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(b) If any water contained in the milk (2) Skim milk and buttertat delivered from which a product is made is removed in bulk (not including consumer-type before the product is utilized or dis- packages or dispenser units) to and used posed of by the handler, the pounds of at commercial food establishments in the skim milk utilized or disposed of in such manufacture of processed foods for huproduct shall be considered to be a man consumption off the premises, bakquantity equivalent to the nonfat milk ery products or candy; solids contained in such product plus all (3) Skim milk and butterfat in fluid the water originally associated with such milk products disposed of for livestock solids.

feed; § 1064.41 Classes of utilization.

(4) Skim milk and butterfat dumped

after prior notification to and opportuSubject to the conditions set forth in

nity for verification by the market ad$$ 1064.43 and 1064.44, the classes of ministrator; utilization shall be as follows:

(5) In the weight of fortified fiuid (a) Class I milk. Class I milk shall be

milk products which is not classified as all skim milk and butterfat:

Class I pursuant to paragraph (a) (1) of (1) Disposed of in the form of a fluid

this section or as Class II pursuant to milk product except:

paragraph (b) of this section; (i) Fluid milk products classified as (6) Skim milk and butterfat in invenClass III pursuant to paragraph (c) (2), tory of fluid milk products at the end of (3), (4), and (5) of this section;

the month; (ii) Fluid milk products which are (7) Skim milk and butterfat, respecfortified with nonfat milk solids shall be tively, in shrinkage allocated pursuant to Class I in an amount equal only to the § 1064.42(b) (1) but not in excess of: weight of an equal volume of an un

(i) Two percent of producer milk, exfortified product of the same butterfat

cept that received from a handler purcontent; and

suant to § 1064.7(c) or diverted pursuant (iii) Sterilized cream disposed of in

to § 1064.15 to a nonpool plant; the same hermetically sealed container

(ii) Plus 1.5 percent of milk received in which received; and

in bulk tank lots from other pool plants; (2) Not accounted for as Class II or

(iii) Plus 1.5 percent of producer milk Class III milk.

received from a handler pursuant to (b) Class II milk. Class II milk shall

§ 1064.7(c) and receipts at a pool supply be all skim milk and butterfat used to

plant from a handler pursuant to produce or added to cottage cheese and

§ 1064.7(b), except that if the handler cottage cheese curd except cottage cheese

operating the pool plant files notice with and cottage cheese curd disposed of as

the market administrator that the purlivestock feed or dumped after prior noti- chase of such milk is on the basis of farm. fication to and opportunity for verifica

tests and weights determined by farm tion by the market administrator: Pro- bulk tank calibrations, the applicable vided, That Class II classification shall

percentage shall be 2 percent; not include the weight of water associ

(iv) Plus 1.5 percent of milk received ated with nonfat milk solids (as com

in bulk tank lots from other order plants, puted pursuant to § 1064.40) used to for

exclusive of the quantity for which Class tify fluid milk products used to produce II or Class III utilization was requested or added to cottage cheese or cottage by the operators of both plants; cheese curd.

(v) Plus 1.5 percent of milk in bulk (c) Class III milk. Class III milk tank lots from unregulated supply plants, shall be:

exclusive of the quantity for which Class (1) Skim milk and butterfat used to II or Class III utilization was requested produce:

by the handler; (i) Any product other than those (vi) Less 1.5 percent of milk in bulk products designated as Class I or Class II tank lots transferred from pool plants pursuant to paragraphs (a) and (b) of to other plants; and plus this section; and

(vii) In the case of milk received by (ii) Cottage cheese and cottage cheese a cooperative in its capacity as a handler curd which is disposed of as livestock pursuant to § 1064.7 (b) and (c) 0.5 perfeed or dumped after prior notification cent of such receipts from producers as to and opportunity for verification by the determined by farm tests and weights. market administrator;

measured by farm bulk tank callbra

tions, unless the exception in subparagraph (7) (iii) of this paragraph applies; and

(8) Skim milk and butterfat in shrinkage allocated pursuant to $ 1064.42(b) (2). § 1064.42 Shrinkage.

The market administrator shall allocate shrinkage over a handler's receipts as follows:

(a) Compute the total shrinkage of skim milk and butterfat, respectively, for each handler; and

(b) Prorate the resulting amounts between receipts of skim milk and butterfat in:

(1) The net quantity of producer milk and other milk specified in § 1064.41(c) (7); and

(2) Bulk fluid milk products in other source milk exclusive of that specified in § 1064.41(c) (7). & 1064.43 Responsibility of handlers

and reclassification of milk. (a) All skim milk and butterfat shall be Class I milk unless the handler who first receives such skim milk or butterfat can prove to the market administrator that such skim milk or butterfat should be classified otherwise.

