fluid milk processors for components not actually received
would be disorderly. New Dairy said raising component levels in the formulas would
harm its southeastern plants as they pay on a skim/fat basis which provides no incentive
to producer to increase components to match the national average.

In its post-hearing brief, NMPF opposed the annual updating feature contained in
Proposal 2. NMPF stated that by limiting changes to the standard component levels to a
periodic basis and relying on 3-year weighted average, Proposal 1 is more likely to
produce accurate component values and avoid disruption from more frequent changes.
Surveyed Commodity Products
This rulemaking proceeding considers four proposals, and a modified proposal
submitted during the hearing, that would add or remove a variety of products in the
DPMRP survey, which are then reported in the National Dairy Product Sales Report
(NDPSR) and used to establish FMMO classified prices. The proposals are as follows:
Proposal 3, submitted by NMPF, seeks to eliminate the Cheddar cheese barrel
price from the cheese price formula.
Proposal 4, submitted by AFBF, seeks to add Cheddar cheese 640-pound block
price series to the cheese price formula.
Proposal 5, submitted by AFBF, seeks to add unsalted butter to the butterfat and
cheese price formulas.
Proposal 6, submitted by the California Dairy Campaign (CDC), seeks to add a
price series for mozzarella to the cheese price formula.
Edge offered a proposal modification during the hearing to adopt different
weighting methodology which would reweigh 40-pound blocks and 500-pound barrels in
the DPMRP survey by all U.S. cheddar block and barrel production volumes.
NMPF witnesses from Foremost Farms USA (Foremost), Ellsworth Cooperative
Creamery (Ellsworth), Land O’Lakes (LOL), and DFA testified in support of Proposal 3.
Foremost is a cooperative with 850 members located in Wisconsin, Michigan, Iowa,
Minnesota, Indiana, Ohio, and Illinois, and operating eight manufacturing plants
producing cheese and butter.

Ellsworth is a Wisconsin-based cheese manufacturer producing a significant
volume of barrel cheese and a variety of specialized cheeses and cheese curds from 250
dairy-farmer members. LOL is a dairy farmer-owned cooperative with more than 1,000
dairy farmer members, primarily producing butter and cheese.
The witnesses explained the current cheese price formula includes both block and
barrel cheese in the computation. They asserted the cheese price formula provides for
orderly marketing if the difference, known as the “spread,” in the respective market
prices of blocks and barrels remains close to the assumed $0.03 per pound cost
difference, which occurred from 2000 to 2016. However, since 2017 the spread between
the block and barrel prices has been volatile. One witness stated the weighted average
spread published in the weekly NDPSR during January 2017 through July 2023 was
$0.120 per pound, with a much wider and more volatile range per pound. The LOL
witness opined that the DPMRP survey could continue to include and publish prices of
500-pound barrel cheese without necessitating its inclusion in the Class III protein price
calculation.
An NMPF witness testified the CME block cheddar price is used as a pricing
index for most cheese produced in the U.S., including cheddar, 40-pound block, 640pound block, mozzarella, other American-type cheese, and other cheese including cream
cheese, and Hispanic cheese. They estimated 90 percent of natural cheese produced in
the U.S. is sold using the CME 40-pound block cheddar price as a pricing index. The
witness estimated the CME barrel cheese price is used to price only about 9 percent of
total domestically produced natural cheeses, including barrels themselves. They said
DPMRP survey volumes of barrel cheese between 2013 and 2022 ranged from 44 to 52
percent, resulting in an overrepresentation of 500-pound barrels compared to the actual
volume of cheese that is priced off of barrels. The witness testified that since 2017, the
significantly wider and increasingly volatile block-barrel spread has caused instability in

the cheese market. Consequently, the witness said, dairy farmer revenue has been
reduced as the over representation of 500-pound barrels lowered the Class III price. The
Foremost witness estimated the undervaluation represented $2 billion since 2017, opining
the value would have been greater if not for the large volume of Class III milk not pooled
in 2020 and 2021.
The NMPF witness testified eliminating 500-pound barrel prices from the Class
III price would create more orderly marketing in FMMOs by reducing the financial
uncertainty for dairy producers and manufacturers and ensuring the cheese price in the
protein component formula represents the single commodity cheddar cheese product.
The witness described how barrel cheese manufacturers are harmed when they must
account to the pool at an FMMO cheese price higher than the revenue generated from
barrel cheese product. The witness said eliminating the 500-pound barrels would have
increased the Class III price by $0.41 per cwt, using average product prices for 2017 to
2022.
An NMPF witness testified that removing 500-pound barrels had been addressed
in prior rulemakings, but denied by USDA in the rulemaking. However, current market
conditions have significantly changed, necessitating a re-evaluation. The witness
attributed the increased volatility in the block-barrel price spread since 2017 to a variety
of factors, including increased 500-pound barrel production capacity that may be due to
increasing values of its white whey by-product.
NMPF witnesses testified eliminating 500-pound barrel cheese from the protein
component price (PCP) formula would still provide adequate volume of cheddar cheese
for price discovery purposes as 40-pound block cheese surveyed represents
approximately 16 percent of total U.S. natural cheddar cheese production. The witness
also said this methodology change would bring the cheese price into conformity with the

price for butter, NFDM, and dry whey, which utilize only one surveyed product for price
discovery purposes.
The witness testifying on behalf of Ellsworth stated 40-pound blocks and 500pound barrels are not interchangeable products. The witness said while 40-pound block
cheddar has many markets and uses, 500-pound barrel cheddar is used for processed
cheese, a market driven by few processors and purchasers. As a result, the witness said,
surveying barrel cheese prices skews the FMMO cheese price towards a smaller market
which is not representative of the rest of the cheese market. The witness estimated the
volatility in the block-barrel spread since 2017 cost Ellsworth producers $0.84 per cwt.
The witness said barrel cheese manufacturers would adjust to the elimination of barrel
prices from the survey and eventually transition to prices based on the 40-pound block
cheese price.
Witnesses representing IDFA, Leprino Foods Company (Leprino), and Associated
Milk Producers, Inc. (AMPI) testified in opposition to Proposal 3. Leprino operates nine
plants in the U.S., manufacturing mozzarella cheese, whey products, and NFDM. AMPI
owns and operates eight manufacturing plants processing cheese, butter and powdered
dairy products from member farms in Wisconsin, Minnesota, Iowa, Nebraska, South
Dakota, and North Dakota.
The witnesses said sales of both block and barrel cheddar cheese are robust and
each play a significant role in setting the market value of cheddar cheese. They argued
eliminating 500-pound barrels would reduce by more than half the cheese market price
contained in the survey and would result in a distorted picture of the total commodity
cheddar market. The witness said opposition to removing barrels was not related to the
presumed effect on the Class III price as the NDPSR weighted average cheese price
(reflecting block and barrel cheese) was higher than the 40-pound block price in 9 of 14
years from 2009 to 2022. One witness opined additional cheddar block plant capacity is

coming on-line in the next couple of years, increasing 40-pound block volumes, and
would reduce the block-barrel spread to historical levels under normal supply-demand
behavior.
The IDFA witness speculated cheddar barrel manufacturers may opt not to pool
milk if the barrel price is no longer surveyed because they would be unable to garner
sufficient market revenue in order to account to the pool and the Class III price.
Two Leprino witnesses testified eliminating 500-pound barrels from the Class III
price formula removes the product most closely reflecting the supply and demand
balance. They were of the opinion that removing 500-pound barrels would both shrink
the survey volume and likely result in greater production of cheddar blocks as a way to
clear the market. The witnesses testified this would add volatility to the block market,
cause unnecessary stress to the U.S. marketplace, and make U.S. cheese a less attractive
option for global buyers.
The Leprino witnesses said dropping 500-pound barrels from the survey would
create a presumption within the Class III formula that all cheese, including barrels, would
then be priced off blocks. The witnesses asserted barrels and blocks have different
supply and demand functions, and eliminating barrels from the Class III formulas would
force barrels to be priced off blocks, adding dysfunction to the barrel market. The
witnesses were of the opinion barrels are the market-clearing cheese, and instead 40pound blocks should be eliminated from the price formula to be more consistent with the
minimum pricing provisions.
In its post-hearing brief, NMPF reiterated testimony regarding price differences
between 40-pound blocks and 500-pound barrels becoming more volatile since 2017.
Historically, NMPF wrote, using both block and barrel prices in the Class III pricing
formula increased the volume of cheddar cheese reported in the NDPSR. However, the
increased price spread has caused instability in the cheese market and reduced revenue

for dairy farmers as the barrel price is a disproportionately large share when compared to
its volume in the cheese market. NMPF estimated 90 percent of the natural cheese
produced in the U.S. is priced using the CME 40-pound block price, while the remaining
is priced off of the CME barrel cheese price. As a result, NMPF wrote, the Class III milk
price has been undervalued and lowered producer revenue.
Leprino submitted a post-hearing brief reiterating the important balancing
function barrels provide and opined removing them would push 40-pound blocks into the
balancing role and would increase price volatility for cheddar blocks.
Select submitted a post-hearing brief in support of Proposal 3, arguing 500-pound
barrels no longer represent the commodity cheddar market and 40-pound blocks are an
appropriate commodity to establish the protein price. According to Select’s brief, current
formulas dramatically over weights the price of barrels relative to the markets actual use
barrels and the cheese priced off of them.
The AFBF submitted a post-hearing brief in support of Proposal 3 reiterating
hearing testimony that barrels represent roughly 50 percent of the NDPSR volume but is
used to set prices for only 10 percent of the cheese in the U.S. market. The AFBF
stressed use of barrels in the cheddar cheese price formula creates a price not
representative of the value of 90 percent of cheddar cheese produced.
IDFA, in their post-hearing brief, opposed Proposal 3 as they argued its adoption
would make 500-pound barrel production uneconomical, resulting in barrel makers going
out of business or switching to block production which would destabilize the block
market. IDFA wrote that 40-pound blocks and 500-pound barrels serve materially
different functions in the market and the failure to include both in the survey would
distort the commodity cheddar cheese market.
NAJ submitted a post-hearing brief in opposition to Proposal 3. NAJ cited
hearing evidence showing the market price of block and barrel cheese has diverged

significantly since 2017, with barrel cheese priced about $0.11 per pound less than block
cheese from 2017-2022. NAJ stated blocks and barrels have different uses, different
buyer markets, and limited substitutability. With an expected increase in block
production in the coming years, NAJ wrote, there may be many months in which barrels
are more per pound and should remain part of the cheese price formula.
A witness representing the AFBF testified in support of adding 640-pound
cheddar blocks to the Class III formula, as contained in Proposal 4. The witness said
adding 640-pound blocks would expand the volume of cheese surveyed and better reflect
U.S. block and barrel production volumes. The witness was of the opinion there has been
a pronounced production shift from 40-pound blocks to 640-pound blocks and adding
640-pound blocks would provide more survey volume to avoid future rulemaking to
address the dwindling 40-pound block survey volume. The witness testified that 40pound and 640-pound blocks are largely interchangeable in price, use, and storage, and
therefore it is appropriate those prices be reflected in the Class III price.
A witness representing IDFA testified in opposition to Proposal 4. The witness
said the DPMRP cheese survey encompassed more than 1.34 billion pounds of sales in
2022, divided almost evenly between 40-pound blocks and 500–pound barrels. The
witness testified the data set is sufficient to determine prices in the market and, since 640pound blocks typically trade off the 40-pound block price, its addition would provide
little additional price discovery information. The witness opined that only a small
percentage of the 640-pound block market would meet survey specifications because of
the nature of how the product is manufactured and sold.
The two Leprino witnesses argued it would be inappropriate to add 640-pound
blocks as the market is largely make-to-order and the lack of equipment to handle 640pound blocks limits sales to a narrow group of buyers. The witnesses noted the 640-

pound block market is balanced through the cutting down of 640-pound blocks into 40pound blocks, so the 40-pound block cheddar market is already reflected in its pricing.
A witness representing Glanbia PLC (Glanbia), testified in opposition to Proposal
4. Glanbia owns four dairy plants in Idaho and partially owns two joint venture plants in
New Mexico and Michigan, processing 34 million pounds of milk daily into barrel
cheese, block cheese, whey protein concentrates, proprietary protein blends, and lactose.
The witness testified Glanbia plants manufacture 40-pound and 640-pound-blocks, both
priced off the CME 40-pound block price and opined that adding 640-pound blocks
would not add new information to the survey.
A witness representing the Wisconsin Cheese Makers Association (WCMA),
whose 81 members include cheese manufacturers making 40-pound blocks, 640-pound
blocks, and 500-pound barrels, testified in opposition to Proposal 4. The witness testified
the industry uses the 40-pound block price to price 640-pound blocks, and since 40pounds blocks are already used in the protein formula, adding 640-pound blocks would
add no new price information.
A DFA witness representing NMPF, testifying in opposition to Proposal 4, said
the 40-pound block volume provides an adequate dataset and the sole inclusion of 40pound blocks is sufficient for cheese price discovery, making adoption of Proposal 4
unnecessary. The witness stated the daily CME cash block cheese market is widely
recognized by market participants as heavily influencing the price of cheese. The witness
concluded that because annual CME block cheese traded volumes are not as large as
NDPSR block survey volumes, the volume of 40-pound blocks reported in the NDPSR is
more than adequate to determine the FMMO cheese price. The witness testified that
incorporating 640-pound blocks into the NDPSR data set could promote the same
disorderly market conditions currently observed with the inclusion of 500-pound barrels.

The AFBF reiterated their support of Proposal 4 in their post-hearing brief. The
AFBF indicated 640-pound blocks are priced identically, or nearly identically, to 40pound blocks, and are a standardized commodity cheddar cheese product. Including the
640-pound blocks in the NDPSR survey, they argued, would help make the survey more
robust.
Select, in their post-hearing brief, expressed support for Proposal 4 agreeing with
proponents that its inclusion would increase DPMRP survey volume. Select mentioned
that with new cheese processing capacity starting in upcoming years in Minnesota, New
Mexico, Michigan, and Texas, 640-pound blocks would become a larger proportion of
the commodity cheddar market and it would be prudent to incorporate their prices and
volume in the survey.
IDFA reiterated opposition to Proposal 4 in its post-hearing brief. IDFA
highlighted evidence describing how 640-pound blocks are typically made to customer
order as there is only a small number of cheese buyers who are able to purchase and
process them. Since manufacturers of 640-pound blocks often balance the 640-pound
block market by cutting them down to 40-pound blocks, IDFA said no new price
information would be gained from including 640-pound blocks in the survey.
WCMA also expressed opposition to Proposal 4 in their post-hearing brief and
wrote that because 640-pound blocks do not have a unique price discovery mechanism,
they would add no new price information to the formulas.
A witness representing the AFBF testified in support of Proposal 5, seeking to add
unsalted butter to the DPMRP butter survey. The witness said because of the growing
volume of unsalted butter production and use in the U.S., the DPMRP salted-only butter
price collection increasingly underrepresents the value of U.S. butter. According to the
witness, the amount of butter captured by the NDPSR as a percentage of total butter

production has been declining, from 16 percent in 1999 to 9.4 percent in 2022. The
witness expected this trend to continue without the addition of unsalted butter.
Citing USDA voluntarily graded salted and unsalted butter volumes, the AFBF
witness said one reason for declining butter survey volumes is the increase in U.S.
unsalted butter production. The AFBF witness testified the exclusion of unsalted butter is
unnecessarily restrictive for the purposes of the DPMRP survey. The witness cited U.S.
butter export data showing 2,000 metric tons exported in 2000, to over 65,000 metric tons
in 2022, estimating almost all the exports were unsalted. The witness said incorporating
unsalted butter prices into the FMMO butterfat formula would make the survey more
representative of the evolving butter market, allow for better market transparency, and
provide for more orderly marketing of butter and milk. The witness claimed salted and
unsalted butter are production substitutes, as the same production line can be used for
both without substantial interruption. The witness clarified Proposal 5 is not intended to
change the current 80 percent butterfat reporting standard for butter, and therefore
exported unsalted butter at 82 percent butterfat would continue to be excluded.
A witness representing CDC expressed support for Proposal 5, without additional
testimony. The CDC represents dairy farmers throughout California and is a state chapter
of the National Farmers Union.
A witness representing IDFA testified in opposition to Proposal 5. The witness
testified there is no uniform specification for unsalted butter, so it is impossible to derive
a uniform price for purposes of an FMMO pricing formula. The witness explained
unsalted butter does not store as well compared to salted butter, rendering unsalted butter
less capable of providing useful uniform price information. The witness also testified
unsalted butter tends to be priced off the CME Grade AA salted butter price, and
therefore does not bring any new pricing information. As substantial quantities of
unsalted butter are exported through premium-assisted sales, which would not be

included in the DPMRP survey, emphasizing unsalted butter should not be relied on for
determining the market price of butter. Moreover, the witness considered the current
volume of salted butter reported in the DPMRP to be a robust quantity of butter sales.
A witness representing the Dairy Institute of California (DIC) testified in
opposition to Proposal 5. The DIC is a trade association, representing fluid milk and
dairy product processing plants in California. The witness asserted most unsalted butter
is 82 percent butterfat and exported and should be considered substantively different from
domestically consumed butter which contains 80 percent butterfat. The witness
referenced a lack of clarity on how subsidies on exported butter would be handled in the
product price reporting as another reason for their opposition.
A California Dairies, Inc. (CDI) witness, representing NMPF, testified in
opposition to Proposal 5. CDI is a California dairy farmer-owned cooperative with 258
members producing and marketing 41 percent of California’s total milk production and
operating six butter and milk powder manufacturing facilities in the state. The witness
disagreed with the assertion that salted butter at 80 percent butterfat no longer represents
an adequate survey volume. The witness testified CDI manufactures both types of butter,
and unlike salted butter, unsalted butter is manufactured exclusively for customer order.
The witness argued sales of the two types of butter are not interchangeable. The witness
stressed the addition of salt allows salted butter to be stored for long periods, making it a
market clearing product, whereas the nature of unsalted butter requires it to be sold and
consumed in a significantly shorter period of time. The witness was of the opinion
introducing unsalted butter into the survey may result in volatility in the relationship
between salted and unsalted butter similar to the current volatile relationship between 40pound block and 500-pound cheddar barrels. The witness said it was preferable to have
one product generate the singular commodity reference price for purposes of calculating
the minimum FMMO prices.

In post-hearing briefs, the AFBF offered additional support for Proposal 5, stating
the growing volume of unsalted butter production and use in the U.S. markets results in a
salted-only butter price collection in the NDPSR survey which increasingly
underrepresents the value of U.S. butter. The AFBF argued the declining trend in butter
survey volume as a percent of actual production would continue, as butter survey volume
has fallen from 16 percent of total production in the 1999 to 9.4 percent in 2022.
Select expressed opposition to Proposal 5 in its post-hearing brief. Select argued
that despite the growth of unsalted butter products, it should not be included in the survey
because it lacks a uniform specification, is typically produced for special orders, has no
active commodity market, is often made with 82 percent butterfat versus 80 percent, and
is viewed as a higher-value product.
IDFA’s post-hearing brief reiterated their opposition to Proposal 5 stating the
Grade AA salted butter survey volume is robust and the product is traded on the CME.
IDFA wrote that a majority of unsalted butter is exported through government or private
assisted sales, such as Dairy Export Incentive Program or Cooperatives Working
Together, which would disqualify such sales from being reported. IDFA also stated
unsalted butter does not store as well as salted butter, making it more likely to be made to
order to a particular buyer’s specifications.
A witness representing the CDC testified in support of adding mozzarella prices
to the FMMO cheese price, as contained in Proposal 6. The witness was of the opinion
adding mozzarella would make the FMMO Class III price more reflective of all U.S.
cheese production. The witness asserted that because the volume of mozzarella
production significantly exceeds cheddar production it should be reflected in the FMMO
cheese price to improve price transparency and increase dairy farmer revenue. The CDC
witness also stated mozzarella production is the largest category of cheese produced

today and deserves a standard specification determined by the volume of mozzarella
produced today.
The CDC witness proposed adding mozzarella to the FMMO protein price based
on the Van Slyke cheese yield formula, a formula for predicting cheddar cheese yields
from milk on the basis of its fat and casein content. The witness submitted numerous
USDA Specifications of Mozzarella Cheese for the Department to consider when
determining an acceptable moisture and fat content of mozzarella cheese to be surveyed.
The specification detailed requirements for six variations of mozzarella types in four
forms (loaf, sliced, shredded, or diced). The witness testified that 5 to 6-pound loaves of
mozzarella would be representative of a wholesale commodity mozzarella product and
reasonable for inclusion in the survey.
A California dairy farmer testified in support of Proposal 6. The witness said
including mozzarella in the survey would create a Class III price that more accurately
reflects the value of the current cheese market. The witness attributed the ongoing
decline in the number of California dairy farms to negative margins and price volatility
and stressed the urgency in capturing the additional value of mozzarella. A Wisconsin
dairy farmer also supported inclusion of mozzarella for similar reasons.
A witness representing IDFA testified in opposition to Proposal 6. The witness
described the difficulty in selecting appropriate mozzarella product specifications, yield
assumptions, and manufacturing costs to include in the formulas whose factors currently
reflect only cheddar production. The witness also testified the commercial mozzarella
cheese market contains wide product variability, including varying fat and moisture
parameters demanded by mozzarella customers. The witness testified that unlike bulk
cheddar products, mozzarella is not a market-clearing product, is often sold to meet the
customer specifications, is not traded on the CME, and is not storable for extended
periods.

Witnesses from Leprino and Glanbia testified in opposition to Proposal 6,
asserting the proposal lacked critical details making it difficult to interpret and evaluate.
The witnesses explained the equipment, production, and yield difference between
mozzarella and commodity cheddar. The witnesses said Proposal 6 does not define the
type of mozzarella to be surveyed or how USDA should address the diversity of
mozzarella cheese types and packages. The witnesses stated significant volumes of
mozzarella are manufactured into value-added forms, whether as shred, string, or smaller
retail or foodservice loaves by the primary manufacturer. The witnesses also noted most
mozzarella is not market-clearing and is stored in refrigerated form with limited shelf life
reducing its role as a market clearing product. The witnesses added that the volume of
mozzarella production sold by the primary manufacturer in bulk format is comparatively
small, in contrast to cheddar, in which most shredding, processing into consumer
packaging, and conversion to other forms is performed by different companies rather than
the original manufacturer. The witnesses opined cheddar remains the most appropriate
Class III cheese product.
Leprino reiterated their opposition to Proposal 6 in their post-hearing brief.
Leprino argued mozzarella cheese is a grouping or collection of similar products with
diverse specifications, and that the assumption mozzarella production volume represents
a single defined bulk product is incorrect. Leprino further stated mozzarella has different
manufacturing processes, costs, and product yields. Therefore, if mozzarella was added
to the Class III pricing formula, the formula would become substantially more
complicated with little incremental benefit.
A Foremost witness, testifying on behalf of NMPF, testified in opposition to
Proposal 6, urging USDA to only utilize one commodity price series to represent each of
the four dairy prices: cheese, butter, NFDM, and dry whey, to ensure orderly marketing.
The witness noted the many mozzarella composition types, and purported deriving a 40-

pound block cheddar equivalent price would be difficult. The witness added mozzarella
manufacturing costs are different and no data exists to determine how those costs should
be reflected in the cheese make allowance. The witness said including mozzarella pricing
into the protein price calculation would not enhance price discovery as mozzarella prices
already move with the 40-pound cheddar market. Other NMPF witnesses testified to the
appropriateness of limiting the cheese price to one survey product, cheddar. Witnesses
representing the AFBF and WCMA opposed the inclusion of mozzarella due to the lack
of standard format that could be surveyed.
Select’s post-hearing brief opposed Proposal 6 because no workable framework
for incorporating mozzarella into the price formula was provided on the record.
IDFA’s post-hearing brief reiterated their opposition of Proposal 6 as mozzarella
lacks uniformity in compositional specifications and yields and is not traded on the CME.
IDFA wrote the U.S. Food and Drug Administration (FDA) Standards of Identity provide
four different variants of mozzarella cheese, with a wide variety of fat and moisture
levels. IDFA also stated that while proponents advocated use of the Van Slyke formula
to determine yields, the record lacked evidence as to how the formula should be revised
to incorporate mozzarella cheese.
WCMA opposed Proposal 6 in their post-hearing brief. WCMA members argued
that there is no FDA Standard of Identity for mozzarella and are concerned over the vast
variety of forms and functionality of each mozzarella manufacturer.
A witness testifying on behalf of the CME offered information regarding its dairy
futures and options markets which utilize FMMO prices. The witness did not appear in
support or in opposition to any proposal under consideration. The witness testified that
the CME dairy product portfolio, which began in 1996, includes Class III and Class IV
milk futures and options, cash-settled cheese, 40-pound block cheese, cash-settled butter,
NFDM, and dry whey. The witness said the relationship between Class III and Class IV

milk futures can serve as a mechanism to manage both input and output costs and provide
the dairy trading community with an opportunity to provide liquidity to the market while
managing risk. The witness testified any changes to FMMO formulas, or underlying
DPMRP survey methodology could result in a material change to the valuation of the
contracts. A post-hearing brief filed by CME reiterated its hearing testimony and stressed
that the Department consider the impact to futures and options markets when determining
the implementation timeframe for any FMMO price formula changes.
A witness representing Edge offered the modified proposal that would reweight 40-pound
blocks and 500-pound barrels by U.S. production volumes, not DPMRP survey volumes.
The witness said this alternative weighting methodology would reduce the weight of
barrel cheese as most cheddar cheese is manufactured into blocks. The witness explained
that since a significant volume of block cheddar cheese does not qualify for inclusion in
the NDPSR, barrels have a weight disproportionate to their true market share of the
cheddar market. The witness was of the opinion the protein price should primarily reflect
the block cheddar cheese market as it is estimated 70 to 75 percent of all cheddar cheese
is produced into 40-pound or 640-pound blocks.
The Edge witness predicted that the block-barrel spread could invert in 2025 due
to the growth of block cheese production. The witness expects cheese manufacturers
who can make either blocks or barrels will react to profitable opportunities, thus reducing
the spread between block and barrel prices by altering their production schedules. The
witness argued that, given the anticipated trends over the next 3 to 5 years, it would be
more prudent to reduce the weight of barrels today and revisit the topic of removing
barrels in 5 years.
Edge reiterated their support for the weighting methodology in its post-hearing
brief, as an alternative to eliminating barrel cheese or adding 640-pound blocks to the
survey. Edge explained that, in practice, the Department would survey all barrel cheese

production volume on an annual basis, including forward contracted cheese volumes, to
determine the percentage of barrel cheese produced in relation to the NASS total U.S.
cheddar cheese production estimates. Edge proposed the percentage be rounded to the
nearest 5 percent, and the inverse would be assumed to represent block production. This
calculated weight would be announced by September 15 and be applicable for the
following calendar year. Survey prices would then be weighted by these percentages to
determine weighted average cheese prices.
IDFA, in their post-hearing brief, opposed Edge’s modified proposal, arguing that
it ignores market clearing, minimum pricing principles. IDFA opposed the idea of Class
III prices being predominantly determined through a 40-pound block cheddar price.
A post-hearing brief submitted by NMPF opposed Proposals 4, 5, 6, and Edge’s
modified proposal on the grounds the proposals perpetuate the problem Proposal 3 seeks
to fix, which is to have only one product surveyed to determine a wholesale commodity
price.
Class III and Class IV Formula Factors
a. Make allowances.
Proponents submitted three proposals to amend the make allowances in the Class
III and IV formulas. Proposal 7, submitted by NMPF, seeks to update make allowances
to the following: cheese, $0.2400; dry whey, $0.2300; NFDM, $0.2100; butter, $0.0210.
WCMA and IDFA submitted Proposal 8 and identical Proposal 9, respectively, to update
make allowances as described in the below table. The proposals contain a four-year
implementation schedule with 50 percent of the increase implemented in year 1 and the
remaining 50 percent implemented evenly across the remaining 3 years.
IDFA/WCMA Proposed Make Allowances
Product

Year 1

Year 2

Year 3

Year 4

Cheese

$0.2422

$0.2561

$0.2701

$0.2840

Dry Whey
NFDM
Butter

$0.2582
$0.2198
$0.2251

$0.2778
$0.2370
$0.2428

$0.2976
$0.2544
$0.2607

$0.3172
$0.2716
$0.2785

A former University of Wisconsin economics professor testified regarding
separate manufacturing cost surveys they conducted on behalf of USDA and IDFA in
2021 and 2023, respectively. Each survey collected data submitted voluntarily from
plants producing commodity cheddar cheese, dry whey, butter, and NFDM. The witness
previously conducted similar surveys used by the Department in determining make
allowance levels. The witness did not testify in support or opposition to any
manufacturing allowance proposals under consideration.
The witness explained that only plants manufacturing commodity products
meeting DPMRP product specifications were eligible to participate. As plant
participation was voluntary, the sample of plants and respective volumes varied by
product and between surveys, with increasing cost variation between plants over time.
The witness noted more observed cost variation across plants can occur due to newer
automation technology employed in some plants, varying utility costs over time, and
economies of scale achieved by some plants who negotiate input costs. The witness
explained that dairy-based raw product costs, such as raw milk or purchased cream, are
excluded, while costs of non-dairy ingredients needed to transform the raw milk into a
manufactured product, such as salt and enzymes, are collected and included in the survey
results. The witness said costs, such as labor and utility, through the product-packaging
stage are incorporated, but post-packaging costs, such as long-term storage or distribution
and sales costs, are not. The witness explained an economic depreciation factor, not
consistent with taxable depreciation, is incorporated to cover consumed capital, and the
asset’s return on investment is included to capture opportunity costs.

The witness explained two different methodologies used for allocating costs in
multi-product plants that could not be associated with a specific product (unallocated
costs). The witness said the 2021 survey utilized a degree-of-transformation factor to
allocate costs based on degree of transformation raw milk must undergo in order to be
manufactured into the wholesale product. Transformation factors were assigned
subjectively, based on knowledge of manufacturing processes. As a result, the witness
said, unallocated costs were weighted towards heavily transformed products, such as
NFDM, while products undergoing less transformation, for example, butter, were
assigned a lower portion of the unallocated costs. Due to questions from the industry
regarding this methodology, the witness said the 2023 survey reverted to allocating costs
on a solids basis, a methodology more familiar to industry stakeholders. The witness said
the 2021 survey showed more variation of costs when compared to current make
allowance levels, ranging from an 18 percent decrease in butter costs to a 75 percent
increase in NFDM costs. The 2023 survey results revealed a more consistent cost change
when compared to current FMMO levels, ranging from a 65 percent increase in NFDM
costs to a 72 percent increase in butter costs.
The witness attributed much of the survey result differences to the plant samples.
For NFDM, the 2021 survey had 27 participating plants, whereas the 2023 survey had 15,
with larger average volume per plant, according to the witness. For cheese, the 2023
survey included 18 cheddar cheese plants compared to 10 in the 2021 survey, and the
witness elaborated that the cheese plants surveyed were much larger on average and
represented a significant proportion of the NDPSR volume when compared to the 2021
survey.
The witness testified the data on butter highlighted the importance of sample
composition. Both surveys sampled a similar numbers of butter plants, 13 in 2023 and 12
in 2021, and represented roughly the same total volume. However, the witness stated the

2023 survey had more variation in production volumes whereas in the 2021 survey, butter
plants were more similarly sized. Finally, the witness testified the dry whey surveys had
similar numbers of participating plants, 9 in 2023 and 8 in 2021, but the surveyed volume
in the 2023 survey was nearly 50 percent more than that contained in the 2021 survey.
NMPF offered Proposal 7 as one option for amending FMMO make allowance
levels. Eleven NMPF witnesses, representing the manufacturing interests of cooperatives,
testified in support of Proposal 7. The witnesses testified the current FMMO make
allowances do not resemble manufacturing costs currently experienced in their plants.
The witnesses provided detailed testimony on the impact of inadequate make allowances,
which consisted of similar themes. First, they were of the opinion inadequate make
allowances cause the FMMOs to overvalue raw milk. Consequently, the witnesses said
many cooperatives have reblended cooperative revenues to members as a way of
recouping manufacturing costs not covered by current FMMO make allowances. Second,
the witnesses said insufficient make allowances disincentivize plant investment, whether
it be in current or potential new plants.
The NMPF witnesses testified the industry lacks consensus on reliable data to
determine make allowances due to inconsistencies in cost allocation and reporting across
operations. The witnesses were of the opinion the available manufacturing cost surveys
are not comprehensive or reliable enough to justify large make allowance increases. The
witnesses all stressed increasing make allowances to levels above actual costs could
cause untenable financial harm to producers, putting many out of business and
jeopardizing the milk supply. One NMPF witness described how an informal
manufacturing cost survey of some NMPF members was used in the development of
Proposal 7.
A CDI witness testified regarding the impact insufficient make allowances have
had on their member farms and six butter and milk powder manufacturing facilities. The

CDI witness testified the NFDM and butter make allowances in Proposal 7 are
transformations of the 2021 survey results, using the combined costs and yields of the
two products. An LOL witness testified inadequate make allowances have led to
disorderly market conditions, including lack of investment in manufacturing plants to
process and balance milk supplies and inequitable producer pay prices between producers
of different cooperatives and between cooperative and nonmember producers.
An Agri-Mark witness said current make allowances overvalue producer milk and
make it difficult for cooperatives with manufacturing facilities to remain profitable and
pay the FMMO blend price. Consequently, the witness said, cooperatives must re-blend
proceeds in order to recoup manufacturing costs, resulting in producer pay prices often
less than FMMO blend prices. Agri-Mark is a dairy farmer-owned cooperative located in
the Northeastern U.S. with over 550 members, 3 cheese manufacturing plants and 1
butter-powder plant in the region.
A Foremost witness attributed higher operating costs seen in their plants to
inflation since 2008, adding that in the last 2 years, they have experienced particularly
acute price increases in all categories. A witness representing FarmFirst Dairy
Cooperative (FarmFirst), a cooperative operating in the Upper Midwest with 2,600 dairy
farmer members, testified negotiated over-order premiums have diminished by 24 percent
since 2020 due to their processor’s compressed margins, partly a result of inadequate
make allowance levels. In addition to reducing premiums, the FarmFirst witness attested
the current make allowances overvalue producer milk and have contributed to an
oversupply of milk in the Upper Midwest, resulting in milk dumping, negative PPDs,
depooling, and milk selling at below Class III prices.
A Northwest Dairy Association (NDA) witness testified in support of Proposal 7.
NDA is a dairy farmer-owned cooperative located in the Pacific Northwest with
approximately 295 members, whose subsidiary (Darigold) operates 5 fluid milk bottling

plants and 7 manufacturing plants making butter, cheese, dry whey, and dry milk
products. The witness testified Darigold’s manufacturing costs increased 80 percent
between 2008 and 2022. The witness said inadequate or delayed investment in
manufacturing plant capacity increases transportation costs, which are borne by
producers, since milk must be shipped farther distances to find an available
manufacturing market. A witness representing Maryland and Virginia Milk Producers
Cooperative, Inc. (MDVA), a dairy farmer-owned cooperative located in the MidAtlantic that operates three pool distributing plants and two pool supply plants
manufacturing bulk butter and NFDM, testified costs had increased compared to 2008
levels, with NFDM conversion costs increasing 64 percent over the period. According to
the MDVA witness, Proposal 7 would reduce, but not eliminate, the manufacturing losses
incurred in balancing their milk supply. A witness representing Lone Star Milk
Producers (Lone Star), a dairy-farmer owned cooperative marketing milk on the
Appalachian, Southeast, Central, and Southwest FMMOs, testified that manufacturing
costs at their butter and NFDM plant have risen since commencing operation in 2017. A
witness representing Ellsworth testified to the increasing costs of production at their
cheese and dry whey operation. Lastly, a DFA witness testified in support of Proposal 7
and provided dairy farm cost of production data, arguing this data should be considered
when determining make allowances.
A dairy economist from the University of Missouri, appearing on behalf of
NMPF, testified on the estimated economic impact of Proposal 7. Using an econometric
model, the witness estimated the proposed make allowances would lead to a $0.30
decline in the All-Milk Price and a 200-million-pound milk production decline in the first
year of implementation, with a further milk production decline of 400 million pounds in
the second year. In the long run, the witness forecasted the decline in the All-Milk Price
would moderate to $0.04 as markets adjusted to lowered milk production.

A dairy farm accountant, testifying on behalf of NMPF, presented various
statistics related to their dairy farmer clientele. The witness testified average total income
from their clients’ operations was $5.50 per cwt in 2022, with a break-even milk price of
$19.78 per cwt. The witness said the average net income from 2006 to 2023 was $1.23
per cwt, on an average milk production of 995,115 cwt, yielding an average net income
of approximately $1.2 million. The witness later stated that a 3,300-milking cow herd
would require an investment of approximately $40 million.
An economist from Cornell University, testifying on behalf of NMPF, testified on
the topics of dairy farm profitability, cost of production measures, and farm data from the
Cornell Dairy Farm Business Summary, Michigan State University, and the University of
Wisconsin. The witness warned that setting make allowances “too high” would lead to
unwarranted investments in processing facilities while setting make allowances “too low”
would lead to insufficient plant investments and cooperative deductions on member milk
checks.
Numerous dairy farmers testified in support of Proposal 7, recognizing the need
for increased make allowances despite what they acknowledge would be a decrease in
FMMO producer prices. These witnesses testified to recent decreased farm margins due
to a declining All-Milk Price, falling net pay prices, higher feed costs, and increased
production costs, leading to near negative operating incomes. The witnesses said that
while make allowance increases would hasten this trend, Proposal 7 accounts for these
factors, balancing producer and processor needs. Multiple witnesses expressed doubt in
the available manufacturing cost survey data due to its voluntary and unaudited nature, as
well as observations of cheese manufacturing profitability and continued investment.
Dairy farmer witnesses testified that inadequate make allowances have
disadvantaged dairy farmer-members of cooperatives who own manufacturing plants
compared to dairy farmer-members of cooperatives who own no plants. Several dairy

farmer witnesses said that the prevalence of market adjustment deductions from their
member milk check signifies negative returns on the cooperatives manufacturing assets
due to inadequate make allowances. Another dairy farmer testified processing costs for
Agri-Mark’s four manufacturing plants producing cheese, butter, NFDM, and whey have
increased by an average of 20 percent since 2008, and insufficient make allowances have
resulted in deductions to member milk checks to cover processing costs. According to
the Agri-Mark witness, this has led to disorderly market conditions, which impair plant
investment and disadvantage cooperative members. A CDI dairy farmer witness testified
to the financial difficulties of operating CDI’s balancing plants given current make
allowance levels.
A witness representing the Milk Producers Council (MPC), an organization
representing California dairy farms, testified Proposal 7’s proposed make allowances
balance producer and processor needs. The witness said the cost survey information
entered into evidence is of limited value due to its voluntary, unaudited nature and the
lack of transparency in cost allocation for multi-product plants. The witness argued
differences between the All-Milk Price and the Mailbox Price indicates a need for
increased make allowances and a guideline to the resulting impact on producer pay
prices, currently estimated at $0.75 per cwt.
In its post-hearing brief, NMPF reiterated its arguments for adopting the make
allowance levels contained in Proposal 7, writing it is the only option accounting for an
increased cost in manufacturing while protecting producer pay prices. NMPF stated there
has never been a make allowance adjustment greater than $0.35 per cwt, and the changes
contained in Proposal 7 would decrease farmer milk prices by approximately $0.50 per
cwt.
NMPF presented in its brief the aggregated costs cooperatives with manufacturing
capacity shared on the record, to emphasize the increases across cost categories since

make allowances were last updated. While the need to update make allowances to reflect
higher costs is necessary, NMPF stated the data on the record is not sufficiently
comprehensive, verifiable, or unambiguous to determine make allowances above those
offered in Proposal 7. In its post-hearing brief, Agri-Mark reiterated support for Proposal
7 as the most balanced approach to updating make allowances, despite acknowledging
the proposed levels are not sufficient to cover all manufacturing costs.
Opponents to Proposal 7, primarily representatives for IDFA or WCMA, echoed
similar concerns from cooperative manufacturers regarding inadequate make allowances,
claiming the inability to recover manufacturing costs on wholesale commodity products
has led to a lack of investment in manufacturing capacity. These witnesses testified on
the importance of make allowances fully covering manufacturing costs, rather than a
portion of costs as proposed in Proposal 7. Witnesses testified that continued capital
investment in plant yield and efficiency gains have not fully countered the effects of
insufficient make allowances as costs have continued to increase. Without make
allowances accurately reflecting costs, the witness said, manufacturers receive inaccurate
financial signals, which impact investments, capital distribution, and FMMO pooling
decisions. Additionally, they said the competitive advantage gained by manufacturing
plants not regulated by an FMMO lead to more investments into operations unaffiliated
with the FMMO system. Only an increase in make allowances reasonably covering
commodity product manufacturing costs, according to these witnesses, can counteract
these effects.
In its post-hearing brief, IDFA reiterated opposition for Proposal 7, writing that
the proposed make allowance levels are inadequate and not grounded in observed data.
IDFA stressed that make allowances are defined as covering the entire cost of converting
raw milk to a given dairy product, not a portion. In its brief, IDFA pointed to NMPF’s
recognition that Proposal 7’s make allowances do not fully cover actual costs but instead

represent a balance dairy farmers can withstand. IDFA objected to the consideration of
farm production costs when determining make allowance levels. IDFA reiterated
FMMOs are not a price support or income support program, and the prices must reflect
the market price of end-dairy products. IDFA explained manufacturers cannot raise the
prices of commodity dairy products to offset higher manufacturing costs because the
wholesale prices are captured in the NDPSR and would raise the reference price by the
same amount. AMPI reiterated in its post-hearing brief opposition for Proposal 7 as
failing to reflect 2022 manufacturing costs. AMPI argued that USDA should not delay
increasing make allowances on the possibility that legislation will give USDA the
authority to conduct a mandatory audited survey.
A witness from DIC testified in support of Proposals 8 and 9. The witness
testified that setting minimum prices too high incentivizes excess milk production, while
a low minimum price through higher make allowances allows for over-order premiums to
set a competitive market price. The witness argued Class III and IV prices should allow
manufacturing plants to clear the market and operate profitably.
The DIC witness entered data concerning its 2022 California dairy manufacturing
cost forecast (2022 CA Forecast). The witness testified the 2022 CA Forecast used a
combination of 2003-2016 California Department of Food and Agriculture (CDFA) data,
state and national indices, and market developments to measure how changes in labor,
utility, and other costs historically moved the actual CDFA cost data. The model then
used that information to forecast California-specific 2017-2022 manufacturing costs,
according to the witness. The witness said while the model forecasts costs, the range of
actual costs around those forecasts could be relatively wide given the relatively few
observations (14 years) used to estimate the model. For example, the expert witness
elaborated that CDFA only collected dry whey costs until 2006, when they surveyed
fewer than three dry whey plants, which is why the CA analysis did not forecast dry

whey costs. The DIC witness opined the best approach to determine manufacturing
allowance levels is using observed cost data but offered the 2022 CA Forecast as another
methodology for use with the other cost surveys and testimony presented.
An IDFA witness testified in support of Proposals 8 and 9, stating make
allowances should be updated to reflect increased costs in manufacturing dairy products.
The witness said that while end-product-prices change monthly to reflect the current
market, make allowances are fixed at 2006 cost levels, forcing dairy manufacturers to
lose money or stop production. The witness stressed the need for relief from the current
inadequate make allowances that do not reflect rising industry costs, adding losses are not
sustainable for plants or dairy farmers who depend on these manufacturing outlets for
their milk. The witness explained IDFA’s proposed make allowances are simple
averages of the 2023 survey and 2022 CA Forecast plus a $0.0015 marketing cost.
The IDFA and WCMA witnesses asserted accurate make allowances need to be
adopted quickly as current make allowances are based on 2005/2006 cost data. The
IDFA witness clarified their staggered implementation proposal, which would implement
proposed year 1 levels shortly after the final decision is published. Both IDFA and
WCMA witnesses said the staggered implementation is designed to recognize the impact
significant make allowance increases would have on producer prices. However, if there
is any delay in implementing changes, both witnesses stressed the staggered
implementation approach should be abandoned and the proposed year 4 levels should be
implemented.
The WCMA witness stated the use of audited California manufacturing cost data
in the 2022 CA Forecast should alleviate any data validity concerns and the 2023 survey
methodology follows precedent used to determine the current make allowance levels.
The witness noted the risk of using a simple average of the 2022 CA Forecast and the

2023 survey to determine proposed make allowances is the potential of the result being
skewed towards California costs, since California plants are represented in both surveys.
A dairy farmer witness, who is a member of AMPI, testified on behalf of IDFA
and expressed support of Proposals 8 and 9. The witness testified that AMPI, who
participated in the 2023 survey, experienced cheese manufacturing costs close to the
study average despite plant sizes that were smaller than the survey average plant size.
The witness said their manufacturing costs of bulk cheese products are 47 percent higher
and general plant expenses are up 62 percent in 2022, compared to 2008.
Several dairy manufacturer witnesses representing Hilmar Cheese Company
(Hilmar), Glanbia, Saputo, and Leprino testified in support of Proposals 8 and 9. Hilmar
is a cheese and whey manufacturer with processing locations in California and Texas.
These witnesses testified dairy processing costs have increased, particularly of late
because of inflation, noting Hilmar’s natural gas costs were 45.1 percent above the 20year average. The Saputo witness echoed testimony on increasing costs, citing the St.
Louis Federal Reserve data series for labor, energy, packaging, and maintenance costs.
The witness said these costs, comprising 20 percent of the total cost to manufacture a
finished cheese product, rose 60 percent, on average since 2006. According to the
witness, Saputo’s manufacturing costs align with the 2021 and 2023 survey results. The
Hilmar witness testified their manufacturing cost increases correlate with the results of
the 2022 CA Forecast. The Leprino witness stated the 2021 survey and 2023 survey had
robust participation, and the 2022 CA Forecast, which used CDFA audited mandatory
data, leveraged a widely accepted statistical modeling approach. All four witnesses
stressed the urgency of updating make allowances. The manufacturer witnesses generally
agreed that inaccurate make allowances distort pricing signals for farmers, processors,
and ultimately consumers.

Witnesses representing Nasonville Dairy and Cedar Grove Cheese, two
proprietary specialty and commodity cheese manufacturer members of WCMA, testified
to rising manufacturing costs by outlining costs in a similar manner to the 2021 and 2023
surveys. According to the witnesses, their costs have risen $0.3226 and $0.77 per pound,
respectively, far beyond the fully implemented Proposal 8 levels. The witnesses testified
that insufficient make allowances negatively impact cheese processing investments and
increase the production of higher-cost specialty products unable to play the same
balancing or foodservice roles as commodity products. They added current make
allowance levels impair the ability of proprietary manufacturers to participate in the
FMMO pool and deprives producers the benefits of having their milk pooled.
In their post-hearing briefs, WCMA and IDFA reiterated their support for
Proposals 8 and 9. IDFA wrote that USDA has consistently set make allowances to
reflect the most recent and reliable actual cost data, using multiple surveys, as in
Proposals 8 and 9. Further, IDFA stressed in its brief the 2023 survey is the most robust
of all of the author’s previous surveys used to set make allowances. IDFA refuted the
notion the 2022 CA Forecast is inappropriate to use for determining make allowances,
explaining the underlying data is robust audited California manufacturing data and the
econometric techniques are widely accepted. IDFA contended that the 2022 CA Forecast
and 2023 survey averages are lower than the cooperative manufacturing costs shared on
the record. Even if inflation has subsided since 2022, IDFA added in its brief, there
would have to be deflation to arrive below pre-2022 levels.
IDFA clarified in its brief the proposed schedule for phasing in make allowance
changes, which is designed to accommodate farmers. When addressing implementation
timing, IDFA refuted the CME’s points about incorporating risk management in the
timing of implementation, arguing that CME's interests do not necessarily align with
those of the broader dairy industry because of the fee revenue they generate.

In its brief, IDFA emphasized the destabilizing effect of current make allowances
on processors and farmers. IDFA shared charts from the hearing, showing how the
Mailbox Price is in close proximity to FMMO blend price, which it says indicates
FMMO prices are too high. IDFA refuted NMPF's argument that Proposals 8 and 9 will
result in a $1.42 per cwt decrease in the All-Milk Price because FMMO prices are
minimum prices and don't reflect premiums received. Further, IDFA wrote in its brief
that dairy farmers whose cooperatives own processing facilities are receiving depressed
prices when make allowances are too low.
IDFA said the best method to update make allowances is through a mandatory
and audited USDA survey; however, USDA does not currently have the authority and
IDFA estimates it would take approximately five years before new make allowances
could be adopted once the authority was granted. IDFA reiterated arguments that make
allowances under-representing actual costs harm both dairy farmers and manufacturers.
In its post-hearing brief, AMPI reiterated support for the make allowance levels in
Proposals 8 and 9, contending they accurately reflect the changes in costs. AMPI added
it supports immediate implementation, rather than the phased 4-year approach. AMPI
wrote the 2023 survey had the largest product volumes of any previous surveys and
highlighted other manufacturing cooperative testimony describing increased
manufacturing costs. AMPI opined continued high manufacturing costs and farm bill
delays have made make allowance updates more urgent.
Leprino’s post-hearing brief reiterated its support of Proposals 8 and 9,
emphasizing the importance of implementing make allowance changes immediately.
Leprino stressed 2023 cost levels have continued to climb and offered its own updated
cost increases, compared to 2022: 11 percent for labor, 17 percent for property insurance,
and 9 percent for liability insurance.

A witness representing the AFBF testified in opposition to Proposals 8 and 9,
opining the 2021 and 2023 survey data may be biased due to its unaudited nature and the
known potential to be used for rulemaking, stating the incentive to overestimate reported
costs for commodity goods disqualifies this voluntary data. The witness testified only the
2016 CDFA survey results can be verified as accurate enough to be used for determining
make allowances. According to the witness, the relatively complicated 2022 CA Forecast
model using a small number of observations (14 years) to forecast 2022 costs (6 years out
from the actual data) could be overfitted to the 2000-2016 data and unreliable to predict
future costs.
Numerous dairy farmer witnesses testified in opposition to Proposals 8 and 9,
focusing on the negative effect significant make allowance increases would have on
producer pay prices. A DFA farmer witness from New Mexico testified the make
allowance increases contained in Proposals 8 and 9 would result in negative operating
income over the next 10 years, making continued operation of their farm unsustainable.
The witness said any make allowance increases would severely and disproportionally
impact producers in the southwest due to the share of milk going into manufacturing
products. A LOL dairy farmer testified significant increases in make allowances would
be difficult for farms in California to absorb, where water scarcity has led to high forage
costs. According to the witness, large make allowance increases would put adequate
milk supply at risk, all the while guaranteeing profit for commodity manufacturers and
leading to over production of manufactured dairy products.
Two dairy farmer witnesses, a member of the CDC and a small Maryland dairy
farmer, testified against increases in make allowances due to the impact on producer pay
prices and lack of accounting for dairy farm production costs. According to the
witnesses, while processors can pass on costs to customers up the supply chain, producer
margins are too thin to sustain substantial price decreases from increased make

allowances. The witnesses testified that further declines to producer margins will cause
more producer exits and disruption to the milk supply. A dairy farmer representing Edge
testified any change in make allowances should require a 15.5-month delay, be restrained
by the impact on producer pay prices, and cover only the most efficient plants.
In its post-hearing brief, NMPF reiterated its arguments in opposition to Proposals
8 and 9. NMPF argued that these proposed changes would decrease dairy farmer milk
prices by approximately $1.45 per cwt, further narrowing producer margins and causing
disorderly marketing.
NMPF cited ongoing plant investment as an indication current make allowances
are not too low as portrayed by proprietary manufacturers. NMPF emphasized
proprietary manufacturers are not required to be regulated and, thus, can choose not to
participate in the FMMO and avoid paying minimum prices they contend are too high
because of inadequate make allowance levels. NMPF opined about the lack of evidence
to merit raising make allowances to levels contained in Proposals 8 and 9.
In its brief, NMPF refuted the studies used as a basis for Proposals 8 and 9.
NMPF cited hearing testimony regarding the insufficiency of some plant sample sizes in
the 2023 survey. Further, NMPF argued the 2023 survey does not capture how
manufacturing costs are skewed by plants that serve a balancing role. NMPF stated if
make allowances are set too high, balancing plants would be incentivized to run at
maximum capacity, rather than running at less than full capacity to provide critical
balancing services to the market. NMPF voiced concerns with the 2022 CA Forecast,
noting the proposed make allowances in Proposals 8 and 9 are duplicative since the 2023
survey included California data. Further, NMPF opined that the 2022 CA Forecast is of
little utility as it did not account for basic changes to the California dairy manufacturing
sector since 2016, such as plant openings and closings and productivity improvements.

