USDA Proposes Milk Contract Program

March 2, 2000

USDA has proposed a pilot program for dairy farmers who want to market their milk through forward pricing contracts with proprietary handlers. It’s a voluntary program mandated by Congress and will operate through Dec. 31, 2004.

The pilot program will apply only to federally regulated milk used for manufacturing; fluid milk, or Class I, is not eligible for contracting under the program. A handler will be able to enter into forward contracts with dairy farmers and cooperative associations for any milk receipts that do not exceed the handler’s manufacturing uses of milk for the month.

Manufacturing uses include milk for cream products, yogurt, dry milk, butter and all types of cheese. For the volume of milk covered by forward contracts, a handler is exempt from paying minimum federal order prices to producers and cooperative associations; instead, prices as agreed to in the forward contract will be paid. The proposed rule was published in the March 1 Federal Register; comments are due no later than March 16.