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Federal Register / Vol. 86, No. 167 / Wednesday, September 1, 2021 / Rules and Regulations
Class IV value assumed the lowest classified value. This analysis projected 2021 class prices based on USDAs March 2021 World Supply and Demand Estimates WASDE, using the FMMO
price formulas. Under those assumptions, AMS estimates the program could expend between $52.1
million and $68.7 million annually.
Furthermore, eligible dairy product donations made under the MDRP are eligible to receive a supplemental reimbursement for donations made starting on January 1, 2020, onward.
Supplemental reimbursement is calculated at the difference between the DDP and MDRP reimbursement values.
The net value of these retroactive reimbursements is estimated at $0.5
million, assuming the highest FMMO
minimum Class I value at the time the milk for the donation was purchased.

Total 2021 U.S. milk production was estimated to be 227.3 billion pounds WASDE, March 2021. As described above, AMS estimates that 273.2 million pounds 0.12 percent of excess milk additional supply would be available to be processed and donated through the DDP. Consequently, AMS does not anticipate this small additional processing volume will impact milk prices. It is likely there will be instances where dairy processors already donating dairy products to non-profit feeding organizations become eligible for reimbursement through DDP. However, those donations are not new production volume to be priced. That is, they would represent dairy products already processed and priced accordingly somewhere in the dairy supply chain.
Furthermore, the DDP does not intend to reimburse for the full cost of processing and delivering donated dairy
products but rather encourages excess milk to be used and not wasted.
This program is expected to have a negligible impact on retail dairy product sales. Typically, populations that receive dairy products from non-profit feeding organizations do so when they cannot buy dairy products at retail outlets. Additionally, the DDP
reimbursement rate does not cover all processing and transportation costs;
therefore, it would not be a financially prudent decision to divert milk from retail outlets to donations. The following table provides examples of costs included and excluded from reimbursement under the DDP. This is not an all-inclusive listing but is intended to demonstrate how dairy product donations through this program are not expected to be a substitute for retail dairy product sales.

TABLE 2EXAMPLES OF COSTS INCLUDED AND EXCLUDED
Cost factor
Includes
Does NOT Include
Input

Minimum classified price of milk used in the donated eligible dairy product.

Manufacturing

Applicable FMMO manufacturing make allowance, representative of the following costs:
Processing Labor
Utilities
Non-Labor
General and Administrative.
Packaging into a commodity volume.
Fuel: Shortest hard surface mileage monthly diesel price 6.1 miles per gallon.

Any contractually obligated monies, over the minimum classified value, due to producers.
Assessments for promotion and research programs, if applicable.
Additional ingredient costs i.e., fruit for fruit-flavored yogurt.
Storage and inventory costs.
Costs of participating in the mandatory Dairy Product Mandatory Reporting Program.

Transportation

In addition, DDP is a voluntary program and reimbursements occur after donations are made. Donations made through this program will be done privately without donation volumes being announced in advance. Therefore, AMS has determined the impact on dairy markets will not be as significant on the markets when compared to making advanced announcements on expected donation volume.

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Regulatory Flexibility Analysis Pursuant to the requirements set forth in the Regulatory Flexibility Act 5
U.S.C. 601612, AMS has considered the economic impact of the action on small entities. Accordingly, AMS has prepared this Regulatory Flexibility Analysis.
The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions so that small businesses will not be unduly or disproportionately burdened. Small dairy farms are defined by the Small
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Vehicle maintenance.
Vehicle depreciation.
Licensing and other administrative fees.

Business Administration SBA 13 CFR
121.601 as those businesses having annual gross receipts of less than $750,000. The SBAs definition of small agricultural service firms, which includes dairy processors, varies based on the type of dairy product manufactured. Small dairy processors are defined as having between 750 and 1,250 or fewer employees, depending on the product made.
According to the 2017 USDA National Agricultural Statistics Service NASS
Census Report, there were 39,303 farms with milk sales. AMS estimates that 36,158 farms, or 92 percent, would be considered small businesses. Dairy farmers of all sizes may benefit from the program as it will encourage donations of dairy products, which contain milk purchased from them. DDP is designed to reduce food waste by providing alternative outlets for milk to be utilized in donated products instead of being dumped due to oversupply. Often, milk is dumped from smaller dairy farms that
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are more costly to service because their pickups may be less than a full tanker load and/or they may be located farther from major trucking routes. By providing cost reimbursement for donated products, the DDP incentivizes processors to pick up and process the milk into products for donation rather than having it dumped.
AMS estimates that approximately 3,000 plants manufacture dairy products in the United States, owned by approximately 1,500 entities. According to AMS calculations, about 10 percent are operated by dairy farmer cooperatives, while the remaining are independently owned. AMS believes 1,500 to be the universe of EDOs that could participate in the DDP. Of this universe of potential EDOs, 90 percent would be considered small businesses, based on total employee numbers.
Participating in the DDP will not unduly or disproportionately burden small dairy processing entities. All entities, regardless of size, can apply for
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