In its post-hearing brief, Select also opposed Proposals 8 and 9, on the basis of the
2022 CA Forecast being inappropriate to use in determining make allowances. Select
echoed NMPF’s argument that use of the forecast would be duplicative of California
data. Further, Select argued indexing does not account for improvements to plant
efficiencies and the Department has not previously used indexing to determine make
allowances.
In its brief, the AFBF opposed any increase to make allowances, instead
advocating they only be increased once a mandatory, audited cost survey was
administered by the Department. The AFBF opined that both the 2021 and 2023 surveys
were biased because there was a clear intention the surveys would be used in a
rulemaking proceeding. The AFBF opposed the use of indexing to set make allowances,
as was done in the 2022 CA Forecast, because it fails to recognize productivity
improvements over time. The AFBF echoed other brief arguments that continued
processor investment is evidence that make allowances are not too low.
The Midwest Dairy Coalition (MDC), an alliance of six dairy farmer-owned
cooperatives operating in the Midwest, filed a post-hearing brief stating make allowance
updates are long overdue, but took the position the Department should be granted
legislative authority to conduct a mandatory and audited cost survey. MDC did not offer
support or opposition to any make allowance related proposals. In its post-hearing brief,
Edge also did not support or oppose any make allowance related proposals but cautioned
against setting make allowances too high. Until there is a mandatory and audited USDAadministered survey, Edge stated, the Department should err on the side of caution to not
subsidize commodity manufacturing.
In its post-hearing brief, Select offered an alternative methodology for
determining the make allowance levels using what Select argued was the most reliable
record data. Select suggested taking the average of the 2021 survey and 2023 survey,

subtracting the current make allowance level, and taking half that difference to add to
current make allowance levels. As a result, Select proposed the following: cheddar
cheese, $0.2281; butter, $0.2004; NFDM, $02260; and dry whey, $0.2498.
In its post-hearing brief, CME noted any make allowance changes would be
considered material changes, and USDA should consider an implementation timeframe
that mitigates risks to those involved in futures and options trading.
b. Yield factors.
Submitted by Select, Proposal 10 seeks to amend the cheese price formula by
increasing the butterfat recovery rate in the cheese yield, from 90 to 93 percent. A Select
witness testified in support of Proposal 10 and clarified a butterfat recovery rate of 93
percent would also necessitate an increase in the butterfat yield factor in the protein price
formula from 1.572 to 1.624. According to the witness, these changes would result in a
modest increase in the Class III price, estimated at $0.04 per cwt. The witness stressed
USDA should not be guided by price impacts but rather by achieving formulas to better
reflect manufacturing realities and the actual value of raw milk. Select reiterated support
for this proposal in its post-hearing brief.
An independent expert witness, retained by Select, testified advancements in vat
technology, coagulants, and curd handling have enabled manufacturers to achieve
recovery rates higher than the currently assumed 90 percent. The witness described how
modern, horizontal vats attain butterfat recoveries far exceeding both open and enclosed
horizontal vats, and how most commodity cheddar manufacturers use advancements in
coagulants and curd handling to attain greater than 93 percent butterfat recovery.
Additionally, the witness said, whey cream can be reintroduced into the cheesemaking
vat to increase cheese yield and revenue, ultimately increasing butterfat recovery.
The AFBF wrote in its brief that it also supports Proposal 10 to increase the
butterfat recovery factor. The AFBF pointed to evidence on the record of increasing

plant efficiencies, justifying updating the butterfat recovery factor to the level in Proposal
10.
Six witnesses, representing Glanbia, Leprino, IDFA, CDI, DIC, and MPC,
testified in opposition to Proposal 10. The Glanbia witness described a broad range of
industry fat recovery based on plant age and processing techniques, and acknowledged
many modern plants, including Glanbia plants, can achieve 93 percent cheddar fat
recovery. The witness testified Proposal 10 is being offered to enhance prices while
ignoring other parts of the formula that overvalue milk. The witness contended lost
solids within the manufacturing plant and the discounted price of whey cream, should
they be considered, outweigh the effects of Proposal 10 on milk prices. The Leprino
witness testified any changes to the yield factor should only occur after a comprehensive
review of all yield assumptions. The witness agreed 93 percent butterfat retention is
achievable in some plants but does not believe it is possible across the entire industry.
The IDFA witness contended Proposal 10 takes a piecemeal approach to changes
in the yield formula and selectively focuses on dairy farmer revenue enhancements only.
The witness opined whey cream is overvalued in the current formula, as butterfat not
going into cheese is currently valued as Grade AA butter despite regulation that whey
cream cannot be used in Grade AA butter. The witness claimed whey cream is
discounted 20 percent or more compared to fresh cream. In addition, the witness said inplant milkfat losses are not recognized in the current formula, something that should be
considered when evaluating yield factor changes. The witness testified any decreases in
the Class III prices that result from accurately accounting for both processing losses and
whey cream values would more than offset the increases in Class III prices proposed by
Select.
A witness from the Center for Dairy Research (CDR), appearing on behalf of
IDFA, testified to observing improvements in butterfat retentions over the past 40 years,

mostly due to improved vat design and technology. The CDR, with a dairy plant on the
University of Wisconsin-Madison campus, supports the U.S. dairy industry with
expertise in cheese, dairy ingredients, cultured products, dairy beverages, quality/safety,
and dairy processing. The witness noted a range of butterfat losses at the cutting stage
including 9 to10 percent fat loss in open vats, 7 percent fat loss in Double O vats, 6
percent fat loss in horizontal vats, and 5 percent fat loss in modern vats. The witness
testified that while large modern plants are installing newer, more efficient vats, old, less
efficient vats are not leaving production, and are being repurposed and installed in
medium and small plants throughout the country. The witness noted there is still a large
variety of vats being using in the industry, and stressed the latest vat design does not
ensure optimal butterfat retention, as the experience of the cheesemaker and product
handling practices could also lower butterfat recovery.
Based on current observations and work within the industry, the CDR witness
provided best estimates for fat recoveries in cheddar cheesemaking as 91 to 93 percent
retention in well-run factories with modern vats, 90 to 92 percent retention in well-run
factories with vertical Double O vats, and 88 to 91 percent retention in factories with
open vats. The witness said, based on their experience, 91 percent could be considered
the industry average butterfat recovery for cheddar cheese plants.
A CDI witness, appearing on behalf of NMPF, testified to the lack of yield data
available to support the proposed recovery rate contained in Proposal 10. The witness
supported a tempered update to the cheese make allowance that does not include an
update to the yield factor. A witness representing DIC testified the current 90 percent
butterfat recovery rate is reasonable because, despite some newer, more efficient plants
achieving higher fat recovery, older plants may not be able to achieve the higher rates.
The DIC witness stated fat recovery data is lacking across the industry and further
asserted the current 90 percent butterfat recovery should be retained. The witness

representing MPC testified the current formula should remain in place until the industry
tackles the mechanics of the Class III formula, and the big issue is how butterfat not
being retained in the cheesemaking process is valued.
A witness representing AMPI provided testimony supporting the improvement
seen in butterfat recovery due to new vat technology. The witness said AMPI installed
cheesemaking equipment that facilitates the recovery of fat; however, they did not
provide specific data.
Submitted by Select, Proposal 11 seeks to eliminate farm-to-plant shrinkage from
the yield factors in the FMMO Class III and IV price formulas. A witness appearing on
behalf of Select testified USDA’s decision to include shrinkage in the formula was
premised on the concept that such losses were not in the handler’s control and are
unavoidable and common. The Select witness was of the opinion producers,
cooperatives, and handlers do have the ability to address and stem losses in the
transportation of milk from the farm to the plant. The witness said historically, as the
number of farms on a milk route increased, the probability for discrepancies between
farm weights and plant weights also increased, as each stop offered potential for spillage,
loss within piping, and errors in measurement. The witness shared statistics on the
increasing size of U.S. dairy farms, stating that in 2016, three-quarters of all U.S. milk
production came from farms that could fill a full tanker, whereas in 2000, less than half
of U.S. production came from farms filling a full tanker. The witness estimated 80
percent of the current milk volume in the U.S. comes from farms able to fill full tankers
on every-other-day pickup schedules. Consequently, said the witness, the occurrence of
shrinkage is decreasing. As an example, explained the witness, Select’s members are
large enough to ship full tanker loads of milk, meaning Select does not experience the
same risks of milk loss which occur on multi-stop routes.

Other than milk losses occurring with hoses, the Select witness was unaware of
any inherent, unavoidable, farm-to-plant losses that could occur within the pick-up
process. The witness said even farms without the ability to fill a tanker can adopt farm
scales, flow measurement, and other technologies to minimize imprecision and
inaccuracy. The witness testified the cost of implementing these improvements would be
offset by the anticipated price impacts of adopting Proposal 11, which the witness
estimated to be $0.07 per cwt.
A second Select witness presented an analysis of Select plant data from August
2022 to July 2023, representing 171,240 milk shipments and a total of 9.8 billion pounds.
The witness stated approximately half of their customers do not report plant weights back
to Select. For those plants who do report, the witness said reported plant weights
exceeded farm weights about half of the time. The witness stated non-shrink factors,
such as scale calibration or weather, typically cause the large discrepancy between farm
and plant weights. The witness concluded that for the subset of loads where differences
occurred between farm and plant weights, the net variance across all loads was less than
0.1 percent.
A witness testifying on behalf of Continental Dairy Facilities (CDF) and
Continental Dairy Facilities Southwest (CDF SW), two wholly owned subsidiary plants
of Select in Michigan and Texas, manufacturing NFDM, butter, and buttermilk powder,
presented farm-to-plant loss data to support Proposal 11. The witness analyzed farm-toplant losses in milk deliveries to the two CDF facilities from August 2022 through July
2023, comprised of both single and multi-farm pickups. The witness stated in total, plant
weights averaged 0.15 percent lower than farm weights for CDF and 0.10 percent lower
for CDF SW. The discrepancies ranged from a negative 0.32 percent (plant weights were
0.32 percent lower than farm weights) to 0.67 percent (plants weights were 0.67 percent
lower than farm weights). Since many of the non-Select shipments to CDF are multi-

farm pickups, the witness said management for farm-to-plant shrink is not unique to
Select or larger farms, generally. The witness described improperly calibrated scales,
input or transposition errors by milk haulers, changes in equipment or personnel when
weighing loads, or snow settled on scales or tanks when weighing, as reasons for weight
discrepancies. The witness testified these variances are not inherent and that they can be
addressed. Select reiterated its arguments supporting Proposal 11 in its post-hearing
brief.
The AFBF expressed support for Proposal 11 in its post-hearing brief. The AFBF
contended that data on farm-to-plant shrinkage contained in evidence is similar to what
was used to determine the original farm-to-plant shrinkage factor. The AFBF argued that
this issue does not merit a formal data collection, but a one-time adjustment to reflect that
farm-to-plant shrinkage is much less significant than it used to be.
Five witnesses representing IDFA, Leprino, CDI, DIC, and MPC testified in
opposition to Proposal 11. The witnesses asserted Select’s minimal farm-to-plant
shrinkage is not the reality for much of the dairy industry, noting the lack of industrywide data on farm-to-plant shrinkage and the differing nature of measuring components
at the farm, rather than at the plant, are reasons Proposal 11 should not be adopted. The
witnesses further testified FMMO yield factors should not be based on one company’s
experience, especially one, they argued, that was an industry leader in this area.
The Leprino witness testified that while Select has been able to limit their own
farm-to-plant loss through increasing herd sizes and improvements in milk weighing and
sampling, this is not a representation of the nationwide dairy industry. Additionally, the
witness argued the scientific characteristic of milk fat clinging to the walls of stainless
steel has not changed; as such, volume and fat loss still occur, even at the most innovative
plants. The IDFA witness claimed less than 10 percent of all farms produce enough milk
to fill entire tanker loads, so it is reasonable to conclude the losses experienced when the

formulas were adopted are still happening today. According to the witness, failure to
account for the diversity of farm size may further incentivize manufacturers to prefer
larger farms over smaller farms.
Submitted by Select, Proposal 12 recommends amending the nonfat solids price
formula by increasing the NFDM yield factor from 0.99 to 1.03. A Select witness
testifying in support of Proposal 12 said it would correct the NFS yield factor by
including the value of milk solids utilized in buttermilk powder, as producers are not
currently paid accurately from a price calculated on NFDM prices alone. According to
the witness, a proper yield factor for NFDM should account for all milk solids, including
the milk solids remaining in cream after separation and used in butter or buttermilk. The
witness stressed the initial NFS formula, correctly adopted in 2000, included buttermilk
powder.
A witness representing CDF and CDF SW testified on price alignment and
processing differences between NFDM and buttermilk powder. The witness stated sales
and regional prices observed at the two plants for buttermilk powder and low-heat NFDM
are closely aligned, as well as consistent with prices reported by AMS’ Dairy Market
News (DMN) from January 2023 through June 2023. The witness further testified that
the process of drying buttermilk utilizes the same equipment as that of drying skim milk
but requires a thorough cleaning of equipment when changing product lines, higher
temperature, and additional drying time due to buttermilk’s higher butterfat content. The
witness said this leads to increased utility costs of approximately $0.02. The witness
testified the NFS yield factor should consider all powder products, including buttermilk
powder whose yield is lower than NFDM. Select reiterated its arguments in support of
Proposal 12 in its post-hearing brief.
In its post-hearing brief, the AFBF expressed support for Proposal 12 as it
believes it reflects the long-term market shift toward valuing buttermilk near the NFDM

price. The AFBF stated that a formal extensive data collection is not necessary for this
proposal to be adopted because there is a clear record of buttermilk values.
Two witnesses, representing Leprino and IDFA, testified in opposition to
Proposal 12. The witnesses testified Proposal 12 is based upon a theoretical yield
approach which assumes a perfect system with no in-plant component losses in the
conversion of NFS to NFDM. The witness said in-plant losses exist even in the most
modern and efficient manufacturing facilities and should be recognized in the price
formulas. The witnesses gave an example of the portion of NFS remaining in cream after
separation, which cannot be processed into NFDM. The Leprino witness argued the
FMMO system is predicated on the notion processors should pay for milk based on the
revenue they can derive from selling products manufactured from that milk. The witness
said milk routinely lost in processing does not end up in finished products, which should
continue to be accounted for in the formulas. The IDFA witness testified product yields
should incorporate manufacturing losses, and overestimating the quantity of NFDM
manufactured from NFS by accounting for buttermilk powder would overvalue the
market-clearing of NFDM and contribute to disorderly marketing.
A witness from CDI testified on behalf of NMPF in opposition to Proposal 12.
The witness testified CDI supports evaluating all factors in the Class III and IV formulas,
and yield factors should only be updated once industry-wide data on product yields are
available. The witness stated the NFS price formula is based on NFDM and the yield
factor correctly reflects the yield of NFDM only, without an adjustment for buttermilk
powder. The witness said Proposal 12 would adjust the NFDM yield factor to represent a
composite yield for multiple products which differ in terms of component composition,
uses, cost of manufacture, and market prices. While acknowledging buttermilk powder’s
processing costs are likely higher than NFDM’s, the CDI witness testified there was not
enough data to quantify the difference in processing costs; further, data presented from

DMN and by Select witnesses are not sufficient to determine the alignment of prices
between buttermilk powder and NFDM. The witness clarified that buyers of butterfat
and NFS must account for all solids utilized at the minimum component prices,
regardless of whether the solids are used in the surveyed products of butter and NFDM or
in other Class IV products such as buttermilk powder.
A witness from the DIC testified in opposition to Proposal 12. According to the
witness, while NFDM yields are likely higher than the current yield factor of 0.99, not all
NFS in producer milk end up in NFDM, with some NFS from cream remaining in
buttermilk. The DIC witness claimed the lower yield factor is to compensate for
generally lower buttermilk powder prices compared to NFDM but acknowledged DMN
data suggested a buttermilk powder price discount relative to NFDM narrowing in recent
years. A witness from MPC testified in opposition to Proposal 12, stating they were
opposed largely due to a lack of adequate data.
In their post-hearing briefs, IDFA and NMPF opposed Proposals 10, 11, and 12.
IDFA argued the three proposals are not representative of industry-wide experience, but
rather on what is possible given modern technology and equipment. NMPF echoed
IDFA’s opposition in its brief, citing insufficient data to justify the proposed changes.
IDFA specifically objected to Proposal 11, stating it would place an unfair burden on
small farms that cannot fill a tanker and, thus, continue to experience shrinkage.
Proposal 11 was also opposed by WCMA in its post-hearing brief. Lastly, IDFA
contended Proposal 12 should be rejected because it overvalues buttermilk powder.
Base Class I Skim Milk Price
Six proposals to amend the base Class I skim milk price were considered in this
proceeding. Proposal 13, submitted by NMPF, seeks to return the base Class I skim milk
price to the higher-of the Class III or Class IV advanced skim milk price, referred to as
the “higher-of” mover. Proposal 14, submitted by IDFA, would use an average of the

advanced Class III and Class IV skim milk prices, plus an adjuster that resets every
January. The adjuster would be the higher of either: 1) $0.74; or 2) the 24-month average
difference between the higher-of and the average-of the advanced Class III and Class IV
skim milk pricing factors. The 24-month calculation would run from August of the three
years prior to July of the previous year. Proposal 15, submitted by MIG, would amend
the current average-of mover from a $0.74 adjuster to a monthly rolling average adjuster
calculated as the difference between the higher-of and the average-of, for 24 months,
with a 12-month lag.
Proposal 16, referred to as “Class III plus,” submitted by Edge, would start with
the announced Class III price and incorporate a 36-month rolling adjuster averaging the
monthly differences between the higher-of the advanced Class III or advanced Class IV
skim milk prices, and the Class III skim milk price. The proposal would eliminate
advanced prices. Proposal 17, also submitted by Edge, would return to the higher-of
mover but would use announced rather than advanced prices. Proposal 18, submitted by
the AFBF, would return to the higher-of mover and would eliminate the advanced pricing
of Class I skim milk, Class I butterfat and Class II skim milk.
An NMPF witness testified in support of Proposal 13. The witness reviewed the
2000 Federal Order Reform (Order Reform) rulemaking and summarized the higher-of
methodology as accurately reflecting the value of the different milk use categories and
ensuring shifts in demand for any one manufactured product does not lower Class I
prices. The witness said the Department determined during Order Reform that the
higher-of mover addresses disorderly marketing by reducing volatility in milk prices,
reducing class price inversions and depooling, and assisting Class I handlers in
competing for a milk supply.
The NMPF witness testified the 2019 change to the average-of was designed to
facilitate price risk management strategies for fluid milk processors, which, the witness

stated, is not an objective of FMMOs. The witness said the intent of the change was to be
roughly revenue neutral, while allowing handlers to better manage volatility in monthly
Class I skim milk prices using Class III and Class IV milk futures and options contracts.
The witness claimed the 2019 change has not functioned as intended or anticipated by
NMPF, has exacerbated disorderly marketing conditions, has not been revenue neutral,
and will continue to have deleterious effects on the dairy industry. The witness described
the asymmetrical risk to producers which was not anticipated when the mover change
occurred. The witness explained the higher-of exceeds the average-of calculation
whenever the Class III and IV advanced skim milk pricing factors differ by more than
$1.48 per cwt, regardless of which factor is higher. The witness noted the reverse is true
when the advanced skim pricing factors differ by less than $1.48 per cwt.
A witness from Southeast Milk, Inc. (SMI), a NMPF cooperative member with
114 dairy farmer members, testified that when the two advanced skim milk pricing
factors are equal, the maximum amount by which the average-of can exceed the higher-of
Class I mover is $0.74 per cwt, but there is no limit by which the average-of can fall
below the higher-of Class I mover. The NMPF witness testified that in 2020 and 2022,
there were instances when the average-of mover fell below what the higher-of mover
would have been, in which the difference was at times significant. The witnesses
testified the maximum divergence recorded between the current average-of mover and
the higher-of mover was a $5.19 lower average-of mover in December 2020, when
Classes II, III, and IV skim prices differed by approximately $11 per cwt. In comparison,
the witness said, the maximum gain during that time was capped at $0.74. The SMI
witness said because the upside is capped, but the downside is not, it is difficult to ever
return to revenue neutrality under the average-of mover.
The SMI witness testified the average-of mover has lowered dairy farmer revenue
compared to what they would have received under the higher-of mover, with estimated

cumulative market losses totaling $998.3 million from May 2019 through August 2023.
The witness said that for the same period, the average-of mover decreased revenue to the
southeastern FMMO producers by more than $192 million. The NMPF witness reviewed
data during periods of relative price stability, revealing the average-of mover generated
modest gains over the higher-of mover. However, in periods of price volatility, there
were substantial revenue losses in months when the average-of mover was less than the
calculated higher-of mover, which resulted in significant cumulative losses to producers
over time.
The NMPF witness claimed the change to the average-of mover increased
disorderly marketing by reducing Class I prices relative to the other classes and creating
greater incentives for handlers to depool milk. The witness said that in 2020, the
enhanced demand for cheese relative to the demand for butter and NFDM widened the
spread between Classes III and IV well beyond $1.48, substantially lowering Class I
prices compared to what they would have been under the higher-of mover. The SMI
witness testified that between May 2019 and June 2023, the Class III skim value
exceeded the Class IV skim value by over $1.48 per cwt in 16 months, and the Class IV
skim value exceed Class III skim value by $1.48 or more per cwt in 11 months. In 2023,
according to the SMI witness, the average-of continued to be lower than the higher-of in
some months, which had a more significant impact to dairy farmers because it occurred
during a time of extremely low dairy farm margins. The witness said they expect to see
more volatility and larger spreads between Class III and Class IV prices in the future
because of anticipated higher butterfat prices which will lower the Class III skim value.
The NMPF witness testified that adoption of the average-of mover created class
price inversions and resulted in significant volumes of depooled Class III milk during the
second half of 2020. Class price inversions occurred again in 2022 and 2023, said the
witness, resulting in price volatility and substantial depooling of Class IV milk. The

witness opined a wide variety of market conditions have proven capable of generating
market volatility, driving a wedge between Class III and IV skim milk prices, and
resulting in an average-of mover of more than $1 per cwt below what the higher-of
mover calculation would have been.
The NMPF witness said the average-of mover has not resulted in increased risk
management activity at a value to handlers anywhere near the losses experienced by dairy
farmers. Numerous witnesses testified their fluid milk customers have shown very little
interest in hedging milk since the average-of mover was implemented.
NMPF witnesses testified other Class I mover proposals under consideration in
this proceeding use the higher-of mover calculation as the benchmark for determining
adequate Class I skim milk price revenue. They testified those proposals provide
producers revenue in an after-the-fact-manner that fails to maintain the maximum
monthly separation between advanced Class I prices and the manufacturing class prices, a
goal expressed by the Department when it recommended the higher-of mover during
Order Reform.
The SMI witness testified that because of the change to the average-of mover, the
southeastern FMMOs experienced disproportionately large reductions in blend prices due
to the higher Class I utilization in the region, making it harder to attract supplemental
milk the region requires to meet fluid demand. The witness noted that using an averageof mover to establish a Class I skim price makes it more difficult for Class I handlers to
procure milk from plants with higher-value manufactured products because the price
difference is not large enough to draw milk away from manufacturing. The witness
opined a Class I skim mover should provide for orderly marketing by ensuring an
adequate supply of raw milk for fluid plants, producer price equity including prompt and
uniform payments to farmers and cooperatives, and stability for dairy farms. The witness

argued the current average-of mover makes it more difficult for FMMOs to achieve those
purposes.
An NMPF consultant witness testified the higher-of mover is necessary to
transmit market signals in real time. The witness said a higher Class I milk price relative
to other class prices sends market signals to move milk from surplus to deficit regions to
ensure adequate fluid milk supplies. Additionally, the witness continued, disorderly
marketing caused by prolonged depooling occurs when the Class I price is lower than
Class II, III, or IV prices. The witness asserted prolonged periods of depooling create
market disorder. Since the change in 2019, claimed the witness, the Class I mover has
facilitated persistent long-term periods of depooling because there is no guarantee Class I
prices will exceed the other class prices over time. In contrast, the witness asserted that
under the higher-of mover, if Class III and IV advance skim prices increased, the Class I
price would remain higher and depooling would moderate.
The NMPF witness presented data to demonstrate the objective of adopting the
average-of mover, to allow for greater risk management, has not been accomplished, and
prolonged periods of depooling have made it difficult for producers to hedge their farm
margins. The witness stated that when milk is not pooled, producer hedging losses
cannot be offset by gains on milk checks because revenue from the higher valued
manufacturing milk is not shared with the marketwide pool. The witness asserted riskmanagement performance is relatively similar under the higher-of and average-of
movers, entering data they believed showed how Class III futures contracts would
similarly mitigate risk. The witness contended other proposals do not adequately
replicate the higher-of price in future periods; nor do they share equally among dairy
producers and others, necessitating periodic recalibration. Rather than recognize the
average-of limitations, the witness said, other proposals seek to align the average-of and
higher-of performance. The witness testified an average-of mover with an adjuster

causes past market conditions to influence current prices, sending pricing misinformation
to the market and causing disorderly marketing. The witness concluded that without
immediate market signals from the advanced Class III and IV milk prices, any of the
average-of or Class III plus movers would struggle to replicate the higher-of mover
performance.
An NMPF witness representing Prairie Farms testified producer revenue has been
significantly reduced, without recovery, since the change to the average-of mover.
Prairie Farms is an Illinois based farmer-owned milk cooperative with over 600 dairy
farmer members operating fluid milk processing and manufacturing facilities that
produce a variety of fluid and manufactured dairy products. Increased depooling in the
last few years because of the average-of mover has resulted in increased price volatility,
the witness said. The witness testified that with the average-of mover either Class III or
Class IV milk is not pooled, depending on which class is higher, because the
manufacturer is able to keep the additional market revenue instead of sharing it among
pooled producers.
The Prairie Farms witness testified dairy producers want a pricing system that
gives real-time market signals, which is accomplished with the higher-of mover. The
witness testified Prairie Farms supported the change to the average-of mover believing it
would facilitate their customers’ ability to hedge Class I milk. However, Class I
processors have generally not increased their use of hedging, said the witness, while dairy
producers have taken on additional risk by giving up a higher Class I price. The witness
stated one reason they believe their customers do not utilize hedging is because of fear of
incurring a price disadvantage compared to their competitor. The witness added that of
the Prairie Farms dairy farmer members engaged in risk management, there has been a
decrease in the use of forward contracting since the implementation of the average-of
mover because of negative PPDs, as they create a negative basis dairy producers are

unable to account for in their risk management decisions. The witness presented data
showing negative PPDs have become larger and more frequent under the average-of
mover, which has increased the volume of depooled milk and significantly reduced
revenue to farmers.
Another NMPF witness representing Upstate Niagara Cooperative (Upstate
Niagara) testified the average-of mover has not operated as intended, has negatively
impacted producer revenue, and has exacerbated disorderly conditions. Upstate Niagara
is a dairy farmer-owned cooperative marketing the milk of approximately 250 members
and operating eight fluid processing and manufacturing plants in New York and
Pennsylvania. According to the witness, under the average-of mover, producers pooled
on FMMOs with higher Class I utilization were most severely impacted due to the
depressed Class I milk prices and no ability to benefit from the higher priced
manufacturing milk. Similar to other witnesses, the Upstate Niagara witness described
the asymmetric price risk of the average-of mover.
From interactions with fluid milk customers, the Upstate Niagara witness said
there is widespread acceptance of prices based on FMMO monthly price announcements
by their conventional customers. The witness said conventional customers have been less
interested in pursuing a fixed price if there was any chance it could result in a competitive
disadvantage in any given month. The witness recognized there may be some processors
or end users in specialized Class I product channels that may utilize hedging but
contended it is a relatively small portion of total Class I sales.
A University of Missouri professor testifying on behalf of NMPF presented
results of an analysis conducted to evaluate the impact of adopting Proposal 13. The
witness testified, under the higher-of mover, Class I prices would increase every year
between $0.32 and $0.50 per cwt; the Class II price would be between $0.08 and $0.12
per cwt less annually; the Class III price would be between $0.06 and $0.13 per cwt less

annually; the Class IV price would be between $0.08 and $0.12 per cwt less annually;
and the all-milk price would be between $0.01 or $0.02 per cwt higher annually, except
for a more significant increase of $0.06 per cwt in the first year. The witness said the
model forecasted the effect on the all-milk price to moderate over time as production
expands.
Twenty dairy farmers testified in support of Proposal 13. Many dairy farmers
testified blend prices have been lower and their milk prices have been reduced since the
average-of mover was implemented. They said only when Class III and Class IV prices
are within a narrow range of each other is the average-of mover equal to or
outperforming the higher-of mover. The witnesses said their experience supports
NMPF’s assertion that farmers’ milk prices have been reduced by $950 million, and the
reduction is not just a COVID-era anomaly. Dairy farmer witnesses said the losses
demonstrate the goal of revenue neutrality with the change to the average-of has not been
achieved. One witness asserted that in 29 of the 52 months since the average-of was
adopted, Class I prices averaged $1.30 per cwt less than what the price would have been
under the higher-of mover. In comparison, said the witness, in the remaining 23 of the 52
months the average-of returned a price only $0.42 higher per cwt. The witnesses testified
to near-universal support by dairy farmers for a return to either the higher-of or, under the
average-of, a mechanism to be equal to the higher-of over a period of time, such as 24
months.
Several dairy farmers urged a return to the higher-of mover, claiming a need for
financial relief as dramatic shifts in milk markets since implementation of the average-of
mover have caused significant financial losses to dairy farmers. Dairy farmers reiterated
the average-of mover change affects 100 percent of pooled producer milk while it is
unlikely fluid milk processors are covering 100 percent of their products with risk
management tools. A dairy farmer testified they were assured the change to the average-

of would be net neutral or net positive, but it has not been. Many dairy farmer witnesses
described losses to dairy farmers under the average-of compared to what the Class I
mover would have been under the higher-of and testified to receiving lower blend prices.
The dairy farmers were concerned about receiving a delayed value of milk from a Class I
mover with a rolling average methodology because they believe they cannot afford to
wait months or years for the added revenue. They testified restoring the higher-of mover
through adoption of Proposal 13 would help to reduce the volatility in monthly milk
prices, bringing more stability and predictability to farmer income.
Dairy farmers of all sizes testified to relying on risk-management tools, such as
Dairy Margin Coverage (DMC), Dairy Revenue Protection (DRP), and CME futures and
options markets because it is difficult to manage their farms through periods of
significant price volatility. Dairy farmers’ testimonies described a range of contract
periods, anywhere from 3-18 months, depending on the individual farmers’ riskmanagement strategy and risk tolerance. In its post-hearing brief, NMPF reiterated
hearing testimony arguing the average-of mover does not meet the standards set forth in
Order Reform, and the change has not been revenue neutral as originally assumed.
NMPF restated that under the average-of mover, price inversions, volatility, and
depooling have increased, and Class I prices have been less effective at incenting milk to
fluid processors relative to manufacturing. NMPF reiterated the asymmetrical risk borne
by dairy farmers with the average-of mover and the frequency of which the difference
between Class III and IV prices exceeded $1.48 per cwt, effectuating that risk.
NMPF reiterated the average-of mover failed to send appropriate market signals
to participants because the fixed adjuster could not maintain the maximum monthly
separation between the advanced Class I and the manufacturing class prices. NMPF
wrote this increased the likelihood manufacturing classes would have a higher value than
milk used in Class I and resulted in increased volumes of depooled milk. Under the

higher-of mover on the other hand, NMPF argued, when a particular manufacturing class
price is rising, the Class I price also rises and tends to maintain Class I as the highest
priced class. To dampen the effect volatility in the manufacturing classes has on Class I,
the highest priced manufacturing class should provide the foundation for ensuring the
Class I price remains above the manufacturing classes almost every month, reducing the
incentive to depool, which is disorderly.
The demand for Class I hedging is not clear, NMPF asserted in its brief, and no
evidence was presented to suggest more than a small minority of the overall fluid market
utilizes hedging, especially beyond ESL handlers. NMPF argued in its brief that while
facilitating risk management for fluid processors may have merit, it is not an objective of
FMMOs. In regulating processors, the AMAA only considers price uniformity to
processors, NMPF asserted. Finally, NMPF restated in its brief the widespread support
of producers for a return to the higher-of mover.
The Dairy Cooperative Marketing Association, Inc. (DCMA), a Capper-Volstead
Marketing Agency in Common with nine cooperative members in the southeastern U.S.,
submitted a post-hearing brief in support of Proposal 13. In its brief, DCMA argued the
change to the average-of mover has not been revenue neutral to dairy farmers, nor
provided benefits to the industry as originally intended. According to DCMA, the
hearing record demonstrates that little Class I hedging occurs, especially on HTST milk,
and includes no evidence that the use of hedging is more prevalent now than prior to the
change. DCMA stated most testimony demonstrated HTST milk is sold based on FMMO
announced prices each month plus a fixed margin. Because revenue on packaged milk
sales flows back to the processor in step with the monthly changes in the FMMO
announced prices, there is no price risk to the Class I processor under this system,
according to DCMA. In its brief, DCMA described the pronounced losses in the
southeastern region as a result of the change to the average-of mover.

The MDC submitted a post-hearing brief in support of Proposal 13, expressing the
importance of making the changes as part of the FMMO reform process underway. MDC
conveyed in its brief the importance of ensuring all reforms are considered in concert
since all changes have ripple effects throughout the entire system and across all classes of
milk.
In its post-hearing brief in support of Proposal 13, Select reiterated the proposal
would support the priorities expressed by the Department in Order Reform, the rationales
of which remain true today. Select cited billions of dollars lost to producers, an increase
in depooling, and a lack of Class I handlers hedging their milk costs as reasons the
average-of has failed.
In both witness testimony and briefs, IDFA and MIG strongly opposed a return to
a higher-of mover. A majority of their opposition was contained in supporting testimony
and evidence for Proposals 14 and 15, as detailed below.
A witness representing IDFA testified in support of Proposal 14. The witness said
the goal of Proposal 14 is to keep producer Class I revenue consistent with what would be
experienced under the previous higher-of mover, while allowing for effective and
affordable Class I risk- management strategies.
The IDFA witness claimed that in the long-run, the proposed Class I mover would
never fall below what the Class I skim milk price would have been under the higher-of
mover. According to the witness, Proposal 14 would have paid more than the higher-of
mover in 13 of the past 21 years. The witness asserted dairy farmers are “made whole”
as compared to the higher-of mover over time through the annual adjuster calculation.
The witness presented data from 2003 through 2019 showing Proposal 14 would have
yielded a Class I price $0.08 greater than the higher-of mover. For 2004 through 2023,
the witness said Proposal 14 would have yielded a Class I price $0.05 higher, due to the
$0.74 floor.

The IDFA witness entered data and analysis to show the volume of milk not
pooled would be slightly less under Proposal 14 than Proposal 13, and the Class I price
would be lower than Class III or Class IV prices in nearly the same number of months
under both proposals. The IDFA witness presented an analysis showing Proposal 14
would have reduced price volatility with the only exception of very high cheese prices in
2020. According to the witness, volatility equates to greater price risk, which increases
hedging costs, and ultimately higher consumer prices.
The IDFA witness countered claims the higher-of mover sends important price
signals to dairy farmers through the Class I price, instead claiming the blend price sends
more important price signals because it is the price farmers receive. The witness alleged
there is little difference between signals sent by the blend price under Proposals 13 and
14, arguing that from 2012 to 2022, Proposal 13 would average 31.9 percent of the Class
I value in the blend price while Proposal 14 would average 31.8 percent. As the impact
on the blend prices is very similar, over time there is little difference in price signals
between the proposals, the witness said.
Regarding the delay incorporated by the rolling adjuster and farmers possibly not
receiving the make-up payments, the IDFA witness noted farmers go out of business for
many reasons, and some may go into the business or expand and benefit from higher
payments. The witness said this issue is no different than handlers going out of business
before the make allowances are raised.
The IDFA witness testified hedging is a critical tool for the subset of innovation
and value-added milk manufacturers to remain competitive with alternative beverages. In
the few growing segments of the milk market, especially ESL and higher value-added
products, retailers are demanding processors provide long-term fixed price contracts,
rather than contracts with fluctuating monthly prices, the witness said. Since processors
cannot enter into a fixed purchase price for raw milk with their milk suppliers, hedging

allows processors to take on the risk of entering into a fixed sales price for its finished
products and cover the risk of raw milk prices rising during the contract period, the
witness testified.
The IDFA witness noted several ESL processors formed and quickly implemented
risk management plans in anticipation of the change to the average-of mover. The
witness noted ESL processors are interested in hedging because of the longer product
shelf-life. According to the witness, a risk management plan allows a processor to level
out what could otherwise be very different costs of milk products that could have been
produced at significantly different times but are being sold to the customer at the same
point in time. The witness noted more hedging of HTST products is done by end users,
such as foodservice customers, not processors. The witness testified that while risk
management is not a stated objective of the AMAA, a stable price, promotion, and
growth of the sale of milk are, and the ability to use risk management tools results in
stable prices and increased sales.
The witness testified IDFA would support a rolling average longer or shorter than
24 months, but the 12-month implementation lag is essential to allow for hedging. The
witness testified Proposal 14 calculates the adjuster from August through July because
long term Class I sales contracts between processors and retailers are often negotiated
and entered into during the final months of the calendar year. To allow for effective
hedging for those contracts, Class I processors would need to know at the time of the
contract negotiations what the adjuster would be for the next calendar year. The witness
supported Proposal 15 as an acceptable alternative to Proposal 14.
A dairy processor witness representing Schreiber Foods (Schreiber) testified in
support of Proposal 14 or 15. Schreiber is a fluid milk processor primarily manufacturing
Class II and Class III products, with approximately 5 percent of their products sold as
ESL Class I products. The witness testified that over the past 20 years risk management

has become a necessary tool for companies with exposure to dairy market volatility. The
witness said that only since the change to the average-of mover in 2019 have milk
processors had a viable way to manage risk. The witness testified that, in response to
requests from foodservice and retail customers to manage Class I costs, Schreiber has
offered Class I forward contracts since 2019. Prior to 2019, the witness said creating an
effective hedge for Class I milk was challenging as it was unknown whether Class III or
Class IV would be the mover. The witness stressed the change to the average-of allows
purchasers to use a combination of Class III and Class IV hedge positions, which gives
everyone in the supply chain the ability to control their market risk in a way that was not
previously possible under the higher-of.
According to the witness, Schreiber hedges price risk for its ESL production
through a combination of Class III and IV futures and swaps, and Class I swaps, which
typically go out 12 to 18 months. Under Proposal 14, the witness explained, market
participants will know the fixed adjuster in advance of the calendar year in order to
conduct their hedging analyses for the coming year. If the Class I mover were to revert to
the higher-of, the witness testified they would have to either find a different way to hedge
or cease offering forward contracts on their ESL products.
A witness representing Nestlé USA (Nestlé) testified in support of Proposal 14.
Nestlé is a fluid milk processor operating one plant regulated by the FMMO system.
Nestlé procures milk from cooperatives using contract agreements, the witness testified,
and offers its customers an annual fixed price contract for their primary Class I product,
an ESL product. The witness stressed the importance of hedging to manage risk and
compete in the market against nondairy beverages. The witness stated Nestlé did not use
hedging for Class I under the higher-of mover because not knowing which class price
would be higher caused uncertainty. The witness testified Nestlé currently hedges all its
Class I milk purchases using Classes III and IV futures contracts, and while they have an

18-month outlook they typically hedge Class I milk 6 months out. If USDA returns to
the higher-of mover, the witness testified, Nestlé would not be able to continue hedging
its Class I milk. The witness testified price volatility has specific impacts on ESL
products, as it is challenging for retailers to set different prices due to monthly milk price
fluctuations for two identical products sold at the same time but produced in different
months.
A witness representing Lamers testified in support of Proposals 14 and 15 stating
those proposals would help smooth out the volatility in the pricing of Class III and Class
IV.
In its post-hearing brief, IDFA reiterated the importance of hedging to processors
for managing price risk and volatility and claimed effective hedging could only be
achieved with an average-of mover. IDFA noted that when price uncertainty does not
allow fluid milk processors to manage risk 6 to 12 months out, they risk losing shelf
space to plant-based and other alternative beverage products that can offer fixed prices.
IDFA argued that the choice for a fluid milk processor, especially with respect to ESL
products, higher value-added products, and foodservice, is increasingly between offering
stable pricing and long-term contracts demanded by customers or losing shelf space to
competing beverages. Pricing stability and long-term contracting are facilitated by
hedging, according to IDFA. IDFA stressed the growing need for Class I hedging
because of increased volatility between the manufacturing classes.
In response to criticism of Proposal 14, IDFA wrote the average-of mover does
not create price inversions or lead to milk not being pooled, arguing depooling occurs
because of the price relationships between classes, and is caused by negative PPDs and
pooling requirements. IDFA also wrote that the average-of mover does not increase price
volatility, unlike a higher-of mover which routinely and unpredictably switches between
Class III and Class IV. Finally, IDFA asserted the value of Class I products is not

necessarily related to the value of Class III or IV products, thus, the higher-of does not
better reflect the value of milk than the average-of mover.
NAJ submitted a post-hearing brief in support of Proposal 14, arguing it better
protects long-term producer milk revenue, provides less Class I price volatility, and
preserves equitable risk-management opportunities for Class I handlers who are required
to participate in the FMMO system. NAJ noted the perception a return to the higher-of
mover would produce higher producer Class I revenues is based on highly divergent
Class III and IV price movers and an expectation this will continue in the future.
However, NAJ argued in its brief this price divergence analysis does not account for
composition factor amendments nor potential Class I differential amendments. With
revised composition factors, NAJ asserted, a restored manufacturing to Class I price
spread would mitigate price inversion and depooling.
A MIG witness testified in support of Proposal 15 seeking to amend the averageof mover from a $0.74 adjuster to a rolling 24-month adjuster with a 12-month lag. The
witness claimed the movers contained in Proposals 14 and 15 provide similar base Class I
skim milk prices and have similar effects on producer prices. The witness explained in
certain years Proposal 15 would return more money to farmers than the higher-of, and
even if farmers do not experience the benefits of a high manufacturing price immediately,
they will over time through the lagged adjuster. The witness presented data comparing
the monthly average base Class I skim milk price calculated under the current mover, the
higher-of mover, and Proposal 15 from 2003 to 2022 to show Proposal 15 would be
revenue neutral in the long run.
The MIG witness testified Proposal 15 preserves risk-management opportunities
for both producers and Class I processors, which is part of orderly marketing. The ability
to hedge Class I milk became effective in 2019, followed by the pandemic and regulatory
uncertainty as to whether the average-of would remain, and time, resources, and lack of

knowledge slowed the adoption of Class I risk-management strategies, the witness
testified.
Five MIG member witnesses representing fairlife, HP Hood, Turner Dairy,
Shehadey, and Crystal Creamery testified on the importance of hedging Class I milk.
The fairlife and HP Hood witnesses said they primarily process ESL products, which they
hedge using CME Class III and IV component and commodity futures. The HP Hood
witness stated they do not hedge HTST milk because it is primarily sold through direct
store delivery where the standard business practice is monthly pricing. However, ESL
products are distributed primarily through grocery warehouses and buyers expect 60 to 90
days’ notice for any price changes, the witness said. The HP Hood witness stated the
ability to hedge has not changed their ESL pricing strategy but has allowed for fewer
price increases. In earlier testimony a witness representing Shamrock, also a MIG
member, said they manufacture both HTST and ESL products and hedge milk used in
their ESL products.
A processor witness representing Shehadey testified contracts with retailers such
as grocery stores use a fixed formula that changes monthly, quarterly, or semi-annually,
and are based on FMMO prices. The witness testified Shehadey has only HTST Class I
milk products and they do not use any form of risk-management tools to hedge their risk.
The Turner Dairy and Crystal Creamery witnesses said their companies primarily process
HTST Class I milk products which they currently do not hedge. Both witnesses
expressed value in hedging HTST milk sold to foodservice, as foodservice customers
prefer to know prices months to years in advance. The fairlife and HP Hood witnesses
testified hedging under the higher-of mover was difficult due to price volatility and
uncertainty, but the average-of mover allows them to offset the risk. The witnesses also
testified it takes time to develop a robust hedging program. The HP Hood witness stated
Class I hedging is primarily used by more sophisticated operators, but as Class I hedging

becomes more accepted, the market should become more liquid, and more processors will
likely use this risk-management tool. The fairlife witness said fairlife typically hedges its
ESL Class I products, mainly 0 to 6 months out, but contracts could extend up to 12
months.
A MIG witness explained that the adoption of Proposal 15 would allow for less
price volatility throughout the market and support industry growth by stabilizing the cost
of milk for retailers and consumers. Hedging, the witness said, is important to offering
customers and consumers a more stable price, which could stem the declines in fluid milk
as fluid milk competes with many beverages in the market. The fairlife witness testified
that price certainty translates to price stability for both the retailer and the consumer. The
HP Hood witness testified the goal of hedging is not to make a higher return, but instead
to act as price risk insurance by removing some input price volatility and increasing
margin certainty for end-product sales. The Turner Dairy witness testified the average-of
mover results in more price stability which is beneficial to the Class I market. The
witness said under the higher-of formula, the Class I price went up with every spike in
butter, cheese, or powder markets, even though short-term changes in those product
prices have no direct effect on the actual Class I market. The witness argued the price
spikes necessitated raising prices to cover cost, without a market-based explanation to
provide to customers.
The MIG and fairlife witnesses testified in support of the 12-month lagged
adjuster contained in Proposal 15, stating it is critical to allow Class I processors to
mitigate risk and hedge successfully. Knowing the adjuster 12 months in advance allows
companies who hedge to reduce or eliminate basis risk, the witness said, while the 24month rolling adjuster updates and provides dynamic market signals. The witnesses said
Proposal 15 would stabilize prices by moving gradually and make fluid milk products a
more reliable and steady purchase for customers. Proposal 15 has no floor or ceiling, as

the witness testified MIG members believe floors and ceilings can create price
distortions. The witnesses testified a lookback of less than 24 months would create more
volatility, while a longer lookback does not transfer market signals well over time. The
fairlife witness testified the 12-month lag is necessary to be able to buy futures 12 months
out. The 24-month rolling average adjuster allows the system to recognize the difference
between Class III and Class IV prices and what the higher-of mover would have been, the
witness said, allowing the industry to know definitively what the premium structure is
going to look like associated with the adjuster 12 months into the future.
In its post-hearing brief in support of Proposal 15, MIG argued USDA should first
assess whether the current average-of formula has resulted in disorderly marketing. MIG
wrote the current average-of mover ensures the market has sufficient milk for both fluid
and manufacturing uses and there is not disorderly competition for fluid market access.
MIG argued a return to the higher-of under Proposal 13 would not provide higher returns
to farmers, estimating a minimal impact of a $0.01 to $0.02 per cwt increase in the long
term. However, MIG argued in its brief, the return to the higher-of mover would have
significant negative impacts on the Class I market and the entire dairy industry. There is
no asymmetrical risk inherent in Proposal 15, MIG argued in its brief, unlike the present
average-of mover formula.
According to MIG, the use of risk management developed primarily after the
average-of formula was adopted and is likely to grow in the future. MIG stated Class I
processors do currently use risk-management tools to hedge ESL products, as this sector
has historically utilized more fixed pricing, meaning hedging can be more easily adopted.
MIG stated many HTST customers, such as grocery stores, have become accustomed to
the monthly fluctuations of pass-through pricing, but HTST customers, such as school
lunch programs or USDA feeding programs, would benefit from the increased price
certainty that comes with an average-of calculated mover. The industry has not yet had

time to widely adopt risk management, MIG reiterated in its brief, and regulatory
uncertainty due to this proceeding has caused processors to hesitate further use of riskmanagement tools.
MIG noted in its brief that even though the AMAA does not specifically provide
for hedging, a Class I formula that supports hedging helps serve the enumerated purpose
of the AMAA of avoiding unreasonable price fluctuations and reducing milk price
volatility. When Class I processors can better manage risk, they can offer more stable
prices to customers and consumers, MIG argued in its brief.
In its brief, MIG reiterated hearing testimony that use of an average-of mover best
ensures an orderly market, and sufficient supply of milk for fluid use, including the most
accurate pricing signals for dairy farmers in a longer, and more appropriate, time. MIG
took exception to arguments that the Class I price be used to address price inversions and
depooling. Using a California pool example, MIG argued that record evidence shows the
Department would have to increase the Class I price an impractical amount to incentivize
both manufacturing classes to remain pooled. MIG reiterated many factors cause
depooling and negative PPDs, and neither the Class I price nor use of an average-of
mover drive those results. Rather, according to MIG, the main drivers of depooling in the
months reviewed in testimony were the Class III/IV spread and advanced pricing.
In its brief, MIG argued a return to the higher-of mover will not help Class I
handlers in competing for milk supply as a higher pool obligation detracts from the
incentive to service Class I plants. MIG reiterated hearing testimony that the current
marketplace is sufficiently served using an average-of formula.
Lamers submitted a post-hearing brief in support of retaining an average-of
mover. Lamers argued that because of the small percentage of Class IV use in the
market, Class IV prices should not be a main driver for setting the Class I price, as an
average-of mover is more representative of the entire manufacturing market. Lamers

preferred the lower of the Class III and IV prices should be used when setting the mover
as they believe the higher-of artificially raises Class I prices to consumers.
NMPF presented numerous witnesses who testified in opposition to the
continuation of the average-of mover, embedded in the summary of their testimony and
post-hearing brief presented above. An SMI witness opposed a modified average-of
mover, testifying it would result in revenue losses to dairy farmers because the Class I
price is paid back to dairy farmers over time and would not compensate dairy farmers
that have exited the business.
Select expressed opposition to Proposals 14, 15, and 16 in its post-hearing brief.
Select wrote that the higher-of more accurately reflects the value of milk in
manufacturing classes, better manages shifts in demand for any one manufactured
product, helps reduce milk price volatility, better addresses class price inversions and
depooling, and makes it more difficult to draw milk away from Class I uses for
manufacturing. Select noted most Class I handlers have not engaged in milk hedging
under the average-of mover, and the average-of mover creates and exacerbates
opportunistic depooling when Class III and IV prices diverge significantly. Select opined
the average-of mover results in market disorder which they believe would continue until
the higher-of mover is restored.
In its post-hearing brief, the AFBF opposed Proposals 14 and 15, arguing they do
not address the key issue of class price misalignment. The AFBF believes handlers of all
sizes can find alternative methods of managing risk under a higher-of mover.
A witness representing Edge testified in support of Proposals 16 and 17. The
witness advocated for the adoption of Proposal 16, referred to as a Class III plus
proposal, because the Class III price is typically higher than the Class IV milk price. In
times of rapidly declining dairy prices brought on by a decrease in demand, the witness
said, government recovery efforts typically prioritize more perishable products, usually

Class III. The witness said this would result in higher Class III prices in relation to Class
IV, and consequently a base Class I skim price under Proposal 16 approximately equal to
the higher-of mover. According to the witness, in situations where the Class IV skim
milk price is higher than the Class III skim milk price, any lost revenue would be
redistributed to producers over the next three years through the adjuster and would better
support dairy farmers during years of lower profitability. The witness testified risk
management under Proposal 16 is easy to implement and less expensive due to high
liquidity of Class III milk futures, creating more predictable prices and making fluid milk
products competitive with plant-based beverages. The witness testified Edge would
support a monthly rolling adjuster in place of an annual adjuster.
The Edge witness testified that as Class I utilization rates continue to fall,
advanced pricing would continue to cause disorderly marketing conditions such as
opportunistic depooling. The witness said advanced prices are antiquated and anticompetitive and their elimination would encourage fluid plants to use risk management.
The Edge witness entered data showing the contribution of various factors to negative
PPDs. The witness testified that while the change to the average-of mover tended to
make PPDs more negative, advanced prices and the spread between Class III and IV
influenced pooling decisions, not the adoption of the average-of mover. The witness
testified that if the Class I price was announced at the same time as the Class III and
Class IV prices, it would prevent a for-profit Class I trading relationship between Class
III and Class IV, and the CME group would be more likely to create a Class I futures
contract. The witness expressed a strong preference for Proposal 16, which they argue
balances producer, processor, and consumer needs and supports risk management which
they said was critical for the success of the nation’s dairy farmers, particularly fluid
sector innovators.

