USDA ANNOUNCES NEW CHEESE PRICE SERIES TO REPLACE NCE PRICE

                                              Release No. 0153.97

                                   Connie Crunkleton 202/720-8998
                                             ccrunkleton@usda.gov
                                       Jerry Redding 202/720-6959
                                                jredding@usda.gov


USDA ANNOUNCES NEW CHEESE PRICE SERIES TO REPLACE NCE PRICE

     WASHINGTON, May 6, 1997--Agriculture Secretary Dan Glickman today
announced that a new cheese price series will be used under the federal milk
marketing order program to calculate the Basic Formula Price (BFP) beginning
June 5.  Cheese prices reported on the National Cheese Exchange had been used
in the calculation of the BFP.  

     The new cheese price series, developed by USDA's National Agricultural
Statistics Service (NASS), is based on a weekly survey of cheese manufacturing
plants throughout the country.  NASS will release the first new cheese price
series May 9. 

     "The new cheese price series being factored into the Basic Formula Price
will significantly contribute to improved market information for the dairy
industry," Glickman said, "while allowing the current longer term process of
reforming federal milk marketing orders, including possible replacement of the
BFP, to continue without disruption."  

     NASS began collecting data in early March from cheddar cheese
manufacturing plants around the country, covering approximately 80-85 percent
of all bulk cheddar cheese sales. The May 9 report will include prices since
the survey began.  NASS intends to publish the new price series on a weekly
basis.  All bulk sales of 40-lb block cheddar cheese during a week are
included in the survey price, thus providing more information than the
National Cheese Exchange (NCE), in which trades only took place each Friday. 

     The BFP serves as the basis for establishing minimum prices for milk
under the federal milk marketing order program.  Because of concerns raised
about use of the NCE price in calculating the BFP, USDA sought public comments
on whether the NCE price should continue to be used or what alternative prices
could replace it.  USDA received nearly 800 comments during the comment
period, which closed March 31.  

     With the April 25 closing of the NCE, it became imperative that a
replacement cheese price be found.  A new cheese price was needed to calculate
the BFP for May, which will be announced June 5, and for milk marketing orders
that use cheese prices to derive a protein price under component pricing
plans.  

     Under existing federal milk marketing order regulations, if a price used
to administer the orders is no longer available, the secretary is authorized
to administratively adopt a suitable and equivalent replacement.  If a
suitable or equivalent cheese price were not available, the existing
regulatory authority could have led to the need to consider an immediate
replacement of the BFP.  With the availability of NASS' survey-based cheese
price series, this will not be necessary.  

     Replacement of the BFP is a longer term effort that will be accomplished
through the current reform process mandated by the 1996 farm bill.  USDA
recently released a preliminary BFP report, as part of the milk order
consolidation and reform process, that focuses on the longer term issues of
modifications or replacement for the BFP.  The Department is receiving
comments on that report now.
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