The Milk
Check
TOM JURCHAK
County Agent
Milk Prices Follow Cheese
The sudden drop in cheese prices
in late' January finally caught up
with the Minnesota-Wisconsin
Price Series in February. Coupled
with falling butter prices it drove
the M-W down 43 cents below
January, the largest drop in one
month since December 1983.
Added to the 21-cent fall since it
peaked for the year at $11.91 in
November, it makes a total cut of
64 cents in three months.
With butter and cheese prices
hovering slightly below support
prices the first week of March, it
isn’t likely that the M-W will drop
much more before it bottoms out in
April or May. In fact, if
wholesalers start early to replace
inventories of butter and cheese
before the Spring flush we may see
little change.
In any case, enough’s enough
and 64 cents in three months is
certainly more than enough and all
of this will be reflected in your
milk check from January to April.
The peak in your Class I price of
„
Hj sb rRi ?8'
„ , Rt
$14.46 for January in Order 2 will
fall to $13.82 in April all because of
butter and cheese prices.
Without the benefit of an over
order pricing mechanism that
other Federal Order areas use and
that more nearly reflects the
supply-demand situation in
Eastern markets your prices will
fall with the dairy product prices in
the mid West. Of course your Class
II prices have already taken the 65
cent cut from $11.94 in November
to $11.29 in February and you’re
also losing money on your milk
check because the butter fat dif
ferential has dropped in four
months from 17.7 to 15.7 cents per
poind per hundred following the
butter prices.
Having said that, you won’t be
surprised to leam that the uniform
or blend price in Order 2 for
February was $12.42 or 34 cents
less than January. The big cut
came in the Class II price of $11.29
that showed the full impact of the
43 cent drop in the M-W last month.
From The Smallest Lawn Tractor
To The Largest Farm and
Industrial Tractor New or Used
See Lancaster Ford Tractor
For Quality Built
FINANCING
For Qualified Buyers of Farm Or Industrial
Tractors As Low As
4.5% A.P.R.
Terms of Contract Will Vary APR Rate
or
WAIVER
For Qualified Buyers of Farm Or
Industrial Tractors
NO INTEREST
NO PAYMENTS
Until Nov. 1,1987
Or
CASH
Rebates For Anyone As Much As
$16,000
Based On A New TW3S
FORD FIRST
For Qualified Lawn And Garden Buyers
7.5% A.P.R.
Jb'V 1 !
,*&£■
Ht HOC omp#ss
-
Order 2 Prices
Just Arrived!
3new^
Ford Diesel LGT
LOW APR FINANCING
LANCASTER FORD TRACTOR, INC.
Your Lanetstor Count/ Rolkblos
1655 Rohrerstown Rd. I Lancaster. P A
Flory Mill Exit off Rt 283
The Class I price was still up at
$14.43 because it takes two months
for the M-W to catch up to the Class
I price. So, whether or not the M-W
drops further this Spring you’ll still
be getting lower prices in your
milk check because of the lower
Class prices and lower Class I
utilization as more milk comes to
market in the Spring months
starting in March.
Speaking of Class I utilization, it
dropped 2.5 percent in February
below January in Order 2 and
contributed to your lower blend
price. On a daily basis Class I sales
fell six percent in February below
January and five percent below
last February. This was surprising
because all during 1986 and up to
January of this year you were
selling more fluid milk than the
year before. Now suddenly it falls 5
percent.
The big change from a year ago
is the reported lower retail prices
in New York City that have been
linked to the market penetration
by out-of-state handlers. Of course,
there’s more to Order 2 sales than
those in New York City, but it was
hoped that the change would have
increased consumption or at least
maintained it. On the theory that
there’s a reason for everything,
hopefully there will be answers for
this.
IRS Helps DTP
Once again the Internal Revenue
Service is giving some relief to
farmers in the Dairy Termination
Program.
The IRS has decided to provide
another tax saving by allowing the
difference between the sale price
of the cows sold for beef and the
(717) 569-7063
average price of milk cows to be
treated as capital gains.