The Edge witness also testified in support of Proposal 17, returning to the higherof mover without advanced pricing. The witness said the proposal would allow the Class
I futures price to be equal to the greater of the Class III futures price and the Class IV
futures price. Risk management players would have minimal risk in providing liquidity
to Class I hedgers by spreading their position between Class I and the higher-of Class III
or IV futures. The witness testified dairy producers may prefer the higher-of mover
without advanced pricing, such as Proposal 17, as it provides real-time maximum income
for Class I milk, whereas Proposal 16 is more of a compromise.
The Edge witness stated that since 2010, total fluid milk sales have been steadily
declining, adding more instability and difficulties hedging under the higher-of mover.
The witness entered data showing how much more risk and costs were involved to hedge
under the higher-of mover than the average-of mover. The witness concluded a person
hedging with futures contracts under the higher-of mover would have significant
difficulties, but hedging under the average-of mover meets effectiveness standards
required for hedge accounting.
Nine dairy farmer witnesses, located in Wisconsin, Minnesota, Iowa, and South
Dakota, testified in support of Proposals 16 and 17. The dairy farmers opined Proposals
16 and 17 would decrease the frequency of negative PPDs and depooling, and enhance
their ability to manage price risk through hedging and other risk-management programs.
One witness said using only the Class III skim price to set the Class I skim price is the
best option because Class III milk futures carry more liquidity than Class IV and better
represent Class I prices. The witnesses testified Proposal 16 would help keep prices
steady, benefitting both plants and customers.
In its post-hearing brief, Edge objected to what it believes are goals of some
proponents to maximize FMMO Class I handler obligations in order for the additional
revenue to be used to offset the negative producer impact of increasing make allowances.

Edge argued the Department should consider the following factors in its decision: there
have not been any significant shortages in the supply of beverage milk to retail stores;
Congress’ reason for changing to the average-of mover to facilitate risk management by
fluid milk processors which fluid milk processors testified is still relevant; advanced
pricing is outdated and no longer necessary to facilitate supply chain coordination but
instead facilitates opportunistic depooling; a mover resulting in the highest fluid milk
price when the Class IV price substantially exceeds Class III is not in the best interest of
consumers; and a mover resulting in the highest fluid milk price when the Class IV price
substantially exceeds Class III is not in the best interest of all dairy farmers. Edge argued
dairy farmers located where Class I utilization is low may be worse off under a higher-of
mover than an average-of or Class III-based pricing as proposed by Edge.
Edge reiterated Proposal 16 would facilitate risk management by fluid milk
manufacturers and large commercial buyers, eliminate outdated advanced pricing and
reduce the incidence and magnitude of opportunistic depooling, and best serve both
producer and consumer interests.
A witness representing the AFBF testified in support of Proposal 18. The witness
said the AFBF believes orderly pooling is the key to orderly marketing, and this is best
accomplished by the proper alignment of the four class prices. The witness claimed
advanced Class I pricing leads to increased Class III component values, a common factor
contributing to negative PPDs. The witness said advanced prices reflect market
conditions that are 25 to 40 days older than final prices, which are announced after the
close of the month. When a market rally occurs between the announcement of advanced
and final prices, the witness said it leads to low or negative PPDs and creates incentives
for handlers to depool milk. The witness stated depooling results in elevated component
prices not being shared with the pool, further depressing the PPD and undermining the
FMMO principle of uniform producer prices. The witness testified advanced pricing may

also cause price inversions when manufacturing prices are rising rapidly, making it
difficult for Class I handlers to attract adequate milk supplies. The witness entered data
showing the effects of advanced pricing on class price alignment from May 2019 to May
2023 under the current average-of, and under Proposals 13, 17, and 18. The witness said
this data showed many months under the current average-of mover and Proposal 13 in
which the manufacturing class prices exceeded the Class I price, testifying this created
disorderly marketing conditions. On the other hand, according to the witness, the data
showed elimination of advanced pricing under Proposals 17 and 18 resulted in more
consistent alignment of class prices.
The AFBF witness testified the frequency of published commodity data allows
handlers to estimate price changes regardless of when prices are announced, and as more
products are available on the CME or other exchanges, processors and manufacturers will
have information needed to hedge and manage risk. The witness opined that the
elimination of advanced pricing would allow for the introduction of Class III and IV
spread options, providing an additional way to hedge Class I milk when both are used in
combination. Three dairy farmers testified in support of Proposal 18, stating the proposal
would reduce the incentive to depool brought on by low and negative PPDs.
The AFBF witness also testified that while they support the elimination of
advanced pricing, they oppose Proposal 16 because it would delink Class I prices from
Class IV prices, which they anticipate being higher than Class III in the future due to
better export markets. The witness said tying the Class I price to only the Class III price
could operate more like a “lower-of” formula. The witness stated the AFBF supports
Proposal 17 because it is identical to Proposal 18 if combined with Proposal 13.
In its post-hearing brief, the AFBF reiterated its support for a return to the higherof mover, which it argued would support class price alignment and substantially decrease
negative PPDs and depooling.

The AFBF reiterated its hearing testimony that volatility has and continues to
increase, contributing to price inversions and rapidly changing markets, resulting in
competitive inequalities among dairy farmers. The AFBF said the CME has indicated a
willingness to provide contracts catering to industry demand, and the fact that the
industry is used to advanced pricing should not be a driving reason for its retention. The
AFBF argued disorderly marketing conditions are present when producers do not receive
uniform prices because of frequent depooling, and its proposals lead to the realignment of
class prices, which encourage consistent pooling and uniform pricing.
An SMI witness, appearing on behalf of NMPF, testified in opposition to
elimination of advanced pricing as contained in Proposals 16, 17, and 18. The witness
said 90 percent of packaged fluid milk is highly perishable HTST milk which is
processed, packaged, distributed, and sold in a relatively short period. The witness said
these marketing characteristics require the price of the product to be known at the time of
purchase, which advanced pricing of Class I milk provides. According to the witness,
most HTST packaged fluid milk is priced monthly by fluid processors to their customers
based on monthly FMMO Class I prices. This is materially different from cheese and
butter products, the witness said, the prices of which are typically based on CME daily
cash prices. According to the witness, advanced pricing enables retailers to set store milk
prices at the beginning of a month, allowing the fluid processor to know the price the
plant would receive for the packaged fluid milk prior to the raw milk being processed,
packaged, and sold.
The SMI witness also testified that if advanced pricing was eliminated, retailers
would not know their fluid milk costs until the end of the month when FMMO Class I
prices are announced. This would mean most fluid milk purchased by retailers would be
sold during the month without knowing its minimum regulated price which, the witness
said, from a retailer’s perspective is not orderly marketing. The witness claimed that if

there were significant month-to-month increases in the Class I price, retailers could seek
price relief from the processor, and ultimately, cooperative suppliers, opening the
potential for fluid milk processors in the same marketing area to have inequitable raw
milk costs and non-uniform payments to producers. In its post-hearing brief, NMPF
reiterated its opposition to the elimination of advanced pricing.
A witness representing IDFA opposed Proposals 16, 17 and 18. The witness
objected to the elimination of advanced pricing as it would result in Class I handlers
pricing milk products to their customer before knowing the minimum regulated milk
price and impact a handler’s ability to hedge. In its post-hearing brief, IDFA supported
the feature of Proposal 16 that would create a predictable Class I price that could be
hedged based off a hedged Class III price plus a known adjuster. However, IDFA
maintained its opposition to the elimination of advanced pricing, arguing it is essential for
non-hedging Class I handlers to know their milk cost before the start of the month. It is
also an important part of planning for fluid milk retail customers to market milk, IDFA
stated. IDFA noted in its brief that traditional fluid milk retail customers are not yet
using hedging sufficiently to permit a regulatory change eliminating advanced pricing.
IDFA reiterated their total opposition to Proposals 17 and 18 in that they would return to
a higher-of mover and, according to the brief, eliminate any practical ability to hedge.
A MIG witness testified in opposition to eliminating advanced pricing. The
witness said the industry is not yet using hedging sufficiently to permit this regulatory
change, as advanced pricing remains critical for the dominant share of the fluid market as
retailers expect to know the price in advance. The witness also opposed Proposal 16,
which would price Class I milk solely off the Class III price. The witness said the
proposal would delink the fluid milk supply and demand from Class IV which MIG
believes is critical for balancing. The witness opposed Proposals 17 and 18 as they limit
risk-management opportunities for Class I processors. In its post-hearing brief, MIG

reiterated its opposition to any proposal (Proposals 16, 17, and 18) seeking to eliminate
advanced pricing, which MIG claimed is critical to Class I processors. MIG further
argued that eliminating advanced pricing would negatively impact those market
segments. With respect to Proposal 16, MIG expressed concern with pricing Class I milk
solely off Class III prices as it would be a significant departure from the current practice
and completely divorce fluid milk supply and demand from the Class IV market.
According to MIG, the record contains testimony from cooperatives that Class IV
remains the ultimate balancing utilization.
In testimony and in its post-hearing brief, MIG opposed a return to the higher-of
mover under Proposals 13, 17, and 18 as it would severely limit risk-management
opportunities. MIG argued in its brief that a return to the higher-of is unnecessary and
not supported by the facts as the industry has acknowledged the higher-of does not work.
Dairy farmers’ concerns are not about the average-of, MIG asserted, but rather the fixed
$0.74 addition. USDA should support moving the industry forward, not revert to an
outdated policy because it is familiar, MIG stated.
MIG argued NMPF introduced no evidence the average-of mover hinders a
sufficient supply of milk for fluid uses. Rather, MIG wrote, a return to the higher-of
mover would result in disorderly marketing as larger spreads between Classes III and IV
would lead to higher prices under the higher-of mover and raise the uniform price,
incentivizing the lower-priced manufacturing milk to remain pooled. In that situation,
MIG argued, FMMOs should not be raising the uniform price paid out to the lowerpriced manufacturing class, thus, encouraging it to remain pooled. This compensation,
argued MIG, overvalues the lower-priced manufacturing milk in the marketplace and
incentivizes milk to move to the lower manufacturing class instead of to a higher
performing class. According to MIG, the average-of mover would better move milk
between the manufacturing classes as the market needs. MIG argued the FMMOs are

designed to ensure processors have sufficient milk supplies for fluid use, but FMMOs
should not be drawing milk away from Class III or IV when a manufacturing use would
be the highest and best value for the milk. According to MIG, Class I does not need more
milk, and FMMOs should not be disrupting the market to pull milk for fluid utilization.
MIG argued in its brief that revenue neutrality is not a valid policy consideration without
evidence to establish revenue neutrality is necessary to ensure a sufficient supply of fluid
milk.
A witness representing Lamers testified in opposition to the elimination of
advanced pricing in Proposals 16, 17, and 18. The witness stated Class I handlers need to
know prices in advance so they can set wholesale pricing with their retail customers.
In its post-hearing brief, Select opposed the elimination of advanced pricing set
forth in Proposals 17 and 18, arguing that testimony at the hearing made clear that the
majority of producers prefer using the higher-of, and the majority of handlers prefer to
maintain advanced pricing which Select believes is in the best interest of stability in the
Class I market.
Class I and Class II Differentials
Numerous witnesses appeared on behalf of NMPF testifying in support of
increasing the Class I differentials as provided for in Proposal 19. Witness testimony
centered around the themes of increased hauling costs, changes in milk supply and
demand locations, changes in supply patterns resulting in longer hauls, and insufficient
over-order premiums to cover the full cost of servicing the Class I market. The witnesses
said the outdated assumptions embedded in the current Class I differentials threaten the
willingness of milk suppliers to serve the Class I market.
An NMPF witness argued current differentials are antiquated, since, other than
the three southeast FMMOs, they have not been updated in almost 25 years. In that time,
they said, fuel costs and hauling distances have increased due to changes in supply and

demand locations . The witness stressed over-order premiums should not be considered
an effective substitute for FMMO prices because they are very difficult to obtain and
maintain at levels adequate to cover the cost of servicing the Class I market. The witness
argued inadequate Class I differentials contribute to price inversions and incentives to
depool, which further jeopardize the availability of milk to meet Class I demand.
The NMPF witness described the methodology used to arrive at the proposed
differential levels. According to the witness, NMPF requested an update of the U.S.
Dairy Sector Simulator Model (USDSS) which was used during Order Reform as a basis
for the differential levels adopted January 1, 2000.
The USDSS model owners testified on the USDSS methodology, the updated data
and parameters, and explained the results. They explained the USDSS model evaluates
the geographic value of milk at fluid milk processing plants across the U.S by finding the
lowest cost solution of assembling milk at farms and delivering it to plants. They said the
model accounts for approximately 90 percent of the U.S. dairy processing and
manufacturing plant capacity, and considers such factors as milk supply locations,
transportation costs (both variable and fixed) associated with raw milk assembly, final
and intermediate product distribution, per capita demand by county population, and road
weight limits. In the model, plant capacity, products produced, and milk components
demanded at each plant are constrained by a variety of government and private sources.
The resulting values, said the witnesses, represent the value of an additional load of milk
at a specific plant location (otherwise known as the “marginal value”).
The witnesses said two sets of USDSS results were provided to NMPF, May and
October 2021, to provide marginal values for both flush and deficit months. According
to the witnesses, the results suggest considerable differences between the values of milk
at fluid plants derived from spatial economic modeling and current Class I differential
values, with differences as large as $3.00 per cwt in some locations. The witnesses

attributed these differences to changes in the location of milk production, the composition
of dairy product demand, changes in the location of dairy product demand from regional
population shifts, and the cost of transportation. Both witnesses discussed how modeling,
even though complex, is a simplification of reality and that there may be unaccounted
factors in some areas that would justify deviations from the model results, including local
traffic congestion, geography, infrastructure restrictions, and price alignment across
orders. The witnesses said the model does not account for other factors, such as existing
business relationships and FMMO regulations, because they could cause a departure from
a market efficient solution. Lastly, the witnesses noted the USDSS does not produce a
base differential value; it merely provides the additional value needed to move milk to a
particular location.
While NMPF cooperative member witnesses testified on how they used the
USDSS results to arrive at the proposed differentials, NMPF witnesses stated they
followed the same iterative process applied during Order Reform, starting with USDSS
results and adjusting for milk movements, plant locations and historic price relationships.
One witness said NMPF started with a base differential assumption of $1.60 per
cwt, as currently contained in the Class I differentials. The witness said the costs
embedded in the base differential (Grade A maintenance, balancing, and a competitive
factor) are still applicable and those costs have not decreased over the past 25 years. The
witness said the base differential should also serve to limit class price inversions,
incentivize Class I milk deliveries, and ensure class price alignment. To accomplish
these goals, the witness said that in some parts of the country the base differential is
recommended to increase to $2.20 per cwt.
One NMPF witness testified regarding the dairy farmer cost of maintaining Grade
A status. The witness said that in order to participate in the FMMO program, dairy
farmers incur costs associated with obtaining and maintaining Grade A licenses. The

witness was of the opinion partial cost reimbursement for maintaining a Grade A license,
which currently represent $0.40 per cwt in the base differential, should continue to be
provided. The witness detailed standards for maintaining Grade A status, which include
various infrastructure maintenance and sanitation requirements, and estimated a total
current cost of $1.30 per cwt to meet those requirements.
A series of NMPF witnesses testified on the regional considerations factored into
the proposed Class I differentials contained in Proposal 19. During their testimony they
also touched on balancing costs faced by NMPF cooperative members and the continued
need to include a competitive factor in the base differential. One witness described how
the average of the May and October 2021 results was used as a starting point. From
there, NMPF formed regional committees to evaluate the USDSS average results and use
their local market knowledge to derive the final proposed differential values. According
to the witness, a series of 19 anchor cities were selected for their proximity near the
border of where two regions abutted. The regional committees used these anchor cities
as common starting points to design a final Class I differential surface that ensured price
alignment between orders. Each committee looked at current price relationships between
plant locations and consumer demand areas, compared those to the USDSS averages, and
designed a Class I differential structure that accounted for factors NMPF members
thought were not adequately addressed in the USDSS results.
Northeast
A DFA witness testifying on behalf of NMPF discussed the changes in the
Northeast marketing area, including increased hauling costs, changes in the milk
production and location of farm and fluid processing plants, and an overall increase in
production costs. The witness said milk production in 11 of the 12 northeast states
declined from 2000 to 2022, except for New York which saw a 31.4 percent increase,
resulting in a small overall increase in the region’s milk production of 2.2 percent.

During this time, the witness said the resident population increased by 9.1 percent. The
witness noted the geographic shift in where milk is processed due to the closure of fluid
plants in urban areas since 2000. The witness surmised local milk supplies in the
northeast are used to meet increasing Class II and Class III needs, necessitating milk to
travel farther distances to meet fluid demand. The witness estimated transportation costs
paid by producers in the region have increased $0.70 per cwt.
An Agri-Mark witness also testified regarding the changing marketing conditions
in the northeast region and described some of the proposed differential differences from
the USDSS model. The witness opined that if the USDSS averages were adopted for
Maine, it would incent producers in Maine to service Massachusetts, instead of remaining
available to meet local demand. Therefore, the witness said NMPF is proposing to flatten
the differentials in Maine to maintain current competitive relationships. NMPF is also
proposing lower differentials in northern Vermont and New York in order to incent milk
movements south and east. The witness said these changes from the USDSS average
results are needed to preserve current milk movements and to maintain competitive
relationships.
Mid-Atlantic
An MDVA witness representing NMPF testified regarding the proposed
differentials in the Mid-Atlantic region. The witness said MDVA operates two balancing
plants in the region that help balance the market’s reserves in both the Northeast and
Appalachian FMMOs. According to the witness, there are large seasonal swings in milk
delivered to those balancing plants, which result in significant cost to the cooperative and
its members. The witness was of the opinion the base Class I differential should provide
some balancing cost reimbursement to its members through its distribution through the
marketwide pool. Transportation costs have also increased significantly, the witness said,
to a point where Class I differentials are less effective in attracting milk from reserve

supply areas to Class I plants. In order to meet fluid demand, the witness said
cooperative members must pay for the additional cost through milk check deductions
without any additional compensation through the Class I differential.
The MDVA witness compared current and USDSS average values for multiple
plant locations in the region. According to the witness, the regional committee focused
on the need to cover additional transportation costs of servicing the fluid market and
maintaining current price relationships as principles when determining deviations from
the USDSS average results. One example cited two plants in Landover, Maryland and
Frederick, Maryland, located approximately 55 miles apart with a current difference in
differential values of $0.10. The witness said the USDSS average would have resulted in
a $0.35 difference and created an artificial regulated cost advantage for the lower zoned
plant in Frederick, Maryland. Another example was in the southeastern region where two
Virginia plants located 15 miles apart and currently in the same differential zone would
have seen a $0.10 differential difference under the USDSS model average scenario. In
this case, said the witness, the committee decided to propose the same differential value
for the two plants in order to preserve their competitive relationship.
Southeast
A DFA witness representing NMPF testified on the proposed differentials in the
southeast region. Similar to other witnesses, their testimony centered on the decline in
dairy farmers and the closure of fluid processing plants which necessitate longer milk
hauls at a greater expense to dairy farmers, particularly cooperative members. The
witness spoke to the unique marketing conditions in the southeast region, with a growing
population, local fluid demand, and a significant milk supply deficit requiring
supplemental milk supplies to be acquired from outside the region. The witness said the
supplemental milk supplies are obtained at great expense to DFA cooperative members.
The witness stated it is typical for supplemental loads to travel between 500-650 miles or

more, and while the transportation credits in the Southeast FMMO provide partial
reimbursement, the fund is inadequate to cover the full cost. The witness said the
proposed differentials contained in Proposal 19 would assist in covering transportation
costs and support dairy farmers who supply the region.
Florida
An SMI witness representing NMPF testified on the proposed differential for the
Florida FMMO. The witness said there is an inadequate milk supply available in Florida
to meet its Class I needs, necessitating significant volumes of milk deliveries from
outside the marketing area, notably Georgia. According to the witness, Florida milk
production is quickly shrinking, declining more than 10.9 percent in 2022, and
necessitating more than 24 percent of its milk needs to come from other states.
The witness discussed Florida’s significant population increase and high Class I
utilization, which has averaged greater than 82 percent since 2000. The witness
described significant seasonal swings in fluid milk needs and SMI’s efforts to balance
those needs through purchasing additional milk tankers, marketing milk to non-pool
plants at below FMMO values when needed and buying supplemental loads at above
FMMO values during other times of the year. The witness said weather and the seasonal
population influx also complicate the region’s milk balancing efforts. These dynamics
make supplying the Florida region particularly expensive, estimating that SMI balancing
costs for the first half of 2023 were $1.33 per cwt.
The SMI witness testified the proposed Florida differentials maintain the
historical differential slope while more adequately reimbursing for transportation costs,
which the witness estimated has more than doubled in the past 20 years, from $2.31 in
2002 to $5.98 in May 2023. The witness said the Florida differentials contained in
Proposal 19 are similar to the averages of the May and October 2021 USDSS results but
were adjusted to preserve current competitive relationships. As a result, the witness

concluded the region would be assured an adequate supply of milk for fluid use and fluid
milk buyers would be better assured of equal raw product costs.
The SMI witness was of the opinion the differentials should not be adjusted to
reflect recently enacted Distributing Plant Delivery Credits in the Florida FMMO, as both
are needed to ensure adequate supplies of fluid milk for the region.
Southeast/Southwest
A Lone Star witness representing NMPF testified regarding the differentials
between the southwest and southeast regions. The witness said the eastern portion of the
Southwest FMMO and the three southeastern FMMOs are milk deficit regions. The
witness emphasized the differential recommendations are designed to provide proper
financial incentives through a steeper differential slope to move milk into and within
those regions. The witness said other factors considered included keeping current city to
city price relationships as well as competitive relationships between plants often clustered
around metropolitan areas. While differentials in some areas were increased relative to
the USDSS average to reflect NMPF member knowledge of milk movements and related
transportation costs in the region, other differentials were lowered. The witness noted
NMPF members believe the USDSS overestimated balancing costs for parts of Virginia
and the Carolinas, and subsequently is proposing muted differential increases for those
regions.
Regarding Florida, the witness said the NMPF members accepted the USDSS
model average output of $7.90 as the differential for Miami, Florida. They then worked
up through the state with a priority of maintaining competitive relationships between
plants. The only deviation the witness noted was Myakka City, Florida, whose current
differential is $0.40 higher than plants in the Tampa-Orlando corridor. The witness was
of the opinion the spread was too large, and consequently Proposal 19 recommends the
spread be reduced to $0.20.

In the southwest region, the Lone Star witness said, milk must move significant
distances from the supply region in the Texas panhandle and eastern New Mexico to the
demand centers in east Texas. The witness said milk routinely travels anywhere from
400-650 miles to service the fluid needs of the state and stressed the current differentials
in the region are inadequate in covering transportation costs for these routine milk
movements. Consequently, Proposal 19 generally contains higher proposed differentials
than the USDSS model average, with greater increases moving northwest to southeast to
incent milk to move where needed. The witness added there is a single differential level
proposed for New Mexico, reflecting what the witness said was primarily a captive instate market for milk.
Mideast
A DFA witness representing NMPF testified in detail on hauling assembly costs
associated with the Mideast marketing area. The witness described the region’s principal
supply areas as central and northeast Michigan, northern Indiana and northwestern Ohio,
and fluid demand areas centering around the region’s large cities of Detroit, Grand
Rapids, Indianapolis, Columbus, and Pittsburgh. The fluid plants compete for a milk
supply with the numerous small to medium-sized cheese plants in northeast Ohio, two
large cheese plants in central and western Michigan and one large cheese plant in western
Pennsylvania, explained the witness.
The DFA witness testified the Mideast region has increased milk production 20
percent over the last 23 years, while simultaneously seeing a 66 percent reduction in
dairy farms. The region’s Class I utilization was 37 percent in 2022, supplied by
approximately 33 distributing plants, down from 57 in 2000. The consolidation in both
the supply and demand sectors, increased hauling distances to fluid plants, along with a
robust manufacturing sector, has created challenges in encouraging milk to meet fluid
demand.

The DFA witness estimated that Ohio assembly and delivery costs have increased
approximately 69 percent from 2006 to 2023, attributing most of the increase to fuel,
labor and equipment costs. The witness said current differentials do not provide enough
financial incentive to move milk from supply regions to Class I plants. As a result, said
the witness, the cost of supplying fluid milk needs is largely borne by cooperatives and
their members.
For the Mideast area, the DFA witness said the committee concentrated on a
selected group of larger cities in the region to analyze the relative value differences. The
overall objective was to determine the value needed to encourage milk to move from milk
supply areas in the north and west to areas of demand. The committee started with
Chicago, Illinois, and determined that even though no fluid plants operated in the
Chicago region, its differential should align with prices of locations that supply packaged
milk, which are Grand Rapids, Michigan, Cedarburg Wisconsin, Rockford, Illinois, and
Dubuque, Iowa. The committee ultimately determined a $3.10 differential appropriate
for Chicago (Cook County). From there, the witness reviewed a series of city pairs and
provided justification for why the proposed differentials were adjusted from the USDSS
model average. Reasons given for the changes centered on distance from larger
population centers and/or milk supply areas and providing enough financial incentive, in
the committee’s opinion, to encourage milk to move where needed. The witness
mentioned another consideration was the willingness of milk haulers to deliver, referring
to resistance of milk haulers to make the long hauls needed to deliver milk to central
Ohio, for example.
The DFA witness also detailed considerations for proposed differentials in
western Pennsylvania, centering around plants in the Pittsburgh area, and plants in
southwest Ohio and eastern Indiana. They said differentials were adjusted in those areas
to account for what the committee believed were current competitive relationships. The

witness said that, ultimately, the committee recommended more slope than the USDSS
model by reducing the differential increases in the milk surplus areas of Michigan and
increasing the slope when moving to the south and east.
Another DFA witness spoke to increased hauling costs in the Mideast area. The
witness said that as the number of dairy farms in the area has declined, so has the number
of available milk haulers. Compounding the issue is competition with other industries
who also rely on commercial haulers. As a result, milk hauling rates have increased as
the fewer number of milk haulers must travel farther distances to assemble and deliver
milk loads. The witness presented data on various factors that contribute to overall
transportation costs, such as wages, diesel fuel prices, and equipment purchase costs.
A witness from the Michigan Milk Producers Association (MMPA) testified on
the unique Michigan marketing conditions that resulted in deviations from the USDSS
model output. The witness said Michigan has experienced significant milk production
growth, accounting for 68 percent of the region’s growth. Michigan milk production
serves as a reserve supply for states south and east, which are considerably longer routes
than when the differentials were adopted in 2000, said the witness. They testified current
differentials are no longer adequate to cover current transportation costs and highlighted
how the large flat differential zone in Michigan, covering 525 miles, makes it difficult to
encourage milk to travel farther distances to supply fluid demand instead of satisfying
local manufacturing plant demand. Therefore, NMPF proposed more, smaller pricing
zones within the state to better reflect the cost to move milk. The witness estimated
MMPA’s hauling cost for transporting milk from mid-Michigan to eastern Ohio,
approximately 287 miles, was $1.06 per cwt per 100 miles.
The MMPA witness testified that is has been more difficult to obtain over order
premiums to cover increased costs because national retailers with more bargaining power
have replaced local independent stores. Consequently, the witness said, national retailers

with a wider geographic footprint and higher milk volume needs have put downward
pressure on premiums. The witness concluded that increasing Class I differentials to
better reflect the cost of supplying the fluid market would be more equitable than an
increasing reliance on a dairy farmer’s ability to negotiate over-order premiums in a
magnitude large enough to fully cover costs.
Upper Midwest
A Prairie Farms witness representing NMPF explained the proposed Minnesota
and Wisconsin differentials. The witness said the USDSS results had too much slope
between the states that would have created too much financial incentive to move milk out
of Minnesota, creating difficulties for Minnesota plants to compete for a milk supply.
Consequently, the witness said NMPF is proposing fewer differential zones in the Upper
Midwest region to ensure a local supply could be maintained. Further, in that region,
NMPF was cognizant to propose differential levels that would minimize negative impacts
on producer blend prices. This witness opined the differentials contained in Proposal 19
would not fully cover the cost of moving milk the long distances required to service the
fluid market in regions where they operate. However, they said, the proposed
differentials would encourage the availability of adequate milk supplies to support milk
demand in distant markets.
Central
The Prairie Farms witness also testified on the proposed Class I differentials in
the Illinois, Iowa, Missouri, and Nebraska areas. The witness said that in the last 20
years the cooperative has become more dependent on supplemental milk supplies to serve
markets in Illinois and Missouri, while Iowa has lost milk processing capacity in the
eastern half of the state due to plant closures. In addition, the decline of milk production
in southeast Iowa has made it more difficult for Prairie Farms to stair step milk into the
Appalachian and Southeast FMMOs to meets its supplemental milk needs. All these

factors have contributed to changes in the region’s milk movements and increased
producer hauling costs, stressed the witness. The witness reviewed several equidistant
Prairie Farms hauling routes and highlighted the disparity in differential gains. For
example, some routes traveling approximately 300 miles may see a differential gain of
$0.90, while other routes traveling a similar distance may only see a gain of $0.25. The
witness stated the region’s differentials need to be adjusted to remove some of the
disparity and provide adequate financial incentive to supply fluid plants located in the
south and east. The Prairie Farms witness said their cost to move milk to its four
southern and southeastern fluid plants was approximately $5.25 to $5.50 per loaded mile,
and costs to supply plants in central Illinois is similar.
A DFA witness also testified to differentials proposed for the Central FMMO
region. The witness echoed other testimony regarding decreased farm numbers, longer
distances traveled, and increased hauling expenses. The witness estimated DFA hauling
costs in the region have increased 151 percent from 2005 to 2022. The witness spoke to
the proposed differential increases in the region. Proposal 19 would increase the current
differential values by $1.35 in Kansas City, $1.15 in Omaha and $1.65 in Wichita. The
witness elaborated that the higher increase in Wichita reflects the area’s lack of an
adequate local milk supply. More specifically, the witness stated that only 27 percent of
Wichita’s demand is delivered from within a 150-mile radius, while in Kansas City and
Omaha, 47 percent and 55 percent, respectively, comes from within 150 miles.
Numerous NMPF witnesses testified about the proposed Colorado differentials.
One DFA witness testified the USDSS model overestimated the amount of milk in
Colorado available to meet the State’s fluid needs because of private contractual
relationships with manufacturing plants. Consequently, NMPF recommends deviations
from the model to recognize current competitive relationships, said the witness. The
witness also discussed population, milk production, and fluid demand similarities

between Denver and other regional cities to justify increasing the Denver area
differentials to more closely align with differentials in those cities. The witness said
adoption of the USDSS model output for Colorado, without adjustments, when combined
with other changes that could result from this rulemaking would result in significant,
unsustainable decreases in producer pay prices and, thus, blend price equity must be
considered when making differential adjustments.
Other DFA witnesses spoke in more detail on the potential producer price impact
on Colorado dairy farmers. The witnesses testified hauling and feed costs in Colorado
are higher than other parts of the region, which they believe were not properly reflected
in the USDSS model. One witness said producer prices in Colorado currently exceed
those of the FMMO’s base zone, however, if the USDSS model average were adopted, it
would result in producer blend prices lower than prices announced at the base zone,
causing significant financial harm to Colorado dairy farmers.
Arizona
A United Dairymen of Arizona (UDA) witness representing NMPF testified in
support of Proposal 19. UDA is a dairy farmer-owned cooperative association, with 36
cooperative members and a manufacturing plant located in Arizona. The witness cited
many factors, such as weather, climate, transportation, fuel, and increased costs of
producing Grade A milk as challenges for Arizona dairy farmers. The witness stressed
the costs of maintaining Grade A status in the State exceeded $2.35 per cwt. According
to the UDA witness, the proposed Arizona Class I differentials: generally follow the
USDSS model, with deviations made to reflect local market conditions; maintain current
price relationships between handlers within Arizona and the surrounding states; and
establish a smooth differential transition from surrounding areas.
The witness noted UDA operates a plant in Tempe, Arizona, that serves as a
balancing plant for the market. The witness said the cost of operating the plant does

increase in the summer months as less milk volume is run through the plant when milk
supplies are lower.
California
A CDI witness testified on the process for determining the proposed California
differentials. The witness said the goal of the California differentials was to recognize
regional cost drivers and local market conditions unique to servicing California urban
areas, and to maintain price relationships with surrounding states. In the witness’
opinion, the USDSS model did not account for the impact on producer prices, which
could alter pool stability and incentives to supply the Class I market, and region-specific
cost drivers such as geography or traffic. Those considerations form the basis for the
deviations from the USDSS model output NMPF proposed.
The CDI witness provided an overview of the similarities between the California
Central Valley and Upper Midwest milksheds to justify the position that the lowest
differential in both regions should remain similar. For that reason, said the witness,
NMPF proposes a minimum differential zone of $2.50 in California, which is similar to
the lowest Upper Midwest differential zone of $2.55. The witness also discussed
dwindling milk supplies, increased population, pervasive traffic congestion, and the
closure of manufacturing plants in southern California as reasons for making adjustments.
The witness described changes made in three California regions (Central Valley, Bay
Area, and Southern California) to provide incentives for dairy farmers to serve the Class I
market in the urban areas.
A DFA witness also testified on California and Northern Nevada proposed Class
I differentials. The witness advocated the maintenance of competitive equity between
Class I and manufacturing plants in northern Nevada and California counties. The
witness was of the opinion the USDSS model fell short in adequately capturing the cost
of producing milk in California. The witness said the current 10-cent difference in zones

is not sufficient as it does not reflect the actual movements of milk or unique California
State regulations, taxes, geography, and high milk production costs. The witness stated
the current differentials do not cover the hauling costs in a state with high gas prices,
heavy traffic, and road weight limits. The witness supported testimony from the CDI
witness justifying the proposed California differentials. The DFA witness also expressed
northern Nevada counties have a historic competitive relationship with northern
California, which should be preserved. The witness noted that Proposal 19 recognizes
this dynamic by proposing a $2.90 differential for the region.
Pacific Northwest
A witness representing Northwest Dairy Association (NDA) testified on behalf of
NMPF regarding the proposed differentials in the Pacific Northwest (PNW) region,
which includes the States of Washington, Oregon, Idaho and Montana. NDA is a dairy
farmer-owned cooperative that markets the milk of approximately 295 dairy farmers in
Washington, Oregon, Idaho, and Montana, and conducts all processing and marketing
operations through the wholly owned subsidiary Darigold. The witness described
regional competitiveness at the farm level, ensuring incentives to service Class I markets,
and geographic and population-influenced cost factors were the primary reasons the
proposed differentials deviate from the USDSS averages. The witness was of the opinion
proposed differentials in the PNW FMMO urban areas should mirror those of the Central
FMMO, as the urban areas of the two regions operate similarly. To ensure competitive
equity and the balancing needs of distinct areas within the region, the witness said
Proposal 19 recommends fewer pricing zones than produced by the USDSS model.
The NDA witness also described market changes similar to those of other
witnesses: declining milk production, increased population, longer haul distances, and
increased transportation costs. The witness estimated NDA transportation costs for
servicing PNW Class I plants has increased $1.10 per cwt in the last 15 years.

In regard to the unregulated areas of the Northwest, the witness used King
County, Washington, as the base at $3.00 per cwt, and kept the zones the same as they
currently exist. In counties with little to no milk production, the differential was reduced
to as low as $2.20 in Idaho. For areas with higher milk production, the differentials are
proposed at $2.55, reflecting the same level of differentials in South Dakota.
In its post-hearing brief, NMPF emphasized adoption of Proposal 19 was
necessary to ensure Class I differentials would be more reflective of the current costs of
supplying the Class I market. NMPF maintained that the proposal would result in Class I
differentials below actual costs, keeping with the FMMO principle of minimum pricing.
NMPF reiterated testimony given at the hearing regarding the continued relevancy of the
costs associated with the base differential, and stressed the costs have increased since it
was first adopted in 2000. NMPF reviewed its own testimony at the hearing on what it
believes were the appropriate regional considerations used to propose deviations from the
USDSS results. According to NMPF, adoption of Proposal 19 would only raise the
regulated cost of Class I milk under FMMOs by slightly less than 8 percent.
NMPF reiterated the importance of Class I prices remaining the highest priced
class to ensure producers move surplus milk to deficit regions to meet Class I demand.
Without such pricing hierarchy, NMPF stated, milk in the higher-valued use class would
not be pooled and it would result in non-uniform prices to producers.
A witness representing the AFBF testified in support of Proposal 19. The witness
concurred with NMPF testimony on the increased costs of servicing the market since the
differentials were adopted in 2000. In offering support for the differential adjustments,
the witness said the purpose of the USDSS model was to mimic an ideal market solution,
so it would be expected that actual market costs are higher. The witness mentioned that
given the seasonality of milk demand, it could be considered more appropriate to start
with the USDSS October 2021 results, rather than the average. In its post-hearing brief,

the AFBF stressed that regulated Class I differentials provide for long-term stability;
something that cannot be assured if a larger portion of milk prices is negotiated through
over-order premiums.
A witness representing IDFA testified in opposition to Proposal 19. The witness
was of the opinion NMPF did not use a consistent methodology when determining
differential level adjustments from the USDSS model results. Additionally, stressed the
witness, some of the factors NMPF considered are not relevant and/or are unevenly
applied (dairy farm production costs, private business relationships, blend price impacts,
and regional dairy farm competitiveness), or were already factored into the USDSS
model (transportation costs and maintaining handler equity). The witness was of the
opinion that if milk suppliers and cooperatives experienced transportation costs higher
than those provided for in the differentials, the additional cost reimbursement should be
negotiated through over-order premiums with milk buyers. The witness also took issue
with what they deemed an undefined base differential, which was proposed at $1.60 in
some areas and $2.20 in other areas, with what they saw as no cost justification for the
difference.
The IDFA witness argued the purpose of Class I differentials is to bring forth an
adequate supply of milk for fluid use. According to the witness, with an FMMO Class I
utilization of 27 percent, the current milk supply is more than adequate to serve Class I
needs and there is no justification for increasing Class I differentials. The IDFA witness
cited a recent retail milk demand study that found milk demand is elastic and, thus, the
quantity demanded is sensitive to price changes. The witness argued any increase in
price would not only hurt Class I sales, but also increase government purchase costs for
milk used in nutrition and feeding programs. The witness stressed retail fluid milk sales
have been declining and USDA should not hasten the decline by increasing Class I
prices. The witness also added that eliminating or reducing the depooling of milk should

not be a consideration when evaluating Class I differential levels. The witness said
depooling is a necessary tool for manufacturing handlers when the Class III or Class IV
price exceeds the blend price. They estimated that in some FMMO areas the Class I
differential would have to increase to $41.32 per cwt in order to disincentivize depooling.
The IDFA witness was of the opinion that if USDA recommends differential
increases, they should not be increased in the three southeastern FMMOs as those
provisions already require fluid milk handlers to pay transportation credits and
distributing plant delivery credit assessments to encourage producers to service Class I
demand in those deficit markets. The witness estimated those assessments already
account for approximately 42 to 46 percent of the differential increases contained in
Proposal 19.
The IDFA witness also argued the $0.40 portion of the base differential attributed
to maintaining Grade A status is no longer relevant given over 99 percent of all milk
currently produced is Grade A. Consequently, said the witness, there is no longer a need
to incentivize farms to become Grade A in order to service the Class I market and the
base differential should be lowered to $1.20 per cwt.
Two witnesses representing IDFA, Saputo and Plains Dairy, testified in
opposition to Proposal 19 and offered support for the arguments put forth by the IDFA
witness. The Saputo witness said increasing fluid milk prices may reduce the retail price
spread between fluid milk and plant-based products, further depress fluid milk sales, and
ultimately force fluid plants to switch from HTST to ESL processing. The witness
speculated a further decline in HTST facilities will force cultured products to be made
elsewhere and increase costs to consumers. In regard to obtaining milk supplies, the
witness said Saputo pays over-order premiums when necessary. The witness also
opposed any increases in minimum regulated prices on the grounds that nonuniform
increases would put some of its plants at a cost disadvantage. The Plains Dairy witness

stated the increase from the model average results would impact consumer prices by
$0.07 per gallon. Plains Dairy is a fluid milk processing facility in Texas.
A witness representing MIG also testified in opposition to Proposal 19 for many
of the same reasons articulated by the IDFA witness. The MIG witness said NMPF failed
to cost-justify any elements of the base differential, either at the $1.60 or $2.20 level, to
support why it should be maintained. In echoing IDFA’s arguments, the MIG witness
also objected to NMPF’s use of the USDSS averages as a starting point. As the FMMO
system provides for minimum prices, the witness was of the opinion any evaluation of
differential changes should start with the USDSS May model results, which represent the
flush season for milk production. The witness said Proposal 19’s problems are
compounded because NMPF failed to use a consistent set of principles to justify its
deviations from the USDSS results. In addition, many of the factors used to justify
deviations, the witness said, were already factors considered by the model and, thus, are
being double counted.
The MIG witness characterized the NMPF deviations as substantial and presented
a series of maps to visualize the magnitude of the disparate changes. The witness also
pointed to areas where price changes are more dramatic between neighboring counties,
and suggested such price disparities could create incentives for disorderly marketing.
The witness deemed the Proposal 19 differentials to be significantly different from
current differentials, and argued the increases are being proposed despite a lack of
evidence from NMPF that there is a shortage of milk available to meet Class I demand.
Class I differentials should reflect the minimum cost of serving Class I milk, stressed the
witness. If there are additional transportation costs not provided for under the current
differential as alleged by NMPF, the witness testified, those would be reflected in
negotiated over-order premiums in the market. Instead, many areas of the country have
no over-order premiums, which the MIG witness interpreted as an indication that FMMO

prices are not minimums, but price enhancing. Similar to the IDFA witness, the MIG
witness was of the opinion no changes should be made to the differentials in the three
southeastern FMMOs until the full impact of the recent amendments to the transportation
credits and establishment of the distributing plant delivery credits are known.
Three witnesses representing Organic Valley testified in opposition to Proposal
19. Organic Valley consists of 1,600 farmer-owners who produce certified organic milk,
three dairy manufacturing facilities which make Class III and IV products and utilizes a
network of co-packers to process and distribute Class I products. The witnesses opposed
the NMPF proposed differentials as they would increase Organic Valley’s obligation to
FMMO marketwide pools.
The Organic Valley witnesses described the differences between the organic and
conventional milk markets (both at the producer and processors level). They were of the
opinion Proposal 19 fails to account for these differences and would result in inefficient
milk movements if adopted. The witnesses countered arguments that the conventional
market balances the organic market, claiming only around 2 percent of organic milk finds
its way into conventional products.
A witness from Aurora testified in opposition to Proposal 19. Aurora is a
vertically integrated organic milk supplier with four organic dairy farms located in
Colorado and Texas. The witness was of the opinion no justification exists to increase
Class I differentials as the areas surrounding the Aurora plants have adequate organic
milk supplies, something that was not accounted for in the USDSS model. The witness
explained the organic milk market and argued its structural differences from the
conventional milk market make any change to the Class I differentials as applied to
organic milk unwarranted. Similar arguments were made by a MIG witness on behalf of
Danone and Crystal Creamery.

A witness for Maple Hill Creamery (Maple Hill) testified in opposition to
Proposal 19. Maple Hill purchases grass-fed organic milk for processing and national
distribution but does not own a fluid milk plant. The witness opposed the proposed Class
I differentials and estimated their Class I marketwide pool obligation could increase up to
80 percent as a result. The witness made arguments similar to other organic processors
and concluded that increasing Class I differentials would result in a choice between
paying a lower organic fixed price to its dairy farm suppliers and jeopardizing supply, or
raising retail prices and jeopardizing sales.
A witness representing Shamrock, a member of MIG, testified in opposition to
Proposal 19. The witness said adoption of Proposal 19 would increase their raw milk
costs anywhere from 29 to 62 percent. The witness testified Shamrock pays over-order
premiums which they believe cover any additional costs associated with servicing their
plants in excess of the Class I differential value. The witness noted an inconsistency in
NMPF methodology, as the differential for their Virginia plant is proposed at the USDSS
model average, while the differential at their Arizona plant is $0.65 greater than the
average.
A witness for AE, a MIG member, also testified in opposition to Proposal 19.
The witness was of the opinion NMPF had not provided justification for the Class I
differential increases. They specifically objected to the Class I differential changes that
would, in the witness’ opinion, give its nearest competitor a $0.15 greater advantage than
currently exists.
A MIG member witness for HP Hood testified in opposition to Proposal 19. HP
Hood also operates four standalone Class II plants in the northeast. Similar to the AE
witness, the HP Hood witness testified the proposed Class I differentials would create
competitive disadvantages for their plants in relation to nearby cooperative owned plants.
The witness criticized what they believe was the lack of uniformity used by NMPF in

developing differentials that deviated from USDSS results. The witness said there are
ample milk supplies to meet Class I needs and any increase in the Class I price would
only serve to decrease fluid milk sales.
A witness from Turner Dairy, a MIG member, testified in opposition of Proposal
19. The witness objected to the continued relevance of the three base differential
components. The witness said Turner Dairy has not had difficulty finding adequate milk
supplies through its independent dairy farm supply. The witness said any Class I
differential increases would be paid into the FMMO marketwide pool, not to its direct
suppliers. The witness said this would make it harder to compete for dairy farm
suppliers, particularly with competitors in the unregulated area to their east. Similar to
other witnesses, the Turner Dairy witness detailed how the proposed Class I differentials
would create competitive disadvantages for their plants relative to nearby cooperative
plants, as well as decrease fluid milk consumption.
A MIG witness testifying on behalf of fairlife opposed Proposal 19. The witness
argued that if more money is needed to attract fluid milk supplies, it should be negotiated
in the marketplace, not mandated in FMMO pricing provisions. The witness said fairlife
regularly pays over order premiums for even day receiving, transportation costs, and
quality attributes. In the witness’ opinion, there are ample fluid milk supplies and any
increase in differential would only serve to create market winners and losers.
A witness from Shehadey, testified in opposition to Proposal 19. Shehadey
operates four manufacturing plants in California, Nevada, and Oregon, producing Class I
and Class II products. The witness argued the Class I differentials proposed for their
plant locations should not be increased as the local milk supply is adequate to meet their
fluid needs. The witness took particular objection with the disproportionate increase by
the Fresno, California, plant in relation to their competitors located farther from the
state’s primary milk supply in the Central Valley. The witness added that their Oregon

plant has a more distant milk supply relative to their other plants, and over-order
premiums are used to compensate dairy farmers for the additional costs of servicing the
plant.
A witness representing United Dairy, Inc. (United) testified in opposition to
Proposal 19. United is a fluid milk processor operating three plants in West Virgina,
Ohio, and Pennsylvania, which are primarily supplied by independent dairy farms. The
witness testified their plants receive adequate milk supplies and pay over-order premiums
when needed to ensure their milk needs are met. The witness opined the market should
depend on over-order premiums, not unduly high regulated prices, to direct milk where
needed. Similar to other witnesses, the United witness argued FMMO prices should not
be increased because it would negatively impact Class I sales. The witness objected to
the uneven application of differential increases, highlighting the differential increases for
the United plants are higher than every other plant in the region, even when United has
had no milk supply shortages. A West Virginia independent dairy farm supplier of
United also testified in opposition to Proposal 19. The witness expressed concern the
proposed differential increases would ultimately lead to the closure of the independent
fluid milk processors in the State, leaving local dairy farmers with few, if any, local
market outlets, and would widen the nutritional gap that already exists in the Appalachian
area as higher prices would reduce fluid milk consumption.
A witness representing Lamer’s testified in opposition to Proposal 19. The
witness said increasing Class I differentials would not benefit consumers or processors as
higher prices would lead to a decline in fluid milk consumption and the closure of more
fluid milk plants. The witness was of the opinion that limiting or disallowing the
depooling of manufacturing milk would be a more beneficial change for all dairy
stakeholders. A post-hearing brief filed by Lamers contended the hearing record contains
no evidence of Class I demand not being fulfilled, thus any increase in Class I prices is

not justified. The brief argued that if additional transportation costs of moving milk to
Class I plants exist, they should be negotiated through over-order premiums.
A series of academic researchers testified regarding milk price elasticity. One
researcher testified on behalf of NMPF regarding the potential impact to fluid milk
demand as a result of regulated price changes. The witness referred to this as price
elasticity, which estimates the percentage change in demand (quantity) due to a 1 percent
change in price. The witness said any price elasticity less than the absolute value of 1 is
considered price inelastic – a 1 percent change in price would result in less than a 1
percent change in demand – implying increased revenue due to the price change would
more than offset the decreased revenue from fewer sales.
The NMPF witness reviewed 38 empirical studies, conducted between 1964 and
2022, measuring milk price elasticity at the retail level. The witness found the study
average elasticity of 0.35 percent, and a median of 0.2 percent, concluding milk demand
is inelastic. The witness said consumers remain price insensitive because milk continues
to be considered a staple food. To illustrate its price inelasticity, the witness elaborated
the real price of milk relative to all goods and services has declined 7 percent since 2013,
during which time milk demand has decreased 18.3 percent. If milk was elastic, said the
witness, a decline in price should have resulted in an increase in demand. The witness
reviewed other factors which they believe are driving decreased milk consumption,
including increased competition in the beverage market from new products and
alternative beverages, an increase in the amount of food consumed away from home, and
the lower proportion of young kids in the population.
The NMPF witness evaluated the average increase in differentials contained in
Proposal 19, $1.49 or an 8.6 percent Class I price increase, to estimate the impact on
demand. Assuming a 55 percent retail price transmission rate (1 percent change in the
Class I price would cause a 0.55 percent change in the retail price), the witness estimated

Proposal 19 would lead to a 1.6 percent decrease in demand. The witness concluded the
decrease in demand would be lower than the increase in Class I revenue, resulting in a net
increase of dairy farmer revenue.
Another researcher testified on behalf of IDFA. The witness presented the results
of a study evaluating the impact milk price changes have on the consumption of milk (in
five disaggregated varieties) and various alternatives, including soft drinks, bottled,
water, juices, and for the first time considered plant-based alternatives. The witness
utilized weekly scanner data from 2017 through August 2023 to evaluate three distinct
time periods (pre-COVID, COVID and post-COVID). The witness estimated the data
represented approximately 84 percent of the milk volume sold at retail outlets, or 64
percent of overall milk volume. The witness attributed the remaining 36 percent to milk
sales through untracked retail, foodservice, schools, and shrinkage. The witness noted it
is likely the elasticity for the unaccounted milk volume was highly inelastic.
The IDFA witness said the study found the own-price elasticities for traditional
white, flavored, and lactose-free milk to be elastic, and when all five categories of milk
were combined, it had an elasticity of -1.26 in the post-COVID time period. Utilizing
some of the NMPF researcher’s assumptions (8.6 percent increase in Class I prices and a
retail price transmission rate of .55 percent), the witness estimated adoption of Proposal
19 would result in an overall 5.98 percent decrease in fluid milk sales and a 2.1 percent
increase in gross dairy farmer revenue. The witness concluded this study revealed retail
fluid milk sales are more sensitive to price changes than previously thought. The witness
also noted other demand studies that utilize AMS estimated fluid milk sales, not weekly
scanner data, do not reflect the current retail marketplace because they incorporate highly
inelastic sales to schools, colleges and universities, long-term care and senior living
facilities, hospitals, and correctional institutions.

