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Federal Register / Vol. 86, No. 90 / Wednesday, May 12, 2021 / Proposed Rules
under the assumption that 50 percent of purchased replacement animals had been transitioned animals, or costs increase by $488,000 under the assumption that 25 percent of purchased replacement animals had been transitioned animals. In these cases, there are no transfers. If the price of organic dairy heifers rises to $2,500
and 25 percent of purchased
replacements are transitioned, our analysis finds that total costs are $732,000 reflecting 488 new organic replacement heifers purchased for $1,500 over the conventional price and transfers are $731,000 reflecting 1,462
previously purchased organic heifers purchased at price $500 higher.
If the price of organic dairy heifers rises 50 percent, and 50 percent of
purchased replacements are transitioned, our analysis finds that total costs would be $1,462,500 reflecting 975 new organic replacement heifers purchased for $1,500 over the conventional price and transfers would be $487,500 reflecting 975 previously purchased organic heifers purchased at price $500 higher. This information is presented in Table 4 below.

TABLE 4ESTIMATED COSTS UNDER ALTERNATIVE ASSUMPTIONS FOR PRICE RESPONSE AND THE QUANTITY OF
TRANSITIONED ANIMALS PURCHASED BY CERTIFIED ORGANIC OPERATIONS ANNUALLY
Assumptions regarding . . .

Estimated additional costs net of transfers
Estimated transfers
. . . Price response
. . . Transitioning heifers
The price of organic heifers remains at $2,000
The price of organic heifers remains at $2,000
The price of organic heifers rises from $2,000 to $2,500.
The price of organic heifers rises from $2,000 to $2,500.

25 percent of heifers are transitioning
50 percent of heifers are transitioning
25 percent of heifers are transitioning

$488,000
975,000
732,000

$0
0 731,000

50 percent of heifers are transitioning

1,462,500

487,500

If some of the sellers of the 975
additional organic heifers required under the 50 percent assumption or the 488 additional organic heifers required under the 25 percent assumption have costs to supplying these animals that are less than $2,500, then industry transfers would exceed the values stated in Table 4. Increased sales are expected to benefit operations that have more flexibility in capacity e.g., available pasture to accommodate raising organic replacement heifers for the organic market. Importantly, sales response across individual farms will likely be uneven and depend on site-specific factors such as the farms ability to access new buyers and increase organic pasture.
Differences in purchase patterns of milk cows and replacement heifers also vary by size in a way that affects the distribution of costs associated with the
proposed rule. Ten percent of operations with fewer than 50 cows reported purchasing milk cows, and the average number purchased was 6 head.
Five percent of operations with between 50 and 99 cows reported purchasing milk cows, and the average number purchased was 14 head. Three percent of operations with between 100 and 199
cows reported purchasing milk cows, and the average number purchased was 10 head. No operations with 200 or more cows reported purchasing milk cows.
The pattern is different for purchasing heifers. Eight percent of operations with fewer than 50 cows reported purchasing heifers, and the average number purchased was 7 head. Sixteen 16
percent of operations with between 50
and 99 cows reported purchasing heifers, and the average number purchased was 4 head. Ten 10 percent
of operations with between 100 and 199
cows reported purchasing heifers, and the average number purchased was 17
head. Seven 7 percent of operations with 200 or more cows reported purchasing heifers, and the average number purchased was 12 head. Based on a cost differences of $1,500 per head between transitioned replacement heifers and organic replacement heifers, and assuming that half of replacement heifers currently purchased are transitioned, the average dairy with fewer than 50 cows would pay an additional $382$510; dairies with between 50 and 99 cows would pay an additional $499$666; dairies with between 100 and 199 cows would pay an additional $1,316$1,755; and dairies with 200 or more cows would pay an additional $628$837. The costs by size of operation are summarized in Table 5.

TABLE 5COSTS BY SIZE OF OPERATION FOR PURCHASING ORGANIC HEIFERS
Size of operation
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Fewer than 50 cows Share of Operations
Percent of operations that purchased replacement heifers
Average number of replacement heifers purchased
Number of Farms
Average Cost Per Farm
Total cost for purchase of replacement heifers across size class
Cost per operation for operations purchasing replacements

The costs in Table 5 do not reflect the offsetting effect of transfers. For this reason, the sum of the total costs of replacing heifers across all size categories $2.41 million and $2.89
million roughly equals the sum costs
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43%
8%
6.68
1,114
$382$510
$425,849$567,798
$5,009$6,678

5099 Cows 34%
16%
4.06
879
$499$666
$438,939$585,252
$3,048$4,063

net of transfer and transfers in Table 4
$2.44 million and $2.92 million with minor discrepancies reflecting rounding differences.

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100199 Cows 13%
10%
17.22
324
$1,316$1,755
$426,377$568,502
$12,919$17,225

200 Or more cows 10%
7%
12.33
247
$628$837
$155,007$206,676
$9,247$12,330

Effects on Heifer-Raising Operations Organic dairy operations that continually source transitioned heifers would need to change their practices to meet the requirements of the proposed
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