[Code of Federal Regulations]
[Title 7, Volume 9]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1140.2]

[Page 194-195]
 
                          TITLE 7--AGRICULTURE
 
  CHAPTER X--AGRICULTURAL MARKETING SERVICE (Marketing Agreements and 
                 Orders; Milk) DEPARTMENT OF AGRICULTURE
 
PART 1140_DAIRY FORWARD PRICING PILOT PROGRAM--Table of Contents
 
               Subpart B_Rules Governing Forward Contracts
 
Sec. 1140.2  Rules governing forward contracts.


    (a) Any handler defined in Sec. Sec. 1000.9 and 1135.9 may enter 
into forward contracts with producers or cooperative associations for 
the handler's eligible milk. Milk under forward contract in compliance 
with these rules will be exempt from the minimum payment provisions that 
would apply to such milk pursuant to Sec. Sec. 1001.73, 1005.73, 
1006.73, 1007.73, 1030.73, 1032.73, 1033.73, 1124.73, 1126.73, 1131.73 
and 1135.73 for the period of time covered by the contract.
    (b) A forward contract with a producer or cooperative association 
participating for the first time in this pilot program may not exceed 12 
months. In no event shall a forward contract executed pursuant to this 
part extend beyond December 31, 2004.
    (c) Forward contracts must be signed and dated by the contracting 
handler and producer (or cooperative association) prior to the 1st day 
of the 1st month for which they are to be effective and must be in the 
possession of the market administrator by the 15th day of that month.\1\ 
The disclosure statement provided in Sec. 1140.1(e) must be signed on 
the same date as the contract by each producer entering into a forward 
contract under the pilot program, and this signed disclosure statement 
must be attached to each contract submitted to the market administrator.
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    \1\ Contracts that have been signed prior to the effective date of 
these rules are invalid under the pilot program.
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    (d) In the event that a handler's contract milk exceeds the 
handler's eligible milk for any month in which the specified contract 
price(s) are below the order's minimum prices, the handler must 
designate which producer milk shall not be contract milk. If the handler 
does not designate the suppliers of the over-contracted milk, the market 
administrator shall prorate the over-contracted milk to each producer 
and cooperative association having a forward contract with the handler.
    (e) Payments for milk covered by a forward contract must be made on 
or

[[Page 195]]

before the dates applicable to payments for milk that is not under 
forward contract under the respective Federal order.
    (f) Handlers participating in the pilot program will continue to be 
required to file all reports that are currently required under the 
respective marketing orders and will continue to be required to account 
to the pool for all milk they receive at their respective order's 
minimum class prices.
    (g) Nothing in this part shall impede the contractual arrangements 
that exist between a cooperative association and its members.