A third academic researcher, also testifying on behalf of IDFA, provided results
of a study evaluating the market effects of Proposal 19. Looking at milk production,
fluid milk consumption, and producer price statistics since 2000, the witness concluded
there are sufficient milk supplies nationally to meet Class I demands. The witness was
also of the opinion sufficient milk supplies, at reasonable prices, exist for the high Class I
utilization FMMOs (the Appalachian, Southeast, and Florida), because retail prices in the
three markets were below those of a 30-city average retail milk price when compared to
other regions of the country. The witness commented that elasticity studies not
accounting for non-dairy alternatives are not representative of the current retail market.
The witness reviewed recent fluid demand studies and concluded adoption of Proposal 19
would increase fluid milk prices, decrease consumption, and result in more milk use in
manufactured products.
A post-hearing brief submitted on behalf of Select supported increasing Class I
differentials, but not to the levels contained in Proposal 19. Select contended deviations
from the USDSS results made by NMPF may be appropriate but disagreed with the type
and extent of those included in Proposal 19. Select took exception to the proposed
adjustments in the mideast and southwest regions where they have member farms. Select
noted reasons for making deviations were not applied uniformly, especially in areas that
have similar supply and demand environments. Select stated increased transportation
costs and shifts in milk production and processing locations justify increasing Class I
differentials and offered support for using the average of the May and October 2021
USDSS results, with minor adjustments and smoothing of the surface as the USDA
would find appropriate.
A post-hearing brief submitted on behalf of MIG opposed adoption of Proposal
19, arguing hearing evidence supports lowering, not raising, Class I differentials. MIG
cites the abundance of milk available to serve the Class I market and FMMO adjustments

to shipping percentages as evidence to deny Proposal 19. MIG reiterated its objection to
the methodology used and deviations made by NMPF in developing the proposed
differentials. The brief contended raising Class I differentials would be disorderly
because it would lower Class I demand and aggravate challenges already faced by fluid
milk processors. MIG also noted Class I differential changes should not be considered
until the impact of recent changes to transportation cost-related provisions in the
Appalachian, Florida, and Southeast FMMOs were known.
A post-hearing brief submitted on behalf of IDFA opposed Proposal 19 on the
grounds its adoption would cause market disorder by raising fluid milk prices, decreasing
fluid milk consumption, harm consumers, and divert milk into manufacturing uses.
IDFA reiterated hearing testimony in its brief regarding the price elasticity of fluid milk
and concluded adopting Proposal 19 would reduce fluid milk consumption by 5.98
percent, resulting in over 2.2 billion pounds of milk being diverted to manufacturing uses.
Similarly, IDFA objected to NMPF’s methodology in determining the differential
levels offered in Proposal 19. IDFA objected to NMPF’s use of dairy farm production
costs to justify increases to the Class I differentials and referenced existing milk
production as more than adequate to meet fluid milk demand. IDFA maintained Class I
differentials should instead be lowered by $0.40 per cwt because the Grade A
maintenance cost consideration is obsolete and inaccurate.
A MIG witness testified in support of Proposal 20, seeking to reduce the base
differential to $0.00. The witness’ testimony centered around the continued relevance of
the cost components currently provided for in the base differential: Grade A maintenance,
balancing, and Class I incentive costs . The witness was of the opinion the base
differential results in market enhancing prices that induce overproduction and reduce
fluid milk consumption. The witness said that since almost all U.S produced milk meets
Grade A standards, it is no longer necessary to provide compensation through Class I

differentials for those costs as they are not unique to producers supplying the Class I
market. They argued these costs are already provided for in market-clearing Class III and
IV prices where most of the U.S. milk supply is utilized.
The MIG witness said the balancing cost factor is no longer justified as fluid milk
processors have either invested in infrastructure to balance their own milk supply or pay
over-order premiums to their suppliers for balancing services. The witness was of the
opinion incorporating balancing costs within the Class I price results in processors paying
for balancing services they do not receive or paying twice for such services – once
through the Class I price and again in an over-order premium. Lastly, the MIG witness
argued the $0.60 Class I incentive cost factor is no longer necessary to attract adequate
supplies of fluid milk given the low, and continually declining Class I utilization.
Witnesses from MIG member companies testified in support of Proposal 20.
MIG’s members echoed the previous MIG testimony on the relevance of the base
differential cost factors in the current market environment. In particular, the MIG
witnesses argued that through plant investments, particularly ESL processing or
additional milk silos, combined with over-order premiums paid to their milk suppliers,
they are directly paying for their individual milk balancing needs. The witnesses all
opined that through the base differential they are being double charged for such services.
All MIG members testified that if additional monies are needed for balancing services or
to obtain adequate milk supplies, it is more appropriate for those costs to be negotiated in
the marketplace and paid directly to their milk suppliers, rather than as part of a regulated
minimum price shared with all pooled producers.
Another MIG witness testified regarding the relevancy of the base differential in
the current marketplace. The witness was of the opinion the base differential should be
reduced to $0.00, and if cost recovery is needed by producers, it can be negotiated with
milk buyers. The witness utilized the USDSS model to compare the value of Class I and

Class III milk at the county level. The witness presented the results and explained in
some parts of the country, where Class III milk is more valuable, it would take additional
incentives to service a Class I plant rather than remain at the higher valued manufacturing
plant. In other areas of the country, namely the southeast, northeast, and California, the
value of Class I is higher, representing the cost to balance the region’s Class I demand.
The witness said the national average value of the differences was negative $0.38,
indicating nationally, it is more valuable for milk to service Class III plants. The witness
drew the conclusion this analysis supports the argument for lowering the base differential
to $0.00 and allowing fluid plants to negotiate and pay premiums directly to their milk
suppliers.
A post-hearing brief submitted on behalf of MIG reiterated its witnesses’
testimony that the base differential is no longer economically justified. MIG stated the
current oversupply of Class I milk is caused, in part, from high FMMO blend prices.
According to MIG, adoption of Proposal 20 would correct this disorder by allowing a
greater proportion of fluid milk costs to be negotiated and paid directly to suppliers. The
brief reviewed MIG witness testimony on the relevancy of the costs associated with the
base differential and the steps taken by its fluid milk processor members to balance and
obtain a milk supply.
A Lone Star witness, appearing on behalf of NMPF, testified in opposition to
Proposal 20. The witness argued a base differential of $0.00 would result in the
elimination of any Class I differential for large portions of the U.S., amounting to
approximately $650 million annually, with no guarantee the money could be recovered
through over-order premiums. Additionally, said the witness, the lower differentials
would lead to disorderly marketing conditions through increased occurrences of negative
PPDs, higher volumes of depooled milk, and reduced or eliminated incentives to supply
the Class I market. The witness stressed that costs to maintain Grade A status and

balance the market’s milk supply are real and significant. The witness said adoption of
Proposal 20 would be akin to adopting individual handler pools in much of the country,
an idea which they said has been found to cause disorderly marketing conditions.
The NMPF witness maintained milk has an inelastic demand, so any reduction in
Class I prices will not have a significant impact on Class I sales. The witness also said
that despite opposition testimony regarding the perils of setting regulated prices too high,
there are also negative consequences for setting the regulated price too low. In the
witness’s opinion, dairy farmers still face a market power imbalance when negotiating
prices above FMMO minimums, reiterating previous testimony on the difficulty
cooperatives have faced when negotiating and maintaining over-order premiums.
The NMPF witness concluded by emphasizing the objective of the FMMO system
is to set prices to ensure a sufficient quantity of milk for fluid use. The witness stressed
providing for prices that reflect the current costs of supplying the market as demonstrated
through NMPF testimony should be a priority of this proceeding.
In their post-hearing brief, NMPF argued Proposal 20 incorrectly assumes the cost
of servicing Class I demand has not increased and reiterated witness testimony on the
continued relevancy and need for the base differential. NMPF stressed that costs
recognized in the base differential continued to be incurred by dairy farmers in servicing
the Class I market and took exception with the position such costs could be adequately
recovered through over-order premiums. NMPF maintained Class I demand is inelastic
and reiterated the need for Class I prices to continue to be the highest priced class in
order to ensure an adequate supply.
The AFBF witness also expressed opposition to Proposal 20. The witness
testified the cost factors provided for in the base differential are still relevant and in fact
higher than when the differential was adopted. The witness suggested the Department
consider raising the base differential and provided current cost estimates for each of the

three factors, which would result in a base differential increase of approximately $0.60
per cwt. The witness stressed the importance of the base differential in contributing to
the proper alignment of classified prices which they considered a critical element of
orderly marketing. The AFBF’s post-hearing brief reiterated its witnesses' hearing
testimony and concluded adoption of Proposal 20 would lead to disorderly marketing
conditions.
A post-hearing brief filed by Lamers offered support for Proposal 20. Lamers
stated its adoption would better reflect the real value of milk and all four classes would
have a closer price relationship. Lamers asserted high Class I differentials are no longer
needed to supply the fluid market given that 98 percent of milk produced is Grade A. A
post-hearing brief submitted by New Dairy also offered support for Proposal 20.
Select's post-hearing brief expressed opposition to Proposal 20 and asserted a base
differential of $1.60 should be maintained. Select opined the cost of maintaining Grade
A status still exists and has increased, as have the costs associated with balancing and
competing for a milk supply.
A post-hearing brief submitted by Edge, while not offering support or opposition
to Proposals 19 or 20, did contend Class I milk prices should not be raised beyond
necessary levels and not be raised merely to offset the negative producer impact of
increasing make allowances.
The AFBF witness also testified in support of Proposal 21, seeking to increase the
Class II differential from $0.70 to $1.56 per cwt. The witness explained the proposed
differential reflects updated drying costs based on the current NFDM make allowance.
The witness did not believe the proposed increase would lead to the substitution of Class
IV powders in lieu of Class II fresh milk. The witness estimated that adoption of
Proposal 21 would increase annual FMMO marketwide pool values by $122 million and

reduce the likelihood of negative PPDs and depooling. These views were reiterated in
AFBF’s post-hearing brief.
Several witnesses representing MIG including Turner Dairy; HP Hood; AE;
Shamrock; CROPP; Aurora; Shehadey; Crystal Creamery; and fairlife testified in
opposition to Proposal 21. The MIG witnesses indicated adoption of Proposal 21 would
result in Class II standalone plants choosing not to participate in the FMMO system,
putting fully regulated Class I plants with Class II production at a competitive
disadvantage. This sentiment was emphasized by witnesses from Turner Dairy and
Shehadey, whose fully regulated Class I plants also produce notable volumes of Class II
products. The witness from Crystal Creamery provided an analysis of CME NFDM and
Class II nonfat solids prices, projecting an increase of 20 to 50 percent in the use of Class
IV nonfat solids if Proposal 21 was adopted. Lastly, a witness from fairlife predicted
adoption of Proposal 21 would cause some manufacturers to reformulate products in
order to avoid paying the higher Class II price.
In its post-hearing brief, MIG reiterated hearing testimony and added that cream,
a Class II product, must be made with fluid milk in accordance with the standards of
identity established by the U.S. Food and Drug Administration. As such, according to
MIG, a pooled Class II manufacturer of cream could not reformulate and, further, would
experience an estimated 3.5 percent increase in its FMMO marketwide pool obligations.
Several witnesses representing IDFA, including Saputo, Galloway, and Lakeview
Farms, also testified in opposition to Proposal 21. The witness for Saputo indicated the
demand for Class II skim solids is likely to decrease if Proposal 21 is adopted, as
alternative milk solids would have a greater substitution value. Further, according to the
witness, costs to consumers for cream would likely increase.
The witness for Galloway testified that adoption of Proposal 21 would not
increase blend prices or limit depooling and negative PPDs, as alleged, because Class II

manufacturers would instead utilize more Class IV powder ingredients in lieu of fresh
milk. In the witness’ opinion, increasing the Class II differential would only serve to
promote disorderly marketing through the displacement of the local milk supply and
permanent investment of equipment to enable the use of Class IV ingredients. The
witness said once a manufacturer makes the costly capital investment decision, they do
not switch back to use fresh milk in the future. The witness estimated adoption of
Proposal 21 would result in a $99.4 million loss to producers through the use of lower
valued Class IV ingredients. A witness from Lakeview Farms supported the statements
of other witnesses, emphasizing the likely increase in costs to the customer. This witness
added that innovation of more oil-based formulations to offset the price volatility of dairy
fat would lead to a disruption in the dairy supply chain.
In its post-hearing brief, IDFA reiterated testimony from the hearing which
stressed that there is already an adequate supply of milk for Class I and Class II needs,
and opined the current Class II price formula is working well as is. As such, according to
IDFA, there is no evidence that suggests a need to increase the Class II differential.
IDFA argued further that farmers are likely to receive lower net prices as a result of
Proposal 21 due to the anticipated substitution of lower cost Class IV NFDM for Class II
nonfat solids. Lastly, IDFA focused on the likely disproportionate impact of Proposal 21
on Class I handlers that also manufacture Class II products. Without the ability to
depool, these handlers could not take advantage of lower NFDM prices, IDFA wrote.
An MMPA witness appearing on behalf of NMPF also testified in opposition to
Proposal 21. The witness’ testimony mirrored other witnesses cautioning that adoption
could cause substitution with Class IV powder ingredients. The witness said not only
does the Class II and Class IV price difference need to be considered, but so does the
significantly lower transportation cost of powder versus fresh milk. Under the current
Class II differential, Class II milk already has an incentive not to be pooled, said the

witness. Increasing the differential would only heighten the incentive and create
competitive disadvantages for Class I plants making Class II products, while
simultaneously lowering marketwide pool values. In its post-hearing brief, NMPF added
that adoption of Proposal 21 may incent the practice of substituting less expensive milk
powder for fresh milk to make Class II products. NMPF also elaborated on its members’
concerns regarding the likely increase in depooling of Class II milk if Proposal 21 was
adopted.
USDA received post-hearing briefs related to Proposal 21 from three additional
stakeholders: New Dairy; Select; and Lamers. New Dairy expressed its opposition to the
AFBF’s Proposal 21, emphasizing that the current milk supply is sufficient, and it shared
the concerns of other hearing participants regarding the potential competitive
disadvantages for Class I handlers manufacturing Class II products. Select explained that
the AFBF’s proposal deviates from the rationale and methodology USDA utilized to
establish the Class II differential during Order Reform and, thus, according to Select,
Proposal 21 likely overstates an appropriate Class II differential. Further, Select was of
the opinion increasing the Class II differential would discourage the use of fresh milk and
cream in lieu of Class IV ingredients. Lastly, Lamers expressed its concern that the
adoption of Proposal 21 would lead to disorderly marketing and stated no evidence was
presented to suggest a need to increase the Class II differential.
Discussion and Findings
An FMMO (or “order”) is a regulation issued by the Secretary of Agriculture
(Secretary) that places certain requirements on the handling of milk in a defined
geographic marketing area. FMMOs are authorized by the AMAA. The declared policy
of the AMAA is to “…establish and maintain such orderly marketing conditions for
agricultural commodities in interstate commerce….”7 U.S.C. 602(1). As specified by the
AMAA, the principal means of meeting the objectives of the FMMO program are

through classified milk pricing and the marketwide pooling of returns. This rulemaking
concerns and is limited to classified milk pricing.
FMMOs announce prices each month for milk received by plants during that
month, according to its use classification. Since 2000, the FMMO program has used
product price formulas that rely on the wholesale price of bulk products to determine the
minimum classified prices handlers pay for raw milk in the four classes of utilization.
Class III and Class IV prices are announced on or before the 5th day of the following
month to which they apply. The Class III and Class IV price formulas form the base, also
known as the mover, from which Class I and Class II prices are determined.
The Class I price is announced in advance of the applicable month. It is
determined by adding the Class I differential assigned to the plant’s location, plus the
average of advanced Class III and Class IV prices (computed by using the most recent
two weeks’ DPMRP data released on or before the 23rd of the preceding month), plus
$0.74. The Class II skim milk price, announced at the same time as the Class I price, is
determined by adding $0.70 per cwt to the advanced Class IV skim milk price. Thus, the
advanced prices pertaining to milk marketed in a particular month use the same formulae
as the calculation of Class III and IV prices for milk marketed in that same month, but the
specific data are from different time periods. The Class II butterfat price is announced at
the end of the month, at the same time as the Class III and Class IV prices, by adding
$0.007 per pound to the Class IV butterfat price.
Component prices are based on prices for the selected bulk products collected
through the AMS-administered DPMRP, which collects weekly wholesale prices for four
manufactured dairy products in various bulk package sizes (cheese, butter, NFDM, and
dry whey powder). Weekly average prices for cheddar cheese (the weighted average of

block and barrel prices), butter, NFDM, and dry whey are reported in the NDPSR.1
Butterfat prices for milk used in products in each of the four classes is determined
through surveyed butter prices. Protein and other solids prices for milk used in Class III
products are derived from surveyed cheese and dry whey prices, respectively. The nonfat
solids price for milk used in Class II and Class IV products is calculated from surveyed
NFDM product prices.
The butterfat, protein, other solids, and nonfat solids prices are derived through
the weighted average monthly NDPSR survey prices of each corresponding commodity,
minus a manufacturing (make) allowance, multiplied by a yield factor. The make
allowance factor represents the fixed and variable processing costs manufacturers incur in
making raw milk into one pound of product. The yield factor represents the approximate
quantity of product that can be made from a cwt of milk received at the plant, assuming a
certain component composition of the milk and the final products. Among other factors
used to determine yield, the milk received at a plant is adjusted to reflect farm-to-plant
shrinkage compared to farm weights. This relates to the basic question of how much
milk is required to make a pound of product.
This product pricing system was implemented as a part of Order Reform on
January 1, 2000. 64 FR 70868 (Dec. 17, 1999). While individual pieces of the price
formulas have been updated occasionally since that time, this proceeding is the first time
since their adoption that the Department is considering a comprehensive update to all
four classified price formulas 68 FR 7063 (Feb. 12, 2003); 71 FR 78333 (Dec. 29, 2006);
78 FR 24334 (Apr. 25, 2013).
The objective of this proceeding is to evaluate whether market or other economic
conditions have changed and if the price formulas need to be updated to reflect current

Official Notice is taken of the Notice of Equivalent Price Series: 77 FR 22282 (April 18, 2012). The
National Dairy Product Sales Report was deemed as equivalent to the price series previously released by
the National Agricultural Statistics Service.
conditions, including economic and technological factors related to processing,
transportation, and other relevant market functions or services. Twenty-one proposals,
divided into five main topic areas, were considered: milk composition factors - two
proposals; surveyed commodity products - four proposals; Class III and Class IV formula
factors - six proposals; base Class I skim milk price (often referred to as the “higher of”) six proposals; and Class I and Class II differentials – three proposals.
The record supports the findings that some price formula factors should be
amended to reflect current market conditions that were evidenced in this proceeding. The
recommended changes, which are discussed in detail below, include:
1. Milk Composition Factors: Update the factors to 3.3 percent true protein, 6
percent other solids, and 9.3 percent nonfat solids.
2. Surveyed Commodity Products: Remove 500-pound barrel cheddar cheese
prices from the DPMRP survey and rely solely on the 40-pound block cheddar
cheese price to determine the monthly average cheese price used in the
formulas.
3. Class III and Class IV Formula Factors:
a. Update the manufacturing allowances as follows:
i. Cheese: $0.2504;
ii. Butter: $0.2257;
iii. NFDM: $0.2268; and
iv. Dry Whey: $0.2653.
b. Update the butterfat recovery factor to 91 percent.
4. Base Class I Skim Milk Price: updating the formula as follows:
a. Class I milk used in ESL products: The average of the advanced Class
III and Class IV skim milk prices, plus a rolling monthly adjuster. The
rolling monthly adjuster would be equal to the average of the

difference between the higher-of and the average-of, for 24 months,
with a 12-month implementation lag period.
b. Milk used in all other Class I products: the higher-of the advanced
Class III or Class IV skim milk prices for the month.
5. Class I and Class II differentials: Update the Class I differentials to generally
reflect the United States Dairy Sector Simulator May results contained in
evidence.
Milk Composition Factors
Milk composition factors contained in the product price formulas represent
assumed component levels of skim milk on a cwt basis. These factors were adopted on
January 1, 2000. Currently, the formulas assume 3.1 pounds of true protein, 5.9 pounds
of other solids, and 9 pounds of nonfat solids in 100 pounds of skim milk.
The level of assumed components in milk ultimately impacts minimum regulated
prices paid by handlers, although the impact varies since there are variations in how
components are used to value milk between FMMOs. All handlers regulated by the
Arizona, Southeast, Florida, and Appalachian FMMOs pay for milk used in all four
classes on a volume (cwt) basis, regardless of the components contained in the skim milk
(referred to as skim/fat pricing). Simply put, handlers pay for the pounds of skim and
pounds of butterfat in milk they purchase from dairy farmers. In the remaining seven
FMMOs, handlers pay for manufacturing milk based on the actual pounds of components
in milk they purchase (referred to as multiple component pricing). Milk used in fluid
milk products (Class I) is paid based on the skim and butterfat pounds delivered,
regardless of the components contained in the milk. Changing the milk component
factors primarily impacts Class I minimum prices paid by fluid milk processors in all 11
FMMOs, and to a lesser extent manufacturing handlers purchasing milk for Class II, III,
and IV uses on skim/fat FMMOs.

Proponents of changing the milk component factors argue actual average milk
component levels in farm milk have increased since January 1, 2000, and milk should be
priced to buyers to reflect the value of those components. NMPF proposes (Proposal 1)
component levels at observed 2022 levels (3.39 true protein, 6.02 other solids, and 9.41
pounds of nonfat solids). NMPF also proposes an updated methodology whereby
components could be updated once every three years, without a rulemaking proceeding, if
the nonfat solids levels in FMMO producer skim milk changed by 0.07 percentage points
or more from the level stated in regulation. In its proposal, NAJ seeks an automatic
annual update, with no change threshold to be met (Proposal 2).
Both NMPF and NAJ argue that because component levels in producer milk have
risen but are still accounted for in the price formulas at 2000 levels, the difference
between Class I prices and manufacturing milk prices (Class III and IV) has narrowed.
Put another way, milk used in manufacturing in the multiple component FMMOs is paid
based on actual component levels, so producers are paid for all component pounds
delivered to manufacturing plants (approximately 85 percent of FMMO manufacturing
milk is pooled on the 7 multiple component orders). Consequently, payments for milk
delivered to manufacturing plants increase as component levels delivered to those plants
increase. However, milk delivered to Class I plants is paid on a fat/skim basis whose
formulas contain the assumed component levels at issue in this proceeding. Thus, as milk
component levels have risen, Class I plants have continued to pay for milk based on the
static component levels contained in the formulas. Proponents argue the result has been a
narrowing between fluid and manufacturing prices causing marketing challenges,
especially in the milk deficit markets in the southeastern region that must compete to
procure a supplemental Class I milk supply with manufacturing milk demands in multiple
component orders. Proponents also stressed the narrowing of the difference between

Class I and manufacturing milk prices increases the occurrence of price inversions and
depooling.
The record of this proceeding reveals FMMO component levels in raw milk have
increased since January 1, 2000, most notably since the mid-2010s. Milk component data
is not available before 2000 because the prior methodology for pricing milk did not
require milk composition-level assumptions. The Order Reform decision did not address
specifically why these assumptions were adopted. However, since component levels
observed in FMMO skim milk in 2000 were 3.1 percent true protein, 5.9 percent other
solids, and 9.0 percent nonfat solids, it is reasonable to assume they were set at those
levels because at the time they were representative of all pooled milk in the FMMO
system. Evidence reveals that from 2000, component levels were relatively flat with only
a slight increase through the mid-2010s. Beginning in 2016, observed data show a
marked increase in component levels. The data also clearly show component levels
throughout the country vary by season, with levels lower in the spring and summer, and
higher in the fall and winter. Hearing testimony revealed numerous reasons for the
recently observed milk component increases, including genomics in dairy cattle selection
and breeding, higher cull rates of less productive cattle, and improvements in cattle
nutrition and animal husbandry.
Opponents of increasing component levels, primarily fluid milk handlers, argued
three general reasons an increase is not justified. First, fluid milk handlers, who would be
primarily impacted by these proposals, do not receive producer milk at the proposed
component levels. They contend higher component milk is delivered to manufacturing
plants, leaving the lower component milk for fluid milk handlers. Second, fluid milk
handlers testified they receive no additional market revenue for higher components in
milk because their sales are on a volume basis (i.e., gallons) not on the skim component
levels in their fluid milk products. Therefore, they argued, they should not be charged for

additional skim components that have no additional market value in their products.
Third, opponents argued updating component levels also would unduly harm
manufacturing handlers in the skim/fat orders who pay for milk based on a skim/fat basis,
as explained earlier. They argue the proposed component levels are higher than those
delivered to plants, both fluid and manufacturing, in the four skim/fat orders. An
evaluation of the record evidence for each of these claims follows.
First, opponents of increasing component levels argued fluid milk handlers do not
receive milk containing the levels of components proposed. Testimony from fluid milk
handlers during the hearing was mixed. Some fluid milk handlers would not reveal
component levels for the Department to consider, citing confidentiality concerns. Other
fluid handlers, who did offer data, showed a range of average component levels in skim
milk received: true protein ranged from 3.03 to 3.63 and other solids ranged from 5.83 to
6.10. Many producers who testified also discussed the rise in their farm component
levels because of the decisions and investments made at the farm. While some producers
could cite data, for example true protein tests ranged from 3.12 to 3.83, many who could
not cite specifics did discuss a general increase in their component levels.
Second, opponents argued that because component levels have no bearing on the
volume of milk sold, they should not be required to pay higher Class I prices for higher
components that provide no additional market revenue. The record clearly shows fluid
milk handlers sell fluid milk products based on volume, which is why prices are based on
skim and butterfat pounds purchased. Proponents of changing the composition levels
provided anecdotal evidence, such as marketing claims and product description, to assert
fluid milk products can garner additional market revenue for higher component levels.
However, no data were provided to prove there is a general industry-accepted norm or
practice that allows handlers to recover a value for nonfat milk solids in excess of the
nutrition label claim.

Finally, opponents claimed that increasing component levels in minimum price
calculations would unduly harm manufacturing handlers in the skim/fat orders. The
record contains actual component tests of producer milk in the multiple component
pricing orders because producers in those orders are paid based on the pounds of
components sold. However, component data for the four skim/fat orders could only be
estimated as producers in those orders are paid based on the volume of skim milk and
butterfat produced, not component levels. Record evidence contains USDA estimated
data showing component levels in milk have consistently been above the current
assumptions in all four fat/skim orders. Estimated protein and other solids levels of skim
milk pooled in the three southeastern orders have been above the assumed levels in most
months since January 2018, and below the levels contained in Proposal 1 in all months.
Estimated protein and other solids levels of skim milk pooled in the Arizona Order have
been above the assumed levels in all months since January 2018, and above the levels
contained in Proposal 1 some months. Dairy Herd Improvement Association component
data offered at the hearing, although by no means all encompassing, is consistent with
estimated data provided by USDA. In the four skim/fat orders, average protein levels
from 2020-2022 were above the current formula assumptions but below those contained
in Proposal 1.
This decision considers how the price formulas should be updated to reflect
current market conditions. Milk composition levels are only one piece of the formulas
being addressed. However, as with all the factors adopted at the time of Order Reform
and updated through subsequent rulemakings, the question before the Department is what
level is representative of current supply and demand conditions as required by the
AMAA. Some parties argued milk composition factors should not be changed because
not all milk would meet the levels proposed by NMPF. Price formulas in the FMMO
system have never had factors that assumed all milk was identical. Since FMMOs utilize

a national pricing system, price formulas have always relied on averages to set levels
representative of market conditions. The nature of an average means some milk will fall
above or below the specified level. This was true with the milk composition levels that
were adopted in 2000, and similar to other factors, such as make allowances, survey
commodity prices, and butterfat recovery percentages.
With sufficient data showing increasing milk composition levels, the record
supports updating the formulas to reflect current market conditions. The question
becomes what levels best represent the entire U.S. market. The review of record
evidence described earlier reveals many factors should be considered: the average
component levels of pooled producer milk, the variability in milk components regionally
and seasonally, the discrepancy in milk component levels received by fluid milk handlers
compared to manufacturing handlers, and the variability of component levels from farm
to farm. These factors were not specifically mentioned as being considered in the Order
Reform decision when the current levels were set. However, given the evolution of the
dairy industry in the past 24 years, they are relevant for consideration in this proceeding.
Fluid milk handlers argued the component levels should not be increased because
Class I plants do not receive component levels as high as proposed. While the record
does not contain a comprehensive data set of milk component levels received at fluid
milk plants, it does contain data on milk component levels of all milk pooled on the
FMMOs, as well as evidence submitted by producers on the component levels in their
milk, and information from fluid milk handlers on the component levels they receive.
Importantly, many fluid plant operators testified the milk components received at their
respective plants are higher than currently assumed in the formulas, but less than what
has been proposed.
While this decision finds milk composition levels should be increased, the levels
in Proposal 1 are not appropriate, assumed component levels applicable to the raw milk

whose price is impacted by these assumptions. Given the variability and seasonality of
component level information contained in the record, this decision finds an average of
component levels in skim milk over a recent time period appropriate. Based on evidence
that component levels have been increasing at a more rapid rate since the mid-2010s, this
decision finds the average component levels from 2016-2022 the most appropriate time
period to represent producer milk currently priced on a skim/fat basis. Accordingly, this
decision recommends the following: 3.3 percent true protein, 6.0 percent other solids, and
9.3 percent nonfat solids. Estimated data for the three southeastern orders show
component levels exceeding these proposed levels in recent months, thus addressing
opponents’ claims that manufacturing handlers in the southeastern orders receive lower
component milk than other FMMOs. The recommendation balances the cumulative body
of evidence and testimony presented at the hearing.
During the hearing and in their post-hearing brief, Edge proposed, in addition to
updating skim component levels, that the assumed butterfat level of 3.5 percent should
also be updated to facilitate risk management. Updating butterfat levels is outside the
scope of this proceeding as no proposal contained in the hearing notice offered such a
change. As risk management programs utilizing FMMO prices are maintained in the
private sector, such programs can adapt as necessary to facilitate the use of updated price
formulas.
NMPF and NAJ also proposed alternative updating and implementation schedules
for the milk composition levels. NMPF proposed the composition levels be updated once
every three years, but only if there was a 0.07 percent or greater change in nonfat solids
levels, compared to what was in regulation. For example, if Proposal 1 was adopted,
milk composition factors could only be updated three years later if the average nonfat
solids levels in pooled FMMO milk was 9.48 percent (9.41 x 1.007). NAJ proposed the
levels be updated annually, regardless of the magnitude of increase. Both proponents

requested a 12-month implementation lag because of the implications such a change
could have on producer risk management positions. Edge proposed a longer
implementation lag of 15 ½ months because of risk management positions tied to the
DRP.
The development and use of dairy risk management tools is relatively new, and
the Department has never before been asked to delay implementation of FMMO changes
in consideration of risk management. However, testimony made clear producers’
concern regarding the negative financial impact that could occur if regulatory changes did
not account for the growing use of risk management tools.
Producers testified to the use of numerous market-based risk management tools,
including the CME futures and options, and the two USDA-Risk Management Agency
approved insurance products, DRP and Livestock Gross Margin – Dairy (LGM-Dairy).
Use of risk management tools by producers testifying at the hearing varied sharply, with
some not using any tools, some only enrolling in the DMC program, and fewer using
DRP insurance or the CME hedging tools. The record reflects 32 percent of U.S. milk
production was covered in 2022 under DRP, and with a much smaller use of LGM-Dairy.
Producers testifying were particularly concerned with the implementation schedule for
the initial change, as risk management positions could be as far out as 18 to 24 months.
Evidence shows that from 2018 through 2022, almost all CME contracts, 97.34 percent,
expired within 12 months. According to producers, any change to the milk composition
level assumptions during the contract period could result in basis risk to producers not
covered by the hedge. A CME witness testified they saw a 54 percent drop in contracts
with expiration dates over 360 days in 2022 as compared to 2018, which the CME
attributed to the industry already anticipating a regulatory change based on the outcome
of this hearing.

Record evidence depicted the concern regulatory changes could have on risk
management tools, particularly the impact on the usability of these tools during a
transition period. Risk management usage must be considered against the interest of
other producers who do not use risk management tools, since it would delay recognition
of the higher components in producer milk. While risk management use is not a factor in
determining what the milk component levels should be, it is appropriate when
determining an implementation timeframe to attempt to mitigate potential financial harm
to producers who utilize risk management tools. Accordingly, this decision finds a 12month implementation lag appropriate, beginning when other changes from this
proceeding become effective. This delayed implementation should cover hedge positions
for the vast majority of producers utilizing these tools. In addition, as this recommended
decision indicates the Department’s initial position, producers making risk management
decisions are aware of the potential changes, should they be approved by producers.
Lastly, this decision does not support an automatic update of the milk
composition levels, as contained in Proposal 1 or Proposal 2. It is clear from the record
that many factors, as described earlier, should be considered when making a change.
Those factors can only be considered through the course of a rulemaking.
Surveyed Commodity Products
USDA administers the DPMRP to gather weekly wholesale prices of four
manufactured dairy products. Average survey prices are released weekly in the NDPSR,
and monthly average commodity prices are released by AMS on or before the 5th of the
following month. The monthly product prices are then used in the FMMO price formulas
to determine component values in raw milk. The same four commodities have been
surveyed since 2000. NASS administered the survey from 2000 to 2012; submitting data
was voluntary until 2008, and then mandatory and verified from 2008 to 2012. AMS has

administered the survey since 2012 with the data being mandatory and audited 73 FR
34175 (June 17, 2008).
This proceeding is considering four proposals that would add or remove a variety
of products in the DPMRP survey. Because FMMOs enforce minimum raw milk pricing,
the overarching question for the Department in this decision is whether the current
surveyed commodities are an appropriate representation of market clearing, wholesale
commodity products whose prices provide an accurate reflection of the minimum value
of raw milk. DPMRP currently surveys cheddar cheese, butter, nonfat dry milk, and dry
whey. Proposals submitted in this proceeding offer changes to the cheese survey
(Proposals 3, 4, and 6) and changes to the butter survey (Proposal 5). No proposals seek
changes to the NFDM or dry whey surveys.
Cheese Survey
Currently, FMMOs utilize a weighted average DPMRP survey price of 40-lb
cheddar cheese blocks and 500-lb cheddar cheese barrels to determine the protein price
used in the Class III price formula. Although both products meet the definition of
cheddar cheese, the different package styles reflect that their intended uses are different.
Cheddar cheese barrels are intended to be further processed into processed cheeses.
Cheddar cheese blocks can also be used for that purpose, but they are produced with the
intention of use in a natural cheese with minimal further processing (for example cutting
into consumer packages or shredding.) DPMRP weights the cheese price by the volume
of surveyed blocks and barrels, which according to record evidence, is typically around
50 percent blocks and 50 percent barrels.
Proposal 3 seeks to drop barrels from the survey and solely rely on a survey of 40lb blocks. Proponents offered a few reasons for dropping barrels. First, they believe
barrels are overrepresented in the survey because the weighting methodology is based on
the production percentages included in the survey and not actual production across the

entire cheddar cheese market. Proponents believe the percentage of cheddar cheese
manufactured and priced off 40- pound block prices is significantly higher than 50
percent of the U.S. natural cheese market. Second, proponents argue that having what
amounts to two products in the survey results in an average price that is not
representative of either blocks or barrels. They say this has been particularly evident
since 2017, when market prices between blocks and barrels began to significantly
diverge, both in magnitude and direction, from the historical average difference of $0.03.
Barrel prices were even occasionally higher than blocks (historically, block prices have
been higher than barrel prices). Proponents argued that when barrel prices have been
well below the assumed $0.03 difference, the current weighting methodology results in a
lower average cheddar price than would have been if the two prices were weighted in
accordance with actual, total production of each product. Members of NMPF testified a
block-only survey would contain adequate survey volume to be representative of the
cheese market.
Opponents of dropping barrels asserted: 1) it is not appropriate to eliminate
approximately half of the current cheese survey volume; 2) barrels are a market-clearing
product and should continue to be included in the survey; and 3) blocks and barrels
together represent the national cheese market as they are both commodity products with
different commercial uses. Opponents also disputed the claim that most cheese is priced
off the block market.
During the hearing, Edge offered an alternative that would reweight the survey
average price based on the U.S. production volume of blocks and barrels as determined
by NASS, instead of volume from respondents to the AMS survey. They opined barrels
should not be removed from the survey because in months where the barrel price
exceeded blocks, the Class III price would have been lower than it otherwise was, and
consequently producer revenue would be less. Instead, Edge argued a better solution to

the issue of overweighting barrels was to use a weighting methodology reflective of
actual U.S. cheddar cheese production.
Proposal 4, submitted by AFBF, seeks to add 640-lb blocks of cheddar cheese to
the survey. This type of cheddar cheese is made using the same process as 40-lb blocks
and differs only in the final container for the cheese curd. Both sizes represent an
intermediate product requiring further processing before it can be consumed. The
proponent’s primary justification is the additional survey volume that would be added.
The AFBF agreed with NMPF that barrels are overrepresented in the survey, and their
proposed solution is to add survey volume through the addition of 640-lb blocks. This
argument implicitly assumes the accuracy of milk valuation is improved when a larger
volume of cheese is surveyed.
Opponents to adding 640-lb blocks argued: 1) most 640-lb blocks are already
priced off 40-lb blocks, so their inclusion would not enhance price discovery; and 2) 640lb blocks are typically customer-specific which would exclude those blocks from the
survey. The opposition is premised on the additional survey volume not adding new
price information either because the prices are already reflected in the 40-pound block
price, or because the customized products are value-added and should not be included for
minimum pricing.
Proposal 6, offered by CDC, seeks to add mozzarella cheese to the survey.
Proponents argue mozzarella is the largest volume of cheese produced in the U.S., and
revenue from mozzarella products should be captured in the survey and ultimately
reflected in prices paid by Class III handlers. Further, proponents argued a higher Class
III price should be reflected in producer prices to offset increasing farm production costs.
Opponents argued there is no one standard of identity for mozzarella cheese,
making it difficult to delineate what mozzarella product would have a substantial volume
of reportable sales to represent the market value of mozzarella cheese. In addition,

opponents stated no manufacturing cost data is available to be evaluated for inclusion in
the manufacturing allowance calculation for cheese. Lastly, opponents asserted
mozzarella is not a market-clearing product and therefore should not be considered when
determining minimum prices.
While there were three proposals offering changes to the cheese survey, two of
them lack data and evidence to support adoption. First, the addition of mozzarella is not
supported by the record. The record reveals multiple standards for different mozzarella
cheese products, but no evidence was presented to show which of those would be
appropriate to survey as an improvement in finding a minimum value for milk.
Furthermore, no evidence was presented on what would define a commodity mozzarella
product, rather than a value-added product, which is a general rule for inclusion in the
DPMRP. Proponents offered information on mozzarella in consumer sized packages
(e.g. mozzarella sticks), but little to no evidence on what should be considered a
commodity mozzarella product. Evidence shows that a majority of what is considered
mozzarella production is driven by customer specification and would not meet any of the
standards of identities offered, indicating it would be considered a value-added product
and excluded from the survey. Lastly, the record indicates mozzarella products are
already typically priced based on the 40-pound cheddar cheese block price. Therefore,
adoption of Proposal 6 would only result in significant costs associated with determining
a commodity mozzarella product to be surveyed and the ongoing cost of surveying said
product, without adding measurable new price information to the DPMRP cheese survey.
Accordingly, Proposal 6 is denied.
The record lacks evidence to support adoption of Proposal 4, adding 640-lb
blocks. The record reflects widespread industry consensus that 640-lb blocks are
typically priced off 40-lb blocks. Because of this price relationship, numerous industry
witnesses testified that no new price information would be captured by including 640-lb

blocks. In addition, several witnesses testified 640-lb blocks are largely made-to-order
on long-term price contracts which would exclude the sales from the survey because of
these marketing characteristics. No data was presented to evaluate whether any
additional price information gained through inclusion of 640-lb blocks would offset the
burden (lack of efficiency) to both the industry and USDA for their inclusion.
Accordingly, Proposal 4 is denied.
The Department considered the idea presented by Edge to reweight blocks and
barrels in the survey to reflect total U.S. cheddar cheese production volumes by
packaging type, instead of survey volumes. However, the record lacks evidence
regarding the market dynamics of barrel production to analyze how this idea would be
implemented, or the impact it may have on prices, to evaluate whether it would result in a
more appropriate cheese price. In addition, as is made clear below, this decision finds
that surveying two cheese products is no longer an appropriate method for providing
orderly marketing in today’s marketplace, rendering further discussion of a more proper
weighting methodology unnecessary.
What is left to consider is whether 500-lb barrels should remain in the survey.
When determining which products are appropriate to be included in surveys, the Order
Reform Final Decision is instructive. As described in the decision, “The importance of
using minimum prices that are market-clearing for milk used to make cheese and
butter/nonfat dry milk cannot be overstated. The prices for milk used in these products
must reflect supply and demand and must not exceed a level that would require handlers
to pay more for milk than needed to clear the market and make a profit.” 64 FR 16026,
16094 (April 2, 1999). To effectuate that objective, FMMOs use survey prices of
market-clearing commodity products.
In the Order Reform decision, both block and barrel cheese were included in the
survey to increase the sample size and give a better representation of the cheese market.

Since Order Reform was implemented, an evaluation of which products should be
included in the cheese survey has occurred twice. In 2000, shortly after implementation
of Order Reform, the Department considered both the addition and subtraction of cheese
products into the survey, which at that time was administered by the NASS. 65 FR 20094
(April 14, 2000) In 2007, the Department again considered changing the products in the
cheese survey, including the removal of 500-lb cheddar cheese barrels. 72 FR 6179 (Feb.
9, 2007) In both proceedings, the Department maintained that inclusion of both 40-lb
blocks and 500-lb barrels was representative of the cheese market at the time.
While not contained in the hearing notice of the 2000 proceeding, there was
testimony at the hearing for incorporation of other cheeses in addition to cheddar. The
idea was denied because “If the survey included other descriptions of cheddar and other
types of cheese, such as mozzarella, it would not be possible to consider the reported
price as representative of the value of any particular product.” 67 FR 67906, 67926 (Nov.
7, 2002) This reasoning illustrates an important consideration of which products should
be contained in the survey; products whose resulting prices are representative of a distinct
product.
For all other product pricing formulas (butter, nonfat dry milk, and dry whey),
DPMRP only surveys one product. The butter survey collects prices of 80 percent salted
Grade AA butter, the NFDM survey collects prices of USDA Extra Grade NFDM, and
the dry whey survey collects prices for USDA Extra Grade dry whey. While all three of
these products can be in varying bulk packaging sizes as specified in regulation, the
product itself is essentially the same. 7 CFR 1170.8 Consequently, the resulting survey
prices represent single, distinct products.
The same cannot be said of the two cheddar cheese products surveyed. Fortypound block cheddar cheese is typically colored, and primarily sent for further processing
into consumer type packages such as “cut and wrap” and shredded products. Barrel

cheese, on the other hand, is typically white (uncolored) and used primarily for processed
cheese and cheese-flavored products. The hearing record demonstrates the two products
are not interchangeable but rather are produced for two distinctly different uses which
have their own supply and demand factors. These fundamental qualities have not
significantly changed since Order Reform. At the time of Order Reform, and during the
subsequent two rulemakings considering changes to the cheese survey, the prices of
blocks and barrels were relatively close, and it was determined the additional volume
added with the inclusion of barrels was a benefit to orderly marketing as it ensured a
robust survey sample.
Testimony and evidence presented showed the historical price alignment of the
two products, estimated at $0.03 per pound, until 2017. Proponents argued the market
changed significantly in 2017 when there was a dramatic increase in price volatility both
within each product and in the relationship between the two products. To determine
statistical validity of that claim, the differences in the monthly average block and barrel
prices from 2001-2023 were analyzed to identify breaks in the structure of the blockbarrel spread. The analysis found December 2016 to be a statistically significant month,
indicating the period between 2001 to 2016 and 2017 to 2023 were statistically different
in terms of the block-barrel spread volatility. Historically, prices for blocks and barrels
were similarly priced. From 2001-2016, the block-barrel spread averaged $0.01 per
pound, while from 2017-2023 the spread significantly increased to $0.115 per pound.
When surveying prices of two products that recently are so divergent, the
resulting average cheese price does not represent either of the products surveyed. For
example, in October 2020, cheddar block prices averaged $2.5692 per pound and cheddar
barrel prices averaged $0.6052 per pound lower at $1.9640 per pound. The weighted
average cheese price for October used to compute FMMO component prices was
$2.2921, a price reflecting neither of the two survey products. Accordingly, after careful

analysis of the record, this decision finds the DPMRP cheese survey should only include
40-lb cheddar cheese blocks. Evidence reveals a clear and statistically significant shift in
the cheddar markets occurred in 2017, which witness testimony attributed to a number of
market factors including plant investments and increased production of white whey. As a
result, inclusion of both blocks and barrels in the cheese survey has resulted in average
cheese prices used in FMMO formulas that are not representative of any one cheese
product. Therefore, this decision recommends adoption of Proposal 3.
There was significant testimony regarding how cheddar barrel makers would be
impacted if 500-lb barrels were no longer surveyed. It was clear there was no industry
consensus, not even between barrel makers, on the impact. What is paramount to any
rulemaking is to ensure FMMO provisions provide for orderly marketing conditions, as
required by the AMAA. The ultimate consideration is which set of bulk, market-clearing,
commodity type dairy products provide the most accurate and efficient means of
determining the minimum value of milk components. One facet of this is to ensure prices
used in the formula best represent the fundamental products selected for their purpose.
As described above, that goal is not being met by using both blocks and barrels in the
survey.
One concern expressed by some barrel cheese manufacturers is that the Class III
price resulting from a block-only calculation would often be too high to ensure a
profitable return to barrel cheese makers. Multiple considerations are worth noting. One,
there are numerous styles of cheese represented in Class III. Manufacturers of each have
no guarantees on their net returns, and, hence, manage their business by taking minimum
pricing into account. To that end, there are many steps remaining in this rulemaking
process, including publication of a final decision, producer referendum, and if passed, an
implementation period. These steps should allow barrel manufacturers ample time to
determine if changes are needed in their business practices to adjust to the prices that

would result from this recommended price survey. As FMMOs only enforce minimum
regulated prices on pooled milk, it should not be overlooked that barrel manufacturers
choose whether to pool milk subject to minimum prices.
Butter Survey
Currently, FMMOs utilize the monthly average DPMRP survey price of 80
percent salted Grade AA butter in 25-kilogram and 68-pound boxes to determine the
butterfat price used in all 4 classified pricing formulas. Proposal 5 seeks to add unsalted
butter to the survey. Proponents argue the volume of U.S. butter production captured by
the survey has been decreasing, and adding unsalted butter would increase the sample
size and yield more robust survey results.
Testimony in opposition to Proposal 5 asserted the production of unsalted butter is
mostly manufactured to a particular customer order. Because the lack of salt results in a
shorter shelf life, unsalted butter is generally not manufactured unless its sale is
imminent. On the other hand, because salted butter can be stored, when milk needs to
clear the market and butter manufacturers lack a buyer, they will make salted butter to
store and sell later. Opponents also noted unsalted butter is typically exported, often
facilitated through premium-assisted sales, rendering those sales unreportable.
The record lacks evidence to support adoption of Proposal 5. Although data was
entered showing the amount of unsalted butter graded by the USDA Dairy Grading
Program tripled between 2005 and 2022, the USDA butter grading program is voluntary;
hence, the data does not give a complete picture of the U.S butter market. Furthermore,
there was no indication regarding what percentage of the graded butter volume would be
reportable given testimony noting the structure of the unsalted butter market would likely
make a large share of it nonreportable. No data was presented to evaluate whether any
additional price information gained through inclusion of unsalted butter would outweigh
the burden to both the industry and USDA for its inclusion. In fact, the record

demonstrates that unsalted butter is not a market clearing product given its shorter shelflife and on-demand production.
The record evidence supports salted butter as the market clearing butter product
and continuation as the only butter product in the survey. In addition, as discussed in
evaluating the cheese survey, having two commodity products surveyed (such as blocks
and barrels) can have the unintended consequence of resulting in a component price that
does not represent either product produced. As no price information was entered into
evidence to evaluate how salted and unsalted butter prices compare, the Department
could not determine if a similar situation might occur by adding unsalted butter to the
survey. Accordingly, Proposal 5 is denied.
Class III and Class IV Formula Factors
The Class III and IV formula factors include four distinct elements –
manufacturing (make) allowance, butterfat recovery, farm-to-plant shrinkage, and nonfat
solids yield.
a. Make allowances.
Make allowances represent the costs of converting raw milk into the four
manufactured dairy products surveyed by USDA. The current make allowance levels
were determined through a 2007 rulemaking that became effective October 1, 2008, and
are as follows ($/per pound): cheese - 0.2003; butter - 0.1715; NFDM - 0.1678; and dry
whey - 0.1991. The 2007 rulemaking used an average of two surveys: a voluntary,
unaudited 2006 nationwide cost survey conducted by the Cornell Program on Dairy
Markets and Policy (CPDMP), and a mandatory, audited 2006 cost survey of plants
located in California conducted by the CDFA. This proceeding must determine whether
manufacturing costs have increased such that a change from the current levels is
warranted, and if so, what are appropriate levels.