(b) Any skim milk or butterfat shall be reclassified if verification by the market administrator discloses that the original classification was incorrect. § 1064.44 Transfers.

Skim milk or butterfat in the form of a fluid milk product shall be classified:

(a) At the utilization indicated by the operators of both plants, otherwise as Class I milk, if transferred from a pool plant to the pool plant of another handler, subject in either event to the following conditions:

(1) The skim milk or butterfat so assigned in any class shall be limited to the amount thereof remaining in such class in the transferee plant after computations pursuant to § 1064.46(a) (8) and the corresponding step of § 1064.46(b);

(2) If the transferor plant received during the month other source milk to be allocated pursuant to $ 1064.46 (a) (3) and the corresponding step of § 1064.46(b), the skim milk and butterfat so transferred shall be classified so as to allocate the least possible Class I utilization to such other source milk; and

(3) If the transferor handler received

during the month other source milk to be allocated pursuant to § 1064.46(a) (7) or (8) and the corresponding steps of § 1064.46(b), the skim milk and butterfat so transferred up to the total of such receipts shall not be classified as Class I milk to a greater extent than would be applicable to a like quantity of such other source milk received at the transferee plant, if such classification would change the classification of producer milk on the market or the classification of such other source milk received by the transferor handler during the month;

(b) As Class I milk if:

(1) Transferred from a pool plant in bulk or packaged form to a producerhandler;

(2) Transferred or diverted in bulk form from a pool plant to the plant of a handler pursuant to $ 1064.7(f), unless the handler pursuant to § 1064.7 (f) certifies that such milk is acquired for use in Class II or Class III products for research or educational purposes; and

(3) Transferred from a pool plant in packaged form to a nonpool plant that is is neither an other order plant, a producer-handler plant;

(c) As Class I milk, if transferred or diverted in bulk to a nonpool plant that is neither an other order plant, a producer-handler plant or the plant of a handler pursuant to § 1064.7(f), located more than 400 miles, by the shortest highway distance as determined by the market administrator, from the nearer of the City Halls of Kansas City, Mo., or Topeka, Kans., except that cream SO transferred may be classified as Class III, subject to such verification of alternate utilization as the market administrator may make, if notice is given to the market administrator prior to shipment and each container is labeled or tagged with a certificate by the transferor that such cream is sold as Grade C cream for manufacturing only;

(d) As Class I milk, if transferred or diverted in bulk to a nonpool plant that is neither an other order plant, a producer-handler plant, or the plant of a handler pursuant to s 1064.7(f), located not more than 400 miles, by the shortest highway distance as determined by the market administrator, from the nearer of the city halls of Kansas City, Mo., or Topeka, Kans.; unless the requirements of subparagraphs (1) and (2) of this paragraph are met, in which case the skim milk and butterfat so transferred

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or diverted shall be classified in accord- milk and butterfat so transferred or diance with the assignment resulting from verted shall be classified as Class II milk subparagraph (3) of this paragraph: to the extent such utilization is avail

(1) The transferring or diverting han- able and then to Class III milk; and dler claims classification pursuant to the (v) If any skim milk or butterfat is assignment set forth in subparagraph (3) transferred or diverted to a second nonof this paragraph in his report sub- pool plant under this paragraph the same mitted pursuant to § 1064.30 for the conditions of audit, classification, and month within which such transaction allocation shall apply; and occurred;

(e) As follows, if transferred to an (2) The operator of such nonpool other order plant in excess of receipts plant maintains books and records show- from such plant in the same category as ing the utilization of all skim milk and described in subparagraph (1), (2), or butterfat received at such plant which (3) of this paragraph: are made available together with the fa- (1) If transferred in packaged form, cilities of the plant, if requested by the classification shall be in the classes to market administrator for the purpose which allocated as a fluid milk product of verification; and

under the other order; (3) The skim milk and butterfat so (2) If transferred in bulk form, classitransferred or diverted shall be classified fication shall be in Class I if allocated as on the basis of the following assignment a fluid milk product to Class I under the of utilization at such nonpool plant in other order, in Class II if allocated to excess of receipts of packaged fluid milk Class II under an order that provides products from all pool plants and other three classes and in Class III if allocated order plants:

to Class III under the other order or if (i) Any Class I utilization disposed of allocated to Class II under an order that on routes in the marketing area shall be provides only two classes (including allofirst assigned to the skim milk and cation under the conditions set forth in butterfat in the fluid milk products so subparagraph (3) of this paragraph); transferred or diverted from pool plants, (3) If the operators of both the transnext pro rata to receipts from other or- feror and transferee plants so request in der plants and thereafter to receipts the reports of receipts and utilization from dairy farmers who the market ad- filed with their respective market administrator determines constitute regu- ministrators, transfers in bulk form shall lar sources of supply of Grade A milk be classified as Class II or Class III to the for such nonpool plant;

