USDA RELEASES THREE MILK ORDER REFORM REPORTS
                                                               
                                            Release No. 0077.97
                                                               
                                 Becky Unkenholz (202) 720-8998
                                            runkenholz@usda.gov
                                   Jerry Redding (202) 720-8998
                                              jredding@usda.gov


USDA RELEASES THREE MILK ORDER REFORM REPORTS

     WASHINGTON, March 7, 1997--The U.S. Department of Agriculture today
released three reports that address several issues relevant to the reform of
federal milk marketing orders.  The reports cover the Class I price structure,
classification of milk and identical federal order provisions.

     Lon Hatamiya, administrator of USDA's Agricultural Marketing Service
said the reports are only a starting point on these issues in the development
of a final product.  "We are releasing these reports to continue the dialogue
that has already begun regarding federal milk order reform.  From here, we
will gather additional comments and suggestions from the dairy industry,
producers and others in order to meet the deadline set by the Farm Bill for
completion of federal milk order consolidation," he said.

     The Class I price structure report presents six pricing options and sets
forth the estimated impacts on Class I differentials resulting from each of
the concepts.

     The classification of milk report suggests the reclassification of a few
products and suggests eliminating or modifying Class III-A pricing for milk
used to produce nonfat dry milk.  Milk used in fluid products is referred to
as Class I and is assigned the highest minimum price under federal milk
orders.  Milk used to make soft products such as ice cream is Class II.  Milk
used for manufactured products such as cheese, butter and nonfat dry milk is
classified as Class III and Class III-A.

     The identical provisions report outlines the basis for developing all
federal milk orders in a simplified, standard format.
     
     The 1996 Farm Bill mandated that the current 32 federal milk orders be
consolidated, or merged, into 10-14 orders.  As part of this process, USDA is
actively considering changes to the Class I price structure and the number of
classes for milk use.  In conjunction with Vice President Gore's National
Performance Review-Regulatory Reform Initiative, the simplification of federal
milk order provisions is also under review. 

     The 1996 Farm Bill allows USDA to use informal rulemaking to accomplish
the legislated mandate.  All reforms must be implemented by April 4, 1999.  In
response to this deadline, USDA developed a projected time line that would
complete consolidation of federal orders in early 1999.  USDA is working with
the public to develop a proposed rule that will be issued in late 1997.  A
final rule, which will be voted on by producers, will be issued in the fall of
1998.

     Industry input will be sought throughout the process.  Ideas regarding
the Class I price structure, classification of milk, identical provisions and
any other aspect of the program are requested by June 1.

     Written ideas should be submitted to Richard M. McKee, Director, Dairy
Division, AMS/USDA, Room 2971, South Building, P.O. Box 96456, Washington, DC
20090-6456, FAXed to (202) 720-690-3410 or E-mailed to
Milk_Order_Reform@usda.gov. 

     Copies of the three reports can be obtained by calling (202) 720-4392,
by contacting any Milk Marketing Administrator office or via the Internet at
http://www.usda.gov/ams/dairy.htm under the "Federal Milk Order Reform"
heading.

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