Dairy Industry’s ROSEMONT, 111. Because of milk’s nutritional importance to American citizens and its perishability and fluctuations in supply and demand, it has become the most regulated of farm com modities. To ensure an adequate supply of fresh milk, the govern-- ment has three dairy programs: federal milk marketing orders, the minimum price support program, and import restrictions.'' Despite depressions, wars, changing administrations and -constant court challenges, the milk marketing orders have operated successfully for more than 40 years, reports the United Dairy Industry Assn.’s house publication. From this Corner. Milk marketing agreements under the Agricultural Adjustment Act of 1933 evolved into the first marketing order in 1936 in the St. Louis market. A milk marketing order establishes mimmum pnces milk buyers must pay for milk purchased from dairy farmers. These prices have to be high enough that dairy farmers can afford to produce sufficient milk for the public. And an order also spells out terms and conditions for transactions so they're known in advance by both seller and buyer. 8y'1962, the number of federal milk orders has risen to 83. Today, because of con solidations, that' number has declined to 47. During 1980, more' than 117,500< dairy delivered milk to handlers regulated under federal milk or ders. These producers accounted Drainage Pays High Returns COMPARE Typical 4 Investment Annual Return Even with the conservative fig :; 2 iS* ures shown here, it’s obvious that Farm Land tin land drainage should top farmers’ Bonds 6.1% lists of investment priorities. € COCALICO EQUIP. CO. VSSf DRAINAGE & EXCAVATING \ tc V RD #3, DENVER, PA 17517 PH:2IS-267-3808 \/ for two-thirds of all the milk marketed in the United States. Currently, 83 percent of the nation’s milk supply is fluid grade and about 44 percent of all milk sold is used in fluid products. From This Corner notes that farmers produce more fluid grade milk than is consumed in fluid form because of fluctuations in supply and demand. The Grade A fluid milk in excess of what is needed for and for “soft” products is ' channeled into production of butter and cheese that can be stored. The publication also points out that all federal orders classify milk on the basis of its use. One classification includes milk used for fluid products; the other in cludes milk used for manufactured products. In all federal orders, milk used as fluid milk is Class I. Many orders defme milk used for perishable (soft) products such as cottage cheese, yogurt and sour cream as Class IT. Cheese, butter and dry milk products go into Class HI. Federal orders also provide for pooling and payment of a uniform or blend price to dairy farmers. This blend price is determined by classifying all milk according to its use. Then the Class I, II or 111 prices are applied to the volume pf milk in each class. The proceeds from all this milk ard totaled and this money is the pool to be divided. farmers Each producer in that market area is paid a share of that pool. This share represents a weighted ★ We Stock Heavy Grade Tubing which Exceeds SCS Specifications. In sizes 4", 6", 8", 10" and 12". 'T ■* < ★ Also Pipe And Fittings For Tile Outlet Terraces. publication average of the class prices applied to the amount of milk - each producers "has contributed. This blend price is sometimes referred to as the farm price. What about the handlers or milk buyers? Handlers have to pay more for milk used in Class I than for milk used in Class II or 111. And the average price they pay also depends on how they use the milk. So handlers pay more than others, yet all handlers must pay the farmer the same amount. This variance is corrected by „an equalization fund that redistributes money to handlers who owe less than they paid for milk. How are milk prices paid to dairy fanners determined? Prices paid by milk companies to dairy farmers for milk to be bottled (Class I) increase as the distance increases from Minnesota and Wisconsin. These states are the nation’s center of milk surplus relative to local demand. Milk can be shipped anywhere from Min nesota or Wisconsin by paying transportation costs. Therefore, Class I prices thrbughout most of the country tend to approximate Minnesota and Wisconsin Class I prices, plus transportation costs. There is no federal order in California where milk supplies are adequate for local bottling needs. ' Under the federal milk order program, prices are established in the various markets by formula pricing, the basic formula price for a given montb-is the Minnesota- Wisconsin manufacturing milk NOW AVAILABLE 15" & 18" Tubing explains milk orders price that reflects supply and demand conditions in the entire dairy industry. This price is for Grade B milk that hasn’t been quality inspected for use in the bottle. Farmers are paid a higher price to produce'Grade A milk (quality-inspected for use in the bottle) because of additional costs in producing it. The pricing for mula provides for a two-month lag. So by watching the minimum Class I price and the Minnesota- Wisconsin price, the minimum Class I price in that specific order can be determined 60 days in advance.^ Do milk marketing orders stabilize the milk market? From - This Corner states “yes” em phatically. Prices established under federal orders are stable. They reflect supply-demand situations and changes in one order’s prices would be made in the context of a system of prices of all 47 markets. But federal orders do not control C' phosil • Makes A Balanced Feed program • Makes Silage More Palatable • Preserves Corn Silage • Has No Urea • Reduces Feed Cost • Makes Farmers Money • Makes Maximum Efficiency of Corn Crop .Lancaster Farming, Saturday, June 13,1981—A31 STEERS AW) MILK COWS LIKE PRO-SH. TREATED SILAS AND SO DO GET IDE FULL STORY FROM YOUR PRO-SB. DEALER MARTIN’S AG SERVICE c/oJohn Z. Martin RDI, Box 716, New Holland. PA 17557 717-354-4996 or 354-5848 or determine the use of milk. Processors do that based on an ticipated orders from their customers. And these orders do not set the prices consumers pay for milk and dairy products at retail outlets. Retail prices for dairy foods are subject to transportation and distribution costs plus the competitive situation in each market. From This Conner emphasizes that marketing orders do not regulate producers. They came into being only with the support of producers and can be amended or changed only if the amended order is approved by producers. Ad ditionally, the law requires the Secretary of Agriculture to ter minate an order if more than one half the producers involved request it. Today and tomorrow the federal order program must continue to be flexible so that changes can easily be made to meet changing con ditions in the marketplace. Silage Activator THEIR OWNERS Because It: