B. Issue: Prevailing Pay Prices Received by Dairy Farmers in the New
England Region

    The issue of the pay prices received by New England dairy farmers
is important because it bears directly on determining the necessary
level of any Compact Over-order Price Regulation that might be imposed.
    According to a review of the statistical data and the comment
received, prevailing farm prices are a function of two computations:
federally regulated uniform (or ``blend'') prices and net or
``mailbox'' price.
    Statistics published by the Market Order # 1 Administrator provide
comprehensive and complete data to address the first part of this
issue--the market structure of federal, minimum, price regulation.
These statistics are compiled by the Market Administrator as part of
the regulation of the federal order, by law, and are published monthly,
annually, and in ten-year compilation form. See 7 C.F.R.
Sec. 100.3(c)(4), (9). They serve as the common basis for all New
England regional dairy marketing analysis and, together with similar
statistics supplied for other regions, form the basis for national
analysis.\55\
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    \55\ submitted for reference by De Geus and Gilmeister, 3/3/97
AC.
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    These statistics report the precise minimum uniform or ``blend''
prices paid to dairy farmers under federal regulation. According to the
statistics, these prices are announced and paid monthly, using one
hundred pounds (cwt) of milk as the unit of measure.
    General managers and economists employed by cooperatives of dairy
farmers which operate in the region described in comprehensive detail
the integration of market forces at work in the regulated marketplace.
According to these commenters, farmers receive from the marketplace a
``mailbox'' or net pay price, which accounts for a variety of market
payments received and costs incurred for the sale of the milk they
produce. \56\
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    \56\ According to Wellington et al, (AC 3/31/97) and pursuant to
federal Market Order # 1, the cost of transporting the bulk fluid
milk from the farm to the processing plant is a key cost to farmers
which reduces the prevailing farm price. This issue is discussed in
more detail in the next finding section.
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    The following chart illustrates these two price computations of
prevailing pay prices of the region's dairy farmers.

[[Page 23038]]



                                                                           Class I, Blend and Mailbox Prices 1995-1996                                                                         
                                                                                            [Per CWT]                                                                                          
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                                                              Jan.       Feb.       Mar.       Apr.       May        June        July       Aug.       Sept.       Oct.        Nov.       Dec. 
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                                                                                              1995                                                                                             
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Class I..................................................      15.10      14.62      14.59      15.03      15.13       14.4       14.36       14.66      14.47       14.79      15.32      15.85
Blend....................................................      13.12      13.13      13.25      13.19      13.27       12.84      12.83       13.24      13.32       13.7       14.24      14.43
Mail box.................................................      11.83      11.86      11.98      11.93      11.92       11.39      11.35       11.71      11.88       12.42      13.14      13.20
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                                                                                              1996                                                                                             
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Class I..................................................      16.11      16.15      15.97      15.83      15.94       16.33      17.01       17.16      17.73       18.18      18.61      17.37
Blend....................................................      13.79      13.63      13.55      13.53      13.84       14.53      15.25       15.48      15.96       16.04      15.65      14.37
Mail box.................................................      13.38      13.23      13.14      13.08      13.49       14.08      14.77       15         15.55       15.83      15.37      14.12
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[[Page 23039]]