extent of the Class II or Class III utiliza(ii) Any Class I utilization disposed tion (or comparable utilization under of on routes in the marketing area of such other order) available for such asanother order issued pursuant to the signment pursuant to the allocation proAct shall be first assigned to receipts

visions of the transferee order; from plants fully regulated by such order,

(4) If information concerning the next pro rata to receipts from pool plants and other order plants not regulated by

classification to which allocated under such order and thereafter to receipts

the other order is not available to the from dairy farmers who the market ad

market administrator for purposes of ministrator determines constitute regular establishing classification pursuant to sources of supply for such nonpool plant; this paragraph, classification shall be as

(iii) Class I utilization in excess of Class I, subject to adjustment when such that assigned pursuant to subdivisions information is available; (i) and (ii) of this subparagraph shall (5) For purposes of this paragraph, if be assigned first to remaining receipts the transferee order provides for only from dairy farmers who the market ad- two classes of utilization, skim milk and ministrator determines constitute the butterfat allocated to a class consisting regular source of supply for such nonpool primarily of fluid milk products shall be plant and Class I utilization in excess of classified as Class I and skim milk and such receipts shall be assigned pro rata butterfat allocated to the other class to unassigned receipts at such nonpool shall be classified as Class III; and plant from all pool and other order (6) If the form in which any fluid plants;

milk product is transferred to an other (iv) To the extent that Class I utiliza- order plant is not defined as a fluid milk tion is not so assigned to it, the skim product under such other order, classification shall be in accordance with the (iii) Receipts of fluid milk products provisions of g 1064.41.

from a producer-handler, as defined [31 F.R. 11345, Aug. 27, 1966, as amended at under this or any other Federal order; 34 F.R. 18666, Nov. 22, 1969)

(iv) Receipts of fluid milk products NOTE: At 35 F.R. 18447, Dec. 4, 1970, the

from a handler pursuant to $ 1064.7(f); following provisions in § 1064.44 were sus

(v) Receipts of reconstituted skim pended for the month of January 1971: para

milk in filled milk from unregulated supgraph (c) in its entirety and in the intro- ply plants; and ductory text of paragraph (d) preceding (vi) Receipts of reconstituted skim subparagraph (1) the provision: ", located milk in filled milk from other order not more than 400 miles, by the shortest

plants which are regulated under an highway distance as determined by the mar

order providing for individual-handler ket administrator, from the nearer of the city halls of Kansas City, Missouri, or Topeka,

pooling, to the extent that reconstituted Kansas.'

skim milk is allocated to Class I at the

transferor plant. $ 1064.45 Computation of skim milk (4) Subtract, in the order specified and butterfat in each class.

below, from the pounds of skim milk For each month the market adminis- remaining in Class II milk or Class III trator shall correct mathematical and milk but not in excess of such quantity, other obvious errors in the report of the pounds of skim milk in each of the receipts and utilization submitted by following: each handler and shall compute the total

(i) Receipts of fluid milk products pounds of skim milk and butterfat, re- that were not subtracted pursuant to spectively, in each class for such handler. subparagraph (3) (v) of this paragraph

from an unregulated supply plant: § 1064.46 Allocation of skim milk and

(a) For which the handler requests butterfat classified.

Class II or Class III in series beginning After making the computations pur- with the requested class; or suant to $ 1064.45, the market adminis- (b) In series beginning with Class III, trator shall determine the classification which are in excess of the pounds of of producer milk for each handler as skim milk determined by subtracting follows:

from 125 percent of the pounds of skim (a) Skim milk shall be allocated in milk remaining in Class I milk, the sum the following manner:

of the pounds of skim milk in producer (1) Subtract from the total pounds milk, receipts from other pool plants, of skim milk in Class III, the pounds of and receipts in bulk from other order skim milk classified as Class III pursuant plants that were not subtracted pursuant to $ 1064.41(c) (7);

to subparagraph (3) (vi) of this para(2) Subtract from the remaining graph; and pounds of skim milk in each class, the (ii) Receipts of fluid milk products pounds of skim milk in fluid milk prod- that were not subtracted pursuant to ucts received in packaged form from subparagraph (3) (vi) of this paragraph other order plants, except that to be sub- in bulk from an other order plant in extracted pursuant to subparagraph (3) cess of similar transfers to such plant, if (vi) of this paragraph, as follows:

Class II or Class III was requested by (i) From Class III milk, the lesser of the operators of both plants in series the pounds remaining or 2 percent of beginning with the requested class; such receipts; and

