Recent Price
(Continued from Pago A 1)
system.
The gain reflects several under
lying factors in the marketplace
that bode well for dairymen,
including increased sales of cheese
and non-fat dry milk powder,
according to industry analysts. The
strength of national prices will out
pace negatives such as an increase
in the current government
imposed assessment and possible
decreases in local over-order
charges, the analysts note.
The 48-cent M-W increase will
raise Class I prices by a corres
ponding amount in June in the reg
ion’s various federal orders; it will
raise Class II and 111 prices this
month. But its larger significance
may well be as a sign that farm
milk prices are headed for hefty
gains during the rest of the year.
Jim Fraher, the economist at
Atlantic Dairy Cooperative, is pre
dicting the M-W will climb another
$1.50 or so before peaking some
time this fall. If he’s right, the $l3
peak would be the highest M-W
price since the fall of 1990.
At this point, there’s little doubt
that 1992 will be better than a dis
mal 1991 was for dairymen. The
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April increase means that the
March M-W price of $10.98 a hun
dredweight will mark the low point
for the year. Last year, the M-W
bottomed out at 10.02 a
hundredweight
In its most recent Dairy Situa
tion and Outlook Report the
USDA projected that farm milk
prices across the country will aver
age $0.50 to $1 per hundredweight
higher this year than last year. Loc
ally, Fraher said, dairymen can
expect to realize $1 to $1.25 more
despite “downward pressure” on
the region’s various over-order
premiums.
Members of the Pennsylvania
Milk Marketing Board will meet
May 22 to consider what to do
about the current $1.30 over-order
charge it enforces, which is due to
expire June 30. Industry sources
say they expect the board will con
tinue the premium, although at a
lower rate.
Similarly, a state-imposed over
order premium in New Jersey of
SI.OS is due to end May 31. This
one is not likely to be extended,
according to the sources. Various
mechanisms will take its place,
however, although they may not
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generate as much money for far
mers. For instance, the Middle
Atlantic Cooperative Milk Market
ing Agency, known as MACM
MA, will re-extend its over-order
pricing authority into the southern
part of New Jersey when the state
program expires, Fraher said.
Another negative part of the
pricing picture is an increase in the
assessment the government
imposes as a budget savings mea
sure. The mandatory assessment
increased from 11.2 S to 13.65
cents per hundredweight May 1 as
a result of more than $23 million in
refunds from last year’s five-cent
assessment. By law, the USDA
must increase the level of the
assessment to compensate for the
refunds it pays to farmers who can
document they sold less milk in the
current year than they did the year
before.
The 47,000 fanners who quali
fied for a refund of their 1991
assessment represented about 30
percent of all dairymen nation
wide. Analysts predict that far few
fanners will qualify this year as
they respond to a more favorable
economic climate.
It’s not a major factor in produc
tion decisions, according to Frahcr,
who noted that even at 13.63 cents.
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die assessment still represents just
one percent of a producer’s total
proceeds from selling milk.
Most of the credit for rising
prices goes to a buoyant cheese
market, according to Fraher.
Added sales of nonfat dry milk,
particularly through the
government-funded Dairy Export
Incentive Program, also have
helped. On the supply side, produc
tion, particularly in the upper Mid
west, remains flat. Overall, USDA
analysts estimate that 1992 pro
duction will match or exceed very
slightly the 1991 total.
To Charlie Shaw, head of the
Dairy Division at USDA’s Agri
cultural Stabilization and Conser
vation Service, the price gains rep
resent a vindication of the Bush
administration’s opposition to new
legisL'ron to help dairy farmers.
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Shaw, speaking in Frederick
County, Md., recently, noted that
Secretary of Agriculture Edward
Madigan has taken a number of
steps to aid the industry. These
include advance purchases of
cheese by the school lunch prog
ram and an expansion of the export
incentive program, which Shaw
termed “very successful.”
At the same meeting, Ed Cough
lin, a National Milk Producers Fed
eration official, said that butter is
the only dark cloud in the present
rosy outlook. From October
through February, Coughlin noted,
roughly four out of every five
pounds of butter produced by the
industry was sold to the
government
“We have no answer to the but
ter problem at present” Coughlin
said.
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