Milk Advisory Council Meets
((Editor’* Note: This con*
cludea an article begun laat week
in Lancaater Farming.)
“Faced with the shortages ot
the past year, the government
had no choice but to lift import
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quotas” Doerring said. “The
import quotas by law must keep
government purchases within
reasonable bounds • that is, of
preventing imports from
displacing domestic milk and
Thanks
LANCASTER •
thereby aggravating the surplus
which also, under law, the
government is required to buy
up.”
Exports and imports of dairy
commodities usually don’t ex
ceed 2 percent of our own
production. Due to present
shortages, it is expected that this
year we will import considerably
more than 2 percent of our own
stock. Doerring said foreign
trade with dairy products is a
very minor part of the total
picture.
The Commodity Credit Cor
poration normally buys up
surplus dairy products at a cost
of seven hundred million dollars,
but this year it has been buying
almost nothing. Furthermore,
not only has surplus disappeared,
supplies have actually even gone
below commercial demands.
Hence, we started to import more
from abroad.
According to the USDA, the
worse shortage in dairy products
has been in non-fat dry milk, and
imports totalling 265 million
pounds have entered this country
since last December 30. In spite
of this, prices have not dropped
and the U. S. Tariff Commission
is currently investigating
feasibility of allowing more non
fat dry milk into the country. The
Department of Agriculture is
reportedly under pressure from
processors to let more dairy
products come in, from abroad
because they cannot meet
demands with the current
domestic production for ad
ditional imports.
Doerring claimed that he
cannot supply non-fat dry milk to
his customers. Pat Healy,
another conference speaker,
commented that he would like to
have USDA’s customers sent to
pennfie d coiporalion
711 Rohrerstown Rd.,
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YORK
Lancaster Farming. Saturday, November 17,1973 —
him. “I can supply their needs by
the carload, but at a price,” he
said. Healy repeatedly referred
to the need of discussing supply
along with price and not by itself
or, as he put it, “in a vacuum”.
Nearly all dairy import quotas
are controlled by Section 22 of the
Agriculture Adjustment Act as
ammended. Normally, the U. S.
has a milk surplus of about 5
billion pounds per year. Doerring
said this is a manageable sur
plus, and small compared to total
annual U. S. milk production of
120 billion pounds.
To those who may wonder why
milk pricing in the upper mid
west would be of concern to
dairymen in Pennsylvania, Graf
explained that the Minnesota
Wisconsin Series is important
because it reflects the price of
half the manufactured milk in the
country and it, in turn, sets the
class one prices in the rest of the
country. Directly and indirectly
MW Series has a big effect on
prices paid to dairymen in almost
any part of the country. Graf
pointed out that in 1972 MW
priced 4.2 billion dollars worth of
milk.
Graf expressed no optimism in
the future of the MW Series. In
fact, he feels it will end within 5
years. He reasons that most milk
will be classed Grade A in the
coming years. Class 1 and Class 2
may be combined and this would
result in the need for new pricing
formulas.
Class 1 utilization varies
around the country from a high of
95 percent in Northern Florida to
a low of 24 percent in Northern
Dakota. The national average for
Class 1 utilization is 60 percent.
There are approximately 14
billion dollars of Grade B milk in
the upper midwest says Graf.
We’re grateful to have been
a part of your harvest.
RED LION
The impact this milk would have
on the rest of the country if it
were suddenly converted to
Grade A could be disastrous-to
many farmers. The Chicago
market, for example, which is
currently using 41 percent of its
milk for Class i would suddenly
drop to 11 percent Class I
utilization. This would be a price
cut to the farmer of 37 cents per
hundred weight.
Graf acknowledges that an
even distribution of Grade B milk
would be desirable, but it would
hardly be satisfactory to the
many different marketing
organizations in this country.
He feels there are 5 possibilities
for making this ’very real
problem easier to overcome.
The first solution is for farmers
from the rest of the country to
form a “standby pool”. Such a
program whereby dairymen pool
money into the MW market in
order to persuade them to keep
their milk in their own area. This,
he concedes, would definitely not
work out as a long range
program. A second suggestion is
for the U.S. to have regional milk
marketing orders. While steps
are being taken in this direction,
Graf states, that we still have 56
orders in the country and it
should be down to about 5 or 6.
Another alternative would be to
have just one order. A fourth
solution would be to have a flat
Class 1 pricing system all across
the country. And the fifth method
would be to narrow the Class 1
differential or in other words,
raise Class 2 prices. What is most
important, according to Graf,- is
for all of us to be willing to share
the pie. Fighting among the
cooperatives will result iq con
siderable market pressures.
(Continued On Page 12)
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