Four manufacturing cost data sets were entered into the record for consideration
in this proceeding. The first was conducted by the University of Wisconsin, on behalf of
USDA, and was a voluntary survey of manufacturing plants throughout the U.S. (2021
survey). This survey was similar to the 2006 CPDMP survey used to determine current
make allowances, as the primary researcher authored both. The 2021 survey collected
cost information provided from manufacturing plants of cheese (10 plants), butter (12
plants), NFDM (27 plants) and dry whey (8 plants). Annual data submitted by plants
primarily represented calendar year 2019, and included labor, utilities, non-labor
processing, packaging, general and administrative, and return on investment cost
categories. The 2021 survey results were presented as total averages, and high and lowcost plant averages.
The 2021 survey methodology was similar to the 2006 study, except for the
allocation of non-allocated costs. Some fixed or overhead costs could not be allocated
directly. Some costs were inherently direct costs but were not collected in a manner that
allowed them to be assigned to a particular processing activity or product. When that
occurred in previous studies, unallocated costs were allocated on a solids basis, which
testimony revealed to be a common practice, according to some manufacturers. In some
facilities making multiple products, such as butter and powder plants, not all plant
operators had the infrastructure to allocate costs to the different products. A common
example was plant utilities wherein the plant only had a single electric meter. If an
operator utilized 70 percent of the solids received at the plant in butter, then 70 percent of
the unallocated costs (e.g. electricity) were allocated to butter production, and the
remaining 30 percent were allocated to NFDM production. This allocation method was
referred to by the study author as the “non-transformation” method.
In the 2021 survey, the author used what they believed to be a better method for
addressing costs the manufacturer could not directly allocate. Unallocated costs were

allocated based on an estimation of the degree of processing transformation the raw milk
underwent to transform into a manufactured product. On a scale from 1 to 10, products
with minimum processing (liquid whey) were assigned a 1, while products with a high
degree of transformation (whey protein concentrate) were assigned a 10. The survey
author argued this somewhat subjective and ordinal measure of costs could provide a
more logical allocation of certain costs that were inarguably not properly attributed
through the non-transformation cost allocation method. The most obvious example was
the highly energy consuming process of drying for NFDM powders. For example,
operating a milk dryer requires significant energy, resulting in an assumption that it was
more appropriate for a higher percentage of the plant’s energy costs to be attributed to its
powder production.
A second data set was a survey conducted by the same author, administered on
behalf of IDFA, seeking to capture more current costs and increase the number of
respondents. This survey, referred to as the 2023 survey, was similar to the 2021 survey
except for two elements. First, the plants that voluntarily submitted data were different in
number and type: 18 cheese, 13 butter, 15 NFDM, and 9 dry whey plants participated.
The survey author explained that while the number of participating plants were similar
for butter and whey across both surveys, the structure of the plants was noticeably
different. Consequently, most of the variability in average costs between the 2021 and
2023 surveys is attributed to the plant sample, rather than actual cost increases over time.
For example, the 2021 butter plants surveyed tended to be larger than the 2023 butter
plants surveyed, accounting for a significant portion of the cost difference between the
two surveys. Some witnesses at hearing also noted the 2023 survey captured 2022 costs,
a time of historically high inflation which has since moderated.
The second notable difference was the 2023 survey used the non-transformation
methodology of allocating unallocated costs on a solids basis. The survey author

indicated mixed industry feedback on the transformation allocation methodology used in
the 2021 survey, as many participants stated allocating costs on a solids basis is standard
practice. To facilitate comparison of the two surveys the author also presented updated
2021 survey results using the non-transformation allocation methodology.
In support of a separate data set, mandatory and audited 2004-2016 California
manufacturing cost survey results, conducted by the CDFA, were entered. These surveys
formed the historical data used to forecast current costs in the CA Forecast described
below. The 2006 CDFA study was used by USDA when determining the current FMMO
make allowances.
The fourth data set, entered on behalf of IDFA, was a result of a statistical model
that used data from the 2004-2016 California manufacturing cost surveys and other
known input prices and productivity data (for example, the producer price index) to
project future California manufacturing costs, referred to hereinafter as the CA Forecast.
The study author testified the model predictions were a better estimate of costs than a
simple trend analysis since they accounted for the impacts of other factors, such as
accelerating inflation, that are known to describe changes in manufacturing costs in
California. Unlike the 2021 and 2023 surveys which evaluated six cost categories
(processing labor, utilities, packaging, non-labor or utilities processing, general and
administrative, and return on investment), the CA Forecast only estimated three cost
categories (labor, utility, and other). Other costs were defined as the remaining costs
after labor and utility costs were deducted. Inasmuch as the CDFA results were used by
USDA when previously amending make allowances, proponents argued this statistical
estimation of what CA manufacturing costs might have been for 2022 would be a helpful
indicator to validate other manufacturing cost data entered into the record.
These data sets were the basis of the manufacturing allowance levels proposed by
stakeholders at the hearing. Two sets of make allowance levels were offered ($/pound):

Product

Proposal
7
NMPF

Cheese
Dry Whey
NFDM
Butter

0.2400
0.2300
0.2100
0.0210

Proposals 8 and 9
IDFA/WCM
A Year 1
0.2422
0.2582
0.2198
0.2251

IDFA/WCM
A Year 2
0.2561
0.2778
0.2370
0.2428

IDFA/WCM
A Year 3
0.2701
0.2976
0.2544
0.2607

IDFA/WCM
A Year 4
0.2840
0.3172
0.2716
0.2785

NMPF asserted that their proposed levels take a balanced approach between
recognizing increased manufacturing costs and the impact to producers if there is a
significant increase from current levels. They testified that while they evaluated the 2021
survey when developing their proposal, the levels they ultimately proposed were a
consensus judgment of all NMPF members. By their own description, the proposal is not
intended to reflect the entirety of current manufacturing costs. NMPF witnesses argued
that their proposal would update make allowances to be a closer reflection of
manufacturing costs, but further increases could not be justified because of the potential
impact to producers. They argued that until a mandatory cost survey can be conducted to
provide assurances of accuracy in the calculation of manufacturing costs, any increases
larger than they proposed would reduce producer revenue, lower already slim (if any)
margins, and negatively impact the availability of adequate supplies of milk for fluid use.
They considered such consequences disorderly.
NMPF stressed current make allowances are too low and have resulted in
cooperative reblending as a method of sharing losses among cooperative members who
own manufacturing plants. NMPF witnesses also testified to receiving reduced premiums
from manufacturing plant customers as they attempt to recoup costs not covered by the
current make allowance levels. Reduced and/or deferred plant investment caused by
inadequate make allowances was also a theme discussed by many witnesses.
Cooperative witnesses spoke of the disproportionate burden on cooperatives with
balancing plants, which inherently have higher manufacturing costs as they do not

operate continuously at full capacity because of the market-wide balancing role they
necessarily assume.
NMPF cooperative witnesses and dairy farmer members presented evidence on
increasing farm production costs and slim farm margins. They opined that the impact to
producers should be considered when determining appropriate make allowance levels.
WCMA and IDFA offered separate, but identical proposals. Their proposed make
allowance levels were derived from the average of the 2023 study and the CA Forecast,
plus a $0.0015 marketing cost factor. The proposals contained a 4-year implementation
schedule with 50 percent of the increase implemented in year 1 and the remaining 50
percent implemented evenly across the next 3 years. Proponents offered a phased
implementation schedule in recognition of the impact that sudden, large increases in
make allowances would have on producer revenue.
WCMA and IDFA witnesses asserted there are limits to a manufacturing
handler’s ability to lower costs through efficiencies. As make allowances have not been
increased in over 15 years, the witnesses stated plants have reached the limit on capturing
cost efficiencies, and inadequate make allowances are now impacting innovation and
capital investments. Manufacturing handlers testified their costs of manufacturing have
increased and are in line with the 2021 and 2023 survey results. As a consequence of
inadequate make allowances, the witnesses said classified prices are overvaluing raw
milk. To substantiate the claim, witnesses compared producer mailbox prices with
FMMO blend prices. In regions where mailbox prices (which contain premiums and
deductions reflecting reblending) are below blend prices, the witnesses asserted regulated
prices are too high, as manufacturers have lowered market premiums to make up for high
manufacturing costs.
The record clearly demonstrates that make allowance levels are not reflective of
the costs manufacturers incur in processing raw milk into the finished bulk products of

cheese, butter, NFDM, and dry whey. This was one of the only facts to which all
participating parties agreed and offered evidence in support, as discussed above.
However, there were divergent views on what should constitute adequate make allowance
values going forward.
Since 2000, when product pricing was adopted, FMMO decisions have
consistently relied on surveys of observed manufacturing costs to determine proper make
allowance levels. Previous make allowances have been derived in whole, or in
combination with, surveys conducted by CPDMP, CDFA, and the USDA Rural Business
Cooperative Service. The importance of relying on actual, observed costs cannot be
overstated. FMMO price formulas determine the classified prices handlers pay to dairy
farmers. It is important that all variables reflect actual market conditions.
While the use of modeling is helpful for policy analysis, the evidentiary record of
this proceeding contains adequate observed market data to determine make allowance
levels without the need to rely on model assumptions. Modeling involves a host of
assumptions made by the modeler, as was described by the CA Forecast author, which
result in estimates with a wide confidence interval. In other words, cost estimates could
have a wide range of possible values consistent with the model. The confidence interval
for the cost estimates widens when some indexes used to forecast are not specific to dairy
manufacturing. Economic modeling was considered and rejected during Order Reform as
a replacement for the Basic Formula Price. This decision affirms the Department’s longheld position that this type of modeling, requiring extensive assumptions, is not an
appropriate methodology for determining make allowances when superior information is
available. As it is common for participants to not reveal confidential information such as
manufacturing costs, the cost surveys contained in evidence provide the best available
information on observed costs for this proceeding. Accordingly, this decision does not

find justification for using the CA Forecast in determining appropriate make allowances
levels.
In opposition to Proposals 8 and 9, cooperatives and dairy farmer members
offered substantial testimony regarding the potential impact to dairy farmers should make
allowances be significantly increased. Accordingly, they recommend adoption of the
NMPF proposal as it attempts to temper the impact to producers.
FMMOs are designed to provide for orderly marketing through classified prices
paid by handlers and marketwide pooling to determine average minimum blend prices
paid to producers. As FMMO formulas are market-oriented, the product prices that drive
classified prices are chosen to reflect current supply and demand conditions. This was
last reiterated by the Department in 2013, writing “when the supply of milk is insufficient
to meet the demand for Class III and Class IV products, the prices for these products
increase as do regulated minimum milk prices paid to dairy farmers; because the milk is
more valuable and the greater value is captured in the pricing formulas.” 78 FR 9248
(Feb. 7, 2013). Further, the Secretary is expressly authorized in the AMAA to set prices
to reflect “…the price of feeds, the available supplies of feeds, and other economic
conditions which affect market supply and demand for milk or its products….” 7 USC
608c(18). This concept was discussed and validated by a Federal court and is relevant to
this proceeding. Bridgewater Dairy, LLC et al. v. USDA, No. 3:07-cv-104, 2007 WL
634059 (N.D. Ohio, 2007). Therefore, the potential impact to producers remains an
inappropriate factor in determining make allowance levels. While many stakeholders
look to the FMMO program to provide stability, it is not within FMMO authority to
support dairy farmer income.
Accordingly, record evidence does not support adoption of Proposal 7, whose
make allowances levels are not reflective of observed costs provided in evidence and is
designed to dampen the impact to producers.

A vast majority of hearing participants supported a USDA-administered,
mandatory, and audited survey as the most appropriate method for obtaining observed
cost data to determine make allowance levels. Some witnesses asserted make allowances
should not be changed until such a survey is administered and results published.
Conducting such a survey is not currently authorized by law. The lack of a mandatory
survey has not been reason to delay two previous updates to make allowance levels, and
its continued lack of existence now is not a reason for delaying such an update in this
proceeding. As discussed, the record of this proceeding clearly demonstrates
manufacturing costs have increased since make allowance levels were last changed.
Given the body of evidence, this decision finds it appropriate to increase make
allowances to ensure the price formulas better reflect manufacturing costs and provide for
more orderly marketing conditions.
The record reveals the voluntary, unaudited nature of the 2021 and 2023 surveys
are met with reluctance by some stakeholders, particularly the producer community.
Questions regarding plant sampling, cost allocation methodology, and capturing of a
high-cost time period expressed on the record are legitimate considerations. Issues with
the results of voluntary, unaudited surveys are not new to the process of determining
make allowances. Similar situations occurred in both the 2006 and 2007 rulemakings. In
both instances, make allowances were determined by using parts of different survey
results. The record of this proceeding supports the same considerations.
What remains for this recommended decision to determine are proper make
allowance levels given the survey data contained in evidence: the 2021 survey; the 2023
survey; and the 2016 CA survey. The record does not support consideration of the 2021
survey results that relied on the transformation cost allocation method for allocating
unallocated costs. Hearing participants expressed skepticism of this method as it is
standard industry practice to allocate costs on a solids basis. Although the study author

explained how the transformation numbers were assigned to products, the record does not
contain sufficient evidence to validate the new methodology. Whether or not the
transformation methodology is theoretically more accurate is not relevant. What is
germane is that manufacturers allocate costs, manage their plants, and make marketing
and pricing decisions in accordance with the traditional method of allocating fixed and
unallocated costs on a pro-rata basis of milk solids in the final products. Accordingly, the
2021 survey results utilizing this methodology were not considered when determining the
levels recommended in this decision. The revised 2021 and 2023 surveys, using nontransformed survey results, and the 2016 CA survey results were used in determining the
make allowances recommended in this decision. Relying on a combination of these
survey results provides a consensus set of data to determine appropriate make allowance
levels and is superior to relying only on one survey.
Cheese

Low Cost
High Cost
Average
# Plants

2021
NonTransformed
$0.2365
2023
Non –
Transformed
$0.2201
$0.3181
$0.2643
2016
CA
Survey
$0.2454
Current

$0.2003

USDA
Proposed

$0.2504

This decision recommends a $0.2504 per pound cheese make allowance, derived from the
average of the 2021 and 2023 non-transformed survey results. The 2023 survey
incorporates a representative sample size, accounting for 55.6 percent of NASS cheddar
cheese production. The record indicates the 2023 survey, which collected cost data
primarily from 2022, covered a period of relatively high inflation and rising input costs.
An example is packaging costs – lumber and corrugated materials – which testimony
indicates have receded since peaking in 2022. Absent any other data on the record, this
decision finds it appropriate to utilize an average of the 2023 and 2021 non-transformed

survey results to ensure the recommended cheese make allowance is not
disproportionately affected by higher 2022 costs that have since moderated. The decision
finds use of the 2021 and 2023 surveys provides a manufacturing allowance reflective of
the national cheddar cheese market. In 2022, California cheddar cheese production
represented approximately 6.9 percent of reported NASS cheddar cheese production. As
incorporation of the 2016 CA survey would result in an over representation of California
cheese manufacturing costs, this decision does not support its consideration.
Butter

Low Cost
High Cost
Average
# Plants

2021
NonTransformed
$0.1338
2023
Non –
Transformed
$0.2616
$0.4210
$0.3176
2016
CA
Survey
$0.1838
$0.2149
$0.1938
Current

$0.1715

USDA
Proposed

$0.2257

This decision recommends a $0.2257 per pound butter make allowance, derived
from the average of the 2021 and 2023 non-transformed survey results. While the 2021
and 2023 surveys had roughly the same number of reporting plants and represented
roughly the same volume of NASS U.S. butter production (approximately 80-82 percent),
the plant samples differed significantly. The study author claimed sampling was the main
driver for the notably different survey results. The 2023 survey captured data from both
smaller and larger plants while the 2021 survey consisted of a more homogenous sample
of larger and more efficient plants. The record indicates the 2023 survey, which collected
cost data primarily from 2022, covered a period of relatively high inflation and rising
input costs. According to the Producer Price Index for All Commodities (PPI), published
by the Bureau of Labor Statistics, prices have moderated since their June 2022 peak.
Thus, this decision finds it appropriate to average the 2023 and 2021 non-transformed
surveys to ensure the recommended butter make allowance is not disproportionately

affected by higher 2022 input costs that have since moderated and account for the
differences in plant sampling. The decision finds use of the 2021 and 2023 surveys
provides a manufacturing allowance reflective of the national butter market, as both
surveys represent over 80 percent of 2022 NASS butter production volumes. This
decision does not support incorporating the 2016 CA survey in the calculation as it would
overrepresent California butter manufacturing costs.
NFDM
2023

Non-

Non –

CA

USDA
Current

Transformed

Transformed

Survey

Low Cost

-

$0.2302

$0.1854

High Cost

-

$0.3247

$0.2786

Average

$0.2454

$0.2750

$0.2082

# Plants

15

Proposed

$0.1678

$0.2268

This decision recommends a $0.2268 per pound NFDM make allowance, derived
from the average of the 2021 non-transformed survey and 2016 CDFA cost of processing
survey results. In 2022, California represented 43.7 percent of U.S. NFDM production.
This supports hearing testimony describing the importance of California manufacturing
facilities in the total U.S. production of NFDM powder. Therefore, this decision finds it
appropriate to place more emphasis on California NFDM plant costs considering the
dominant share of NFDM production by California plants. As 2016 was the last CDFA
study published, and it contains audited data, unlike the 2021 and 2023 surveys, it is
appropriate to use as one of the surveys to determine the recommended average make
allowance. As stated previously, given all the cost surveys contained in the evidentiary
record have shortcomings, this decision finds it appropriate to use an average of two

surveys when recommending make allowances. Regarding a NFDM make allowance,
what remains is consideration of either the 2021 or 2023 survey. In the 2023 survey,
significantly fewer plants participated and record evidence suggests at least one large
NFDM manufacturer did not participate. The record reveals the 2021 survey to be a
better representation of plants producing NFDM in the U.S. than the 2023 survey.
Additionally, as NFDM production is heavily energy dependent, the 2023 survey
captured the historically high energy costs, particularly natural gas, that have since
moderated. Utilizing the 2021 survey figures moderates the influence of the high
inflationary period experienced in 2022, particularly for energy and utilities.
Dry Whey

Low Cost
High Cost
Average
# Plants

2021
NonTransformed
$0.2457
2023
Non –
Transformed
$0.2848
$0.3952
$0.3361
2016
CA
Survey
-

Current

$0.1991

USDA
Proposed

$0.2653

This decision recommends a $0.2653 per pound dry whey make allowance,
derived from the 2021 non-transformed survey and 2023 non-transformed low-cost
survey result. Similar to NFDM, dry whey production is heavily energy dependent, and
the same concerns regarding the 2023 survey results exist for dry whey. The record
reflects incrementally higher drying costs are incurred when drying whey compared to
NFDM due to the higher moisture content in whey. Natural gas prices increased
substantially between 2019 and 2022. The Henry Hub Natural Gas Spot Price increased
153 percent between 2019 and 2022. However, prices declined in 2023, with the spot
price falling by 61 percent. Natural gas prices in 2023 were comparable to prices in
2019, with the spot price one percent lower than in 2019. Compared to 2016, natural gas
prices were slightly lower in 2023, with spot prices about 4 percent below 2016 levels.

These data suggest natural gas prices are similar to price levels observed during the
Stephenson 2021 survey. Absent any other data on the record, this decision finds it
appropriate to utilize the 2023 non-transformed low-cost average ($0.2848) with the 2021
non-transformed survey to ensure the recommended dry whey make allowance is not
disproportionately affected by higher 2022 energy and utilities costs that have since
moderated.
The record does not support inclusion of a $0.0015 per pound marketing cost for
any of the four make allowances. While supported by a few participants in both
testimony and post-hearing briefs, no data was provided to validate $0.0015 as an
appropriate estimation of marketing costs.
The make allowances recommended in this decision are more representative of
manufacturing costs than current make allowances, which were last changed in 2008.
Record evidence clearly supports updates; however, as previously mentioned, each of the
surveys of observed costs has weaknesses. The recommended make allowance levels are
the best approximation of manufacturing costs given publicly available data and evidence
contained in this proceeding’s record. In accordance with long-standing practice, this
decision does not recommend delaying the implementation of make allowances
determined to best reflect current conditions. Should these make allowances be approved
by producers, they would be implemented through the publication of a final rule.
b. Butterfat recovery.
Currently, the Class III formulas contain a 90-percent butterfat recovery
assumption. This represents the percentage of butterfat in raw milk that can be recovered
during the cheesemaking process, recognizing that for both theoretical and practical
reasons, 100% of utilization of butterfat (or any other raw milk component) in the
production of a dairy product is impossible. Proposal 10 seeks to increase the butterfat
recovery assumption to 93 percent. Proponents claimed modern cheesemaking

equipment and better cheese handling techniques make a higher butterfat recovery not
only attainable, but common in practice.
Opponents mainly consisted of manufacturers asserting that while some cheese
plants attain butterfat recovery percentages in excess of 90 percent, yield assumptions
that increase producer revenue, such as butterfat recovery, should not be amended outside
a comprehensive review of all assumptions that determine yield factors. Multiple
opponents mentioned the overvaluation of whey cream as an example of a potential issue.
This rulemaking proceeding sought to consider changes to the FMMO pricing
formulas. Industry participants were invited to submit proposals concerning the current
pricing provisions of the FMMOs. Those opposing changes to the butterfat recovery
percentage had an opportunity to submit proposals on any of the yield factors, as they fall
within the provisions of the pricing formulas. None, other than those submitted by
Select, were received. This decision does not find it appropriate to deny consideration of
any yield related proposal presented in this proceeding on the basis of a potential future
evaluation of all yield factors.
The record contains testimony from several expert witnesses explaining the
cheesemaking process and use of more modern cheese equipment and technology,
including improvements in coagulants and curd handling, allowing handlers the ability to
capture a larger percentage of butterfat in cheese. As butterfat recovery numbers are
considered confidential information, the record does not contain a well-developed picture
of recovery levels in U.S. cheese plants. The record indicates the age of equipment and
technology used in cheese plants varies widely. While evidence was submitted
describing high butterfat retention rates that are achievable using new equipment, it does
not demonstrate those rates are reflective of the general industry conditions. Other than a
few new, very modern plants, the record does not support a 93 percent butterfat recovery
factor as attainable by most cheese plants.

The record contains considerable testimony estimating current butterfat recovery
rates in the universe of cheese plants with varying ages of equipment and technology.
Expert witnesses estimated butterfat recovery in cheddar plants ranged from 88 to 93
percent, attributing much of the difference to cheddar vat equipment. It is important that
the product price formulas reflect current, not theoretical, conditions for the general
population of plants. Experts generally offered that most commodity cheddar cheese
plants can obtain greater than 90 percent recovery, but few obtain 93 percent, with a 91
percent butterfat recovery rate considered the industry average. Accordingly, this
decision recommends a 91 percent butterfat recovery rate. Such an increase necessitates
a change to the butterfat yield factor in cheese from 1.572 to 1.589.
c. Farm-to-Plant shrinkage.
Currently, the FMMO formulas assume a farm-to-plant shrinkage factor of 0.25
percent. This represents normal milk losses that occur when milk is delivered from the
farm to a plant. Under the FMMO system, most handlers purchase milk from producers
based on farm weights and tests. The shrinkage factor recognizes that when milk is
pumped from a farm bulk tank to a milk tanker, and then from milk tanker to the plant
silo, milk sticks to the sides of the pipes and tanks. Milk can also be lost in the milk
hauling process when milk haulers must make multiple farm stops to fill a load. As a
result, plants often physically receive less milk than was measured at the farm. In
recognition of this reality, the yields are slightly reduced to reflect the amount of milk
actually available to make a product, as compared to the amount of milk picked up on
farms.
The proponents asserted that producers shipping full tanker loads is common in
the Southwest where they operate. They testified to and provided cooperative data
regarding the steps they have taken to reduce shrinkage. Proponents said increased
average farm size results in fewer stops by the milk hauler to fill up a load, thus lowering

overall shrinkage. They opined shrinkage should no longer be a reality for farms as
losses can be managed on any size farm through adoption of farm scales, flow
measurements, and other technologies to improve accuracy.
Opponents argued only a small percentage of dairy farms are able to produce
enough milk to fill an entire tanker load. While the number of large farms has grown,
opponents testified removing the shrinkage factor could further incentivize manufacturers
to prefer large over small farms. Consequently, they opined the farm-to-plant shrinkage
factor should remain.
Record evidence reveals most dairy farms are unable to fill a tanker load per day.
According to the NASS, daily milk production per cow averaged 66.5 pounds in 2022.
Assuming an average tanker load of milk is approximately 48,000 pounds, it would
require a milking herd of 722 cows to fill a tanker. In 2022, of the 24,470 U.S. dairy
farms with milk sales, only 3,451 farms (approximately 14 percent) had 500 or more milk
cows, and 2,013 (approximately 8 percent) had 1,000 or more milk cows.
For the approximately 90 percent of farms that are not able to ship full tanker
loads of milk, the record indicates farm-to-plant losses remain a reality for most
producers and cooperatives operating within the FMMO system. As most handlers pay
producers based on farm weights and tests, it remains appropriate to provide recognition
in the formulas for milk solids paid for but not physically received at the handler’s
facility. Accordingly, Proposal 10 is not recommended for adoption.
d. Nonfat solids yield.
Currently, the FMMO Class IV price formula contains a NFDM yield factor of
0.99, representing the pounds of NFDM that can be made from one pound of nonfat
solids of raw milk delivered from the farm. This factor is less than 1.0, as it recognizes
both farm-to-plant shrinkage and the portion of nonfat solids utilized in NFDM.

Select offered Proposal 12 to adjust the NFDM yield factor to account for both the
NFDM and buttermilk powder that can be manufactured from the same pound of nonfat
solids, and proposed an NFDM yield factor of 1.02. Proponents claim producers are not
compensated for nonfat solids that end up in buttermilk powder since such production is
not accounted for in the yield factor.
A review of previous rulemakings reveals numerous changes to the NFDM yield
factor both during and since Order Reform. The Order Reform recommended decision
contained a nonfat solids yield factor of 0.96 as a divisor (equivalent to a 1.04 multiplier)
in the nonfat solids price equation. It represented the percent of nonfat solids in a pound
of NFDM. In other words, if a NFDM plant had 1 pound of nonfat solids, it could make
1.04 pounds of NFDM due to the moisture content in the final product. The factor was
changed in the Order Reform final decision to 1.02 (equivalent to a 0.98 multiplier) as
stakeholders commented it should represent both the NFDM and buttermilk powder that
could be produced from one pound of nonfat solids.
The nonfat solids yield factor was again considered in a 2000 rulemaking.
Initially, the factor was amended to 1.00. 65 FR 82832 (Dec. 28, 2000). During that
proceeding, stakeholders argued the yield factor should reflect that more than one pound
of NFDM can be manufactured from one pound of nonfat solids, resulting in a divisor
less than one, or a multiplier greater than one. Evidence from that proceeding was used
to demonstrate a calculation using only the NFDM price, NFDM make allowance, and a
multiplier of 1.00 would be equivalent to a more complex formula attempting to combine
the NFDM and buttermilk net prices using corresponding yield factors.
The final decision in the 2000 rulemaking changed all yield factors, including the
nonfat solids yield, from divisors to multipliers. 67 FR 67906 (Nov. 7, 2002). Keeping in
line with only reflecting the nonfat solids used in NFDM, the nonfat solids yield
multiplier changed from 1.0 to 0.99, with the incorporation of a farm-to-plant shrinkage

factor of 0.25 percent. As calculated, for 1 pound of nonfat solids leaving the farm,
0.9975 pounds entered the plant (1.00 - 0.0025 = 0.9975). Subtracting an estimated
0.0479 pounds of nonfat solids ending up in buttermilk powder left 0.9496 pounds of
nonfat solids in NFDM (0.9975 - 0.0479 = 0.9496). It was assumed NFDM is 96.2
percent nonfat solids, resulting in a NFDM yield factor calculation of 0.9496/0.962 =
0.9871, which was rounded to 0.99. The final decision made clear the 0.99 should be
considered a NFDM yield factor, no longer a nonfat solids yield factor as was the case
when Order Reform was implemented.
Proposal 12 requests buttermilk powder again be incorporated into the NFDM
yield. Proponents testified that without accounting for buttermilk powder, producers are
not compensated for all the nonfat solids they sell to a Class IV manufacturer. Record
evidence does not support such a claim. Class IV manufacturers are required to pay the
nonfat solids price for pooled milk purchased, regardless of whether those nonfat solids
end up in NFDM, butter, buttermilk powder, or any other Class IV product. The same
can be said for other classified products whose component prices are computed similarly,
even if there are numerous products in the category. For example, the other solids price
is determined through a survey of dry whey prices and a dry whey make allowance.
Manufacturers pay the other solids price even if they are making other products in the
category, such as whey protein concentrate or whey protein isolate.
Additionally, while the rulemaking history of the NFDM and nonfat solids yield
factors is complex, evidence does not support that attempting to reflect two products
(buttermilk powder and NFDM) in the NFDM yield would provide for more orderly
marketing conditions. Recommendations are made throughout this recommended
decision attempting to simplify, where possible, an already complex set of pricing
formulas. As such, this decision finds it appropriate to maintain the current NFDM yield

factor that only reflects one product. Accordingly, Proposal 12 is not recommended for
adoption.
Base Class I Skim Milk Price
Currently, the base Class I skim milk price, also referred to as the “Class I mover”
or “mover,” is the simple average of the monthly advanced Class III and Class IV skim
milk pricing factors, plus an adjuster of $0.74 per cwt. This formula was implemented
under the 2018 Farm Bill, which amended the AMAA to revise the provisions related to
determining the monthly Class I skim milk price. Pub. L. 115-334, 132 Stat. 4490 § 1403.
Congress exempted this amendment from the formal rulemaking process, and USDA
implemented the change through a final rule. The formula has been in effect for milk
marketed on and after May 1, 2019. 84 FR 8590 (March 11, 2019). Prior to the change,
the base Class I skim milk price was the higher of the advanced Class III or Class IV
skim milk prices (the “higher-of"), announced on or before the 23rd of the prior month.
The higher-of formula had been in effect since January 1, 2000.
Industry stakeholders offered six proposals to amend the Class I mover. Proposal
13 would return to the previous higher-of Class I mover. NMPF explained the change to
the average-of was supported at the time by both NMPF and IDFA, as it was intended to
be revenue neutral for producers and provide Class I processors the ability to utilize
hedging for risk management.
IDFA and MIG proposed maintaining the average-of mover but recommended
different calculations for the adjuster. Proposal 14, offered by IDFA, incorporates an
adjuster that resets every January and would be the higher of either: 1) $0.74; or 2) the
24-month average difference between the higher-of and the average-of the advanced
Class III and Class IV skim milk pricing factors. The 24-month calculation would run
from August of three years prior to July of the previous year. For example: the 2024
adjuster would have been calculated by subtracting the average of the advanced Class III

and IV skim pricing factors from the higher of the advanced Class III or Class IV skim
pricing factor for each month of August 2021 through July 2023, then averaging the
differences of the 24 months. The result for the August 2021 to July 2023 time period is
$0.95, which is higher than $0.74, and thus would have been the adjuster effective
January 1, 2024, for the calendar year. For the month of January 2024, the advanced
Class III and IV skim pricing factors were $5.74 per cwt and $9.25 per cwt, respectively,
averaging to $7.50 per cwt. With the addition of the adjuster, the January 2024 base
Class I skim milk price would have been $8.45 per cwt ($7.50 + $0.95) under Proposal
14.
Proposal 15, offered by MIG, incorporates a monthly rolling average adjuster
calculated as the difference between the higher-of and the average-of, for 24 months,
with a 12-month lag. For example, the adjuster for January 2024 would have been $1.01
per cwt, calculated from the 24-month average difference of the higher of the advanced
Class III or Class IV skim pricing factor less the average of the advanced Class III and IV
skim pricing factors from January 2021 to December 2022. The January 2024 advanced
Class III skim pricing factor was $5.74 per cwt and advanced Class IV skim pricing
factor was $9.25 per cwt, resulting in an average of $7.50 per cwt. The average-of, with
the addition of the adjuster, would result in a January 2024 base Class I skim milk price
of $8.51 per cwt ($7.50 + $1.01) under Proposal 15.
Edge offered Proposals 16 and 17. The Class I mover in Proposal 16 would be
the announced Class III skim milk price, plus an adjuster reflecting the 36-month average
of the difference between the higher-of the advanced2 Class III or Class IV skim milk
prices and the announced3 Class III skim milk price from August of four years prior to
July of the previous year. The adjuster would be calculated annually and be effective

2
Advanced refers to prices announced on or before the 23rd of the prior month.
Announced refers to prices announced on or before the 5th of the following month.

January of each year. For example: The adjuster for 2024 would be $1.64 per cwt,
calculated from the 36-month average difference of the higher of the advanced Class III
or Class IV skim pricing factor and the announced Class III skim milk price from August
2020 to July 2023. The announced Class III skim milk price for January 2024 was $4.92
per cwt, and with the addition of the adjuster would result in a January 2024 base Class I
skim milk price of $6.56 per cwt under Proposal 16. Proposal 17 would return to the
previous higher-of calculation. Both Proposals 16 and 17 would eliminate advanced
pricing for Class I and Class II milk. Edge preferred Proposal 16, stating it would
facilitate Class I hedging.
The AFBF offered Proposal 18, which is nearly identical to Proposal 17. Both
Edge and the AFBF stressed the importance of eliminating advanced pricing as a means
for limiting price inversions that result in significant volumes of milk not pooled.
NMPF presented testimony describing how the 2019 mover change was not
revenue neutral, which is why they seek a return to the higher-of. NMPF and dairy
farmers described volatile markets in response to the COVID-19 pandemic. Even as the
COVID-19 pandemic has ended, prices have remained volatile, and stakeholders opined
they expect volatility to continue. NMPF witnesses asserted that because of the current
formula and volatile markets, there is no way for the impact to dairy farmers to be
revenue neutral in the long term.
According to NMPF, an unanticipated consequence of the average-of mover is the
asymmetric risk borne by dairy farmers. NMPF explained the static nature of the $0.74
adjuster means that dairy farmers only benefit from the average-of when the difference
between the advanced Class III and Class IV skim milk prices is less than $1.48. When
the difference is greater, producers are paid less, sometimes significantly less, than they
would have been under the higher-of mover. During the 50-month period from May
2019-June 2023, the average-of mover was lower than the higher-of in 27 months.

NMPF asserted when the average-of exceeded the higher-of, it did so by no more than
$0.74, regardless of the magnitude of the difference between Class III and Class IV skim
milk prices. However, when the average-of was lower than the higher-of, the reduction
could be significantly more than $0.74. NMPF cited October 2022 as an example. At
that time, the average-of was lower than the higher-of by $2.08. According to NMPF,
from May 2019 to August 2023, producers were paid $998.3 million less than they would
have if the higher-of mover had been in place.
Both IDFA and MIG asserted their adjusters would result in revenue neutrality to
producers over time because of regular updates to better reflect current market
conditions, whereas the current static $0.74 adjuster reflects market conditions from 2000
- 2018. IDFA further claimed the $0.74 floor contained in Proposal 14 ensures producers
would receive Class I skim milk prices at least equating to what they receive under the
current formula. MIG opined a rolling average adjuster would provide better dynamic
market signals while also stabilizing prices through more gradual monthly changes.
In justifying these methods to continue an average-of mover, IDFA and MIG
witnesses stressed the importance of maintaining the ability for Class I processors to
hedge their future prices. The use of an average-of mover would allow them to continue
to spread risk by taking equal positions in the Class III and Class IV futures and options
markets. IDFA and MIG maintained hedging is a critical tool for certain processors,
particularly ESL, to remain competitive with alternative beverages, such as bottled water,
juice, and milk alternatives that do not face the same regulatory pricing framework as
fluid milk. The ability to lock in a future price makes their cost known and allows a
longer price horizon. They further asserted promoting and growing the sale of milk is a
goal of the AMAA, which can be achieved using hedging. Both proponents explained a
processor’s ability to hedge is not negatively impacted by the adjuster calculation

(whether monthly or annually), so long as it is announced well in advance. IDFA was
amenable to either adjuster calculation, so long as the average-of mover is maintained.
Proponents of maintaining an average-of mover argued Congress amended the
AMAA to facilitate risk management for Class I, and as it directed the Department to
adopt the average-of mover, the Department must now continue that policy and refrain
from taking action that would inhibit risk management. However, in the 2018 Farm Bill,
Congress stipulated the average-of mover must be maintained for a period of not less than
two years, at which time the formula could be modified through the standard FMMO
amendment process. Congress did not direct that risk management consideration must be
maintained beyond the two years following implementation of the 2018 Farm Bill.
To evaluate the NMPF claim regarding asymmetric risk, AMS analyzed May
2019 - December 2023 prices (56 months). The analysis found the current average-of
mover to be greater than the higher-of mover in 23 months, resulting in $334 million in
additional revenue paid to producers in those months. The two movers were equal in 2
months, and in the remaining 31 months, the average-of mover was less than the higherof mover, resulting in $1.4 billion less in revenue paid to producers in those months than
would have been without the mover change. The net result to dairy farmers during those
56 months was negative $1.066 billion. Further, in months when the average-of was
more than the higher-of mover, the difference was never greater than $0.74 and,
mathematically, could never be greater than that amount under the current average-of
system. However, in months when the average-of was less than the higher-of mover, the
difference was as great as $5.19. This analysis supports NMPF’s assertion of the
asymmetric risk borne by producers under the current mover calculation.
The record reveals the $0.74 static adjuster was adopted because, at the time, it
represented the additional value paid to producers through the higher-of versus what
would have been the average-of mover from 2000-2017. Evidence shows $0.74 is no

longer representative of the additional higher-of value to producers as Class III and IV
prices have become significantly more divergent in recent years. A comparison of
advanced Class III skim and Class IV skim milk prices from January 2000 – April 2019
and from May 2019 – December 2023 illustrates the increased volatility. From January
2000 – April 2019, when the Class I skim milk price was determined by the higher-of
mover, the monthly difference in advanced prices ranged from $0 to $6.77. From May
2019 through December 2023, the range was $0 to $11.86, equating to an increase of
slightly more than 75 percent.
Testimony described rapidly changing Class III and IV prices resulting not only in
months when the Class I mover was significantly lower than it would have been under
the higher-of formula, but times when the Class I price (announced before the month)
was less than the Class III and/or Class IV price (announced after the month). As
handlers have the option to pool Class III and Class IV milk, this price inversion led to
many months when the higher-valued manufacturing milk was not pooled. Testimony on
the record described several consequences: 1) manufacturing handlers opted out of pool
participation, keeping the higher market revenue instead of sharing it with all pooled
producers; 2) instances when a manufacturing handler opted out of pool participation,
and the historically high market revenue was not shared with their own producer
suppliers; and 3) significant disparity in payments to pooled and nonpooled producers in
some months.
Testimony detailed the conditions in 2020 when the demand for cheese relative to
butter rapidly widened the spread between Class III and Class IV Prices. For example,
the base Class I skim milk price for June 2020 (announced May 20, 2020) was $7.08
(based on an $6.68 advanced Class III skim milk price and an $5.99 advanced Class IV
skim milk price). Cheese prices rose rapidly during the month, resulting in a $15.06
Class III skim milk price and $6.62 Class IV skim milk price. According to record

evidence, high volumes of Class III milk were not pooled in order to avoid paying the
higher valued Class III price into the marketwide pool.
Record data reveals a significant increase in the estimated volume of milk not
pooled in 2020 and 2021, which NMPF attributed to price volatility. Data shows milk
volumes not pooled in 2020 and 2021 were approximately 60 percent greater than in
2019. Testimony and evidence pointed to pronounced price volatility being considered
the norm, not the exception, going forward.
Record evidence also shows how the lower average-of mover value resulted in
muted blend prices in some regions of the county, making it difficult to attract milk
supplies for fluid use. This was particularly a concern in the southeastern FMMOs which
experienced a disproportionate reduction in blend prices relative to other FMMOs
because of their high Class I utilization. Testimony described how blend prices between
the Southeast FMMO and nearby orders narrowed, making it difficult to attract
supplemental milk to meet the fluid demand in the milk deficit region.
During Order Reform, the Department considered numerous options for
determining Class I prices as it evaluated an appropriate Class I pricing system. In the
Order Reform recommended decision, several variations of an average mover were
considered, including a moving average and a declining average weighted most heavily
by the current month’s price, along with a higher-of option based on the second
preceding month’s prices. When considering its recommendation, the Department
evaluated each option’s ability to improve price stability while maintaining appropriate
producer price signals to ensure an adequate supply of milk for fluid use.
The Department initially recommended a 6-month declining average of the
higher-of the Class III and Class IV skim milk prices. The goal was to “decrease
monthly Class I price volatility while minimally affecting the long-run price.” 63 FR
4802, 4886 (Jan. 30, 1998). Analysis of that option compared to the higher-of option

showed only a two-cent difference based on data from 1992 - 1997, thus supporting the
notion an average-of price would not impact prices in the long run. Public comments in
response to the recommended decision cautioned the Class I price should be closely and
directly linked to manufacturing prices. Commenters opposed a six-month declining
average because it would delay the linkage with the Class I price, resulting in countercyclical pricing – something noted in the final decision, which stated that, for example, if
Class I prices are undervalued, “it reduces producers’ pay prices at a time when the
producers should be receiving a positive price signal.” 64 FR 16026, 16102 (Apr. 2,
1999). Analysis conducted for the Order Reform final decision evaluated prices post1998 and found using a 6-month average mover during times of increased price volatility
would have led to price inversions. The decision explained how price inversions could
lead to depooling under which disorderly marketing conditions may arise. As a result,
the final decision also articulated, on the same page as the most recently noted quotation,
“because handlers compete for the same milk for different uses, Class I prices should
exceed Class III and Class IV prices to assure an adequate supply of milk for fluid use.”
Accordingly, the final decision recommended the higher-of mover which remained in
place until May 2019.
Record evidence clearly shows that the price inversions and depooling predicted
in the Order Reform final decision occurred after the average-of mover was implemented
in 2019. The principle of maintaining a proper link between Class I and manufacturing
prices to avoid price inversions and depooling remains an important consideration in
evaluating change to the Class I mover in this rulemaking.
Proponents offering modifications to the average-of mover acknowledge price
inversions and depooling have occurred with greater frequency and duration. However,
they maintain hedging is a critical risk management tool that should be preserved and
cannot be achieved using the higher-of mover. Record evidence highlights that although

both HTST and ESL are fluid milk products, there are notable differences between HTST
and ESL processing and sales. ESL products require unique processing techniques and
packaging that significantly increase product shelf-life. The record indicates ESL
products have a shelf-life of at least 65 days; some ESL processors stated their products
have a shelf-life of 120 days or more.
ESL processors described marketing differences between the two types of
products. ESL products: 1) have a longer shelf-life which facilitates a wider distribution;
2) are typically shipped to centralized retail warehouses (distribution centers) and from
there are distributed to individual stores by the store owners; and 3) are sold to retail
customers who prefer long-term contracts and a long lead time for any price changes,
often 60-90 days or more. This is significantly different than HTST products that: 1)
have a significantly shorter self-life (common range is 14-21 days) necessitating more
local distribution; 2) are typically distributed through direct-store-delivery (DSD); and 3)
whose retail customers are accepting of FMMO Class I prices that vary monthly.
ESL processors explained the average-of mover has enabled them to meet
customer demand for long-term price-fixed contracts by using the futures and options
market to hedge the risk associated with changes in monthly FMMO Class I prices. They
credit the ability to manage risk as a factor in the growth of ESL products. Before
adoption of the average-of mover, processors of ESL products took on a significant
amount of price risk to meet the long-term, fixed price contracts required by customers
because they had no way of knowing when they negotiated contracts whether the
advanced Class III or Class IV price would become the base Class I skim milk price. The
record contains no similar evidence that HTST processors face the same constraints. In
fact, record evidence shows advanced Class I pricing with monthly sales negotiations
was, and remains, standard practice for these products.

Given all the record evidence, this decision must determine the best method for
determining Class I skim milk prices that ensure adequate fluid milk supplies and orderly
marketing conditions. The earlier discussion of record evidence clearly highlights the
disorderly marketing conditions that occurred as a result of the average-of mover.
However, when considering how to provide for more orderly marketing conditions, this
decision cannot ignore how the Class I market has evolved since 2000.
Prior to FMMO Reform, fluid milk products were almost exclusively HTST,
which have a shorter shelf-life and move from farm to retail in a relatively short time.
Advanced pricing ensures equity among fluid milk handlers, allowing them to know their
regulated minimum raw milk cost at the time they negotiate prices with their buyers and
ensure equal raw milk cost between similarly situated handlers.
The record reflects significant development and growth of ESL products since
Order Reform. The record also highlights marketing ESL products is significantly
different than HTST products. Evidence shows the different distribution pattern
(warehouse v. DSD) and longer shelf-life (65 -120 days) facilitates wider geographic,
rather than local, marketing and distribution. In addition, it is common for competing
ESL products being sold in the same month to have been processed during a range of
previous months. As a result, processors of ESL products do not necessarily have the
same regulated minimum raw milk prices for products sold during the same month. This
undermines handler equity between processors of ESL products as they do not have equal
raw milk costs for products competing for sales in the same month. This decision
supports a hybrid solution that will ensure adequate supplies of milk for fluid use, while
also accounting for the inequities between processors of ESL products.
FMMOs are tasked with ensuring minimum prices reflect supply and demand
conditions, which is accomplished, in part, through weekly surveys of wholesale bulk
commodity products. Weekly survey prices provide signals to market participants on the

changing value relationships between dairy product markets. FMMOs do not control
those market-based relationships. As monthly average prices are determinants of Class III
and IV prices, it is expected there will be periods when Class III values will be higher,
and other times when Class IV values will be higher. Under a monthly pricing system
that allows for voluntary pooling of manufactured milk and advanced Class I pricing,
there will be occasions when these value differences are large enough to have price
inversions and/or incentivize handlers to not pool milk during a particular month. The
record clearly shows such situations occurred prior to May 2019. However, record data
highlights the shift in duration and magnitude of these occurrences since the average-of
mover was adopted. The record reveals large and prolonged value differences can cause
significant differences in pay prices between producers and reduced willingness to supply
the Class I market. The record of this proceeding supports returning to the higher-of
Class I mover for HTST products. The higher-of would provide a better link between
Class I and manufacturing prices and better ensure Class I prices remain the highest to
bring forth an adequate supply of fluid milk. Therefore, this decision recommends
adoption of Proposal 13 for HTST fluid milk products.
Returning to the higher-of mover for ESL products would deepen the pricing
inequity that naturally exists for those products, as described earlier. For example, under
the higher-of mover, a handler processing and selling an ESL product in January 2023
would have faced a base Class I skim milk price of $11.62 per cwt. However, handlers
who processed ESL products two or four months before, which are also being sold in
January 2023, would have faced a base Class I skim milk price of $12.61 and $13.82 per
cwt, respectively. This results in a difference of base raw milk costs of up to $2.20 per
cwt for ESL products competing for sales during January 2023.
Given the marketing characteristics of ESL products, short of providing for fixed
minimum prices, price differences between these competing products will always exist.

However, this decision strives to recognize the evolution of the ESL market since Order
Reform with a pricing structure for ESL products that would narrow differences, make
them more predictable, and provide for more orderly marketing conditions. This decision
finds pricing differences would be reduced through adoption of a Class I ESL adjustment
that would equate to a Class I price for all ESL products equal to the average-of mover
contained in Proposal 15. The Class I ESL adjustment will provide more long-run
pricing equity for ESL product by better ensuring handlers whose ESL products compete
for sales during the same month, but whose raw milk may have been purchased and
processed during different time periods, have more similar costs.
In practice, the higher-of Class I mover would be announced on or before the 23rd
of the prior month. A Class I ESL adjustment would be announced at the same time, and
equal the difference between the higher-of mover and the average-of the advanced Class
III and Class IV skim pricing factors plus a rolling monthly adjuster. The rolling monthly
adjuster would be calculated as the average of the differences between the higher-of and
the average-of calculations for the prior 13 to 36 months. All milk used in ESL products
with a shelf-life no less than 60 days, regardless of the type of Class I plant4 in which
they are made, would be subject to the adjustment. The adjustment would be added to or
subtracted from the handler’s pool obligation applicable to the amount of milk used in
ESL products. The rolling adjuster would be computed in advance and announced on or
before the 23rd of the month 12 months in advance of its application (i.e. January 2023
rolling adjuster would have been announced on or before December 23, 2021).
For example, the advanced Class III and IV skim pricing factors for January 2023
were $9.54 per cwt and $11.62 per cwt, respectively.
•

The average-of the two factors (applicable to ESL milk) would have been
$10.58 plus the rolling adjuster reflecting the average of the differences

1xxx.7(a) or 1xxx.7(b)

between the higher-of and the average-of from January 2020 to December
2021 ($1.58 per cwt), for a total of $12.16 per cwt.
•

The higher-of mover (applicable to HTST milk) would have been $11.62 per
cwt.

•

The January 2023 Class I ESL adjustment would have been $0.54 ($12.16 $11.62), calculated by subtracting the higher-of announced price from the
average plus rolling average calculation.