(5) Subtract from the pounds of skim (ii) From Class I milk, the remainder milk remaining in each class, in series of such receipts;

beginning with Class III milk, the (3) Subtract, in the order specified pounds of skim milk in inventory of below, from the pounds of skim milk re- fluid milk products at the beginning of maining in each class, in series beginning the month; with Class III milk, the pounds of skim (6) Add to the remaining pounds of milk in each of the following:

skim milk in Class III milk, the pounds (i) Other source milk in a form other subtracted pursuant to subparagraph than that of a fluid milk product;

(1) of this paragraph; (ii) Receipts of fluid milk products, (7) Subtract from the pounds of skim except filled milk, for which Grade A milk remaining in each class pro rata certification is not established, and re- to such quantities, the pounds of skim ceipts of fluid milk products from milk in receipts of fluid milk products unidentified sources;

from unregulated supply plants which were not subtracted pursuant to sub- times the simple average of the daily paragraph (3) (v) or (4) (i) of this wholesale selling prices (using the midparagraph;

point of any price range as one price) (8) Subtract from the pounds of skim of Grade A (92-score) bulk creamery milk remaining in each class, in the butter per pound at Chicago, as reported following order, the pounds of skim milk by the Department for the month. The in receipts of fluid milk products in bulk basic formula price shall be rounded to from an other order plant, in excess in the nearest cent. For the purpose of each case of similar transfers to the computing Class I prices from the effecsame plant, that were not subtracted tive date hereof, the basic formula price pursuant to subparagraphs (3) (vi) or shall not be less than $4.33. (4) (ii) of this paragraph:

[31 F.R. 11345, Aug. 27, 1966, as amended (i) In series beginning with Class III, at 33 F.R. 6523, Apr. 30, 1968; 33 F.R. 20008, the pounds determined by multiplying Dec. 31, 1968) the pounds of such receipts by the larger

§ 1064.51 Class prices. of the percentage of estimated combined Class II and Class III utilization of skim Subject to the provisions of $$ 1064.52 milk announced for the month by the

and 1064.53, and rounded to the nearest market administrator pursuant to cent, the minimum class prices per $ 1064.22(m) or the percentage that hundredweight for the month shall be combined Class II and Class III utiliza- as follows: tion remaining is of the total remaining

(a) Class I milk. The Class I price shall utilization of the handler; and

be the basic formula price for the pre(ii) From Class I, the remaining

ceding month plus $1.54 and plus 20 pounds of such receipts;

cents. (9) Subtract from the pounds of skim

(b) Class II milk. The Class II price milk remaining in each class, the pounds

shall be the Class III price plus 15 cents of skim milk received in fluid milk prod

but shall not be less than the basic ucts from pool plants of other handlers formula price for the month; and according to the classification assigned

(c) Class III milk. The Class III price pursuant to § 1064.44(a); and

shall be the basic formula price for the (10) If the pounds of skim milk re- month, but not to exceed a price commaining exceed the pounds of skim milk puted as follows: in producer milk, subtract such excess

(1) Multiply by 4.2 the simple averfrom the pounds of skim milk remaining age, as computed by the market adminin each class in series beginning with

istrator, of the daily wholesale selling Class III. Any amount so subtracted prices (using the midpoint of any price shall be known as “overage”;

range as one price) of Grade AA (93(b) Butterfat shall be allocated in ac- score) bulk creamery butter per pound cordance with the procedure outlined for

at Chicago as reported by the Departskim milk in paragraph (a) of this sec

ment during the month: Provided, That tion; and

if no price is reported for Grade AA (93(c) Combine the amounts of skim

score) butter, the highest of the prices; milk and butterfat determined pursuant reported for Grade A (92-score) butter to paragraphs (a) and (b) of this sec- for that day shall be used; tion into one total for each class and

(2) Multiply by 8.2 the weighted averdetermine the weighted average butter- age of carlot prices per pound for nonfat fat content of producer milk in each

dry milk solids, spray process, for human class.

consumption, f.o.b. manufacturing plants (34 F.R. 18666, Nov. 22, 1969)

in the Chicago area, as published for the MINIMUM PRICES

period from the 26th day of the imme§ 1064.50 Basic formula price.

diately preceding month through the

25th day of the current month by the The basic formula price shall be the

Department; and average price per hundredweight for

(3) From the sum of the results armanufacturing grade milk, f.o.b. plants in Wisconsin and Minnesota, as reported

rived at under subparagraphs (1) and by the U.S. Department of Agriculture

(2) of this paragraph subtract 48 cents, for the month. Such price shall be ad- and round to the nearest cent. justed to a 3.5 percent butterfat basis by (31 F.R. 11345, Aug. 27, 1966, as amended at & butterfat differential rounded to the 33 F.R. 12821, Sept. 11, 1968; 33 F.R. 20008, nearest one-tenth cent computed at 0.12 Dec. 31, 1968]

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