C. Issue: Costs of Transporting Bulk Fluid Milk Products to Plants
Located Within the New England Region

    As made clear by comment received, and based on common knowledge,
the cost of transporting bulk fluid milk products is most significant
to the calculation of the cost of the delivered raw product to the
processing plant, because of the significant expense involved. It is
thus a critical input of the wholesale and, hence, the retail
price.\73\
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    \73\ The broader issues of impact on the wholesale and retail
markets are analyzed at the end of this finding section.
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    According to Wellington et al, ``[d]ue to its bulkiness, milk is
expensive to transport. Back haul opportunities to lower transportation
costs are also more limited with milk due to its sanitary standards and
large volume which moves on a daily basis.'' \74\
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    \74\ Wellington et al, 3/31/97 AC at 4.
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    According to the reported statistics, the regulated price itself
accounts for the transportation costs of raw fluid milk supplies.
Market Order #1 establishes a zone differential to account for this
transportation cost. This differential is established per cwt. in an
amount equal to 3.6 cents per ten miles transported. According to
Wellington et al, this rate has not changed since 1982.
    Market Order #1 uses zone 21 as the representative zone for farm
pricing. 7 CFR 1001.50(a). This zone is 210 miles from the Boston, or
city, zone. 7 CFR 1001.52(d). The cost of transportation from this
representative zone 21 to the city, zone 1, is 72 cents per cwt. 7 CFR
1001.52(g).
    Further, according to Wellington et al, a 1994 consolidation of
federal orders in the southern market established a rate of 3.9 cents/
cwt per ten miles transported. There is no explanation as to whether
the higher rate for the new southern order better reflects costs in the
Northeast, although that is the inference, or whether the higher cost
is attributable to market conditions in the south. The comment does
identify with specificity a higher cost of transportation for the Agri-
Mark cooperative, which represents approximately half of all New
England farmers. This cost is represented as 4 cents/cwt for each ten
miles transported.