(X-Umcastar Famiihg, Sttur&y, jiiiy 18, VsBt ' The Milk Check TOM JURCHAK County Agent Over-Order Prices Set For the first time in 14 years dairymen in the Northeast will have an opportunity to get milk prices higher than the minimums required by Federal Milk Market ing Orders. After two years of efforts to organize a bargaining cooperative that provided membership volun tarily for all producers, the Board of Directors of the Regional Cooperative Marketing Agency meeting in Albany, N.Y. last Fri day announced their over-order prices for the fall months. Rather than set premiums above the Fed eral Order minimum prices, the Board announced the Class I price of $14.45 for Order 2 from Sep tember to December. This would be the price handlers would pay for Class I milk with 3.5 percent but terfat at the 201-210 mile zone. Differentials for butterfat and transportation that are now part of the Federal Order would still apply as well as any handler premiums for fall production, higher volume, quality or transportation. In other words, only the difference between the Federal Order Class I minimum price and $14.45 would go to RCMA to be distributed only to its members. The minimum Class I price for Order 2 in September will not be announced until the Minnesota- Wisconsin Price Series for July is available for Aug. 5. However, the August Class I price is $13.63 and the expected September price may be $13.75 which would provide a premium of 70 cents in the over order price for fluid milk. Even with the level price of $14.45 for four months, the over-order pre mium may vary from month to month depending on the effect of the price support cut in October and supply/demand conditions in the market. Comparable Class I prices will be determined for Order 4 when the directors of the Mid-Atlantic Cooperative Marketing Agency meet this week. The over-order price in that area will be different than Order 2 considering the Fed eral Order differences in Class 1 differentials: transportation credit and farm point pricing but the handler costs will be similar. The major difference is that only mem bers of the Order 4 or Pennmarva Cooperatives are part of the Mid- Atlantic Cooperative Marketing Agency so independent producers shipping to Order 4 handlers must be members of RCMA to share in the premiums. It’s A Start With a lot of new members sign ing contracts in recent months to meet the July 10 deadline set in May by the RCMA Board, they now have nearly 95 percent of the producers in the 11-state region. Considering the marketing condi tions in the Northeast, the Board felt it was time to start obtaining higher prices for its members. When the combined board of 75 dairymen including both coopera tive and independent farmer mem bers applied an economic formula that gave equal weight to the cost of production and the expected supply/demand conditions in the market, they arrived at the $14.45 over-order price for Order 2 fluid milk. This matches the Class I price of $14.46 in January which was the highest since April 1985 in Order 2. If that price could have been maintained all year through over order pricing eliminating the sea sonally lower prices in the spring the premium to RCMA members would have been 90 cents on Class I milk in June and July. Seasonally higher prices in the fall months will result in a lower premium if the over-order price Is maintained at $14.45 through December. Similarly, as the Class I price falls next spring to an expected $12.75 to $l3, the RCMA premium could increase to $1.45 or even $1.70 if the $14.45 Class I price can be maintained under the supply/demand condi tions that exist at that time. However, it does provide some protection from cuts in the support price and the uncertainty of nation al production levels that are creep ing up monthly toward last year’s record high. The Minnesota-Wisconsin Price bottomed out for the year at $ll in May and only got up to $11.07 in June. Most forecasters expect the M-W to peak in Novem ber around $ 11.70 which would be 20 cents less than last year. RCMA over-order prices could make up these differences for its members It takes performance to tame today’s tough forage jobs: Performance for tough silo-unloading jobs: Performance for tough manure pumping jobs: L f Agitator / Filler Pump Forage season the lime of year when you’ve got one eye on the weather and the other on your crop. Time everything just right and it’ll mean dollars in your pocket later-on. The payoff comes at feeding time, and that’s when you can count on Van Dale to deliver quality forage to your herd. Van Dale equipment performs when you need it to... Van Dale silo unloaders that really dig in, even at -20°F; Van Dale conveyors and feeders that let you feed more animals in less time; and Van Dale mixers that can actually improve the value of your ration. To tame tough forage jobs on your farm, team up with a tough partner: Van Dale! Performance for tough ration-building jobs: Performance for tough feed-distribution jobs: The NEW durable 330 belt system CONVEY - OR - FEEDER VERSATILE AND ADAPTABLE TO ANY FARM SITUATION **=*’"T == T“ = i VAN DALE Check Our Prices Before You Buy. when local marketing conditions warrant higher prices. Market Effect Some RCMA members may feel the Board did not go far enough in increasing Class I prices but they had to make a decision balancing the members need for higher prices against the market effect such changes. If they were a little conservative in their first efforts in determining what the market would bear they can be for given. It would be far worse to over estimate the situation than settle for something less the first time out. Also, there has to be some “test ing of the waters” to more accu rately determine the reaction of the market as well as developing the organizational procedures for col lecting and dispensing the pre miums including all the record keeping that goes with it. You have to leant to walk before you run. Besides, only the Board knows where that 95 percent of the pro ducers who are RCMA members ‘ M t* *» o .• are located. Or, more to the point, where are the 5 percent who chose not to participate. All things considered, the $14.45 should be an attainable goal since that was a price the market has already experienced this year back in January. It too high at that time to affect demand so it should work again. You sold 409 million pounds of Class I milk in Order 2 in January 1986 when the price was $13.44 and you sold 410 million pounds in January 1987 when the price was $14.46. The classic inelasticity of milk prices apparendy can handle a 7.6 percent increase in price without affecting sales and all RCMA is trying to do is maintain that price against seasonal variations and price support cuts. This may be even more important next year when the support price may drop 50 cents to $10.60 in January. If we assume that the September (Turn to Page C 3) Performance for tough manure-handling jobs: Performance for tough barn cleaning jobs: Van Dale, Inc. Box 337, Long Lake, MM 55356
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