A36-Lancaster Farming, Saturday, December 16,1989 Record-Setting M-W Prices Mean Christmas Bonus For Area Dairymen BY KARL BERGER il forecasting is to dress it up in the year. Secretary of Agriculture , , Special Correspondent clothes that don’t fit”-about aver- Clayton Yeutter is still due to surplus purchases for the coming ducers Federation. FREDERICK,MD —On the a S e Prices over, say. a year, than decide by Jan. 1 whether the gov- year exceed the 5-bilhon-pound Coughlin, also noted, that the wings of a soaring price for manu- the individual peaks and valleys emment support price should be trigger level. He also was directed government dairy program is factoring milk in the upper Mid- wilhin that lime frame. Most eco- cut from its current level of $10.60 to reduce thc government’s purch- responsible for $9 million in sav west, area dairymen will enjoy nomists, he said, are guessing that for milk of average butterfat ase price for butter by at least 10.5 mgs under the budget reconciha sevcral months of the highest average milk prices in 1990 will at content. cents, to $l.lO a pound, regardless tion package. This will be prices in history. least equal those in 1989; he is of what he decides. achieved through an assessment of Having broken through the pie- among those who think they will Under the budget legislation latter directive means that dairy farmers’ milk checks that vious record in September, the be somewhat higher. recently passed by Congress, butterfat differential in federal will total eight cents a hundred- Minnesota-Wisconsin price series The milk market has de- Yeutter was given the discretion order pricing will be dropping, weight fw one month, although it - the benchmark price in the emphasized one issue that seemed not to reduce the price by 50 cents according to Ed Coughlin, an offi- could be levied m lesser amounts nationwide federal order system- very important at the beginning of even if estimates of government cial w,th the National Milk Pro- over several months. uncharted territory. It rose 77 ™ Farm Employers Must Withhold Income Taxes m October and another 82 cents in * •> November (even the monthly increases have set records), to a dizzying $14.69 a hundredweight In the Middle Atlantic federal order, that will translate into a $17.72 Class I price for January 1990. It also means November blend prices in Federal Order 4 will total $15.66 for base milk and $14.74 for excess milk -- and that doesn’t count an additional 60 or so cents as an over-order premium from the Middle Atlantic Coopera tive Milk Marketing Agency. One measure of how quickly prices have risen: the November excess price in Order 4 is just five cents lower than the Class I price for September. Another is that the government support price - still just $10.35 for 3.5-percent milk - no longer matters. A Dark Lining . . . The dark lining to this silver cloud -- if there is one - is that the prices paid by the consumer for dairy products have begun to shoot up as well. Dairy price gains have begun to outstrip those registered by foods in general and by the gov ernment’s Consumer Price Index. However, consumption continues to record gains, particularly for cheese. The astounding increases have dwarfed even the most starry-eyed forecasts. Early in the year, eco nomists were predicting a peak M-W price in die fall of perhaps $12.10. Since mid-summer, when the M-W first began its ascent, they’ve had to revise their fore casts upwards just about every month. Jim Fraher, the economist for Atlantic Dairy Cooperative, said he thinks the M-W may have final ly hit a peak in November and is predicting a December price at the current level. The major uncertain ty is what happens after that. The fall price gains in the M-W flow from a tight market in the upper Midwest is the result of both lagging production and continued gains in cheese consumption. In the Northeast, where production in some states is down as much as 6-7 percent compared to year-earlier levels, the market is even tighter, Fraher noted. That’s one reason that MACMMA has been able to continue to charge a $1.05 pre mium on Class I milk when the minimum federal order prices have been skyrocketing on their own. Spring Prices? However, the traditional turnar ound in the spring, when produc tion rises and consumption decreases, will surely reduce prices. The question is how much. Forecasters have become some what wary of making predictions at a time when traditional factors, such as the support price, no longer have much influence. One view is that price fluctuations will be much greater in the current envi ronment and that today’s record high prices will translate into cor respondingly low prices at some point in the "future. Fraher, for one, said he’s more comfortable “guessing” - “To call CAMP HILL (Cumberland Co.) — The Pennsylvania Far mers’ Association (PFA) is alert ing all farm employers that they must start withholding federal income taxes from their employ ees beginning on January Ist. Richard Denison, General Man ager of the PFA Members’ Ser vice Corp. and Manager of PFA’s Farm Management Services, said, “The new requirements were included in the federal budget reconciliation legislation approved by Congress last month. American Farm Bureau attempted to have the provision deleted from the final bill but was unsuccess ful.” PFA is a voluntary farm organi zation representing over 23,000 families in Pennsylvania. It is a part of the American Farm Bureau Federation which represents 3.8 million families nationwide. PFA’s Farm Management Ser vices is sending its clients instruc tions on how to deal with the with holding requirements. “Basically,” Denison said, “farm employers will need to get copies of three forms from the Internal Revenue Service (IRS). Circular E is a withholding table to determine the proper withhold ing rates for each employee. In addition, each employee will have to be provided with a iW-4, Employee Withholding Allow ance Certificate, and an 1-9, an Employment Eligibility Verifica tion, to fill out to verify their citi zenship and dependents. Employ ers must keep copies of both forms on file for their employees.” Denison added, “The rulp IRS is using is if a farmworker’s wages are subject to the Federal Insur ance Contributions Act (FICA) withholding, then cash wages are also subject to federal income tax withholding.” Copies of the three forms needed to comply with the with holding provisions. Circular E, W-4, and 1-9, can be obtained by -calling IRS toll-free at 1-800-424-FORM.
Significant historical Pennsylvania newspapers