Statutory authority for seasonal base plans such as the ones in effect in the Carolina and Southeast orders expires December 31, 1996. The Senate extended authority for such plans, but the House did not. The Conference Committee appointed to resolve differences in the two bills agreed on the House version. Congressman Gunderson, that great friend of the southern dairy industry, takes credit for the death of base plan authority.

What this means is that there will no longer be base provisions to encourage production in the fall when milk is short and to discourage production during the spring flush. Producers who have geared up to operate under the base rules with the expectations of a continuation of the plan have every right to gripe. However, note that to the extent the base plans have been effective, their absence will mean even higher blend prices in the fall and relatively lower utilization and blend prices in the spring. The loss of the plans may also create an incentive for milk not normally associated with the two orders to be pooled on them during the spring flush, further driving Class I utilization down during these months.

The loss of this government marketing tool means the industry must work diligently to come up with innovative schemes that help synchronize deliveries to expected demand in the best interest of producers. Some of this may be achieved within a given co-op--more effectives tools will probably require coordination among producer groups supplying these markets.

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1996 by Department of Agricultural and Applied Economics, Clemson University