The effect of the adjustment would be a base Class I skim price for HTST milk of
$11.62, and an effective base Class I skim milk price for ESL milk of $12.16. While this
example computes a positive adjustment resulting in a higher effective price for ESL
milk, it is to be expected in some months the adjustment will be negative, resulting in a
lower effective price. The objective of the ESL adjustment is not to create a higher or
lower effective Class I price, but rather to reduce the range of base Class I skim prices
paid for milk used in ESL products being sold during a month. Evidence on the record
indicates the Class I ESL adjustment will tend to moderate the price highs and lows, thus
providing improved price equity between handlers of ESL products. The record indicates
ESL products represent approximately 8 to 10 percent of the Class I market and would be
subject to the Class I ESL adjustment.
This decision finds the Class I ESL adjustment, combined with the higher-of
mover price for HTST products will provide for more orderly marketing and better
ensure price equity for handlers of similar Class I products.
This decision also recommends maintaining advanced Class I pricing. Proponents
of Proposals 16, 17, and 18 argued advanced pricing should be eliminated to prevent
short term inversions between the monthly Class I price and Class III and/or IV prices,
and subsequent incentives for depooling. Opponents, both independent and cooperative
Class I processors along with a majority of producers, supported the continued use of

advanced pricing. As discussed previously, advanced Class I pricing provides equity to
regulated Class I processors by informing them of their regulated minimum raw milk cost
in advance of the sale of their product. This ensures all dairy processors have an
opportunity to align their raw milk costs with the sale prices of their products, which are
generally negotiated before the start of the month. In the case of Class I products and the
nonfat solids portion of Class II products, this alignment is facilitated by advanced
pricing. Accordingly, Proposals 16, 17, and 18 are denied.
Select argued USDA should omit a recommended decision on the Class I mover
following a finding by the Secretary “on the basis of the record that due and timely
execution of his functions imperatively and unavoidably requires such omission.” (Select
Post Hearing Brief, 2024, pp. 46-47) (citing 7 CFR 900.12(d)). The Secretary finds no
sufficient information on the record to determine that skipping the recommended decision
is unavoidable and is therefore issuing a recommended decision on the Class I mover.
Class I and Class II Differentials
a. Class I Differentials
The current Class I price structure was developed during the Order Reform
process when Congress directed the Department to review the Class I price structure as
part of larger FMMO consolidation efforts. Federal Agriculture Improvement and
Reform Act of 1996, Pub. L. 104-127, 110 Stat. 888. The Department considered several
objectives when determining an appropriate Class I price surface, including: being
national in scope, while also accounting for local and regional conditions; recognizing the
location value of milk; recognizing all uses of milk; and meeting AMAA requirements.
The Department met AMAA requirements governing classified pricing by ensuring the
price surface would “reflect enough of the milk value to maintain sufficient revenue for
producers to maintain an adequate supply of milk and provide equity to handlers with

regards to raw product costs.” 64 FR 16026, 16109 (Apr. 2, 1999) 5 The Class I price
surface adopted on January 1, 2000, met those objectives.
Class I milk pricing consists of two pieces: the base Class I mover applied
uniformly to all Class I milk (as discussed previously) and a location specific differential
which represents the location value of milk at a specific plant location. The differentials
provide producers a financial incentive to supply the Class I market, which tends to be
closer to the population centers, rather than delivering milk to a manufacturing plant
typically closer to the farm. The location specific differential consists of two parts: a
base value (also referred to as the “base differential”) applied uniformly to all Class I
milk, and a location value.
The base differential is currently $1.60 per cwt, representing three costs whose
values were determined to reflect market conditions during the late 1990s. First, the cost
of maintaining Grade A farm status ($0.40) which includes costs associated with the
labor, resources and utility expenses for maintaining required equipment and facilities,
and adherence to certain management practices. Second, marketing costs (also referred
to as balancing costs) ($0.60) which include, among other things, the costs associated
with seasonal and daily reserve balancing of milk supplies and transportation to more
distant processing plants. Lastly, a competitive factor ($0.60) is included to represents a
portion of the competitive costs incurred by fluid plants to compete with manufacturing
plants for a milk supply.
The location values were developed during the Order Reform process through an
analysis conducted with the USDSS, maintained at the time by Cornell University. The
USDSS was used to evaluate the geographic or “spatial” value of milk and milk
components across the U.S. under the assumption of efficient markets. The model used
240 supply locations, 334 consumption locations, 622 dairy processing plant locations, 5

Order Reform Final Decision

product groups, 2 milk components, and transportation and distribution costs among all
locations to determine mathematically consistent location values for milk and
components. Model results provided county specific information regarding the
relationship of prices between geographic locations based on May and October 1995
data.
Since adoption on January 1, 2000, only differentials in the Appalachian, Florida,
and Southeast FMMOs have been amended. The amendments, effective May 1, 2008,
were the result of a region-specific rulemaking evaluating transportation costs .in
servicing those milk deficit orders. 73 FR 14153 (Mar. 17, 2008).
The record reflects consensus among hearing participants that the dairy
marketplace has evolved significantly over the past 25 years. However, there remains
strong disagreement on how the market changes should be interpreted and recognized in
the Class I differentials. The producer community argued Class I differentials no longer
reflect the cost of servicing fluid milk demand and should be updated to reflect the
current structure and significantly higher transportation costs through adoption of
Proposal 19. The processing and manufacturing community argued certain cost factors
contained in the differentials are no longer relevant and should be eliminated through
adoption of Proposal 20. They stressed that if the costs of servicing the Class I market
exceed those of the proposed reduced Class I differential values, they can be negotiated
between buyers and sellers through over-order premiums.
Proposal 19 would increase the Class I differentials based in part on updated
USDSS results reflecting the current dairy market structure and transportation costs.
NMPF witnesses explained USDSS result averages were the foundation of their
deliberations, and deviations were made to account for a variety of factors they believed
were not accounted for, including producer price impacts, competitive relationships,
blend price alignment, private supply arrangements, and unique local market conditions

such as traffic or geography. Although NMPF began with results from a mathematical
model, the process thereafter was primarily subjective. They started by selecting a series
of cities, which they called “anchor cities,” to represent areas which bordered multiple
FMMO regions. Then, regional committees adjusted model-derived location values to
better align location values and reflect local marketing and transportation conditions
within their region, respecting the anchor cities as starting points. NMPF combined the
independently derived regional results and made further refinements to ensure smooth
pricing transitions between the regions. Ultimately, NMPF proposed that the lowest
differential increase from $1.60 per cwt to $2.20 per cwt. NMPF maintains the cost
factors provided for in the base differential value remain relevant and presented
testimony from member cooperatives that such costs have increased.
Opposition to Proposal 19 centered on several areas. First, opponents argued
there is more than an adequate supply of milk nationally to meet Class I needs, therefore
adoption of Proposal 19, or any increase to Class I differentials, is not warranted.
Second, opponents contended raising Class I prices would be disorderly because it would
further decrease already declining Class I consumption and, they argued, the FMMO
objective of ensuring adequate milk supplies implies FMMOs should adopt provisions
that encourage Class I consumption. One such opponent presented an econometric study
which found fluid milk demand is elastic, concluding that increasing Class I prices would
decrease consumption and violate FMMO objectives. Third, opponents took exception to
NMPF’s proposal development process and what they considered a lack of unifying
principles used to adjust the USDSS results, believing NMPF had failed to provide cost
justification for maintaining a base differential. Independent fluid milk processors further
argued the entire development process led to results with a favorable bias towards NMPF
member-owned plants. Lastly, organic milk processors and some organic cooperatives
argued organic milk should not be treated similarly to conventional milk in the FMMO

program because it has different and unrelated market structures. In its post-hearing
brief, MIG reiterated its position on organic milk and further argued that because NMPF
did not demonstrate current Class I differentials create disorderly marketing conditions
the evidentiary threshold for increasing differentials had not been met.
MIG offered Proposal 20, which would lower the base differential value to $0.00,
contending FMMO Class I prices are too high and have resulted in an oversupply of milk
that they believe is disorderly. According to MIG, there is more than an adequate supply
of milk to meet fluid demand. Given 99 percent of U.S. milk production meets Grade A
standards, MIG argued compensation for Grade A maintenance is already provided for in
manufacturing milk prices and therefore the $0.40 Grade A factor is no longer justified.
Additionally, MIG members’ testimony detailed efforts they have adopted to
balance their own milk supply, including infrastructure investments, creating more
uniform receiving and processing schedules, and paying over-order premiums. Organic
and ESL MIG members testified their fluid milk products function as wholly distinct
markets with their own balancing and supply challenges. Therefore, MIG concluded the
balancing cost and Class I competitive factors should no longer be recognized in the
Class I price. Lastly, MIG and its members argued that if additional money is needed to
compensate dairy farmers and cooperatives for balancing costs or to incentivize milk to
serve Class I plants, those costs should be negotiated between the buyer and seller and
paid through over-order premiums, not as part of the regulated price.
A vast majority of producers and their cooperatives opposed Proposal 20. They
maintained, both in witness testimony and post-hearing briefs, there is relevancy of costs
associated with the base differential. NMPF stressed the costs, while difficult to
precisely quantify, are still relevant and have increased since adopted in 2000. NMPF
described the disorder that would arise if the base differential was reduced to $0.00 and a
greater portion of market-wide cost reimbursement was forced to be negotiated in the

market. While some NMPF members testified to receiving over-order premiums, they
stressed establishing and maintaining premiums is difficult because there remains a
market imbalance of power between milk sellers and buyers.
Opponents of any change to Class I prices, either through a change to Class I
differentials or other FMMO amendments, raised several overarching objections. First,
they alleged disorderly marketing must first be proven to justify any changes to FMMO
provisions. They cited a lack of instances of fluid demand not being met as an indication
disorder is not present in the fluid milk market.
The declared policy of the AMAA is to “… establish and maintain such orderly
marketing conditions for agricultural commodities in interstate commerce.…” FMMOs
accomplish this mandate through the classified pricing of milk products and marketwide
pooling of those classified use values. Through these mechanisms, orderly marketing
conditions are provided so handlers are assured of uniform minimum raw milk costs and
producers receive minimum uniform payments for their raw milk, regardless of its use.
While previous FMMO amendatory proceedings may have found market disorder to
warrant changes to provisions, the AMAA does not contain an express or implied
declaration that a finding of disorderly marketing conditions is required before an order
can be amended. Second, opponents argued Class I prices cannot be amended until the
FMMO system is modified to recognize the organic milk sector. However, potential
amendments that would adopt disparate treatment of organic milk were not within the
scope of this proceeding, as defined in the hearing notice.
Third, Class I processors and manufacturers argued the Department should
consider the impact to Class I sales when evaluating changes as they allege the AMAA
objective of ensuring adequate milk supplies implies the FMMO should encourage fluid
consumption. They further argue that demand for fluid milk is elastic and, therefore,
raising Class I differentials would be disorderly as it would result in a decline in Class I

sales. The AMAA authorizes FMMOs to provide for orderly marketing conditions and
ensure an adequate supply of milk for fluid use. It does not explicitly state nor imply
FMMO provisions should encourage Class I sales. FMMOs are charged with ensuring
adequate supplies of fluid milk, regardless of the quantity demanded.
As to whether or not fluid milk has an inelastic or elastic demand, numerous
studies were entered into the record, some drawing opposite conclusions. An
econometric study entered on behalf of MIG found the retail level demand for fluid milk
to be elastic. The study looked at cross sectional data over relatively short periods of
time. In contrast, an NMPF witness reviewed numerous studies published within the last
20 years that evaluated time series data, concluding the studies support the assertion that
fluid milk demand remains inelastic with respect to prices for those products. An
analysis of the MIG study indicates that other than product prices and quantities, no other
variables were considered that could explain changes in demand. Such variables which
are generally recognized to be determinants of demand outside of price include, but are
not limited to, household income, demographics, and measures of preferences. While the
MIG study found retail price affects retail milk demand, it did not demonstrate price was
the only factor that impacts demand. By design, the study estimated that only prices for
milk and competing products could account for changes in quantities sold. Certainly,
more study may be warranted given the evolution of the dairy industry in the last 25
years. However, a conclusion of the long-term demand elasticity of fluid milk cannot be
drawn from one study of cross-sectional data, given the overwhelming body of studies
contained in this hearing record which found otherwise.
Finally, opponents opined that milk is typically more valuable when used in Class
III products, rather than Class I, and therefore the record lacks justification to increase
Class I differentials. Testimony was given comparing USDSS model results (utilizing
2016 data) showing, outside of the southeastern region, higher marginal location values

for milk used at Class III manufacturing locations than for milk used in Class I
processing in the same locations. No evidence was presented as to how the Class III
location values could or should be implemented to achieve the purposes of the AMAA.
Unlike estimated Class I location values which have been historically relied upon to
determine Class I differentials, this was the first time the USDSS model results were
utilized to calculate location values for Class III milk, and the first time testimony was
offered to suggest how the correlation between Class III and Class I location values
should impact pricing decisions. The record lacks evidence to validate the interpretation
of Class III location values, as further indicated by the differing views of the study
authors as to whether this would be an appropriate interpretation of the various sets of
USDSS results.
The record of this proceeding indicates the cost of servicing the Class I market is
no longer sufficiently reflected by existing Class I differentials. This was evident in the
USDSS results and validated through firsthand testimony of cooperative milk suppliers
who described increased servicing costs. Current Class I differentials were established
based on 1995 data. In the nearly thirty years since, the record reflects the market has
substantially changed in size and structure. While milk production has increased
approximately 45 percent from 1995 until 2022, during the same time period the number
of dairy farms has decreased by approximately 74 percent, and the average herd size has
increased from 68 to 261 cows.
Consolidation has also occurred on the processing and manufacturing side. The
record describes plant closures, particularly on the fluid processing side, and plant
investment, especially in large manufacturing plants. Considerable testimony and
evidence were given describing increased distances milk must travel to find a market
outlet. Because of the greater distances between supply locations and fluid processing
plants, cooperative witnesses testified to increasing costs to ensure fluid demand is met.

The witnesses also described in detail how the increasing costs are disproportionately
borne by cooperative members who often see deductions on their milk checks to cover
increased organizational and individual transportation costs, which some witnesses
attested more than doubled in the past 20 years.
There was little to no rebuttal to the claim the market has consolidated on both the
producer and processor side, resulting in increased transportation costs. The USDSS
study authors themselves attributed the observed differences in the 2022 results, when
compared to the current differentials, to four primary factors: change in milk production
locations, change in compositions of dairy product demand, change in demand locations,
and increased transportation costs per mile. What is at issue is the justification for
increasing Class I differentials. While only one witness described a situation in which
they were unable to procure enough milk to meet the demand of their fluid milk
processor, the record is full of testimony on the difficulty cooperatives have faced to
ensure fluid milk demand is met. Cooperative witnesses discussed needing to reach out
to more distant supply locations to find available milk supplies willing to serve the Class
I market instead of remaining at a manufacturing plant, and the inability to recoup a large
portion of the additional transportation costs through over-order premiums.
FMMOs were established in the 1930s when the market contained many sellers
and few buyers of milk. The highly perishable nature of raw milk resulted in producers
engaging in pricing behavior that lowered farm prices as producers undercut one another
in order to find a market outlet, a condition generally described as destructive
competition. This unavoidable competitive behavior was among the reasons producers
petitioned Congress to authorize a marketing order program to provide orderly marketing
through known terms of trade and the pooling of market returns, which in turn provided a
more equitable balance of power between buyers and sellers.

While the record of this proceeding reveals continued consolidation on both the
producer and processing sides of the market, it also contains evidence the fundamental
elements that were the genesis of the FMMO program still exist. Raw milk remains a
highly perishable product, produced every day, that cannot be stored for any significant
length of time and incurs high costs when transported over long distances. No
substantive evidence was presented to indicate there is no longer an imbalance of market
power between buyers and sellers. Processors spoke of the abundance of milk produced
as a reason Class I prices should not be increased. However, that reality also highlights
how the dairy marketplace continues to place processors in a price setting role. As a
price taker, the record reflects considerable testimony attesting to the difficulty dairy
farmers have had and continue to have in obtaining and maintaining over-order premiums
at levels sufficient to cover actual and/or opportunity costs.
It is natural for buyers of milk to want to pay less and for sellers of milk to want
to be paid more. The role of FMMOs is to determine minimum prices that provide for
orderly marketing conditions that balance these natural competitive desires. The AMAA
expressly authorizes marketwide pooling of classified prices as a tool for accomplishing
orderly marketing. In determining appropriate classified prices, the Department cannot
place an undue reliance on over-order premiums which diminish the role of marketwide
revenue pooling and can lead to disorderly marketing conditions. Accordingly, this
decision recommends changes to the Class I differentials to better reflect the various
aspects of the current marketplace.
The first step in evaluating appropriate Class I differential levels is the base
differential. While the USDSS model is appropriate to show the value differences of
milk between two fluid plant locations, as will be discussed later, it is not designed to
inform the level of the minimum value needed to service Class I plants. Proposal 20
seeks to reduce the base differential to $0.00 on the premise the costs represented either

are no longer relevant (Grade A maintenance) or should be left up to negotiation with the
fluid milk processor and their supplier (balancing and Class I incentive cost). While the
record does not precisely describe how much the cost components of the base differential
have increased, it lacks evidence to demonstrate those costs have decreased. In fact,
discussion of various costs throughout the proceeding indicates that costs have instead
increased. Given the lack of clear record evidence specific to costs accounted for in the
base differential, this decision recommends continuation of the $1.60 base differential.
Despite arguments Grade A maintenance costs should no longer be covered
because 99 percent of U.S. milk production is Grade A, this decision continues to find it
appropriate to recognize the additional costs for maintaining Grade A status in a
regulatory pricing system requiring Grade A standards be met for participation. When
the Grade A factor was incorporated into the base differential, it was specifically for
Grade A maintenance costs, not costs associated with conversion to Grade A status.
Proponents argue that because almost all milk meets Grade A standards, it is no longer
necessary to provide a recognition of that cost in the base differential. Whether 99
percent of milk production today is Grade A, or 96 percent as it was at the time of Order
Reform, is irrelevant. The record demonstrates dairy producers incur costs to maintain
Grade A standards which are a requirement for participating in the FMMO system. As
only Class I milk is required to participate and raw milk used in fluid milk products is
required to meet Grade A standards, it is appropriate for the Class I price to continue to
recognize those costs.
The record does not demonstrate the remaining two base differential factors,
balancing costs and additional monies needed to compete for a milk supply, are no longer
relevant. All parties testified to their continued existence. Proposal 20 would require
those costs to be negotiated in the market.

Proponents of Proposal 20 argued they have made capital investments to balance
their supply and/or pay over-order premiums to their suppliers to meet their milk needs,
and/or provide balancing services. While their testimony acknowledges these costs exist,
proponents argued the FMMO is making them pay twice for such services – once through
the regulated price and again through their negotiated over-order premium. They further
argued that if cost reimbursement is needed for such services, they should be able to pay
that value to their suppliers directly through over-order premiums, not into the
marketwide pool.
Cooperative witnesses testified at length on the costs associated with ensuring
daily, weekly, monthly, and seasonal fluctuating needs of the fluid market are met.
While their balancing costs were considered confidential information, cooperative
witnesses testified to the overall increase in costs associated with providing those
services. In particular, cooperative witnesses spoke to the higher costs incurred to
operate regional balancing plants. These plants often do not run at full capacity yearround in order to ensure capacity to balance excess supply during flush periods or provide
additional milk to fluid processing plants during months of increased demand. The
record reflects these marketing costs are incurred for the benefit of balancing the entire
market’s milk supplies, thus providing for the orderly marketing of milk for fluid use. It
has always been the case that an individual processor may find it necessary and/or
advantageous to pay premiums above the minimum value to suit their individual and
fluctuating needs. FMMO pricing balances the value needed to be reflected in the
minimum regulated prices, without an over-reliance on over-order premiums that can
undermine marketwide revenue pooling and lead to unequal raw product costs between
similarly situated handlers and non-uniform payments to producers.
An additional function of the base differential, as described in the Order Reform
Recommended Decision, is to generate the additional monies necessary for the FMMO

pools to balance the reliance on over-order premiums. This was of particular concern in
marketing orders with low Class I differentials and low Class I utilization, for which the
decision noted “there is a risk that handlers may not face equal raw product costs for
various reasons. Thus, having a larger proportion of the actual value of Class I milk in
the market order pool in these areas, than is now the case, should promote pricing equity
among market participants.” 63 FR 4802, 4909 (Jan. 30, 1998). As this decision seeks to
update Class I differentials, maintaining the balance of what proportion of the value of
Class I should be reflected in the marketwide pool remains a consideration. Negotiations
for over-order premiums are not conducted in a vacuum, but are done with the benefit of
both parties knowing minimum FMMO values and the costs represented in the minimum
values the plant is responsible for paying. If Class I processors believe they are being
double charged, they can use that information in their over-order premium negotiations.
Maintaining the $1.60 base differential would ensure Class I prices typically
remain the highest, which is of particular importance in locations where the base
differential is the effective differential. Without a base differential value in these
locations, there would be little difference between the Class I price and the manufacturing
price, and thus no financial incentive to serve the fluid market would exist to ensure the
FMMO policy objective is met. Accordingly, this decision finds a $1.60 base differential
remains an appropriate minimum value to ensure Class I demand is met.
While the Department appreciates the effort put forth to submit a comprehensive
option in Proposal 19, the record of this proceeding does not support its adoption.
Proposal 19 contains a base differential of $2.20, which is an increase of $0.60 from the
current level. However, the record lacks data to quantify costs in excess of the $1.60
base value.
Proponents described using the average of the USDSS May and October results as
a starting point for consideration but did not provide evidence as to why, under a

minimum pricing system, the average rather than the minimum values observed in the
May results was appropriate or preferable. Furthermore, the record does not contain
evidence to support how the deviations made from the USDSS averages are appropriate.
Proponents described their own marketing expertise but presented insufficient evidence
to determine if the proposed differentials would result in Class I prices in excess of what
is appropriate for a minimum pricing system. Accordingly, this decision does not
recommend adoption of Proposal 19.
However, this decision finds evidence to support raising the Class I differentials
from the current levels. The record of this proceeding reveals the cost of servicing the
Class I market has increased since the Class I differentials were adopted in 2000 and
amended in the southeastern FMMOs in 2008. Evidence reflects the market structure of
Class I plants and the milk supply have changed considerably in the last 25 years. That
was supported in witness testimony, as well as USDSS model results, which clearly show
the location value of milk has changed. The Department continues to find the USDSS
model the best available tool for determining the location value of milk given the vast
array of factors that contribute to how milk is produced, transported, processed, and
distributed in the U.S.
When the differentials were adopted during Order Reform, testimony reflects the
Department used USDSS model results as a starting point and made adjustments for
various reasons. The Order Reform Recommended Decision described several options
the Department considered. Of the differential surface ultimately adopted, AMS wrote,
“Nine differential zones provide the basis for establishing the price structure. These
zones were established based on results of the USDSS model, knowledge of current
supply and demand conditions, and recognition of other marketing conditions such as
fluid versus manufacturing markets, urban versus rural areas, and surplus versus deficit
markets.” 63 FR 4802, 4905 (Jan. 30, 1998). The decision went on to outline additional

reasons for adjustments including ensuring price alignment with neighboring zones and
adequate marketwide pool draws.
The USDSS model estimates results for an efficient milk supply and distribution
network, provided at its lowest cost. The USDSS study authors acknowledged when
using the model results to determine Class I differentials, adjustments would be
appropriate as there are factors unaccounted for in the model, such as FMMO provisions,
abnormal traffic patterns, and competitive relationships.
Accordingly, this decision recommends Class I differentials be changed to better
reflect the current cost of serving the Class I market. When determining appropriate
levels, the Department began with the USDSS May results, referred to hereinafter as
“May results.” The May results are the lower of the two months provided in evidence,
which is an appropriate starting point for determining minimum prices. The Department
then evaluated the results on a regional basis and made adjustments based on three
principles and two additional considerations.
First, adjustments were made where necessary to better align Class I handler
equity. This means the proposed Class I differentials should not give one handler an
uneconomic cost advantage relative to an actual or potential competing handler. Second,
adjustments were made to maintain producer equity and prevent uneconomic rewards or
penalties to producers who deliver or could deliver milk to the same plant or market.
Third, adjustments were made to ensure the marketwide pools continue to provide
orderly marketing conditions. The combination of handler and producer equity goals is
further achieved through the size and shape of pricing zones. The USDSS values are
determined at specific locations, or “nodes,” in the model. Model results can be
displayed on a map or in a list of counties to convey the price surface, but the
methodology for doing so, as explained by the study authors, was a mathematical tool
which interpolated values between distances. Additional information about markets can

be added to the model results through knowledge about the economic or geographic
(roads, natural barriers, etc.) conditions in specific locations. This may lead to a decision
to change the shape or contours of the pricing surface that is estimated from the model
results. Lastly, adjustments were made to reflect unique challenges associated with
servicing dense urban environments. The changes by regions are described below.
The general process began with roughly $0.20 differential bands generated from
the May results. The May and October results formed a soft boundary for differential
adjustments. The current differentials formed a hard lower boundary, which were
rounded to the nearest dime to eliminate $0.05 differences between zones, consistent with
the USDSS model results which were in $0.10 increments.
Northeast
The recommended differentials in the Northeast region largely follow the May
results with minimal changes. The differential for Portland, Maine, was raised to $4.50
to match the results in Concord, New Hampshire, to ensure handler equity. Albany
County, New York, and Rensselaer County, New York, were moved to the same
differential by increasing the Albany differential $0.10 to meet the Rensselaer
differential, as plants in those counties are located just across a bridge from one another
but were assigned different prices by the model. Differentials in most New Jersey
counties are proposed to be $0.10 to $0.20 above the May results, but within the May and
October range, to reflect testimony on the cost of servicing urban areas and transportation
concerns. The differential for Washington, D.C., is also proposed to be $0.10 above the
May result to reflect testimony on servicing an urban area.
Appalachian
The variation between the model results in May and October are more significant
in the three southeastern orders. As discussed by several witnesses, this region
experiences unique marketing conditions with high Class I utilization and deficit local

milk supply. Due to the substantial seasonality of the local milk supply, it requires
significant but variable volumes of supplemental milk supplies from outside the region as
well as changes in milk movements of regular suppliers to the market throughout the
year. The Transportation Credit Balancing Fund (TCBF) and the recently implemented
Distributing Plant Delivery Credit (DPDC) are programs to compensate handlers for
some of the additional and variable transportation costs associated with supplying the
Class I markets in these orders during different periods of the year. The reimbursement
rates for these programs include adjustments for any gain in Class I differentials from
supply point to receiving plant. Therefore, any changes in difference in Class I
differentials would be reflected in the calculated rate for eligible payments in both the
TCBF and DPDC in all three southeastern orders.
The recommended differentials in the Appalachian region are largely formed in
$0.20 and $0.30 bands based on the May results starting with $3.70 in Southern Indiana
and, moving southeast, increasing to $6.00 along the Carolina coast. In most areas, the
proposed differentials are within $0.10 (+/-) of the May results. There are a few
exceptions where the proposed differentials are $0.20 less than the May results to better
align handler equity. For example, in Spartanburg County, South Carolina, the proposed
differential is $5.60, $0.20 less than the May results. This maintains the current
competitive relationship between this area and the Atlanta, Georgia area, and with the
competing handlers in North Carolina.
Southeast
The proposed differentials in the Southeast FMMO start at $3.20 in southwest
Missouri and increase moving southeast to $6.00 in southeast Georgia. The proposed
differentials follow the May results closely, within $0.10 (+/-), with a few modifications.
The East Baton Rouge Parish differential was reduced by $0.20 from the May results to
be consistent with the May result of $5.20 for competing areas such as Lafayette Parish.

Tangipahoa Parish was placed in the $5.40 zone, or $0.30 below the May result. These
decreases are meant to ensure handler equity while still acknowledging the thinner and
steeper surface reflected in the May results in the southeastern U.S.
Rutherford County, Tennessee, is also proposed to be modified to be consistent
with neighboring Davidson County, Tennessee, at $4.60 ($0.20 below the May result) to
provide for handler equity. In Missouri, Webster County was placed in the $3.20 zone to
match the Greene, Hickory, and Polk County differentials. This addresses handler equity
concerns and results in a $0.10 proposed decrease for Webster County from the May
result.
Florida
The proposed differentials for Florida largely follow the May results with
modification to address handler equity concerns. The differentials start at $6.00 in the
Florida panhandle region and increase going south with mostly $0.40 bands ending at
$7.40 in south Florida. Processing plants in central Florida were placed in the same
$6.80 band to match the May result in Volusia County due to handler equity concerns.
This necessitated decreases from the May results of $0.10 in Orange County, $0.10 in
Hillsborough County, and $0.20 in Polk County. For similar handler equity concerns,
Broward County is proposed to match the May result in Dade County of $7.40 in the
southernmost part of Florida.
Upper Midwest
In the Upper Midwest region, deviations from the May results are proposed to
ensure producer equity and ensure the marketwide pool provides for orderly marketing.
The Upper Midwest FMMO is unique in its low Class I utilization, which creates
challenges in setting a differential surface that sends the proper signals to producers
supplying the Class I market while also ensuring producer equity and orderly marketing
among producers supplying the region’s plants. Estimates indicate a large differential

range in the region would not result in equity between producers and could result in
disorderly marketing. Therefore, the differential surface was flattened from the May
results, in general, by raising the differentials in the western part of the region – in the
eastern Dakotas and much of Minnesota – and lowering the differentials in the eastern
part – in northern Illinois, southeastern Minnesota, and Wisconsin.
Differentials in five counties, Dakota, Hennepin, Ramsey, Scott, and Washington,
in the Minneapolis/St. Paul metropolitan area of Minnesota, are raised $0.10 higher than
neighboring counties to reflect higher costs of serving an urban area and incentivize Class
I service relative to surrounding manufacturing plants. In addition, they are set at the
same differential of $2.90 to promote handler equity among fluid processing plants in the
metropolitan area. The new differential for these counties, except for Hennepin, are
$0.10 to $0.20 above the May results. The differential for Hennepin, $0.30 above the
May results, is set the same as its peer counties to ensure that handlers in this county are
able to compete for available milk supplies on an equitable basis.
Differentials in the regions supplying the Chicago, Illinois, area are adjusted to
ensure handler equity. Generally, the differentials in this area are set at $3.10 to $3.20.
The record reflects bottling plants in eastern Iowa, northern Illinois, southeastern
Wisconsin, northern Indiana, and southwest Michigan all compete for Class I sales into
the Chicago area. Thus, Class I differentials in northern Illinois are lowered $0.20 and
$0.10 in Kane and Winnebago counties, respectively, from the May results. Similarly,
comparisons and adjustments were made to the May results to align with northern
Indiana and southwest Michigan counties supplying the Chicago area.
Central
The proposed differentials in the Central FMMO start at $2.30 in western
Colorado and increase moving east to $4.00 in southern Illinois. The proposal aligns the
production area of northern Colorado with the large production areas of New Mexico, the

Texas Panhandle, and southwest Kansas at $2.50. This required increasing the
differential in Weld, Boulder, and Morgan counties of Colorado by $0.10 to $0.20 from
the May model results. In order to encourage milk to service Class I demand, some
counties in the greater Denver area, including Colorado Springs, are proposed at the May
results of $2.70, while others are proposed to increase as much as $0.20 above the May
results to provide for handler equity.
In southern Illinois, testimony reflects plants compete for sales within a similar
distribution area. Therefore, counties were grouped into a $3.60 zone. This represents an
increase of $0.10 for some plants, while others remained at the May result of $3.60. In
Iowa, all counties with distributing plants are set at the May result of $2.70.
Douglas County, Nebraska, and Minnehaha County, South Dakota, proposed
differentials are $2.70 and $2.60, an increase of $0.20 and $0.10, respectively, from the
May results. These increases recognize handler equity both to the east with Polk County,
Iowa, and to the north with Cass County, North Dakota.
In Kansas, the two counties with distributing plants, Reno and Sedgwick, are
proposed to be $2.90, as they are neighboring counties, and the same differential levels
would provide for handler equity. This increase also provides handler equity and price
alignment with Oklahoma plants to the south.
In Oklahoma, Lincoln, Cleveland, and Grady counties are proposed at the same
differential of $3.30. Lincoln and Cleveland counties are proposed at the May results,
while this represents a $0.20 increase for Grady County. The $3.30 differential for these
three counties provides for handler equity and price alignment both to the north in Kansas
and the south in Texas.
Mideast
Differentials in the Mideast region were evaluated on a state-by-state basis.
Michigan differentials are set at the May results, $3.00 in the upper peninsula and $3.30

in the lower peninsula, because there were no additional producer or handler equity issues
to address. Indiana is divided into three differential zones moving north to south ($3.30,
$3.60, and $3.70) which align with the May results. The differentials for Lake and
Huntington counties are proposed to be lowered by $0.40 and $0.10, respectively, from
the May results to provide handler equity in the northern Indiana zone. The differentials
in Madison and Wayne counties are proposed to increase $0.10 and $0.20, respectively,
from the May results to provide handler equity in the central Indiana zone of $3.60.
Southern Indiana counties are proposed at the May result of $3.70.
Proposed differentials in Ohio generally follow the May results within $0.10 (+/-)
and zones were determined based on handler equity concerns. Moving northwest to
southeast, proposed differential zones are $3.30, $3.60, $3.80, $4.00, and $4.30. The five
differential zones align within a $0.10 (+/-) range of the May results. The exception is
Cuyahoga County with a proposed $0.20 decrease from the May result to provide for
hander equity with Wayne and Stark counties.
Proposed differentials in western Pennsylvania are generally consistent with the
May results to provide for handler equity, either in a $3.90 or $4.00 zone. Butler,
Fayette, Lawrence, and Mercer counties are proposed to be lowered by $0.10 from the
May results to the $4.00 zone. West Virgina differentials range from $4.00 to $4.80,
moving northwest to southeast, consistent with the May results as there were no
additional producer and handler equity to address.
Southwest
The proposed differentials in the Southwest FMMO start at $2.30 in northwest
New Mexico and increase moving southeast to $4.80 in southeast Texas. Bernalillo
County, New Mexico, is proposed to increase $0.30 from the May result to provide for
handler and producer equity with nearby manufacturing plants. Testimony reflects the
Texas Panhandle and southeastern New Mexico regions contain mostly manufacturing

plants and draw milk from the same supply region in the Panhandle. For producer equity
concerns, these regions are proposed to be in a $2.50 zone. This matches the May results
for the eastern New Mexico plant locations, necessitating a proposed increase of $0.10 to
$0.30 in counties within the Panhandle region to reach a uniform $2.50 zone. In Lubbock
County, Texas, the differential is proposed at $2.60, a decrease of $0.20 from the May
result, recognizing handler equity in the Panhandle region and producer equity
considerations with manufacturing plants competing for milk supplies. Dallas County,
Texas, is proposed at the May result of $3.70 and a $0.10 increase is proposed for Tarrant
County to maintain handler equity. Bexar County, Texas is proposed at $4.30, a $0.10
increase from the May result, and Harris and Montgomery counties are proposed at
$4.80, a $0.20 increase from the May result to reflect difficulties in servicing congested
urban areas.
Arizona
In Arizona, the metropolitan area of Phoenix encompasses both Maricopa and
Pinal counties. The differentials for these counties are proposed to increase $0.30 and
$0.20, respectively, above the May results to reflect the higher cost of servicing an urban
area, in addition to providing handler equity with Clark County, Nevada. The differential
for Yuma County is proposed at $2.50, an increase of $0.40 from the May result to
maintain handler equity between Maricopa County, Arizona, and Los Angeles,
California.
California
For California, testimony was given regarding additional transportation costs from
excessive traffic congestion and geographic obstacles in southern California that were not
accounted for in the model. Accordingly, the differential in San Diego is proposed to
increase $0.20 from the May result to $2.80. To maintain handler equity within the
southern California region, the differentials for Orange, Riverside, and Los Angeles

counties are proposed to be $2.80. This is $0.40, $0.50 and $0.60 above the May results
in Orange, Riverside, and Los Angeles counties, respectively. Ventura County is
proposed to increase $0.40 from the May result, to $2.60, to address producer equity
concerns and ensure price alignment with the surrounding counties. For Kern County,
the primary milk supply area for much of this region, the differential is proposed to be
$2.50. This also serves to encourage Kern County milk to move south to distributing
plants, rather than north to manufacturing plants where the proposed differential is $2.20.
The differentials in the remaining San Joaquin Valley counties, Tulare, Kings,
Fresno, Madera, Merced, Stanislaus, and San Joaquin, are proposed to be $2.20 based on
testimony indicating these counties are considered one supply area. Of these counties,
Madera County has the highest increase from the May result, $0.40, to maintain handler
equity as well as maintain producer equity for the producer milk in this area.
The proposed $2.20 differential zone is then carried into the Sacramento Valley
counties of Sacramento, Yolo, Colusa, and Glenn, an increase of $0.20 to $0.30 from the
May results. These counties, along with those in the San Joaquin Valley, supply milk for
distributing plants in the San Francisco Bay area. The proposed differentials for
Alameda, Contra Costa, Solano, Napa, Marin, and Sonoma counties are set at $2.40 to
encourage milk to service the San Francisco Bay area. This represents an increase of
$0.40 to $0.50 from the May model results for these supply counties to maintain handler
equity.
San Francisco and counties south along the central California coast are further
from a milk supply. The differentials in that area are proposed at $2.50 and include San
Francisco, San Mateo, Santa Cruz, Santa Clara, San Benito, Monterey, San Luis Obispo,
and Santa Barbara counties, representing increases from the May results of $0.20 to
$0.50.

Similar to the Sacramento Valley, the differentials for the counties of Mendocino,
Lake, and Humboldt, which are located along the northeast California coast and supply
the San Francisco Bay area, are proposed to be $2.20 to provide for producer equity.
Western unregulated states
Differentials in Nevada generally follow the May results, except for a few
modifications. In northern Nevada, to provide for handler equity, Washoe County is
proposed to increase $0.10 from the May result to align with the neighboring $2.00
California zone. Eureka, Nye, and Esmerelda counties are proposed at $2.20, resulting in
changes from the May results of plus or minus $0.10.
The proposed differentials in Utah start at $2.00 in the north and increase moving
south up to $2.50 in the southwest part of the State. While most of the proposed
differentials are aligned with the May results, the counties of Davis, Morgan, Salt Lake,
Tooele, Utah, and Weber are recommended at $2.20, an increase of $0.10. This aligns
those counties with counties to the north and west, ensuring both producer and handler
equity.
The proposed differentials in the state of Montana start at $1.70 and increase to
$2.40 in the southeast part of the state. Most of the proposed differentials are aligned
with the May results. The only county with a proposed differential more than $0.10
different from the May result is Golden Valley which is lowered $0.20 to ensure handler
equity with the counties to its north and south.
The proposed differentials in the unregulated portions of the state of Idaho start at
$1.70 and increase to $2.20. While most of the proposed differentials are within $0.10 of
the May results, the county of Cassia is decreased $0.20 for handler equity with plants to
the south into Utah. This brings the unregulated Idaho counties in alignment with
counties to the north and south, ensuring both producer and handler equity with those
areas.

Lastly, the proposed differentials in Wyoming generally follow the May results as
there were no producer or handler equity concerns to address. Except for Laramie,
Wyoming, which is proposed at $2.50 to align with neighboring Northeast Colorado.
This represents a $0.20 increase compared to the May results.
Pacific Northwest
In the Pacific Northwest, the proposed differential in Seattle was increased $0.30
above the May result to reflect unique geography and the cost of serving an urban market.
Likewise, the proposed differential in Portland, Oregon, was increased from the May
result to align with Seattle to provide for producer and handler equity. Testimony
reflected both cities are equidistant to milk supplies in south central Washington, and
both have similar supply issues. The remaining proposed differentials reflect a $0.20
banding around the May results.
Summary
In total, the differentials proposed by this decision reflect a simple average $0.01
higher than the USDSS model May results ($3.81 versus $3.80) for the 3,108 counties in
the contiguous U.S.
The following is a general description of the changes from the USDSS model
May results:
Number of Counties
5
224
2,652
190
Range of Difference
-$0.40 to -$0.60
-$0.20 to -$0.30
-$0.10 to +$0.10
+$0.20 to +$0.30
+$0.40 to $0.60

Number of Plants
1
12
172
35
An analysis shows the proposed differentials, on a weighted average basis for
FMMO Class I milk (2019-2023), increased $1.24/cwt. Based on pooled Class I milk
during 2019-2023, the current weighted Class I differential was $2.63 per cwt. The
proposed differentials would have increased the weighted average to $3.87 per cwt.

Other Issues
In post-hearing briefs, some stakeholders objected to NMPF's use of producer
costs of production for proposing updated Class I differential levels. As described above,
such costs were not considered in the development of the Class I differentials
recommended in this decision.
Another argument made in post-hearing briefs centered on the amended TCBF
provisions in the Appalachian and Southeast FMMOs and newly established DPDC
provisions in the Appalachian, Florida, and Southeast FMMOs. These provisions became
effective March 1, 2024, and were a result of a regional rulemaking proceeding to address
the chronic milk supply issues of those regions. 89 FR 6401 (Feb.1, 2024). As the
proceeding resulted in increased transportation cost related assessments on Class I
handlers, some stakeholders argue no changes should be made to the Class I differentials
until the impact of these regional changes can be observed.
The Appalachian, Florida, and Southeast FMMOs adopted marketwide service
payment provisions that authorize year-round assessments on Class I milk, paid by
handlers, for payment to handlers for Class I deliveries made to their plants according to
the TCBF and DPDC provisions. Under the marketwide service provisions of the
AMAA, marketwide service programs are only authorized to pay monies to handlers. 7
U.S.C. 608c(5)(J). Therefore, it would not be appropriate to delay consideration of Class
I differential levels, monies which are paid to producers (both cooperative and
independent), for TCBF and DPDC payments which are made only to handlers. If Class
I differential levels are changed as a result of this proceeding, thus impacting the market
conditions which led to the creation of the marketwide service programs, stakeholders
could petition USDA to make changes to the TCBF and DPDC provisions.
b. Class II Differential

The FMMO system currently prices milk used in Class II products uniformly. The
Class II skim milk price is computed as the advanced Class IV skim price plus $0.70 per
cwt. The Class II butterfat price is the Class III butterfat price for the month, plus the
same amount expressed as $0.007 per pound. The $0.70 differential between the Class
IV and Class II skim milk prices, adopted in the Order Reform Final Decision, was based
on an estimate of the cost of drying condensed milk and re-wetting the solids for use in
Class II products, which was seen as an economic, upper-bound constraint on the use of
fresh milk in Class II processing.
Proposal 21, submitted by AFBF, seeks to update the Class II differential to $1.56
per cwt. AFBF derived the proposed level by updating the factors originally used to
determine drying cost. Those include the NFDM make allowance and the nonfat solids
yield factor used in the FMMO formulas, and butterfat and nonfat solids levels in FMMO
pooled milk. As rewetting solids, the practice of first reconstituting powdered milk with
water, is no longer a common practice, AFBF argued such cost no longer needs to be
considered. AFBF opined a $1.56 Class II differential would not be high enough to
incentivize the substitution of Class IV products for fresh milk. AFBF claimed the
additional Class II value added to the marketwide pool because of the higher differential
would reduce the occurrence of negative PPDs and depooling.
Opponents of Proposal 21 argued such a large Class II differential increase would
incentivize the substitution of Class IV products in the manufacture of Class II products.
Class I processors, who also have Class II production, argued such an increase would put
them at a competitive disadvantage with standalone Class II manufacturers. They
indicated processors who produce both products are required to pool all milk received at
the plant but processors who only produce Class II products can opt to pool milk.
Record evidence does not support adoption of Proposal 21. Mathematically, the
formula used by AFBF to compute an updated Class II differential mimics the calculation

from Order Reform. However, it is clear from record testimony that more than doubling
the current Class II differential, as proposed by AFBF, would result in handler equity
issues and increased substitution of Class IV products in lieu of fresh fluid milk in Class
II products. Class II production is unusual, if not unique, among dairy processing
facilities as some products are produced at Class I plants, and others at standalone Class
II plants. Because all milk received at Class I plants is required to be pooled, regardless
of use, this can result in the same products having different regulatory burdens depending
on the type of plant where it was produced. That phenomenon has existed since 2000.
However, the record shows that instances of milk in Class II products produced from
Class II plants not being pooled could dramatically increase with adoption of Proposal
21. The result would be a competitive disadvantage for Class I plants by creating a
pricing inequity that would produce disorderly marketing conditions. Accordingly,
Proposal 21 is denied.
Conforming Changes
Proposal 22, authored by AMS, would authorize changes, where necessary, in the
respective marketing orders to conform with any amendments resulting from this
proceeding. The record contains no opposition to the proposal. Accordingly, this
decision recommends a series of conforming changes to ensure the proposed amendments
to the uniform pricing formulas applicable to the respective marketing orders can be
effectuated. The proposed changes are as follows:
1. Amending 7 CFR 1000.43 to remove references to 1135.11, as the order is no
longer in effect. Also adding 7 CFR 1000.43(e) which would define skim milk used in
ultra-pasteurized or aseptically processed and packaged fluid milk products eligible for
the Class I ESL adjustment be limited to available Class I producer milk classified
pursuant to the allocation process contained in Section1000.44(a);

2. Amending 7 CFR 1000.50 to remove all references to NASS and replace them
with AMS;
3. Amending the following counties (and FIPS code) in 7 CFR 1000.52, to be
consistent with the Federal Information Procession Series maintained by the Federal
Communication Commission: Yellowstone, MT (30113) has been merged into Gallatin
and Park Counties, MT (30031) (30067), Shannon, SD (46113) has been renamed Oglala
Lakota, SD (46102), Bedford City, VA (51515) has been merged into Bedford County,
VA (51019), and Clifton Forge City, VA (51560) has been merged into Alleghany
County, VA (51005). Additionally, amending the FIPS code for Pierce, WA (53053) as
it was original printed incorrectly.
4. Amending 7 CFR 1000.76, provisions governing partially regulated
distributing plants to add “applicable” to references to the Class I price throughout the
section to indicate application of a Class I ESL adjustment, when applicable, and remove
the reference in 7 CFR 1000.76(b)(1)(i) to 7 CFR 1135.11 as the latter is no longer in
effect;
5. Amend the introductory paragraphs of 7 CFR 1001.60, 1005.60, 1006.60,
1007.60, 1030.60, 1032.60, 1033.60, 1051.60, 1124.60, 1126.60, and 1131.60, sections
which calculate the handler’s value of milk in each FMMO. Section .60 of each order
would be revised with the addition of an instruction to compute an adjustment to a
handler’s producer milk obligation for Class I producer milk eligible for the Class I ESL
adjustment. The adjustment would be calculated by multiplying the monthly Class I ESL
adjustment by the monthly pounds of eligible Class I skim milk. The instruction would
be inserted prior to the instruction regarding reconstituted milk for each order. Other
paragraphs are proposed to be redesignated to reflect the insertion;

6. Further amending 7 CFR 1005.60(g), 1006.60(g) – (i), and 1007.60(g) to
remove language pertaining to transportation cost reimbursement during the months of
January 2005 through March 2005 and September 2017, which is no longer in effect; and
7. Amending 7 CFR 1005.51, 1006.51, and 1007.51 to remove Class I price
adjustments in the Appalachian, Florida, and Southeast FMMOs. The order language
would no longer be necessary with the proposed amendments to the Class I differentials.
Rulings on Proposed Findings and Conclusions
Briefs, proposed findings, and conclusions were filed on behalf of certain
interested parties. These briefs, proposed findings, conclusions, and the evidence in the
record were considered in making the findings and conclusions set forth above. To the
extent that the suggested findings and conclusions filed by interested parties are
inconsistent with the findings and conclusions set forth herein, the claims to make such
findings or reach such conclusions are denied for the reasons previously stated in this
decision.
General Findings
The findings and determinations hereinafter set forth supplement those that were
made when the Northeast, Southeast, Appalachian, Florida, Upper Midwest, Central,
Mideast, California, Southwest, Pacific Northwest, and Arizona FMMOs were first
issued and when they were amended. The previous findings and determinations are
hereby ratified and confirmed, except where they may conflict with those set forth herein.
The following findings are hereby made with respect to the aforenamed marketing
agreements and orders:
a. The tentative marketing agreements and the orders, as hereby proposed to be
amended, and all of the terms and conditions thereof, will tend to effectuate the declared
policy of the Act;

b. The parity prices of milk as determined pursuant to section 2 of the Act are not
reasonable with respect to the price of feeds, available supplies of feeds, and other
economic conditions that affect market supply and demand for milk in the marketing
area, and the minimum prices specified in the proposed marketing agreements and the
orders are such prices as will reflect the aforesaid factors, ensure a sufficient quantity of
pure and wholesome milk, and be in the public interest; and
c. The proposed marketing agreements and the orders will regulate the handling
of milk in the same manner as and will be applicable only to persons in the respective
classes of industrial and commercial activity specified in, the marketing agreements upon
which a hearing have been held.
d. All milk and milk products handled by handlers, as defined in the marketing
agreements and the orders as hereby proposed to be amended, are in the current of
interstate commerce or directly burden, obstruct, or affect interstate commerce in milk or
its products.
Recommended Marketing Agreements and Orders
The recommended marketing agreements are not included in this decision because
the regulatory provisions thereof would be the same as those contained in the orders, as
hereby proposed to be amended. The following orders regulating the handling of milk in
Northeast, Appalachian, Florida, Southeast, Upper Midwest, Central, Mideast, California,
Pacific Northwest, Southwest, and Arizona marketing areas are recommended as the
detailed and appropriate means by which the foregoing conclusions may be carried out.
List of Subjects in 7 CFR parts 1000, 1001, 1005, 1006, 1007, 1030, 1032, 1033, 1051,
1124, 1126, and 1131
Milk marketing orders.
For the reasons set forth in the preamble, AMS proposes to amend 7 CFR parts
1000, 1001, 1005, 1006, 1007, 1030, 1032, 1033, 1051, 1124, 1126, and 1131 as follows:

PART 1000 – GENERAL PROVISIONS OF FEDERAL MILK MARKETING
ORDERS
1. The authority citation for 7 CFR part 1000 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
2. Amend § 1000.43 by removing the words “and § 1135.11 of this chapter” from
paragraph (a) and paragraph (b) introductory text and the words “or § 1135.11 of this
chapter” from paragraph (b)(2) and by adding paragraph (e) to read as follows:
§ 1000.43 General classification rules.
*****
(e) Any skim milk used in ultra-pasteurized or aseptically processed and packaged
fluid milk products shall be allocated in combination with Class I milk and the quantity
of producer milk eligible to be priced shall be limited to available Class I producer milk
classified pursuant to § 1000.44(a).
3. Revise and republish § 1000.50 to read as follows:
§ 1000.50 Class prices, component prices, and advanced pricing factors.
Class prices per hundredweight of milk containing 3.5 percent butterfat,
component prices, and advanced pricing factors shall be as follows. The prices and
pricing factors described in paragraphs (a), (b), (c), (e), (f), and (q) of this section shall be
based on a weighted average of the most recent 2 weekly prices announced by the
Agriculture Marketing Service (AMS) before the 24th day of the month. These prices
shall be announced on or before the 23rd day of the month and shall apply to milk
received during the following month. The prices described in paragraphs (g) through (p)
of this section shall be based on a weighted average for the preceding month of weekly
prices announced by AMS on or before the 5th day of the month and shall apply to milk
received during the preceding month. The price described in paragraph (d) of this section
shall be derived from the Class II skim milk price announced on or before the 23rd day of

the month preceding the month to which it applies and the butterfat price announced on
or before the 5th day of the month following the month to which it applies.
(a) Class I price. The Class I price per hundredweight, rounded to the nearest
cent, shall be 0.965 times the Class I skim milk price plus 3.5 times the Class I butterfat
price.
(b) Class I skim milk price. The Class I skim milk price per hundredweight shall
be the adjusted Class I differential specified in § 1000.52, plus the higher of the advanced
pricing factors computed in paragraph (q)(1) or (2) of this section rounded to the nearest
cent.
(c) Class I butterfat price. The Class I butterfat price per pound shall be the
adjusted Class I differential specified in § 1000.52 divided by 100, plus the advanced
butterfat price computed in paragraph (q)(3) of this section.
(d) Class II price. The Class II price per hundredweight, rounded to the nearest
cent, shall be .965 times the Class II skim milk price plus 3.5 times the Class II butterfat
price.
(e) Class II skim milk price. The Class II skim milk price per hundredweight shall
be the advanced Class IV skim milk price computed in paragraph (q)(2) of this section
plus 70 cents.
(f) Class II nonfat solids price. The Class II nonfat solids price per pound,
rounded to the nearest one-hundredth cent, shall be the Class II skim milk price divided
by 9.3.
(g) Class II butterfat price. The Class II butterfat price per pound shall be the
butterfat price plus $0.007.
(h) Class III price. The Class III price per hundredweight, rounded to the nearest
cent, shall be 0.965 times the Class III skim milk price plus 3.5 times the butterfat price.

