PA State Milk Producers To Earn More

Governor Rendell Says Milk Marketing Board’s Decision Means Dairy Producers Will Get Fair Share of Premium Payments – Decision Could Increase Premium Payments to Producers by $6.7 Million

Harrisburg – Governor Edward G. Rendell hailed news that the Pennsylvania Milk Marketing Board will change its method of calculating over-order premium payment obligations on milk produced, processed and sold in the state.

The Governor said the June 2 decision—which comes amidst one of the longest, most trying economic environments for dairy producers in generations—would translate into approximately $6.7 million more being paid to the state’s milk producers.

“Pennsylvania’s 7,400 dairy farm families are hurting financially and this decision will help alleviate some of that pain by ensuring these producers receive what’s fair and what’s rightfully owed to them,” said Governor Rendell. “As one of the few states with the ability to affect pricing, Pennsylvania is taking decisive action to help its dairy producers.

“Together, we used every ounce of authority given to us by the state’s Milk Marketing Law to provide some relief to our dairy farmers during this unprecedented crisis.”

Under the Milk Marketing Board’s ruling, a milk processor who purchases milk from both Pennsylvania and out-of-state dairy farmers will be required to pay the entire over-order premium on the Pennsylvania milk. 

Under the existing system, the amount paid to producers is reduced by the ratio of milk purchased from Pennsylvania producers compared to the total purchase amount. For instance, if half of the milk a processor purchased is from Pennsylvania, the over-order premium obligation to those farmers is reduced by half.

Under the new calculation, the over-order premium would be paid on 100 percent of the Pennsylvania milk as long as the processor sold that much milk at wholesale in Pennsylvania. This is because the mandatory minimum price for every gallon of milk sold in Pennsylvania includes an amount to cover these payments, which is approximately $0.25 per gallon.

The decision was the result of a joint petition filed by Governor Rendell, Agriculture Secretary Russell C. Redding, and the Pennsylvania Milk Marketing Board staff following discussions on how the state could bolster the dairy industry during a period of historically low milk prices.

Beginning in September 2009, the three parties began discussing options to revise longstanding processes and procedures to ensure the state’s dairy farmers received their full share of the over-order premium. Two weeks after a Dec. 9, 2009, state Senate hearing focused on the dairy crisis, the Pennsylvania Milk Marketing Board staff identified three action items that, if completed, would increase the money being returned to dairy producers in Pennsylvania.

The most immediate option identified was to change the over-order premium allocation, leading to the petition that was filed on Dec. 30.

The Governor said the General Assembly could provide further relief to dairy farmers by acting on the remaining recommendations the Milk Marketing Board outlined to improve the financial stability of Pennsylvania’s dairy farms.

Those recommendations include two changes to the Milk Marketing Law in order to track milk that is produced and sold at retail in Pennsylvania, but that is processed or sold at wholesale out-of-state. Presently, the state cannot track such milk for the purpose of assessing the over-order premiums.

For more information about dairy production in Pennsylvania, visit www.centerfordairyexcellence.com.