The average price for milk cows
will come from the monthly USDA
publication “Agricultural Prices”
which includes them by states in
their reports for January, April,
July and October. The price quoted
for Pennsylvania in April 1966 was
$865 a head; in July it was $840; in
October $B5O and in January 1967,
$BBO. If you sold cows in other
months use the price announced in
the most recent quotation before
the sale. The difference between
the beef price and the dairy cow
price is reported on IRS Form 4797
and taxed at the 40 percent capital
gains rate. This applies only to
cows held for two years or more.
The savings in taxes could be
significant depending on your sale
price so you may wish to file an
amended return for 1986 and save
some tax money but it will also
decrease your Social Security. If
your tax advisor needs more in
formation on this tell him to get the
regulations from the IRS Bulletin
1987-10 released March 9.
PSU Survey
Blair Smith and Jack Kirkland of
Penn State University are con
ducting a survey of the 418 farmers
in the state who are participating
in the Dairy Termination Program
to leam their reasons for getting in
the program and their future plans
for the use of their facilities. It’s a
mailed questionnaire that will be
received during March and April
so do your best to provide the in
formation requested and we’li
share the results with you.
Money Markets or *
Certificates of
Deposit coming
due? Where will
you Re-Invest ?
David W Hirneisen. CLU. ChFC \
Do you want to get a better interest rate ana
Not Have To Pay Current Income Tax on the
earnings 7 We have a Tax Deferred Annuity that
you should know more about and is currently
paying 8%
You may also want to know about a new
Universal Life Plan that currently earns 9.8%in
terest tax deferred
Call today and ask me Your financial security is
my full time concern
New York Life Insurance
124 S West Mam St P 0 Box 217
RCMA Organizes
Members of the Regional
Cooperative Marketing Agency
who are not members of another
milk marketing cooperative are
organizing by regions to elect
directors and delegates. Meetings
have been scheduled in New York
and New England from March 18
to April 2 to take this first step for
independent producers to par
ticipate in running RCMA.
Each of the 11 regions in that
area have been designated
geographically to represent a
uniform volume of milk and to
allow the election of a director for
the region and one delegate for
every 300 independent producers.
Delegates and directors from the
co-ops will be represented in the
same proportion. Here in Penn
sylvania five regions have been
designated and April 6 is the
meeting date for Region 12 which
includes 10 northeastern counties
and northern New Jersey.
The meeting will be held at 1
p.m. in the Department of
Agriculture building in
Tunkhannock. Meeting dates for
the other Pennsylvania regions are
April 7 for the nine north central
counties in Region 13; April 8 for
Region 17 that includes Lancaster
and York counties and Maryland;
April 9 for Region 14 in the
southcentral counties; Region 15
meets on April 13 for the central
Pennsylvania counties around
Sunbury and April 14 for Region 16
including the southeastern
counties and parts of Delaware
and southern New Jersey.
All producers who have signed
contracts with RCMA are invited
to attend the meetings and par
ticipate in the election of delegates
and a member of the board of
directors who will be responsible
for running the cooperative. That
includes determining the over
order premiums and distributing
them to the members. If you want
to participate in organizing this
new cooperative for over-order
pricing sign a contract before the
meeting date and attend the
meeting in your region.
RCMA Meeting
Set For Lancaster
LANCASTER Dairymen in
the Northeast are attempting to
form a bargaining agency known
as the Regional Cooperative
Marketing Agency for the purpose
of negotiating higher prices for the
milk they produce.
An information meeting,
scheduled for 7:30 p.m. Monday
March 23 at the Lancaster Farm
and Home Center, will discuss
over-order pricing and the
ramifications of supporting the
RCMA effort.
Representatives from RCMA
and local milk handlers will be
present, with an opportunity for
questions and answers. The
meeting will be conducted by the
Lancaster County Cooperative
Extension Service.
DAVID W. HIRNEISEN, CLU, ChFC
**
" ll;iS
m