(i) Class III skim milk price. The Class III skim milk price per hundredweight,
rounded to the nearest cent, shall be the protein price per pound times 3.30 plus the other
solids price per pound times 6.00.
(j) Class IV price. The Class IV price per hundredweight, rounded to the nearest
cent, shall be 0.965 times the Class IV skim milk price plus 3.5 times the butterfat price.
(k) Class IV skim milk price. The Class IV skim milk price per hundredweight,
rounded to the nearest cent, shall be the nonfat solids price per pound times 9.30.
(l) Butterfat price. The butterfat price per pound, rounded to the nearest onehundredth cent, shall be the U.S. average AMS AA Butter survey price reported by the
Department for the month, less 22.57 cents, with the result multiplied by 1.211.
(m) Nonfat solids price. The nonfat solids price per pound, rounded to the nearest
one-hundredth cent, shall be the U.S. average AMS nonfat dry milk survey price reported
by the Department for the month, less 22.68 cents and multiplying the result by 0.99.
(n) Protein price. The protein price per pound, rounded to the nearest onehundredth cent, shall be computed as follows:
(1) The U.S. average AMS survey price for 40-lb. block cheese reported by the
Department for the month;
(2) Subtract 25.04 cents from the price computed pursuant to paragraph (n)(1) of
this section and multiply the result by 1.383;
(3) Add to the amount computed pursuant to paragraph (n)(2) of this section an
amount computed as follows:
(i) Subtract 25.04 cents from the price computed pursuant to paragraph (n)(1) of
this section and multiply the result by 1.589; and
(ii) Subtract 0.91 times the butterfat price computed pursuant to paragraph (l) of
this section from the amount computed pursuant to paragraph (n)(3)(i) of this section; and

(iii) Multiply the amount computed pursuant to paragraph (n)(3)(ii) of this section
by 1.17.
(o) Other solids price. The other solids price per pound, rounded to the nearest
one-hundredth cent, shall be the U.S. average AMS dry whey survey price reported by
the Department for the month minus 26.53 cents, with the result multiplied by 1.03.
(p) Somatic cell adjustment. The somatic cell adjustment per hundredweight of
milk shall be determined as follows:
(1) Multiply 0.0005 by the weighted average price computed pursuant to
paragraph (n)(1) of this section and round to the 5th decimal place;
(2) Subtract the somatic cell count of the milk (reported in thousands) from 350;
and
(3) Multiply the amount computed in paragraph (p)(1) of this section by the
amount computed in paragraph (p)(2) of this section and round to the nearest full cent.
(q) Advanced pricing factors. For the purpose of computing the Class I skim milk
price, the Class II skim milk price, the Class II nonfat solids price, and the Class I
butterfat price for the following month, the following pricing factors shall be computed
using the weighted average of the 2 most recent AMS U.S. average weekly survey prices
announced before the 24th day of the month:
(1) An advanced Class III skim milk price per hundredweight, rounded to the
nearest cent, shall be computed as follows:
(i) Following the procedure set forth in paragraphs (n) and (o) of this section, but
using the weighted average of the 2 most recent AMS U.S. average weekly survey prices
announced before the 24th day of the month, compute a protein price and an other solids
price;
(ii) Multiply the protein price computed in paragraph (q)(1)(i) of this section by
3.30;

(iii) Multiply the other solids price per pound computed in paragraph (q)(1)(i) of
this section by 6.0; and
(iv) Add the amounts computed in paragraphs (q)(1)(ii) and (iii) of this section.
(2) An advanced Class IV skim milk price per hundredweight, rounded to the
nearest cent, shall be computed as follows:
(i) Following the procedure set forth in paragraph (m) of this section, but using
the weighted average of the 2 most recent AMS U.S. average weekly survey prices
announced before the 24th day of the month, compute a nonfat solids price; and
(ii) Multiply the nonfat solids price computed in paragraph (q)(2)(i) of this section
by 9.30.
(3) An advanced butterfat price per pound rounded to the nearest one-hundredth
cent, shall be calculated by computing a weighted average of the 2 most recent U.S.
average AMS AA Butter survey prices announced before the 24th day of the month,
subtracting 22.57 cents from this average, and multiplying the result by 1.211.
(r) Class I Extended Shelf Life (ESL) adjustment. The Class I ESL adjustment,
rounded to the nearest cent, shall be computed as follows:
(1) Compute the simple average of the advanced pricing factors computed in
paragraphs (q)(1) and (2) of this section;
(2) Add the following:
(i) Determine the higher of the advanced pricing factors computed in paragraphs
(q)(1) and (2) of this section, for each of the preceding 13 to 36 months;
(ii) Calculate the average of the advanced pricing factors computed in paragraphs
(q)(1) and (2) of this section, for each of the preceding 13 to 36 months;
(iii) For each of the preceding 13 to 36 months, subtract the amount computed in
paragraph (r)(2)(ii) of this section from the amount computed in paragraph (r)(2)(i) of
this section; and

(iv) Compute the average of the differences computed in paragraph (r)(2)(iii) of
this section.
(3) Subtract the higher of the advanced pricing factors computed in paragraphs
(q)(1) and (2) of this section.
4. Revise and republish § 1000.52 to read as follows:
§ 1000.52 Adjusted Class I differentials.
The Class I differential adjusted for location to be used in § 1000.50(b) and (c)
shall be as follows:

County/parish/city

Autauga
Baldwin
Barbour
Bibb
Blount
Bullock
Butler
Calhoun
Chambers
Cherokee
Chilton
Choctaw
Clarke
Clay
Cleburne
Coffee
Colbert
Conecuh
Coosa
Covington
Crenshaw
Cullman
Dale
Dallas
DeKalb
Elmore
Escambia
Etowah

State

FIPS code

Class I differential
adjusted for
location

AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL

01001
01003
01005
01007
01009
01011
01013
01015
01017
01019
01021
01023
01025
01027
01029
01031
01033
01035
01037
01039
01041
01043
01045
01047
01049
01051
01053
5.80
5.80
5.80
5.60
5.40
5.80
5.80
5.60
5.60
5.40
5.60
5.80
5.80
5.60
5.60
5.80
4.90
5.80
5.60
5.80
5.80
5.40
5.80
5.80
5.40
5.80
5.80
5.40

Fayette
Franklin
Geneva
Greene
Hale
Henry
Houston
Jackson
Jefferson
Lamar
Lauderdale
Lawrence
Lee
Limestone
Lowndes
Macon
Madison
Marengo
Marion
Marshall
Mobile
Monroe
Montgomery
Morgan
Perry
Pickens
Pike
Randolph
Russell
Shelby
St. Clair
Sumter
Talladega
Tallapoosa
Tuscaloosa
Walker
Washington
Wilcox
Winston
Arkansas
Ashley
Baxter
Benton
Boone
Bradley
Calhoun
Carroll
Chicot

AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AL
AR
AR
AR
AR
AR
AR
AR
AR
AR

01057
01059
01061
01063
01065
01067
01069
01071
01073
01075
01077
01079
01081
01083
01085
01087
01089
01091
01093
01095
01097
01099
01101
01103
01105
01107
01109
01111
01113
01117
01115
01119
01121
01123
01125
01127
01129
01131
01133
05001
05003
05005
05007
05009
05011
05013
05015
5.40
5.20
5.80
5.60
5.60
5.80
5.80
5.20
5.60
5.40
4.90
5.20
5.80
5.20
5.80
5.80
5.20
5.80
5.20
5.40
5.80
5.80
5.80
5.40
5.60
5.40
5.80
5.60
5.80
5.60
5.60
5.60
5.60
5.60
5.60
5.40
5.80
5.80
5.40
4.60
4.90
3.60
3.20
3.30
4.60
4.60
3.30
4.90

Clark
Clay
Cleburne
Cleveland
Columbia
Conway
Craighead
Crawford
Crittenden
Cross
Dallas
Desha
Drew
Faulkner
Franklin
Fulton
Garland
Grant
Greene
Hempstead
Hot Spring
Howard
Independence
Izard
Jackson
Jefferson
Johnson
Lafayette
Lawrence
Lee
Lincoln
Little River
Logan
Lonoke
Madison
Marion
Miller
Mississippi
Monroe
Montgomery
Nevada
Newton
Ouachita
Perry
Phillips
Pike
Poinsett
Polk

AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR

05019
05021
05023
05025
05027
05029
05031
05033
05035
05037
05039
05041
05043
05045
05047
05049
05051
05053
05055
05057
05059
05061
05063
05065
05067
05069
05071
05073
05075
05077
05079
05081
05083
05085
05087
05089
05091
05093
05095
05097
05099
05101
05103
05105
05107
05109
05111
4.00
4.30
4.00
4.60
4.30
4.00
4.30
3.30
4.60
4.30
4.30
4.90
4.60
4.00
3.60
4.00
4.00
4.30
4.30
4.00
4.30
4.00
4.00
4.00
4.30
4.60
3.60
4.30
4.30
4.60
4.60
3.60
3.60
4.30
3.30
3.60
4.00
4.30
4.60
4.00
4.30
3.60
4.30
4.00
4.60
4.00
4.30
3.60

Pope
Prairie
Pulaski
Randolph
Saline
Scott
Searcy
Sebastian
Sevier
Sharp
St. Francis
Stone
Union
Van Buren
Washington
White
Woodruff
Yell
Apache
Cochise
Coconino
Gila
Graham
Greenlee
La Paz
Maricopa
Mohave
Navajo
Pima
Pinal
Santa Cruz
Yavapai
Yuma
Alameda
Alpine
Amador
Butte
Calaveras
Colusa
Contra Costa
Del Norte
El Dorado
Fresno
Glenn
Humboldt
Imperial
Inyo
Kern

AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AR
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA

05115
05117
05119
05121
05125
05127
05129
05131
05133
05135
05123
05137
05139
05141
05143
05145
05147
05149
04001
04003
04005
04007
04009
04011
04012
04013
04015
04017
04019
04021
04023
04025
04027
06001
06003
06005
06007
06009
06011
06013
06015
06017
06019
06021
06023
06025
06027
3.60
4.30
4.30
4.00
4.30
3.60
3.60
3.60
3.60
4.00
4.60
4.00
4.60
4.00
3.30
4.30
4.30
3.60
2.30
2.40
2.40
2.40
2.40
2.40
2.50
2.60
2.50
2.30
2.40
2.60
2.40
2.40
2.50
2.40
1.80
1.80
2.00
1.80
2.20
2.40
2.20
1.80
2.20
2.20
2.20
2.50
2.20
2.50

Kings
Lake
Lassen
Los Angeles
Madera
Marin
Mariposa
Mendocino
Merced
Modoc
Mono
Monterey
Napa
Nevada
Orange
Placer
Plumas
Riverside
Sacramento
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Luis Obispo
San Mateo
Santa Barbara
Santa Clara
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tehama
Trinity
Tulare
Tuolumne
Ventura
Yolo
Yuba
Adams
Alamosa
Arapahoe
Archuleta
Baca

CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CO
CO
CO
CO
CO

06031
06033
06035
06037
06039
06041
06043
06045
06047
06049
06051
06053
06055
06057
06059
06061
06063
06065
06067
06069
06071
06073
06075
06077
06079
06081
06083
06085
06087
06089
06091
06093
06095
06097
06099
06101
06103
06105
06107
06109
06111
06113
06115
08001
08003
08005
08007
2.20
2.20
2.00
2.80
2.20
2.40
1.80
2.20
2.20
2.00
2.00
2.50
2.40
2.00
2.80
2.00
2.00
2.80
2.20
2.50
2.60
2.80
2.50
2.20
2.50
2.50
2.50
2.50
2.50
2.00
2.00
2.00
2.40
2.40
2.20
2.20
2.20
2.00
2.20
1.80
2.60
2.20
2.00
2.70
2.50
2.70
2.30
2.50

Bent
Boulder
Broomfield
Chaffee
Cheyenne
Clear Creek
Conejos
Costilla
Crowley
Custer
Delta
Denver
Dolores
Douglas
Eagle
El Paso
Elbert
Fremont
Garfield
Gilpin
Grand
Gunnison
Hinsdale
Huerfano
Jackson
Jefferson
Kiowa
Kit Carson
La Plata
Lake
Larimer
Las Animas
Lincoln
Logan
Mesa
Mineral
Moffat
Montezuma
Montrose
Morgan
Otero
Ouray
Park
Phillips
Pitkin
Prowers
Pueblo
Rio Blanco

CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO

08011
08013
08014
08015
08017
08019
08021
08023
08025
08027
08029
08031
08033
08035
08037
08041
08039
08043
08045
08047
08049
08051
08053
08055
08057
08059
08061
08063
08067
08065
08069
08071
08073
08075
08077
08079
08081
08083
08085
08087
08089
08091
08093
08095
08097
08099
08101
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.70
2.70
2.30
2.70
2.30
2.70
2.50
2.70
2.70
2.70
2.30
2.50
2.50
2.50
2.30
2.70
2.50
2.70
2.50
2.50
2.30
2.50
2.50
2.50
2.70
2.50
2.30
2.50
2.30
2.30
2.30
2.50
2.70
2.30
2.70
2.50
2.50
2.50
2.70
2.30

Rio Grande
Routt
Saguache
San Juan
San Miguel
Sedgwick
Summit
Teller
Washington
Weld
Yuma
Fairfield
Hartford
Litchfield
Middlesex
New Haven
New London
Tolland
Windham
District of Columbia
Kent
New Castle
Sussex
Alachua
Baker
Bay
Bradford
Brevard
Broward
Calhoun
Charlotte
Citrus
Clay
Collier
Columbia
DeSoto
Dixie
Duval
Escambia
Flagler
Franklin
Gadsden
Gilchrist
Glades
Gulf
Hamilton
Hardee
Hendry

CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CT
CT
CT
CT
CT
CT
CT
CT
DC
DE
DE
DE
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL

08105
08107
08109
08111
08113
08115
08117
08119
08121
08123
08125
09001
09003
09005
09007
09009
09011
09013
09015
11001
10001
10003
10005
12001
12003
12005
12007
12009
12011
12013
12015
12017
12019
12021
12023
12027
12029
12031
12033
12035
12037
12039
12041
12043
12045
12047
12049
2.50
2.50
2.50
2.30
2.30
2.50
2.50
2.70
2.50
2.50
2.50
5.00
4.80
4.80
4.80
4.80
4.80
4.80
4.80
4.70
4.60
4.40
4.80
6.40
6.40
6.00
6.40
6.80
7.40
6.00
7.00
6.80
6.40
7.40
6.40
7.00
6.40
6.40
5.80
6.80
6.00
6.00
6.40
7.00
6.00
6.40
7.00
7.40

Hernando
Highlands
Hillsborough
Holmes
Indian River
Jackson
Jefferson
Lafayette
Lake
Lee
Leon
Levy
Liberty
Madison
Manatee
Marion
Martin
Miami-Dade
Monroe
Nassau
Okaloosa
Okeechobee
Orange
Osceola
Palm Beach
Pasco
Pinellas
Polk
Putnam
Santa Rosa
Sarasota
Seminole
St. Johns
St. Lucie
Sumter
Suwannee
Taylor
Union
Volusia
Wakulla
Walton
Washington
Appling
Atkinson
Bacon
Baker
Baldwin
Banks

FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
GA
GA
GA
GA
GA
GA

12053
12055
12057
12059
12061
12063
12065
12067
12069
12071
12073
12075
12077
12079
12081
12083
12085
12086
12087
12089
12091
12093
12095
12097
12099
12101
12103
12105
12107
12113
12115
12117
12109
12111
12119
12121
12123
12125
12127
12129
12131
12133
13001
13003
13005
13007
13009
6.80
7.00
6.80
6.00
7.00
6.00
6.00
6.40
6.80
7.00
6.00
6.40
6.00
6.00
7.00
6.80
7.00
7.40
7.40
6.40
5.80
7.00
6.80
6.80
7.40
6.80
6.80
6.80
6.40
5.80
7.00
6.80
6.40
7.00
6.80
6.40
6.40
6.40
6.80
6.00
6.00
6.00
6.00
6.00
6.00
5.80
5.80
5.60

Barrow
Bartow
Ben Hill
Berrien
Bibb
Bleckley
Brantley
Brooks
Bryan
Bulloch
Burke
Butts
Calhoun
Camden
Candler
Carroll
Catoosa
Charlton
Chatham
Chattahoochee
Chattooga
Cherokee
Clarke
Clay
Clayton
Clinch
Cobb
Coffee
Colquitt
Columbia
Cook
Coweta
Crawford
Crisp
Dade
Dawson
Decatur
DeKalb
Dodge
Dooly
Dougherty
Douglas
Early
Echols
Effingham
Elbert
Emanuel
Evans

GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA

13013
13015
13017
13019
13021
13023
13025
13027
13029
13031
13033
13035
13037
13039
13043
13045
13047
13049
13051
13053
13055
13057
13059
13061
13063
13065
13067
13069
13071
13073
13075
13077
13079
13081
13083
13085
13087
13089
13091
13093
13095
13097
13099
13101
13103
13105
13107
5.80
5.60
6.00
6.00
5.80
5.80
6.00
6.00
6.00
6.00
6.00
5.80
5.80
6.00
6.00
5.60
5.40
6.00
6.00
5.80
5.40
5.60
5.80
5.80
5.80
6.00
5.60
6.00
6.00
5.80
6.00
5.80
5.80
5.80
5.40
5.60
6.00
5.80
5.80
5.80
5.80
5.60
5.80
6.00
6.00
5.80
6.00
6.00

Fannin
Fayette
Floyd
Forsyth
Franklin
Fulton
Gilmer
Glascock
Glynn
Gordon
Grady
Greene
Gwinnett
Habersham
Hall
Hancock
Haralson
Harris
Hart
Heard
Henry
Houston
Irwin
Jackson
Jasper
Jeff Davis
Jefferson
Jenkins
Johnson
Jones
Lamar
Lanier
Laurens
Lee
Liberty
Lincoln
Long
Lowndes
Lumpkin
Macon
Madison
Marion
McDuffie
McIntosh
Meriwether
Miller
Mitchell
Monroe

GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA

13111
13113
13115
13117
13119
13121
13123
13125
13127
13129
13131
13133
13135
13137
13139
13141
13143
13145
13147
13149
13151
13153
13155
13157
13159
13161
13163
13165
13167
13169
13171
13173
13175
13177
13179
13181
13183
13185
13187
13193
13195
13197
13189
13191
13199
13201
13205
5.60
5.80
5.60
5.60
5.60
5.80
5.60
5.80
6.00
5.60
6.00
5.80
5.80
5.60
5.60
5.80
5.60
5.80
5.60
5.60
5.80
5.80
6.00
5.80
5.80
6.00
5.80
6.00
5.80
5.80
5.80
6.00
5.80
5.80
6.00
5.80
6.00
6.00
5.60
5.80
5.80
5.80
5.80
6.00
5.80
5.80
5.80
5.80

Montgomery
Morgan
Murray
Muscogee
Newton
Oconee
Oglethorpe
Paulding
Peach
Pickens
Pierce
Pike
Polk
Pulaski
Putnam
Quitman
Rabun
Randolph
Richmond
Rockdale
Schley
Screven
Seminole
Spalding
Stephens
Stewart
Sumter
Talbot
Taliaferro
Tattnall
Taylor
Telfair
Terrell
Thomas
Tift
Toombs
Towns
Treutlen
Troup
Turner
Twiggs
Union
Upson
Walker
Walton
Ware
Warren
Washington

GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA

13209
13211
13213
13215
13217
13219
13221
13223
13225
13227
13229
13231
13233
13235
13237
13239
13241
13243
13245
13247
13249
13251
13253
13255
13257
13259
13261
13263
13265
13267
13269
13271
13273
13275
13277
13279
13281
13283
13285
13287
13289
13291
13293
13295
13297
13299
13301
6.00
5.80
5.40
5.80
5.80
5.80
5.80
5.60
5.80
5.60
6.00
5.80
5.60
5.80
5.80
5.80
5.60
5.80
6.00
5.80
5.80
6.00
6.00
5.80
5.60
5.80
5.80
5.80
5.80
6.00
5.80
6.00
5.80
6.00
5.80
6.00
5.60
6.00
5.60
5.80
5.80
5.60
5.80
5.40
5.80
6.00
5.80
5.80

Wayne
Webster
Wheeler
White
Whitfield
Wilcox
Wilkes
Wilkinson
Worth
Adair
Adams
Allamakee
Appanoose
Audubon
Benton
Black Hawk
Boone
Bremer
Buchanan
Buena Vista
Butler
Calhoun
Carroll
Cass
Cedar
Cerro Gordo
Cherokee
Chickasaw
Clarke
Clay
Clayton
Clinton
Crawford
Dallas
Davis
Decatur
Delaware
Des Moines
Dickinson
Dubuque
Emmet
Fayette
Floyd
Franklin
Fremont
Greene
Grundy
Guthrie

GA
GA
GA
GA
GA
GA
GA
GA
GA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA

13305
13307
13309
13311
13313
13315
13317
13319
13321
19001
19003
19005
19007
19009
19011
19013
19015
19017
19019
19021
19023
19025
19027
19029
19031
19033
19035
19037
19039
19041
19043
19045
19047
19049
19051
19053
19055
19057
19059
19061
19063
19065
19067
19069
19071
19073
19075
6.00
5.80
6.00
5.60
5.40
5.80
5.80
5.80
5.80
2.70
2.90
2.90
2.90
2.70
2.90
2.90
2.70
2.90
2.90
2.60
2.90
2.70
2.70
2.70
3.10
2.90
2.60
2.90
2.90
2.60
2.90
3.10
2.60
2.70
2.90
2.90
2.90
3.10
2.70
3.10
2.70
2.90
2.90
2.70
2.70
2.70
2.90
2.70

Hamilton
Hancock
Hardin
Harrison
Henry
Howard
Humboldt
Ida
Iowa
Jackson
Jasper
Jefferson
Johnson
Jones
Keokuk
Kossuth
Lee
Linn
Louisa
Lucas
Lyon
Madison
Mahaska
Marion
Marshall
Mills
Mitchell
Monona
Monroe
Montgomery
Muscatine
O'Brien
Osceola
Page
Palo Alto
Plymouth
Pocahontas
Polk
Pottawattamie
Poweshiek
Ringgold
Sac
Scott
Shelby
Sioux
Story
Tama
Taylor

IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA

19079
19081
19083
19085
19087
19089
19091
19093
19095
19097
19099
19101
19103
19105
19107
19109
19111
19113
19115
19117
19119
19121
19123
19125
19127
19129
19131
19133
19135
19137
19139
19141
19143
19145
19147
19149
19151
19153
19155
19157
19159
19161
19163
19165
19167
19169
19171
2.70
2.70
2.70
2.60
2.90
2.80
2.70
2.60
2.90
3.10
2.90
2.90
2.90
3.10
2.90
2.70
3.10
2.90
3.10
2.90
2.60
2.70
2.90
2.90
2.90
2.70
2.80
2.60
2.90
2.70
3.10
2.60
2.70
2.90
2.70
2.60
2.70
2.70
2.70
2.90
2.90
2.60
3.10
2.60
2.60
2.70
2.90
2.90

Union
Van Buren
Wapello
Warren
Washington
Wayne
Webster
Winnebago
Winneshiek
Woodbury
Worth
Wright
Ada
Adams
Bannock
Bear Lake
Benewah
Bingham
Blaine
Boise
Bonner
Bonneville
Boundary
Butte
Camas
Canyon
Caribou
Cassia
Clark
Clearwater
Custer
Elmore
Franklin
Fremont
Gem
Gooding
Idaho
Jefferson
Jerome
Kootenai
Latah
Lemhi
Lewis
Lincoln
Madison
Minidoka
Nez Perce
Oneida

IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
IA
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID

19175
19177
19179
19181
19183
19185
19187
19189
19191
19193
19195
19197
16001
16003
16005
16007
16009
16011
16013
16015
16017
16019
16021
16023
16025
16027
16029
16031
16033
16035
16037
16039
16041
16043
16045
16047
16049
16051
16053
16055
16057
16059
16061
16063
16065
16067
16069
2.90
2.90
2.90
2.70
2.90
2.90
2.70
2.70
2.80
2.60
2.80
2.70
1.70
2.00
2.00
2.20
2.40
2.00
1.80
1.70
2.40
2.00
2.40
2.00
1.80
1.70
2.00
1.70
2.00
2.00
1.80
1.70
2.00
2.00
1.70
1.70
2.00
2.00
1.70
2.40
2.20
1.80
2.00
1.70
2.00
1.70
2.00
2.00

Owyhee
Payette
Power
Shoshone
Teton
Twin Falls
Valley
Washington
Adams
Alexander
Bond
Boone
Brown
Bureau
Calhoun
Carroll
Cass
Champaign
Christian
Clark
Clay
Clinton
Coles
Cook
Crawford
Cumberland
De Witt
DeKalb
Douglas
DuPage
Edgar
Edwards
Effingham
Fayette
Ford
Franklin
Fulton
Gallatin
Greene
Grundy
Hamilton
Hancock
Hardin
Henderson
Henry
Iroquois
Jackson
Jasper

ID
ID
ID
ID
ID
ID
ID
ID
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL

16073
16075
16077
16079
16081
16083
16085
16087
17001
17003
17005
17007
17009
17011
17013
17015
17017
17019
17021
17023
17025
17027
17029
17031
17033
17035
17039
17037
17041
17043
17045
17047
17049
17051
17053
17055
17057
17059
17061
17063
17065
17067
17069
17071
17073
17075
17077
1.80
1.70
2.00
2.20
2.00
1.70
1.80
1.70
3.20
4.00
3.60
3.10
3.40
3.40
3.60
3.20
3.40
3.60
3.60
3.60
3.60
3.60
3.60
3.20
3.60
3.60
3.40
3.20
3.60
3.20
3.60
3.60
3.60
3.60
3.60
3.60
3.40
4.00
3.60
3.40
3.60
3.20
4.00
3.20
3.20
3.60
3.60
3.60

Jefferson
Jersey
Jo Daviess
Johnson
Kane
Kankakee
Kendall
Knox
La Salle
Lake
Lawrence
Lee
Livingston
Logan
Macon
Macoupin
Madison
Marion
Marshall
Mason
Massac
McDonough
McHenry
McLean
Menard
Mercer
Monroe
Montgomery
Morgan
Moultrie
Ogle
Peoria
Perry
Piatt
Pike
Pope
Pulaski
Putnam
Randolph
Richland
Rock Island
Saline
Sangamon
Schuyler
Scott
Shelby
St. Clair
Stark

IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL

17081
17083
17085
17087
17089
17091
17093
17095
17099
17097
17101
17103
17105
17107
17115
17117
17119
17121
17123
17125
17127
17109
17111
17113
17129
17131
17133
17135
17137
17139
17141
17143
17145
17147
17149
17151
17153
17155
17157
17159
17161
17165
17167
17169
17171
17173
17163
3.60
3.60
3.10
4.00
3.20
3.40
3.20
3.40
3.40
3.10
3.60
3.20
3.40
3.40
3.40
3.60
3.60
3.60
3.40
3.40
4.00
3.40
3.10
3.40
3.40
3.20
3.60
3.60
3.40
3.60
3.20
3.40
3.60
3.40
3.40
4.00
4.00
3.40
3.60
3.60
3.20
4.00
3.40
3.40
3.40
3.60
3.60
3.40

Stephenson
Tazewell
Union
Vermilion
Wabash
Warren
Washington
Wayne
White
Whiteside
Will
Williamson
Winnebago
Woodford
Adams
Allen
Bartholomew
Benton
Blackford
Boone
Brown
Carroll
Cass
Clark
Clay
Clinton
Crawford
Daviess
Dearborn
Decatur
DeKalb
Delaware
Dubois
Elkhart
Fayette
Floyd
Fountain
Franklin
Fulton
Gibson
Grant
Greene
Hamilton
Hancock
Harrison
Hendricks
Henry
Howard

IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN

17177
17179
17181
17183
17185
17187
17189
17191
17193
17195
17197
17199
17201
17203
18001
18003
18005
18007
18009
18011
18013
18015
18017
18019
18021
18023
18025
18027
18029
18031
18033
18035
18037
18039
18041
18043
18045
18047
18049
18051
18053
18055
18057
18059
18061
18063
18065
3.10
3.40
4.00
3.60
3.60
3.20
3.60
3.60
3.60
3.20
3.20
4.00
3.10
3.40
3.30
3.30
3.70
3.60
3.30
3.60
3.70
3.60
3.30
4.00
3.60
3.60
4.00
3.70
3.70
3.70
3.30
3.60
3.70
3.30
3.60
4.00
3.60
3.70
3.30
3.70
3.30
3.70
3.60
3.60
4.00
3.60
3.60
3.60

Huntington
Jackson
Jasper
Jay
Jefferson
Jennings
Johnson
Knox
Kosciusko
LaGrange
Lake
LaPorte
Lawrence
Madison
Marion
Marshall
Martin
Miami
Monroe
Montgomery
Morgan
Newton
Noble
Ohio
Orange
Owen
Parke
Perry
Pike
Porter
Posey
Pulaski
Putnam
Randolph
Ripley
Rush
Scott
Shelby
Spencer
St. Joseph
Starke
Steuben
Sullivan
Switzerland
Tippecanoe
Tipton
Union
Vanderburgh

IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN

18069
18071
18073
18075
18077
18079
18081
18083
18085
18087
18089
18091
18093
18095
18097
18099
18101
18103
18105
18107
18109
18111
18113
18115
18117
18119
18121
18123
18125
18127
18129
18131
18133
18135
18137
18139
18143
18145
18147
18141
18149
18151
18153
18155
18157
18159
18161
3.30
3.70
3.60
3.30
4.00
3.70
3.60
3.70
3.30
3.30
3.30
3.30
3.70
3.60
3.60
3.30
3.70
3.30
3.70
3.60
3.60
3.60
3.30
3.70
3.70
3.60
3.60
4.00
3.70
3.30
3.70
3.30
3.60
3.60
3.70
3.60
4.00
3.60
4.00
3.30
3.30
3.30
3.70
4.00
3.60
3.60
3.60
3.70

Vermillion
Vigo
Wabash
Warren
Warrick
Washington
Wayne
Wells
White
Whitley
Allen
Anderson
Atchison
Barber
Barton
Bourbon
Brown
Butler
Chase
Chautauqua
Cherokee
Cheyenne
Clark
Clay
Cloud
Coffey
Comanche
Cowley
Crawford
Decatur
Dickinson
Doniphan
Douglas
Edwards
Elk
Ellis
Ellsworth
Finney
Ford
Franklin
Geary
Gove
Graham
Grant
Gray
Greeley
Greenwood
Hamilton

IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS

18165
18167
18169
18171
18173
18175
18177
18179
18181
18183
20001
20003
20005
20007
20009
20011
20013
20015
20017
20019
20021
20023
20025
20027
20029
20031
20033
20035
20037
20039
20041
20043
20045
20047
20049
20051
20053
20055
20057
20059
20061
20063
20065
20067
20069
20071
20073
3.60
3.60
3.30
3.60
3.70
4.00
3.60
3.30
3.60
3.30
2.90
2.90
2.90
2.60
2.60
3.20
2.90
2.90
2.70
2.90
3.20
2.50
2.60
2.70
2.70
2.90
2.60
2.90
3.20
2.50
2.70
2.90
2.90
2.60
2.90
2.50
2.60
2.50
2.50
2.90
2.70
2.50
2.50
2.50
2.50
2.50
2.90
2.50

Harper
Harvey
Haskell
Hodgeman
Jackson
Jefferson
Jewell
Johnson
Kearny
Kingman
Kiowa
Labette
Lane
Leavenworth
Lincoln
Linn
Logan
Lyon
Marion
Marshall
McPherson
Meade
Miami
Mitchell
Montgomery
Morris
Morton
Nemaha
Neosho
Ness
Norton
Osage
Osborne
Ottawa
Pawnee
Phillips
Pottawatomie
Pratt
Rawlins
Reno
Republic
Rice
Riley
Rooks
Rush
Russell
Saline
Scott

KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS

20077
20079
20081
20083
20085
20087
20089
20091
20093
20095
20097
20099
20101
20103
20105
20107
20109
20111
20115
20117
20113
20119
20121
20123
20125
20127
20129
20131
20133
20135
20137
20139
20141
20143
20145
20147
20149
20151
20153
20155
20157
20159
20161
20163
20165
20167
20169
2.90
2.90
2.50
2.50
2.90
2.90
2.60
3.20
2.50
2.90
2.60
3.20
2.50
2.90
2.60
3.20
2.50
2.90
2.70
2.70
2.70
2.50
3.20
2.60
3.20
2.70
2.50
2.70
2.90
2.50
2.50
2.90
2.50
2.70
2.50
2.50
2.70
2.60
2.50
2.90
2.60
2.60
2.70
2.50
2.50
2.50
2.70
2.50

Sedgwick
Seward
Shawnee
Sheridan
Sherman
Smith
Stafford
Stanton
Stevens
Sumner
Thomas
Trego
Wabaunsee
Wallace
Washington
Wichita
Wilson
Woodson
Wyandotte
Adair
Allen
Anderson
Ballard
Barren
Bath
Bell
Boone
Bourbon
Boyd
Boyle
Bracken
Breathitt
Breckinridge
Bullitt
Butler
Caldwell
Calloway
Campbell
Carlisle
Carroll
Carter
Casey
Christian
Clark
Clay
Clinton
Crittenden
Cumberland

KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY

20173
20175
20177
20179
20181
20183
20185
20187
20189
20191
20193
20195
20197
20199
20201
20203
20205
20207
20209
21001
21003
21005
21007
21009
21011
21013
21015
21017
21019
21021
21023
21025
21027
21029
21031
21033
21035
21037
21039
21041
21043
21045
21047
21049
21051
21053
21055
2.90
2.50
2.90
2.50
2.50
2.50
2.60
2.50
2.50
2.90
2.50
2.50
2.90
2.50
2.70
2.50
2.90
2.90
3.20
4.20
4.20
4.20
4.00
4.20
4.20
4.80
4.00
4.20
4.20
4.20
4.00
4.50
4.00
4.00
4.20
4.00
4.20
4.00
4.00
4.00
4.20
4.20
4.20
4.20
4.50
4.50
4.00
4.50

Daviess
Edmonson
Elliott
Estill
Fayette
Fleming
Floyd
Franklin
Fulton
Gallatin
Garrard
Grant
Graves
Grayson
Green
Greenup
Hancock
Hardin
Harlan
Harrison
Hart
Henderson
Henry
Hickman
Hopkins
Jackson
Jefferson
Jessamine
Johnson
Kenton
Knott
Knox
Larue
Laurel
Lawrence
Lee
Leslie
Letcher
Lewis
Lincoln
Livingston
Logan
Lyon
Madison
Magoffin
Marion
Marshall
Martin

KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY

21059
21061
21063
21065
21067
21069
21071
21073
21075
21077
21079
21081
21083
21085
21087
21089
21091
21093
21095
21097
21099
21101
21103
21105
21107
21109
21111
21113
21115
21117
21119
21121
21123
21125
21127
21129
21131
21133
21135
21137
21139
21141
21143
21151
21153
21155
21157
4.00
4.20
4.20
4.20
4.20
4.20
4.50
4.00
4.00
4.00
4.20
4.00
4.20
4.00
4.20
4.20
4.00
4.20
4.80
4.20
4.20
4.00
4.00
4.00
4.00
4.20
4.00
4.20
4.50
4.00
4.50
4.50
4.20
4.50
4.20
4.20
4.50
4.80
4.20
4.20
4.00
4.20
4.00
4.20
4.50
4.20
4.00
4.50

Mason
McCracken
McCreary
McLean
Meade
Menifee
Mercer
Metcalfe
Monroe
Montgomery
Morgan
Muhlenberg
Nelson
Nicholas
Ohio
Oldham
Owen
Owsley
Pendleton
Perry
Pike
Powell
Pulaski
Robertson
Rockcastle
Rowan
Russell
Scott
Shelby
Simpson
Spencer
Taylor
Todd
Trigg
Trimble
Union
Warren
Washington
Wayne
Webster
Whitley
Wolfe
Woodford
Acadia Parish
Allen Parish
Ascension Parish
Assumption Parish
Avoyelles Parish

KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
KY
LA
LA
LA
LA
LA

21161
21145
21147
21149
21163
21165
21167
21169
21171
21173
21175
21177
21179
21181
21183
21185
21187
21189
21191
21193
21195
21197
21199
21201
21203
21205
21207
21209
21211
21213
21215
21217
21219
21221
21223
21225
21227
21229
21231
21233
21235
21237
21239
22001
22003
22005
22007
4.20
4.00
4.50
4.00
4.00
4.20
4.20
4.20
4.50
4.20
4.20
4.00
4.20
4.20
4.00
4.00
4.00
4.50
4.00
4.50
4.50
4.20
4.50
4.20
4.20
4.20
4.50
4.00
4.00
4.20
4.00
4.20
4.20
4.20
4.00
4.00
4.20
4.20
4.50
4.00
4.50
4.20
4.20
5.20
4.90
5.20
5.20
5.20

Beauregard Parish
Bienville Parish
Bossier Parish
Caddo Parish
Calcasieu Parish
Caldwell Parish
Cameron Parish
Catahoula Parish
Claiborne Parish
Concordia Parish
De Soto Parish
East Baton Rouge Parish
East Carroll Parish
East Feliciana Parish
Evangeline Parish
Franklin Parish
Grant Parish
Iberia Parish
Iberville Parish
Jackson Parish
Jefferson Davis Parish
Jefferson Parish
La Salle Parish
Lafayette Parish
Lafourche Parish
Lincoln Parish
Livingston Parish
Madison Parish
Morehouse Parish
Natchitoches Parish
Orleans Parish
Ouachita Parish
Plaquemines Parish
Pointe Coupee Parish
Rapides Parish
Red River Parish
Richland Parish
Sabine Parish
St. Bernard Parish
St. Charles Parish
St. Helena Parish
St. James Parish
St. John the Baptist Parish
St. Landry Parish
St. Martin Parish
St. Mary Parish
St. Tammany Parish
Tangipahoa Parish

LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA

22011
22013
22015
22017
22019
22021
22023
22025
22027
22029
22031
22033
22035
22037
22039
22041
22043
22045
22047
22049
22053
22051
22059
22055
22057
22061
22063
22065
22067
22069
22071
22073
22075
22077
22079
22081
22083
22085
22087
22089
22091
22093
22095
22097
22099
22101
22103
4.90
4.60
4.30
4.30
4.90
4.90
4.90
5.20
4.30
5.20
4.30
5.20
5.20
5.20
4.90
4.90
4.90
5.20
5.20
4.60
4.90
5.60
4.90
5.20
5.60
4.60
5.40
5.20
4.90
4.60
5.60
4.90
5.60
5.20
4.90
4.60
4.90
4.60
5.60
5.60
5.40
5.20
5.60
5.20
5.20
5.20
5.60
5.40

Tensas Parish
Terrebonne Parish
Union Parish
Vermilion Parish
Vernon Parish
Washington Parish
Webster Parish
West Baton Rouge Parish
West Carroll Parish
West Feliciana Parish
Winn Parish
Barnstable
Berkshire
Bristol
Dukes
Essex
Franklin
Hampden
Hampshire
Middlesex
Nantucket
Norfolk
Plymouth
Suffolk
Worcester
Allegany
Anne Arundel
Baltimore
Baltimore City
Calvert
Caroline
Carroll
Cecil
Charles
Dorchester
Frederick
Garrett
Harford
Howard
Kent
Montgomery
Prince George's
Queen Anne's
Somerset
St. Mary's
Talbot
Washington
Wicomico

LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
MA
MA
MA
MA
MA
MA
MA
MA
MA
MA
MA
MA
MA
MA
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD

22107
22109
22111
22113
22115
22117
22119
22121
22123
22125
22127
25001
25003
25005
25007
25009
25011
25013
25015
25017
25019
25021
25023
25025
25027
24001
24003
24005
24510
24009
24011
24013
24015
24017
24019
24021
24023
24025
24027
24029
24031
24033
24035
24039
24037
24041
24043
5.20
5.60
4.60
5.20
4.60
5.60
4.30
5.20
4.90
5.20
4.60
5.10
4.50
5.10
5.10
5.10
4.70
4.70
4.70
5.10
5.10
5.10
5.10
5.10
4.90
4.10
4.60
4.40
4.60
4.80
4.60
4.40
4.40
4.80
4.80
4.40
4.10
4.40
4.60
4.60
4.60
4.60
4.60
4.80
4.80
4.60
4.20
4.80

Worcester
Androscoggin
Aroostook
Cumberland
Franklin
Hancock
Kennebec
Knox
Lincoln
Oxford
Penobscot
Piscataquis
Sagadahoc
Somerset
Waldo
Washington
York
Alcona
Alger
Allegan
Alpena
Antrim
Arenac
Baraga
Barry
Bay
Benzie
Berrien
Branch
Calhoun
Cass
Charlevoix
Cheboygan
Chippewa
Clare
Clinton
Crawford
Delta
Dickinson
Eaton
Emmet
Genesee
Gladwin
Gogebic
Grand Traverse
Gratiot
Hillsdale
Houghton

MD
ME
ME
ME
ME
ME
ME
ME
ME
ME
ME
ME
ME
ME
ME
ME
ME
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI

24047
23001
23003
23005
23007
23009
23011
23013
23015
23017
23019
23021
23023
23025
23027
23029
23031
26001
26003
26005
26007
26009
26011
26013
26015
26017
26019
26021
26023
26025
26027
26029
26031
26033
26035
26037
26039
26041
26043
26045
26047
26049
26051
26053
26055
26057
26059
4.80
4.20
3.90
4.50
4.20
3.90
4.20
4.20
4.20
4.20
3.90
3.90
4.20
3.90
3.90
3.90
4.50
3.30
3.00
3.30
3.30
3.30
3.30
3.00
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.00
3.30
3.30
3.30
2.80
2.80
3.30
3.30
3.30
3.30
2.80
3.30
3.30
3.30
3.00

Huron
Ingham
Ionia
Iosco
Iron
Isabella
Jackson
Kalamazoo
Kalkaska
Kent
Keweenaw
Lake
Lapeer
Leelanau
Lenawee
Livingston
Luce
Mackinac
Macomb
Manistee
Marquette
Mason
Mecosta
Menominee
Midland
Missaukee
Monroe
Montcalm
Montmorency
Muskegon
Newaygo
Oakland
Oceana
Ogemaw
Ontonagon
Osceola
Oscoda
Otsego
Ottawa
Presque Isle
Roscommon
Saginaw
Sanilac
Schoolcraft
Shiawassee
St. Clair
St. Joseph
Tuscola

MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI

26063
26065
26067
26069
26071
26073
26075
26077
26079
26081
26083
26085
26087
26089
26091
26093
26095
26097
26099
26101
26103
26105
26107
26109
26111
26113
26115
26117
26119
26121
26123
26125
26127
26129
26131
26133
26135
26137
26139
26141
26143
26145
26151
26153
26155
26147
26149
3.30
3.30
3.30
3.30
2.80
3.30
3.30
3.30
3.30
3.30
3.00
3.30
3.30
3.30
3.30
3.30
3.00
3.00
3.30
3.30
3.00
3.30
3.30
2.80
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
2.80
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.00
3.30
3.30
3.30
3.30

Van Buren
Washtenaw
Wayne
Wexford
Aitkin
Anoka
Becker
Beltrami
Benton
Big Stone
Blue Earth
Brown
Carlton
Carver
Cass
Chippewa
Chisago
Clay
Clearwater
Cook
Cottonwood
Crow Wing
Dakota
Dodge
Douglas
Faribault
Fillmore
Freeborn
Goodhue
Grant
Hennepin
Houston
Hubbard
Isanti
Itasca
Jackson
Kanabec
Kandiyohi
Kittson
Koochiching
Lac qui Parle
Lake
Lake of the Woods
Le Sueur
Lincoln
Lyon
Mahnomen
Marshall

MI
MI
MI
MI
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN

26159
26161
26163
26165
27001
27003
27005
27007
27009
27011
27013
27015
27017
27019
27021
27023
27025
27027
27029
27031
27033
27035
27037
27039
27041
27043
27045
27047
27049
27051
27053
27055
27057
27059
27061
27063
27065
27067
27069
27071
27073
27075
27077
27079
27081
27083
27087
3.30
3.30
3.30
3.30
2.80
2.80
2.70
2.30
2.80
2.70
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.70
2.30
2.30
2.80
2.80
2.90
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.90
2.80
2.70
2.80
2.30
2.80
2.80
2.80
2.30
2.30
2.70
2.30
2.30
2.80
2.60
2.70
2.60
2.30

Martin
McLeod
Meeker
Mille Lacs
Morrison
Mower
Murray
Nicollet
Nobles
Norman
Olmsted
Otter Tail
Pennington
Pine
Pipestone
Polk
Pope
Ramsey
Red Lake
Redwood
Renville
Rice
Rock
Roseau
Scott
Sherburne
Sibley
St. Louis
Stearns
Steele
Stevens
Swift
Todd
Traverse
Wabasha
Wadena
Waseca
Washington
Watonwan
Wilkin
Winona
Wright
Yellow Medicine
Adair
Andrew
Atchison
Audrain
Barry

MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MO
MO
MO
MO
MO

27091
27085
27093
27095
27097
27099
27101
27103
27105
27107
27109
27111
27113
27115
27117
27119
27121
27123
27125
27127
27129
27131
27133
27135
27139
27141
27143
27137
27145
27147
27149
27151
27153
27155
27157
27159
27161
27163
27165
27167
27169
27171
27173
29001
29003
29005
29007
2.80
2.80
2.80
2.80
2.80
2.80
2.70
2.80
2.70
2.60
2.80
2.80
2.30
2.80
2.60
2.30
2.80
2.90
2.30
2.80
2.80
2.80
2.60
2.30
2.90
2.80
2.80
2.30
2.80
2.80
2.80
2.80
2.80
2.70
2.80
2.80
2.80
2.90
2.80
2.70
2.80
2.80
2.70
3.20
2.90
2.70
3.40
3.20

Barton
Bates
Benton
Bollinger
Boone
Buchanan
Butler
Caldwell
Callaway
Camden
Cape Girardeau
Carroll
Carter
Cass
Cedar
Chariton
Christian
Clark
Clay
Clinton
Cole
Cooper
Crawford
Dade
Dallas
Daviess
DeKalb
Dent
Douglas
Dunklin
Franklin
Gasconade
Gentry
Greene
Grundy
Harrison
Henry
Hickory
Holt
Howard
Howell
Iron
Jackson
Jasper
Jefferson
Johnson
Knox
Laclede

MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO

29011
29013
29015
29017
29019
29021
29023
29025
29027
29029
29031
29033
29035
29037
29039
29041
29043
29045
29047
29049
29051
29053
29055
29057
29059
29061
29063
29065
29067
29069
29071
29073
29075
29077
29079
29081
29083
29085
29087
29089
29091
29093
29095
29097
29099
29101
29103
3.20
3.20
3.20
3.60
3.40
3.20
4.00
3.20
3.40
3.40
3.60
3.20
4.00
3.20
3.20
3.20
3.30
3.20
3.20
3.20
3.40
3.40
3.60
3.20
3.30
3.20
3.20
3.60
3.30
4.30
3.60
3.60
2.90
3.20
3.20
2.90
3.20
3.20
2.90
3.40
3.60
3.60
3.20
3.20
3.60
3.20
3.20
3.30

Lafayette
Lawrence
Lewis
Lincoln
Linn
Livingston
Macon
Madison
Maries
Marion
McDonald
Mercer
Miller
Mississippi
Moniteau
Monroe
Montgomery
Morgan
New Madrid
Newton
Nodaway
Oregon
Osage
Ozark
Pemiscot
Perry
Pettis
Phelps
Pike
Platte
Polk
Pulaski
Putnam
Ralls
Randolph
Ray
Reynolds
Ripley
Saline
Schuyler
Scotland
Scott
Shannon
Shelby
St. Charles
St. Clair
St. Francois
St. Louis

MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO

29107
29109
29111
29113
29115
29117
29121
29123
29125
29127
29119
29129
29131
29133
29135
29137
29139
29141
29143
29145
29147
29149
29151
29153
29155
29157
29159
29161
29163
29165
29167
29169
29171
29173
29175
29177
29179
29181
29195
29197
29199
29201
29203
29205
29183
29185
29187
3.20
3.20
3.20
3.60
3.20
3.20
3.20
3.60
3.60
3.20
3.20
2.90
3.40
4.00
3.40
3.40
3.40
3.40
4.00
3.20
2.90
4.00
3.60
3.60
4.30
3.60
3.40
3.60
3.40
3.20
3.20
3.40
2.90
3.40
3.40
3.20
3.60
4.00
3.40
3.20
3.20
4.00
3.60
3.20
3.60
3.20
3.60
3.60

St. Louis City
Ste. Genevieve
Stoddard
Stone
Sullivan
Taney
Texas
Vernon
Warren
Washington
Wayne
Webster
Worth
Wright
Adams
Alcorn
Amite
Attala
Benton
Bolivar
Calhoun
Carroll
Chickasaw
Choctaw
Claiborne
Clarke
Clay
Coahoma
Copiah
Covington
DeSoto
Forrest
Franklin
George
Greene
Grenada
Hancock
Harrison
Hinds
Holmes
Humphreys
Issaquena
Itawamba
Jackson
Jasper
Jefferson
Jefferson Davis
Jones

MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS

29510
29186
29207
29209
29211
29213
29215
29217
29219
29221
29223
29225
29227
29229
28001
28003
28005
28007
28009
28011
28013
28015
28017
28019
28021
28023
28025
28027
28029
28031
28033
28035
28037
28039
28041
28043
28045
28047
28049
28051
28053
28055
28057
28059
28061
28063
28065
3.60
3.60
4.00
3.30
3.20
3.30
3.60
3.20
3.60
3.60
4.00
3.20
2.90
3.30
5.20
4.90
5.40
5.20
4.90
4.90
5.20
5.20
5.20
5.20
5.20
5.60
5.20
4.90
5.40
5.60
4.60
5.80
5.20
5.80
5.80
5.20
5.80
5.80
5.40
5.20
5.20
5.20
5.20
5.80
5.60
5.20
5.60
5.60

Kemper
Lafayette
Lamar
Lauderdale
Lawrence
Leake
Lee
Leflore
Lincoln
Lowndes
Madison
Marion
Marshall
Monroe
Montgomery
Neshoba
Newton
Noxubee
Oktibbeha
Panola
Pearl River
Perry
Pike
Pontotoc
Prentiss
Quitman
Rankin
Scott
Sharkey
Simpson
Smith
Stone
Sunflower
Tallahatchie
Tate
Tippah
Tishomingo
Tunica
Union
Walthall
Warren
Washington
Wayne
Webster
Wilkinson
Winston
Yalobusha
Yazoo

MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS

28069
28071
28073
28075
28077
28079
28081
28083
28085
28087
28089
28091
28093
28095
28097
28099
28101
28103
28105
28107
28109
28111
28113
28115
28117
28119
28121
28123
28125
28127
28129
28131
28133
28135
28137
28139
28141
28143
28145
28147
28149
28151
28153
28155
28157
28159
28161
5.40
4.90
5.80
5.60
5.60
5.40
5.20
5.20
5.40
5.20
5.40
5.60
4.90
5.20
5.20
5.40
5.60
5.40
5.20
4.90
5.80
5.80
5.40
4.90
4.90
4.90
5.40
5.40
5.20
5.60
5.60
5.80
4.90
4.90
4.90
4.90
4.90
4.60
4.90
5.60
5.20
4.90
5.80
5.20
5.20
5.40
4.90
5.20

Beaverhead
Big Horn
Blaine
Broadwater
Carbon
Carter
Cascade
Chouteau
Custer
Daniels
Dawson
Deer Lodge
Fallon
Fergus
Flathead
Gallatin
Garfield
Glacier
Golden Valley
Granite
Hill
Jefferson
Judith Basin
Lake
Lewis and Clark
Liberty
Lincoln
Madison
McCone
Meagher
Mineral
Missoula
Musselshell
Park
Petroleum
Phillips
Pondera
Powder River
Powell
Prairie
Ravalli
Richland
Roosevelt
Rosebud
Sanders
Sheridan
Silver Bow
Stillwater

MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT

30001
30003
30005
30007
30009
30011
30013
30015
30017
30019
30021
30023
30025
30027
30029
30031
30033
30035
30037
30039
30041
30043
30045
30047
30049
30051
30053
30057
30055
30059
30061
30063
30065
30067
30069
30071
30073
30075
30077
30079
30081
30083
30085
30087
30089
30091
30093
1.80
2.40
2.00
1.80
2.40
2.40
1.80
1.80
2.40
2.30
2.40
1.80
2.40
2.00
2.00
2.00
2.40
1.80
2.00
1.80
1.80
1.80
2.00
2.00
1.70
1.80
2.00
1.80
2.40
1.80
2.00
1.80
2.40
2.00
2.40
2.30
1.70
2.40
1.80
2.40
1.80
2.40
2.30
2.40
2.00
2.30
1.80
2.40

Sweet Grass
Teton
Toole
Treasure
Valley
Wheatland
Wibaux
Yellowstone
Alamance
Alexander
Alleghany
Anson
Ashe
Avery
Beaufort
Bertie
Bladen
Brunswick
Buncombe
Burke
Cabarrus
Caldwell
Camden
Carteret
Caswell
Catawba
Chatham
Cherokee
Chowan
Clay
Cleveland
Columbus
Craven
Cumberland
Currituck
Dare
Davidson
Davie
Duplin
Durham
Edgecombe
Forsyth
Franklin
Gaston
Gates
Graham
Granville
Greene

MT
MT
MT
MT
MT
MT
MT
MT
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC

30097
30099
30101
30103
30105
30107
30109
30111
37001
37003
37005
37007
37009
37011
37013
37015
37017
37019
37021
37023
37025
37027
37029
37031
37033
37035
37037
37039
37041
37043
37045
37047
37049
37051
37053
37055
37057
37059
37061
37063
37065
37067
37069
37071
37073
37075
37077
2.00
1.70
1.80
2.40
2.30
2.00
2.40
2.40
5.40
5.60
5.40
5.80
5.40
5.40
5.80
5.60
5.80
6.00
5.40
5.60
5.60
5.60
5.60
6.00
5.40
5.60
5.60
5.40
5.60
5.60
5.60
6.00
6.00
5.80
5.60
5.80
5.60
5.60
5.80
5.40
5.60
5.40
5.60
5.60
5.60
5.40
5.40
5.80

Guilford
Halifax
Harnett
Haywood
Henderson
Hertford
Hoke
Hyde
Iredell
Jackson
Johnston
Jones
Lee
Lenoir
Lincoln
Macon
Madison
Martin
McDowell
Mecklenburg
Mitchell
Montgomery
Moore
Nash
New Hanover
Northampton
Onslow
Orange
Pamlico
Pasquotank
Pender
Perquimans
Person
Pitt
Polk
Randolph
Richmond
Robeson
Rockingham
Rowan
Rutherford
Sampson
Scotland
Stanly
Stokes
Surry
Swain
Transylvania

NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC

37081
37083
37085
37087
37089
37091
37093
37095
37097
37099
37101
37103
37105
37107
37109
37113
37115
37117
37111
37119
37121
37123
37125
37127
37129
37131
37133
37135
37137
37139
37141
37143
37145
37147
37149
37151
37153
37155
37157
37159
37161
37163
37165
37167
37169
37171
37173
5.40
5.60
5.80
5.40
5.60
5.60
5.80
5.80
5.60
5.60
5.80
6.00
5.60
5.80
5.60
5.60
5.40
5.80
5.60
5.60
5.40
5.60
5.60
5.60
6.00
5.60
6.00
5.40
6.00
5.60
6.00
5.60
5.40
5.80
5.60
5.60
5.80
5.80
5.40
5.60
5.60
5.80
5.80
5.60
5.40
5.40
5.40
5.60

Tyrrell
Union
Vance
Wake
Warren
Washington
Watauga
Wayne
Wilkes
Wilson
Yadkin
Yancey
Adams
Barnes
Benson
Billings
Bottineau
Bowman
Burke
Burleigh
Cass
Cavalier
Dickey
Divide
Dunn
Eddy
Emmons
Foster
Golden Valley
Grand Forks
Grant
Griggs
Hettinger
Kidder
LaMoure
Logan
McHenry
McIntosh
McKenzie
McLean
Mercer
Morton
Mountrail
Nelson
Oliver
Pembina
Pierce
Ramsey

NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND

37177
37179
37181
37183
37185
37187
37189
37191
37193
37195
37197
37199
38001
38003
38005
38007
38009
38011
38013
38015
38017
38019
38021
38023
38025
38027
38029
38031
38033
38035
38037
38039
38041
38043
38045
38047
38049
38051
38053
38055
38057
38059
38061
38063
38065
38067
38069
5.80
5.80
5.40
5.60
5.40
5.80
5.40
5.80
5.40
5.80
5.40
5.40
2.40
2.60
2.30
2.40
2.30
2.40
2.30
2.40
2.70
2.30
2.60
2.30
2.40
2.40
2.40
2.40
2.40
2.30
2.40
2.60
2.40
2.40
2.60
2.40
2.30
2.40
2.40
2.40
2.40
2.40
2.30
2.30
2.40
2.30
2.30
2.30

Ransom
Renville
Richland
Rolette
Sargent
Sheridan
Sioux
Slope
Stark
Steele
Stutsman
Towner
Traill
Walsh
Ward
Wells
Williams
Adams
Antelope
Arthur
Banner
Blaine
Boone
Box Butte
Boyd
Brown
Buffalo
Burt
Butler
Cass
Cedar
Chase
Cherry
Cheyenne
Clay
Colfax
Cuming
Custer
Dakota
Dawes
Dawson
Deuel
Dixon
Dodge
Douglas
Dundy
Fillmore
Franklin

ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE

38073
38075
38077
38079
38081
38083
38085
38087
38089
38091
38093
38095
38097
38099
38101
38103
38105
31001
31003
31005
31007
31009
31011
31013
31015
31017
31019
31021
31023
31025
31027
31029
31031
31033
31035
31037
31039
31041
31043
31045
31047
31049
31051
31053
31055
31057
31059
2.60
2.30
2.60
2.30
2.60
2.40
2.40
2.40
2.40
2.60
2.40
2.30
2.60
2.30
2.30
2.40
2.30
2.60
2.60
2.40
2.40
2.50
2.60
2.40
2.50
2.50
2.50
2.60
2.60
2.70
2.60
2.50
2.40
2.40
2.60
2.60
2.60
2.50
2.60
2.40
2.50
2.40
2.60
2.60
2.70
2.50
2.60
2.60

Frontier
Furnas
Gage
Garden County
Garfield
Gosper
Grant
Greeley
Hall
Hamilton
Harlan
Hayes
Hitchcock
Holt
Hooker
Howard
Jefferson
Johnson
Kearney
Keith
Keya Paha
Kimball
Knox
Lancaster
Lincoln
Logan
Loup
Madison
McPherson
Merrick
Morrill
Nance
Nemaha
Nuckolls
Otoe
Pawnee
Perkins
Phelps
Pierce
Platte
Polk
Red Willow
Richardson
Rock
Saline
Sarpy
Saunders
Scotts Bluff

NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE

31063
31065
31067
31069
31071
31073
31075
31077
31079
31081
31083
31085
31087
31089
31091
31093
31095
31097
31099
31101
31103
31105
31107
31109
31111
31113
31115
31119
31117
31121
31123
31125
31127
31129
31131
31133
31135
31137
31139
31141
31143
31145
31147
31149
31151
31153
31155
2.50
2.50
2.70
2.40
2.50
2.50
2.40
2.60
2.60
2.60
2.50
2.50
2.50
2.50
2.40
2.60
2.60
2.70
2.60
2.50
2.50
2.40
2.60
2.60
2.50
2.40
2.50
2.60
2.40
2.60
2.40
2.60
2.70
2.60
2.70
2.70
2.50
2.50
2.60
2.60
2.60
2.50
2.70
2.50
2.60
2.70
2.60
2.40

Seward
Sheridan
Sherman
Sioux
Stanton
Thayer
Thomas
Thurston
Valley
Washington
Wayne
Webster
Wheeler
York
Belknap
Carroll
Cheshire
Coos
Grafton
Hillsborough
Merrimack
Rockingham
Strafford
Sullivan
Atlantic
Bergen
Burlington
Camden
Cape May
Cumberland
Essex
Gloucester
Hudson
Hunterdon
Mercer
Middlesex
Monmouth
Morris
Ocean
Passaic
Salem
Somerset
Sussex
Union
Warren
Bernalillo
Catron
Chaves

NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NH
NH
NH
NH
NH
NH
NH
NH
NH
NH
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NM
NM
NM

31159
31161
31163
31165
31167
31169
31171
31173
31175
31177
31179
31181
31183
31185
33001
33003
33005
33007
33009
33011
33013
33015
33017
33019
34001
34003
34005
34007
34009
34011
34013
34015
34017
34019
34021
34023
34025
34027
34029
34031
34033
34035
34037
34039
34041
35001
35003
2.60
2.40
2.50
2.40
2.60
2.60
2.40
2.60
2.50
2.60
2.60
2.60
2.50
2.60
4.50
4.50
4.50
4.20
4.40
4.50
4.50
4.50
4.50
4.50
4.80
5.00
4.80
4.70
4.80
4.70
5.00
4.70
5.00
4.70
4.70
4.90
4.90
4.90
4.90
5.00
4.70
4.90
4.70
5.00
4.70
2.40
2.30
2.50

Cibola
Colfax
Curry
DeBaca
Dona Ana
Eddy
Grant
Guadalupe
Harding
Hidalgo
Lea
Lincoln
Los Alamos
Luna
McKinley
Mora
Otero
Quay
Rio Arriba
Roosevelt
San Juan
San Miguel
Sandoval
Santa Fe
Sierra
Socorro
Taos
Torrance
Union
Valencia
Carson City
Churchill
Clark
Douglas
Elko
Esmeralda
Eureka
Humboldt
Lander
Lincoln
Lyon
Mineral
Nye
Pershing
Storey
Washoe
White Pine
Albany

NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NY

35006
35007
35009
35011
35013
35015
35017
35019
35021
35023
35025
35027
35028
35029
35031
35033
35035
35037
35039
35041
35045
35047
35043
35049
35051
35053
35055
35057
35059
35061
32510
32001
32003
32005
32007
32009
32011
32013
32015
32017
32019
32021
32023
32027
32029
32031
32033
2.30
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.40
2.50
2.30
2.50
2.50
2.50
2.30
2.50
2.30
2.50
2.40
2.40
2.50
2.40
2.50
2.40
2.50
2.40
1.90
1.90
2.60
1.80
2.00
2.20
2.20
1.90
2.00
2.50
1.90
2.00
2.20
1.90
1.90
2.00
2.20
4.40

Allegany
Bronx
Broome
Cattaraugus
Cayuga
Chautauqua
Chemung
Chenango
Clinton
Columbia
Cortland
Delaware
Dutchess
Erie
Essex
Franklin
Fulton
Genesee
Greene
Hamilton
Herkimer
Jefferson
Kings
Lewis
Livingston
Madison
Monroe
Montgomery
Nassau
New York County
Niagara
Oneida
Onondaga
Ontario
Orange
Orleans
Oswego
Otsego
Putnam
Queens
Rensselaer
Richmond
Rockland
Saratoga
Schenectady
Schoharie
Schuyler
Seneca

NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY

36003
36005
36007
36009
36011
36013
36015
36017
36019
36021
36023
36025
36027
36029
36031
36033
36035
36037
36039
36041
36043
36045
36047
36049
36051
36053
36055
36057
36059
36061
36063
36065
36067
36069
36071
36073
36075
36077
36079
36081
36083
36085
36087
36091
36093
36095
36097
3.90
5.10
4.00
3.90
3.90
3.90
4.00
4.00
4.20
4.40
3.90
4.20
4.70
3.80
4.20
4.10
4.10
3.80
4.40
4.10
4.00
4.00
5.10
4.00
3.80
3.90
3.80
4.10
5.10
5.10
3.80
3.90
3.90
3.80
4.70
3.80
3.90
4.10
4.70
5.10
4.40
5.10
5.00
4.20
4.20
4.20
3.90
3.90

St. Lawrence
Steuben
Suffolk
Sullivan
Tioga
Tompkins
Ulster
Warren
Washington
Wayne
Westchester
Wyoming
Yates
Adams
Allen
Ashland
Ashtabula
Athens
Auglaize
Belmont
Brown
Butler
Carroll
Champaign
Clark
Clermont
Clinton
Columbiana
Coshocton
Crawford
Cuyahoga
Darke
Defiance
Delaware
Erie
Fairfield
Fayette
Franklin
Fulton
Gallia
Geauga
Greene
Guernsey
Hamilton
Hancock
Hardin
Harrison
Henry

NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH

36089
36101
36103
36105
36107
36109
36111
36113
36115
36117
36119
36121
36123
39001
39003
39005
39007
39009
39011
39013
39015
39017
39019
39021
39023
39025
39027
39029
39031
39033
39035
39037
39039
39041
39043
39045
39047
39049
39051
39053
39055
39057
39059
39061
39063
39065
39067
4.00
3.90
5.10
4.40
4.00
3.90
4.40
4.20
4.20
3.80
5.00
3.80
3.80
4.00
3.30
3.80
3.80
4.00
3.60
4.00
4.00
3.80
3.80
3.60
3.60
4.00
3.80
4.00
3.80
3.60
3.80
3.60
3.30
3.60
3.60
3.80
3.80
3.60
3.30
4.30
3.80
3.60
3.80
3.80
3.60
3.60
3.80
3.30

Highland
Hocking
Holmes
Huron
Jackson
Jefferson
Knox
Lake
Lawrence
Licking
Logan
Lorain
Lucas
Madison
Mahoning
Marion
Medina
Meigs
Mercer
Miami
Monroe
Montgomery
Morgan
Morrow
Muskingum
Noble
Ottawa
Paulding
Perry
Pickaway
Pike
Portage
Preble
Putnam
Richland
Ross
Sandusky
Scioto
Seneca
Shelby
Stark
Summit
Trumbull
Tuscarawas
Union
Van Wert
Vinton
Warren

OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH

39071
39073
39075
39077
39079
39081
39083
39085
39087
39089
39091
39093
39095
39097
39099
39101
39103
39105
39107
39109
39111
39113
39115
39117
39119
39121
39123
39125
39127
39129
39131
39133
39135
39137
39139
39141
39143
39145
39147
39149
39151
39153
39155
39157
39159
39161
39163
4.00
4.00
3.80
3.60
4.00
4.00
3.80
3.80
4.30
3.80
3.60
3.80
3.30
3.60
4.00
3.60
3.80
4.30
3.30
3.60
4.00
3.60
4.00
3.60
3.80
4.00
3.60
3.30
4.00
3.80
4.00
3.80
3.60
3.30
3.60
4.00
3.60
4.00
3.60
3.60
3.80
3.80
4.00
3.80
3.60
3.30
4.00
3.80

Washington
Wayne
Williams
Wood
Wyandot
Adair
Alfalfa
Atoka
Beaver
Beckham
Blaine
Bryan
Caddo
Canadian
Carter
Cherokee
Choctaw
Cimarron
Cleveland
Coal
Comanche
Cotton
Craig
Creek
Custer
Delaware
Dewey
Ellis
Garfield
Garvin
Grady
Grant
Greer
Harmon
Harper
Haskell
Hughes
Jackson
Jefferson
Johnston
Kay
Kingfisher
Kiowa
Latimer
Le Flore
Lincoln
Logan
Love

OH
OH
OH
OH
OH
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK

39167
39169
39171
39173
39175
40001
40003
40005
40007
40009
40011
40013
40015
40017
40019
40021
40023
40025
40027
40029
40031
40033
40035
40037
40039
40041
40043
40045
40047
40049
40051
40053
40055
40057
40059
40061
40063
40065
40067
40069
40071
40073
40075
40077
40079
40081
40083
4.00
3.80
3.30
3.60
3.60
3.30
2.60
3.60
2.50
2.60
2.90
3.60
2.90
2.90
3.30
3.30
3.60
2.50
3.30
3.60
2.90
3.30
3.20
3.30
2.60
3.20
2.60
2.60
2.90
3.30
3.30
2.90
2.60
2.60
2.60
3.60
3.30
2.90
3.30
3.60
2.90
2.90
2.90
3.60
3.60
3.30
3.30
3.30

Major
Marshall
Mayes
McClain
McCurtain
McIntosh
Murray
Muskogee
Noble
Nowata
Okfuskee
Oklahoma
Okmulgee
Osage
Ottawa
Pawnee
Payne
Pittsburg
Pontotoc
Pottawatomie
Pushmataha
Roger Mills
Rogers
Seminole
Sequoyah
Stephens
Texas
Tillman
Tulsa
Wagoner
Washington
Washita
Woods
Woodward
Baker
Benton
Clackamas
Clatsop
Columbia
Coos
Crook
Curry
Deschutes
Douglas
Gilliam
Grant
Harney
Hood River

OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR

40093
40095
40097
40087
40089
40091
40099
40101
40103
40105
40107
40109
40111
40113
40115
40117
40119
40121
40123
40125
40127
40129
40131
40133
40135
40137
40139
40141
40143
40145
40147
40149
40151
40153
41001
41003
41005
41007
41009
41011
41013
41015
41017
41019
41021
41023
41025
2.60
3.60
3.20
3.30
3.60
3.30
3.30
3.30
3.20
3.20
3.30
3.30
3.30
3.20
3.20
3.20
3.30
3.60
3.30
3.30
3.60
2.60
3.20
3.30
3.30
3.30
2.50
2.90
3.30
3.30
3.20
2.60
2.60
2.60
2.20
2.20
2.70
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20

Jackson
Jefferson
Josephine
Klamath
Lake
Lane
Lincoln
Linn
Malheur
Marion
Morrow
Multnomah
Polk
Sherman
Tillamook
Umatilla
Union
Wallowa
Wasco
Washington
Wheeler
Yamhill
Adams
Allegheny
Armstrong
Beaver
Bedford
Berks
Blair
Bradford
Bucks
Butler
Cambria
Cameron
Carbon
Centre
Chester
Clarion
Clearfield
Clinton
Columbia
Crawford
Cumberland
Dauphin
Delaware
Elk
Erie
Fayette

OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA

41029
41031
41033
41035
41037
41039
41041
41043
41045
41047
41049
41051
41053
41055
41057
41059
41061
41063
41065
41067
41069
41071
42001
42003
42005
42007
42009
42011
42013
42015
42017
42019
42021
42023
42025
42027
42029
42031
42033
42035
42037
42039
42041
42043
42045
42047
42049
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
1.80
2.20
2.20
2.70
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
4.30
4.00
4.00
4.00
4.10
4.30
4.00
4.00
4.50
4.00
4.00
4.00
4.30
4.00
4.30
4.00
4.00
4.00
4.10
4.00
4.20
4.20
4.40
4.00
3.90
4.00

Forest
Franklin
Fulton
Greene
Huntingdon
Indiana
Jefferson
Juniata
Lackawanna
Lancaster
Lawrence
Lebanon
Lehigh
Luzerne
Lycoming
McKean
Mercer
Mifflin
Monroe
Montgomery
Montour
Northampton
Northumberland
Perry
Philadelphia
Pike
Potter
Schuylkill
Snyder
Somerset
Sullivan
Susquehanna
Tioga
Union
Venango
Warren
Washington
Wayne
Westmoreland
Wyoming
York
Bristol
Kent
Newport
Providence
Washington
Abbeville
Aiken

PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
RI
RI
RI
RI
RI
SC
SC

42053
42055
42057
42059
42061
42063
42065
42067
42069
42071
42073
42075
42077
42079
42081
42083
42085
42087
42089
42091
42093
42095
42097
42099
42101
42103
42105
42107
42109
42111
42113
42115
42117
42119
42121
42123
42125
42127
42129
42131
42133
44001
44003
44005
44007
44009
45001
4.00
4.20
4.10
4.00
4.10
4.00
4.00
4.10
4.30
4.30
4.00
4.20
4.30
4.20
4.10
3.90
4.00
4.10
4.40
4.40
4.10
4.40
4.10
4.20
4.60
4.40
3.90
4.20
4.10
4.10
4.10
4.20
4.00
4.10
4.00
3.90
4.00
4.30
4.00
4.20
4.30
5.10
5.10
5.10
5.10
5.10
5.80
6.00

Allendale
Anderson
Bamberg
Barnwell
Beaufort
Berkeley
Calhoun
Charleston
Cherokee
Chester
Chesterfield
Clarendon
Colleton
Darlington
Dillon
Dorchester
Edgefield
Fairfield
Florence
Georgetown
Greenville
Greenwood
Hampton
Horry
Jasper
Kershaw
Lancaster
Laurens
Lee
Lexington
Marion
Marlboro
McCormick
Newberry
Oconee
Orangeburg
Pickens
Richland
Saluda
Spartanburg
Sumter
Union
Williamsburg
York
Aurora
Beadle
Bennett
Bon Homme

SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SD
SD
SD
SD

45005
45007
45009
45011
45013
45015
45017
45019
45021
45023
45025
45027
45029
45031
45033
45035
45037
45039
45041
45043
45045
45047
45049
45051
45053
45055
45057
45059
45061
45063
45067
45069
45065
45071
45073
45075
45077
45079
45081
45083
45085
45087
45089
45091
46003
46005
46007
6.00
5.60
6.00
6.00
6.00
6.00
6.00
6.00
5.60
5.80
5.80
6.00
6.00
6.00
6.00
6.00
5.80
5.80
6.00
6.00
5.60
5.80
6.00
6.00
6.00
6.00
5.80
5.80
6.00
6.00
6.00
5.80
5.80
5.80
5.60
6.00
5.60
6.00
5.80
5.60
6.00
5.80
6.00
5.60
2.60
2.60
2.40
2.60

Brookings
Brown
Brule
Buffalo
Butte
Campbell
Charles Mix
Clark
Clay
Codington
Corson
Custer
Davison
Day
Deuel
Dewey
Douglas
Edmunds
Fall River
Faulk
Grant
Gregory
Haakon
Hamlin
Hand
Hanson
Harding
Hughes
Hutchinson
Hyde
Jackson
Jerauld
Jones
Kingsbury
Lake
Lawrence
Lincoln
Lyman
Marshall
McCook
McPherson
Meade
Mellette
Miner
Minnehaha
Moody
Oglala Lakota
Pennington

SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD

46011
46013
46015
46017
46019
46021
46023
46025
46027
46029
46031
46033
46035
46037
46039
46041
46043
46045
46047
46049
46051
46053
46055
46057
46059
46061
46063
46065
46067
46069
46071
46073
46075
46077
46079
46081
46083
46085
46091
46087
46089
46093
46095
46097
46099
46101
46102
2.60
2.60
2.50
2.50
2.40
2.50
2.50
2.60
2.60
2.60
2.40
2.40
2.60
2.60
2.60
2.40
2.60
2.50
2.40
2.50
2.60
2.50
2.40
2.60
2.50
2.60
2.40
2.50
2.60
2.50
2.40
2.60
2.40
2.60
2.60
2.40
2.60
2.50
2.60
2.60
2.50
2.40
2.40
2.60
2.60
2.60
2.40
2.40

Perkins
Potter
Roberts
Sanborn
Spink
Stanley
Sully
Todd
Tripp
Turner
Union
Walworth
Yankton
Ziebach
Anderson
Bedford
Benton
Bledsoe
Blount
Bradley
Campbell
Cannon
Carroll
Carter
Cheatham
Chester
Claiborne
Clay
Cocke
Coffee
Crockett
Cumberland
Davidson
Decatur
DeKalb
Dickson
Dyer
Fayette
Fentress
Franklin
Gibson
Giles
Grainger
Greene
Grundy
Hamblen
Hamilton
Hancock

SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
SD
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN

46105
46107
46109
46111
46115
46117
46119
46121
46123
46125
46127
46129
46135
46137
47001
47003
47005
47007
47009
47011
47013
47015
47017
47019
47021
47023
47025
47027
47029
47031
47033
47035
47037
47039
47041
47043
47045
47047
47049
47051
47053
47055
47057
47059
47061
47063
47065
2.40
2.50
2.60
2.60
2.60
2.40
2.50
2.40
2.50
2.60
2.60
2.50
2.60
2.40
4.90
4.90
4.60
4.90
5.20
5.20
4.90
4.90
4.60
5.20
4.60
4.60
4.90
4.60
5.20
4.90
4.30
4.90
4.60
4.60
4.90
4.60
4.30
4.60
4.60
5.20
4.30
4.90
4.90
5.20
4.90
5.20
5.20
4.90

Hardeman
Hardin
Hawkins
Haywood
Henderson
Henry
Hickman
Houston
Humphreys
Jackson
Jefferson
Johnson
Knox
Lake
Lauderdale
Lawrence
Lewis
Lincoln
Loudon
Macon
Madison
Marion
Marshall
Maury
McMinn
McNairy
Meigs
Monroe
Montgomery
Moore
Morgan
Obion
Overton
Perry
Pickett
Polk
Putnam
Rhea
Roane
Robertson
Rutherford
Scott
Sequatchie
Sevier
Shelby
Smith
Stewart
Sullivan

TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN

47069
47071
47073
47075
47077
47079
47081
47083
47085
47087
47089
47091
47093
47095
47097
47099
47101
47103
47105
47111
47113
47115
47117
47119
47107
47109
47121
47123
47125
47127
47129
47131
47133
47135
47137
47139
47141
47143
47145
47147
47149
47151
47153
47155
47157
47159
47161
4.60
4.90
5.20
4.60
4.60
4.30
4.60
4.60
4.60
4.60
5.20
5.20
4.90
4.30
4.30
4.90
4.90
5.20
5.20
4.60
4.60
5.20
4.90
4.90
5.20
4.90
5.20
5.20
4.30
4.90
4.90
4.30
4.60
4.60
4.60
5.40
4.60
4.90
4.90
4.60
4.60
4.90
5.20
5.20
4.60
4.60
4.30
5.20

Sumner
Tipton
Trousdale
Unicoi
Union
Van Buren
Warren
Washington
Wayne
Weakley
White
Williamson
Wilson
Anderson
Andrews
Angelina
Aransas
Archer
Armstrong
Atascosa
Austin
Bailey
Bandera
Bastrop
Baylor
Bee
Bell
Bexar
Blanco
Borden
Bosque
Bowie
Brazoria
Brazos
Brewster
Briscoe
Brooks
Brown
Burleson
Burnet
Caldwell
Calhoun
Callahan
Cameron
Camp
Carson
Cass
Castro

TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX

47165
47167
47169
47171
47173
47175
47177
47179
47181
47183
47185
47187
47189
48001
48003
48005
48007
48009
48011
48013
48015
48017
48019
48021
48023
48025
48027
48029
48031
48033
48035
48037
48039
48041
48043
48045
48047
48049
48051
48053
48055
48057
48059
48061
48063
48065
48067
4.60
4.60
4.60
5.40
4.90
4.90
4.90
5.20
4.90
4.30
4.90
4.60
4.60
4.00
2.90
4.60
4.60
3.30
2.50
4.30
4.30
2.50
4.00
4.30
2.90
4.60
4.00
4.30
4.00
2.90
3.60
4.00
4.80
4.30
3.30
2.50
4.60
3.60
4.30
4.00
4.30
4.60
3.30
4.60
3.70
2.50
4.00
2.50

Chambers
Cherokee
Childress
Clay
Cochran
Coke
Coleman
Collin
Collingsworth
Colorado
Comal
Comanche
Concho
Cooke
Coryell
Cottle
Crane
Crockett
Crosby
Culberson
Dallam
Dallas
Dawson
Deaf Smith
Delta
Denton
DeWitt
Dickens
Dimmit
Donley
Duval
Eastland
Ector
Edwards
El Paso
Ellis
Erath
Falls
Fannin
Fayette
Fisher
Floyd
Foard
Fort Bend
Franklin
Freestone
Frio
Gaines

TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX

48071
48073
48075
48077
48079
48081
48083
48085
48087
48089
48091
48093
48095
48097
48099
48101
48103
48105
48107
48109
48111
48113
48115
48117
48119
48121
48123
48125
48127
48129
48131
48133
48135
48137
48141
48139
48143
48145
48147
48149
48151
48153
48155
48157
48159
48161
48163
4.80
4.00
2.60
3.30
2.50
3.30
3.60
3.70
2.60
4.30
4.00
3.60
3.60
3.30
4.00
2.60
2.90
3.30
2.60
2.90
2.50
3.70
2.90
2.50
3.70
3.70
4.30
2.60
4.00
2.50
4.60
3.60
2.90
3.60
2.70
3.70
3.60
4.00
3.70
4.30
2.90
2.60
2.90
4.60
3.70
4.00
4.30
2.60

Galveston
Garza
Gillespie
Glasscock
Goliad
Gonzales
Gray
Grayson
Gregg
Grimes
Guadalupe
Hale
Hall
Hamilton
Hansford
Hardeman
Hardin
Harris
Harrison
Hartley
Haskell
Hays
Hemphill
Henderson
Hidalgo
Hill
Hockley
Hood
Hopkins
Houston
Howard
Hudspeth
Hunt
Hutchinson
Irion
Jack
Jackson
Jasper
Jeff Davis
Jefferson
Jim Hogg
Jim Wells
Johnson
Jones
Karnes
Kaufman
Kendall
Kenedy

TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX

48167
48169
48171
48173
48175
48177
48179
48181
48183
48185
48187
48189
48191
48193
48195
48197
48199
48201
48203
48205
48207
48209
48211
48213
48215
48217
48219
48221
48223
48225
48227
48229
48231
48233
48235
48237
48239
48241
48243
48245
48247
48249
48251
48253
48255
48257
48259
4.80
2.90
4.00
3.30
4.60
4.30
2.50
3.70
4.00
4.60
4.30
2.50
2.50
3.60
2.50
2.90
4.80
4.80
4.00
2.50
2.90
4.00
2.60
3.70
4.60
3.70
2.60
3.70
3.70
4.00
2.90
2.70
3.70
2.50
3.30
3.30
4.60
4.80
2.90
4.80
4.60
4.60
3.70
3.30
4.30
3.70
4.00
4.60

Kent
Kerr
Kimble
King
Kinney
Kleberg
Knox
La Salle
Lamar
Lamb
Lampasas
Lavaca
Lee
Leon
Liberty
Limestone
Lipscomb
Live Oak
Llano
Loving
Lubbock
Lynn
Madison
Marion
Martin
Mason
Matagorda
Maverick
McCulloch
McLennan
McMullen
Medina
Menard
Midland
Milam
Mills
Mitchell
Montague
Montgomery
Moore
Morris
Motley
Nacogdoches
Navarro
Newton
Nolan
Nueces
Ochiltree

TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX

48263
48265
48267
48269
48271
48273
48275
48283
48277
48279
48281
48285
48287
48289
48291
48293
48295
48297
48299
48301
48303
48305
48313
48315
48317
48319
48321
48323
48307
48309
48311
48325
48327
48329
48331
48333
48335
48337
48339
48341
48343
48345
48347
48349
48351
48353
48355
2.90
4.00
3.60
2.90
4.00
4.60
2.90
4.30
3.70
2.50
4.00
4.30
4.30
4.00
4.80
4.00
2.60
4.30
4.00
2.90
2.60
2.90
4.00
4.00
2.90
3.60
4.80
4.00
3.60
4.00
4.30
4.00
3.60
2.90
4.00
3.60
3.30
3.30
4.80
2.50
3.70
2.60
4.00
3.70
4.80
3.30
4.60
2.50

Oldham
Orange
Palo Pinto
Panola
Parker
Parmer
Pecos
Polk
Potter
Presidio
Rains
Randall
Reagan
Real
Red River
Reeves
Refugio
Roberts
Robertson
Rockwall
Runnels
Rusk
Sabine
San Augustine
San Jacinto
San Patricio
San Saba
Schleicher
Scurry
Shackelford
Shelby
Sherman
Smith
Somervell
Starr
Stephens
Sterling
Stonewall
Sutton
Swisher
Tarrant
Taylor
Terrell
Terry
Throckmorton
Titus
Tom Green
Travis

TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX

48359
48361
48363
48365
48367
48369
48371
48373
48375
48377
48379
48381
48383
48385
48387
48389
48391
48393
48395
48397
48399
48401
48403
48405
48407
48409
48411
48413
48415
48417
48419
48421
48423
48425
48427
48429
48431
48433
48435
48437
48439
48441
48443
48445
48447
48449
48451
2.50
4.80
3.30
4.00
3.70
2.50
3.30
4.60
2.50
2.90
3.70
2.50
3.30
4.00
3.70
2.90
4.60
2.50
4.00
3.70
3.30
4.00
4.60
4.60
4.60
4.60
3.60
3.60
2.90
3.30
4.60
2.50
3.70
3.70
4.60
3.30
3.30
2.90
3.60
2.50
3.70
3.30
3.30
2.60
3.30
3.70
3.30
4.00

Trinity
Tyler
Upshur
Upton
Uvalde
Val Verde
Van Zandt
Victoria
Walker
Waller
Ward
Washington
Webb
Wharton
Wheeler
Wichita
Wilbarger
Willacy
Williamson
Wilson
Winkler
Wise
Wood
Yoakum
Young
Zapata
Zavala
Beaver
Box Elder
Cache
Carbon
Daggett
Davis
Duchesne
Emery
Garfield
Grand
Iron
Juab
Kane
Millard
Morgan
Piute
Rich
Salt Lake
San Juan
Sanpete
Sevier

TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT
UT

48455
48457
48459
48461
48463
48465
48467
48469
48471
48473
48475
48477
48479
48481
48483
48485
48487
48489
48491
48493
48495
48497
48499
48501
48503
48505
48507
49001
49003
49005
49007
49009
49011
49013
49015
49017
49019
49021
49023
49025
49027
49029
49031
49033
49035
49037
49039
4.60
4.80
3.70
3.30
4.00
3.60
3.70
4.60
4.60
4.60
2.90
4.30
4.30
4.60
2.60
2.90
2.90
4.60
4.00
4.30
2.90
3.30
3.70
2.60
3.30
4.30
4.00
2.40
2.00
2.20
2.20
2.30
2.20
2.20
2.30
2.30
2.30
2.40
2.20
2.40
2.30
2.20
2.30
2.20
2.20
2.30
2.20
2.30

Summit
Tooele
Uintah
Utah
Wasatch
Washington
Wayne
Weber
Accomack
Albemarle
Alexandria City
Alleghany
Amelia
Amherst
Appomattox
Arlington
Augusta
Bath
Bedford
Bland
Botetourt
Bristol City
Brunswick
Buchanan
Buckingham
Buena Vista City
Campbell
Caroline
Carroll
Charles City
Charlotte
Charlottesville
Chesapeake City
Chesterfield
Clarke
Colonial Heights
Covington
Craig
Culpeper
Cumberland
Danville City
Dickenson
Dinwiddie
Emporia
Essex
Fairfax
Fairfax City
Falls Church City

UT
UT
UT
UT
UT
UT
UT
UT
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA

49043
49045
49047
49049
49051
49053
49055
49057
51001
51003
51510
51005
51007
51009
51011
51013
51015
51017
51019
51021
51023
51520
51025
51027
51029
51530
51031
51033
51035
51036
51037
51540
51550
51041
51043
51570
51580
51045
51047
51049
51590
51051
51053
51595
51057
51059
51600
2.20
2.20
2.30
2.20
2.20
2.50
2.30
2.20
4.80
4.50
4.50
4.50
4.80
4.50
4.80
4.60
4.30
4.50
4.80
4.80
4.80
5.20
5.20
4.80
4.80
4.50
4.80
4.80
5.20
5.20
4.80
4.50
5.20
4.80
4.30
4.80
4.50
4.80
4.50
4.80
5.20
4.80
5.20
5.20
4.80
4.60
4.50
4.50

Fauquier
Floyd
Fluvanna
Franklin City
Franklin County
Frederick
Fredericksburg City
Galax City
Giles
Gloucester
Goochland
Grayson
Greene
Greensville
Halifax
Hampton City
Hanover
Harrisonburg
Henrico
Henry
Highland
Hopewell
Isle of Wight
James City
King and Queen
King George
King William
Lancaster
Lee
Lexington
Loudoun
Louisa
Lunenburg
Lynchburg City
Madison
Manassas
Manassas Park
Martinsville City
Mathews
Mecklenburg
Middlesex
Montgomery
Nelson
New Kent
Newport News City
Norfolk City
Northampton
Northumberland

VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA

51061
51063
51065
51620
51067
51069
51630
51640
51071
51073
51075
51077
51079
51081
51083
51650
51085
51660
51087
51089
51091
51670
51093
51095
51097
51099
51101
51103
51105
51678
51107
51109
51111
51680
51113
51683
51685
51690
51115
51117
51119
51121
51125
51127
51700
51710
51131
4.50
5.20
4.50
5.20
4.80
4.30
4.50
5.20
4.80
5.20
4.80
5.20
4.50
5.20
5.20
5.20
4.80
4.30
4.80
5.20
4.30
5.20
5.20
5.20
4.80
4.80
4.80
5.20
4.80
4.50
4.40
4.50
5.20
4.80
4.50
4.50
4.50
5.20
5.20
5.20
5.20
4.80
4.50
5.20
5.20
5.20
4.80
4.80

Norton City
Nottoway
Orange
Page
Patrick
Petersburg City
Pittsylvania
Poquoson City
Portsmouth City
Powhatan
Prince Edward
Prince George
Prince William
Pulaski
Radford City
Rappahannock
Richmond City
Richmond County
Roanoke
Roanoke City
Rockbridge
Rockingham
Russell
Salem City
Scott
Shenandoah
Smyth
Southampton
Spotsylvania
Stafford
Staunton
Suffolk City
Surry
Sussex
Tazewell
Virginia Beach City
Warren
Washington
Waynesboro
Westmoreland
Williamsburg
Winchester City
Wise
Wythe
York
Addison
Bennington
Caledonia

VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VT
VT
VT

51720
51135
51137
51139
51141
51730
51143
51735
51740
51145
51147
51149
51153
51155
51750
51157
51760
51159
51161
51770
51163
51165
51167
51775
51169
51171
51173
51175
51177
51179
51790
51800
51181
51183
51185
51810
51187
51191
51820
51193
51830
51840
51195
51197
51199
50001
50003
4.80
4.80
4.50
4.30
5.20
5.20
5.20
5.20
5.20
4.80
4.80
5.20
4.50
4.80
4.80
4.50
4.80
4.80
4.80
4.80
4.50
4.30
4.80
4.80
4.80
4.30
5.20
5.20
4.50
4.50
4.30
5.20
5.20
5.20
4.80
5.20
4.30
5.20
4.30
4.80
5.20
4.30
4.80
5.20
5.20
4.30
4.50
4.30

Chittenden
Essex
Franklin
Grand Isle
Lamoille
Orange
Orleans
Rutland
Washington
Windham
Windsor
Adams
Asotin
Benton
Chelan
Clallam
Clark
Columbia
Cowlitz
Douglas
Ferry
Franklin
Garfield
Grant
Grays Harbor
Island
Jefferson
King
Kitsap
Kittitas
Klickitat
Lewis
Lincoln
Mason
Okanogan
Pacific
Pend Oreille
Pierce
San Juan
Skagit
Skamania
Snohomish
Spokane
Stevens
Thurston
Wahkiakum
Walla Walla
Whatcom

VT
VT
VT
VT
VT
VT
VT
VT
VT
VT
VT
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA

50007
50009
50011
50013
50015
50017
50019
50021
50023
50025
50027
53001
53003
53005
53007
53009
53011
53013
53015
53017
53019
53021
53023
53025
53027
53029
53031
53033
53035
53037
53039
53041
53043
53045
53047
53049
53051
53053
53055
53057
53059
53061
53063
53065
53067
53069
53071
4.30
4.20
4.20
4.20
4.30
4.30
4.20
4.30
4.30
4.50
4.50
2.20
2.20
2.20
2.40
2.40
2.70
2.20
2.40
2.40
2.40
2.20
2.20
2.20
2.40
2.40
2.40
2.70
2.40
2.40
2.20
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.20
2.40

Whitman
Yakima
Adams
Ashland
Barron
Bayfield
Brown
Buffalo
Burnett
Calumet
Chippewa
Clark
Columbia
Crawford
Dane
Dodge
Door
Douglas
Dunn
Eau Claire
Florence
Fond du Lac
Forest
Grant
Green
Green Lake
Iowa
Iron
Jackson
Jefferson
Juneau
Kenosha
Kewaunee
La Crosse
Lafayette
Langlade
Lincoln
Manitowoc
Marathon
Marinette
Marquette
Menominee
Milwaukee
Monroe
Oconto
Oneida
Outagamie
Ozaukee

WA
WA
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI

53075
53077
55001
55003
55005
55007
55009
55011
55013
55015
55017
55019
55021
55023
55025
55027
55029
55031
55033
55035
55037
55039
55041
55043
55045
55047
55049
55051
55053
55055
55057
55059
55061
55063
55065
55067
55069
55071
55073
55075
55077
55078
55079
55081
55083
55085
55087
2.20
2.20
2.90
2.80
2.80
2.80
2.90
2.80
2.80
2.90
2.80
2.80
2.90
2.90
2.90
2.90
2.90
2.80
2.80
2.80
2.80
2.90
2.80
2.90
2.90
2.90
2.90
2.80
2.80
2.90
2.90
3.10
2.90
2.90
2.90
2.90
2.80
2.90
2.90
2.90
2.90
2.90
3.10
2.90
2.90
2.80
2.90
3.10

Pepin
Pierce
Polk
Portage
Price
Racine
Richland
Rock
Rusk
Sauk
Sawyer
Shawano
Sheboygan
St. Croix
Taylor
Trempealeau
Vernon
Vilas
Walworth
Washburn
Washington
Waukesha
Waupaca
Waushara
Winnebago
Wood
Barbour
Berkeley
Boone
Braxton
Brooke
Cabell
Calhoun
Clay
Doddridge
Fayette
Gilmer
Grant
Greenbrier
Hampshire
Hancock
Hardy
Harrison
Jackson
Jefferson
Kanawha
Lewis
Lincoln

WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WI
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV

55091
55093
55095
55097
55099
55101
55103
55105
55107
55111
55113
55115
55117
55109
55119
55121
55123
55125
55127
55129
55131
55133
55135
55137
55139
55141
54001
54003
54005
54007
54009
54011
54013
54015
54017
54019
54021
54023
54025
54027
54029
54031
54033
54035
54037
54039
54041
2.80
2.80
2.80
2.90
2.80
3.10
2.90
2.90
2.80
2.90
2.80
2.90
2.90
2.80
2.80
2.80
2.90
2.80
3.10
2.80
2.90
2.90
2.90
2.90
2.90
2.90
4.30
4.30
4.50
4.30
4.00
4.50
4.30
4.50
4.30
4.50
4.30
4.30
4.50
4.30
4.00
4.30
4.30
4.30
4.30
4.50
4.30
4.50

Logan
Marion
Marshall
Mason
McDowell
Mercer
Mineral
Mingo
Monongalia
Monroe
Morgan
Nicholas
Ohio
Pendleton
Pleasants
Pocahontas
Preston
Putnam
Raleigh
Randolph
Ritchie
Roane
Summers
Taylor
Tucker
Tyler
Upshur
Wayne
Webster
Wetzel
Wirt
Wood
Wyoming
Albany
Big Horn
Campbell
Carbon
Converse
Crook
Fremont
Goshen
Hot Springs
Johnson
Laramie
Lincoln
Natrona
Niobrara
Park

WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WV
WY
WY
WY
WY
WY
WY
WY
WY
WY
WY
WY
WY
WY
WY
WY

54045
54049
54051
54053
54047
54055
54057
54059
54061
54063
54065
54067
54069
54071
54073
54075
54077
54079
54081
54083
54085
54087
54089
54091
54093
54095
54097
54099
54101
54103
54105
54107
54109
56001
56003
56005
56007
56009
56011
56013
56015
56017
56019
56021
56023
56025
56027
4.50
4.00
4.00
4.30
4.80
4.80
4.10
4.50
4.10
4.80
4.30
4.50
4.00
4.30
4.00
4.50
4.10
4.50
4.50
4.30
4.30
4.30
4.80
4.30
4.30
4.00
4.30
4.50
4.50
4.00
4.30
4.00
4.80
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.50
2.20
2.40
2.40
2.20

Platte
Sheridan
Sublette
Sweetwater
Teton
Uinta
Washakie
Weston

WY
WY
WY
WY
WY
WY
WY
WY

56031
56033
56035
56037
56039
56041
56043
2.40
2.40
2.20
2.40
2.20
2.20
2.40
2.40

5. Amend § 1000.76 by removing the words “and § 1135.11 of this chapter”
wherever they appear and by revising and republishing paragraphs (a)(2) through (4) and
paragraph (c) to read as follows:
§ 1000.76 Payments by a handler operating a partially regulated distributing plant.
*****
(a) * * *
(2) For orders with multiple component pricing, compute a Class I differential
price by subtracting Class III price from the current month's applicable Class I price.
Multiply the pounds remaining after the computation in paragraph (a)(1)(iii) of this
section by the amount by which the Class I differential price exceeds the producer price
differential, both prices to be applicable at the location of the partially regulated
distributing plant except that neither the adjusted Class I differential price nor the
adjusted producer price differential shall be less than zero;
(3) For orders with skim milk and butterfat pricing, multiply the remaining
pounds by the amount by which the applicable Class I price exceeds the uniform price,
both prices to be applicable at the location of the partially regulated distributing plant
except that neither the adjusted Class I price nor the adjusted uniform price differential
shall be less than the lowest announced class price; and
(4) Unless the payment option described in paragraph (d) of this section is
selected, add the amount obtained from multiplying the pounds of labeled reconstituted
milk included in paragraph (a)(1)(iii) of this section by any positive difference between

the applicable Class I price at the location of the partially regulated distributing plant
(less $1.00 if the reconstituted milk is labeled as such) and the Class IV price.
*****
(c) The operator of a partially regulated distributing plant that is subject to
marketwide pooling of returns under a milk classification and pricing program that is
imposed under the authority of a State government shall pay on or before the 25th day
after the end of the month (except as provided in § 1000.90) to the market administrator
for the producer-settlement fund an amount computed as follows: after completing the
computations described in paragraphs (a)(1)(i) and (ii) of this section, determine the
value of the remaining pounds of fluid milk products disposed of as route disposition in
the marketing area by multiplying the hundredweight of such pounds by the amount, if
greater than zero, that remains after subtracting the State program's class prices
applicable to such products at the plant's location from the applicable Federal order Class
I price at the location of the plant.
*****
PART 1001 – MILK IN THE NORTHEAST MARKETING AREA
6. The authority citation for part 1001 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
7. Amend § 1001.60 by:
a. Revising the introductory paragraph;
b. Redesignating paragraph (i) as paragraph (j); and
c. Adding new paragraph (i).
The revision and addition read as follows:
§ 1001.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with

respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (i) of this section and subtracting from that
total amount the value computed in paragraph (j) of this section. Unless otherwise
specified, the skim milk, butterfat, and the combined pounds of skim milk and butterfat
referred to in this section shall result from the steps set forth in § 1000.44(a), (b), and (c)
of this chapter, respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim milk. Receipts
of nonfluid milk products that are distributed as labeled reconstituted milk for which
payments are made to the producer-settlement fund of another Federal order under §
1000.76(a)(4) or (d) of this chapter shall be excluded from pricing under this section.
*****
(i) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1005 – MILK IN THE APPLACHIAN MARKETING AREA
8. The authority citation for part 1005 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
9. Amend § 1005.51 by revising paragraph (a) and removing and reserving
paragraph (b) to read as follows:
§ 1005.51 Class I differential, adjustments to Class I prices, and Class I price.
(a) The Class I differential shall be the differential established for Mecklenburg
County, North Carolina, which is reported in § 1000.52 of this chapter. The Class I price
shall be the price computed pursuant to § 1000.50(a) of this chapter for Mecklenburg
County, North Carolina.

(b) [Reserved]
10. Amend § 1005.60 by:
a. Revising the introductory paragraph and paragraph (a);
b. Removing paragraph (g);
c. Redesignating paragraph (f) as paragraph (g); and
d. Adding new paragraph (f).
The revisions and addition read as follows:
§ 1005.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (f) of this section and subtracting from that
total amount the value computed in paragraph (g) of this section. Receipts of nonfluid
milk products that are distributed as labeled reconstituted milk for which payments are
made to the producer-settlement fund of another Federal order under § 1000.76(a)(4) or
(d) of this chapter shall be excluded from pricing under this section.
(a) Multiply the pounds of skim milk and butterfat in producer milk that were
classified in each class pursuant to § 1000.44(c) of this chapter by the applicable skim
milk and butterfat prices, and add the resulting amounts;
*****
(f) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1006 – MILK IN THE FLORIDA MARKETING AREA

11. The authority citation for part 1006 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
12. Amend § 1006.51 by revising paragraph (a), removing and reserving
paragraph (b), and removing paragraph (c) to read as follows:
§ 1006.51 Class I differential, adjustments to Class I prices, and Class I price.
(a) The Class I differential shall be the differential established for Hillsborough
County, Florida, which is reported in § 1000.52 of this chapter. The Class I price shall be
the price computed pursuant to § 1000.50(a) of this chapter for Hillsborough County,
Florida.
(b) [Reserved]
13. Amend § 1006.60 by:
a. Revising the introductory paragraph and paragraph (a);
b. Removing paragraphs (g) through (i);
c. Redesignating paragraph (f) as paragraph (g); and
d. Adding new paragraph (f).
The revisions and addition read as follows:
§ 1006.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (f) of this section and subtracting from that
total amount the value computed in paragraph (g) of this section. Receipts of nonfluid
milk products that are distributed as labeled reconstituted milk for which payments are
made to the producer-settlement fund of another Federal order under § 1000.76(a)(4) or
(d) of this chapter shall be excluded from pricing under this section.

(a) Multiply the pounds of skim milk and butterfat in producer milk that were
classified in each class pursuant to § 1000.44(c) of this chapter by the applicable skim
milk and butterfat prices, and add the resulting amounts;
*****
(f) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1007 – MILK IN THE SOUTHEAST MARKETING AREA
14. The authority citation for part 1007 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
15. Amend § 1007.51 by revising paragraph (a) and removing and reserving
paragraph (b) to read as follows:
§ 1007.51 Class I differential, adjustments to Class I prices, and Class I price.
(a) The Class I differential shall be the differential established for Fulton County,
Georgia, which is reported in § 1000.52 of this chapter. The Class I price shall be the
price computed pursuant to § 1000.50(a) of this chapter for Fulton County, Georgia.
(b) [Reserved]
16. Amend § 1007.60 by:
a. Revising the introductory paragraph and paragraph (a);
b. Removing paragraph (g);
c. Redesignating paragraph (f) as paragraph (g); and
d. Adding new paragraph (f).
The revisions and addition read as follows:
§ 1007.60 Handler’s value of milk.

For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (f) of this section and subtracting from that
total amount the value computed in paragraph (g) of this section. Receipts of nonfluid
milk products that are distributed as labeled reconstituted milk for which payments are
made to the producer-settlement fund of another Federal order under § 1000.76(a)(4) or
(d) of this chapter shall be excluded from pricing under this section.
(a) Multiply the pounds of skim milk and butterfat in producer milk that were
classified in each class pursuant to § 1000.44(c) of this chapter by the applicable skim
milk and butterfat prices, and add the resulting amounts;
*****
(f) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1030 – MILK IN THE UPPER MIDWEST MARKETING AREA
17. The authority citation for part 1030 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
18. Amend § 1030.60 by:
a. Revising the introductory paragraph;
b. Redesignating paragraphs (j) and (k) as paragraphs (k) and (l); and
c. Adding new paragraph (j).
The revision and addition read as follows:
§ 1030.60 Handler’s value of milk.

For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (j) of this section and subtracting from that
total amount the values computed in paragraphs (k) and (l) of this section. Unless
otherwise specified, the skim milk, butterfat, and the combined pounds of skim milk and
butterfat referred to in this section shall result from the steps set forth in § 1000.44(a),
(b), and (c) of this chapter, respectively, and the nonfat components of producer milk in
each class shall be based upon the proportion of such components in producer skim milk.
Receipts of nonfluid milk products that are distributed as labeled reconstituted milk for
which payments are made to the producer-settlement fund of another Federal order under
§ 1000.76(a)(4) or (d) of this chapter shall be excluded from pricing under this section.
*****
(j) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1032 – MILK IN THE CENTRAL MARKETING AREA
19. The authority citation for part 1032 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
20. Amend § 1032.60 by:
a. Revising the introductory paragraph;
b. Redesignating paragraph (j) as paragraph (k); and
c. Adding new paragraph (j).
The revision and addition read as follows:

§ 1032.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (j) of this section and subtracting from that
total amount the value computed in paragraph (k) of this section. Unless otherwise
specified, the skim milk, butterfat, and the combined pounds of skim milk and butterfat
referred to in this section shall result from the steps set forth in § 1000.44(a), (b), and (c)
of this chapter, respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim milk. Receipts
of nonfluid milk products that are distributed as labeled reconstituted milk for which
payments are made to the producer-settlement fund of another Federal order under §
1000.76(a)(4) or (d) of this chapter shall be excluded from pricing under this section.
*****
(j) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1033 – MILK IN THE MIDEAST MARKETING AREA
21. The authority citation for part 1033 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
22. Amend § 1033.60 by:
a. Revising the introductory paragraph;
b. Redesignating paragraph (j) as paragraph (k); and
c. Adding new paragraph (j).

The revision and addition read as follows:
§ 1033.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (j) of this section and subtracting from that
total amount the value computed in paragraph (k) of this section. Unless otherwise
specified, the skim milk, butterfat, and the combined pounds of skim milk and butterfat
referred to in this section shall result from the steps set forth in § 1000.44(a), (b), and (c)
of this chapter, respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim milk. Receipts
of nonfluid milk products that are distributed as labeled reconstituted milk for which
payments are made to the producer-settlement fund of another Federal order under §
1000.76(a)(4) or (d) of this chapter shall be excluded from pricing under this section.
*****
(j) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1051 – MILK IN THE CALIFORNIA MARKETING AREA
23. The authority citation for part 1051 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
24. Amend § 1051.60 by:
a. Revising the introductory paragraph;
b. Redesignating paragraph (i) as paragraph (j); and

c. Adding new paragraph (i).
The revision and addition read as follows:
§ 1051.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (i) of this section and subtracting from that
total amount the value computed in paragraph (j) of this section. Unless otherwise
specified, the skim milk, butterfat, and the combined pounds of skim milk and butterfat
referred to in this section shall result from the steps set forth in § 1000.44(a), (b), and (c)
of this chapter, respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim milk. Receipts
of nonfluid milk products that are distributed as labeled reconstituted milk for which
payments are made to the producer-settlement fund of another Federal order under §
1000.76(a)(4) or (d) of this chapter shall be excluded from pricing under this section.
*****
(i) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1124 – MILK IN THE PACIFIC NORTWEST MARKETING AREA
25. The authority citation for part 1124 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
26. Amend § 1124.60 by:
a. Revising the introductory paragraph;

b. Redesignating paragraph (i) as paragraph (j); and
c. Adding new paragraph (i).
The revision and addition read as follows:
§ 1124.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (i) of this section and subtracting from that
total amount the value computed in paragraph (j) of this section. Unless otherwise
specified, the skim milk, butterfat, and the combined pounds of skim milk and butterfat
referred to in this section shall result from the steps set forth in § 1000.44(a), (b), and (c)
of this chapter, respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim milk. Receipts
of nonfluid milk products that are distributed as labeled reconstituted milk for which
payments are made to the producer-settlement fund of another Federal order under §
1000.76(a)(4) or (d) of this chapter shall be excluded from pricing under this section.
*****
(i) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1126 – MILK IN THE SOUTHWEST MARKETING AREA
27. The authority citation for part 1126 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.
28. Amend § 1126.60 by:

a. Revising the introductory paragraph;
b. Redesignating paragraph (j) as paragraph (k); and
c. Adding new paragraph (j).
The revision and addition read as follows:
§ 1126.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (j) of this section and subtracting from that
total amount the value computed in paragraph (k) of this section. Unless otherwise
specified, the skim milk, butterfat, and the combined pounds of skim milk and butterfat
referred to in this section shall result from the steps set forth in § 1000.44(a), (b), and (c)
of this chapter, respectively, and the nonfat components of producer milk in each class
shall be based upon the proportion of such components in producer skim milk. Receipts
of nonfluid milk products that are distributed as labeled reconstituted milk for which
payments are made to the producer-settlement fund of another Federal order under §
1000.76(a)(4) or (d) of this chapter shall be excluded from pricing under this section.
*****
(j) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****
PART 1131 – MILK IN THE ARIZONA MARKETING AREA
29. The authority citation for part 1131 continues to read as follows:
Authority: 7 U.S.C. 601-674, and 7253.

30. Amend § 1131.60 by:
a. Revising the introductory paragraph;
b. Redesignating paragraph (f) as paragraph (g); and
c. Adding new paragraph (f).
The revision and addition read as follows:
§ 1131.60 Handler’s value of milk.
For the purpose of computing a handler's obligation for producer milk, the market
administrator shall determine for each month the value of milk of each handler with
respect to each of the handler's pool plants and of each handler described in § 1000.9(c)
of this chapter with respect to milk that was not received at a pool plant by adding the
amounts computed in paragraphs (a) through (f) of this section and subtracting from that
total amount the value computed in paragraph (g) of this section. Receipts of nonfluid
milk products that are distributed as labeled reconstituted milk for which payments are
made to the producer-settlement fund of another Federal order under § 1000.76(a)(4) or
(d) of this chapter shall be excluded from pricing under this section.
*****
(f) Compute an adjustment for eligible Class I producer milk pursuant to §
1000.43(e) of this chapter by multiplying the Class I skim milk price adjuster computed
in § 1000.50(r) of this chapter by the pounds of skim milk eligible in Class I.
*****

Erin Morris,
Associate Administrator,
Agricultural Marketing Service.

[FR Doc. 2024-14769 Filed: 7/12/2024 8:45 am; Publication Date: 7/15/2024]