A24-Lancaster Farming, Saturday, October 25, 1997
Pennsylvania Milk Marketing Board Approves 40-Cent Increase
(Continued from Pago A 1)
Therefore, on May 1,1998, the
over-order premium is set to return
to 50-cents.
Close to, but prior to that time, it
can be expected that the PMMB
will again hold a public hearing to
gather information to help guide its
policies.
Just less than half of all milk
sold in Pennsylvania is used as
fluid milk and receives a federal
Class I use rating.
The federal government uses a
formula to determine minimum
federal order prices. The nation is
divided into “milk pools” and the
federal orders reflect those pools,
though the relevance of the rela
tionship between local prices and
local milk availability has been
dimming in recent years with mer
gers of producer and milk market
ing cooperatives.
Furthermore, the whole prog
ram is undergoing change as pre
scribed in the 1996 Farm Bill, and
the Farm Bill calls for a reduction
in the number of different federal
orders.
in general, the USDA sets
monthly national minimums for
each federal milk marketing order
by considering market prices of
milk and related dairy poducts, as
well as production prices. It also
considers how the milk is used.
An USDA federal order admini-
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strator announces the prices, and
provides data on milk usage and
volume.
Farmers receive their pay for
milk after it is used by a processor.
The processor decides how best to
use the milk to supply its markets,
and then pays the farmer based on
those decisions. The farmer usual
ly also gets billed for hauling the
milk to the processor.
The PMMB is an oversight and
consumer-interest board for the
dairy industry in Pennsylvania,
charged with the mission of ensur
ing a safe, reliable milk supply,
and protection of farmer-pay from
the sale of milk, among other
mandates.
It has the authority to set mini
mum retail and wholesale prices
on milk sold in Pennsylvania, and
to set an over-order premium
(money that gets paid to farmers
above the federal marketing order
minimum pice) on drinking milk
produced, processed and sold
within Pennsylvania.
The Oct 10 special hearing of
the PMMB to reconsider the level
was held at the recommendation
and request of state Secretary of
Agriculture Samuel Hayes Jr.,
whose reasons included severely
declined milk prices, increased
feed prices, and decreased crop
production (currently the entire
state is eligible for disaster assis
tance via federal low-interest
loans).
Upon learning of Secretary
Hayes leadership in calling for the
special hearing, the state’s leading
agricultural organizations joined
in support.
Secretary Hayes also testified at
the Oct 10 hearing, as well as did
representatives of the farmer
organizations.
“My testimony is not going to be
a statistical treatise about milk
prices. I have poured over num
bers, charts, coefficients, graphs,
tables, diagrams, and other data,”
Hayes told the board.
“However, after all of the eco
nomic analysis, you come back to
one fundamental fact dairy far
mers are receiving approximately
30 percent less for their milk today
than they did last year.
“Dairy farmers cannot survive
this type of economic depression
forever.”
He said that while some con
tinue to offer that, “Fanners need
to be better managers,” an oft
repeated phrase of no specific
help, Hayes argued that today’s
Pennsylvania dairy farmer is an
excellent model of efficiency.
‘There are over 3,000 fewer
farms, 92,000 fewer cows, but the
remaining dairy fanners and their
cows have increased total avail
able milk by 400 million pounds,”
Hayes said, comparing 1996 data
to that of 1986.
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“The dairy fanner knows how to
be a good manager. But, it is pretty
hard to manage over an extended
period of time through a
depression-like environment
which brings about a 30-percent
drop in your revenues.”
He said that though individual
states cannot change the federal
order milk marketing structure,
Pennsylvania has the opportunity
to adjust its over-order premium to
provide some relief to instate
producers.
“Such an opportunity will not
solve all of the problems which are
inherent in the federal pricing sys
tem. Nevertheless, we should do
what we can to provide some mea
sure of empathy and economic
relief for our embattled dairy
fanners.”
He said that he wanted to, "...
respectfully suggest we should be
guided by a few principles when
considering the dairy farmers’
plight”
He said that the first principle
should be the prevention of the loss
of the state’s dairy business.
“You and I do not want the dairy
industry to become an offshore
industry as happened with Pen
nsylvania’s steel and textiles.
“From 1956 to 1996, Pennsyl
vania employment in the primary
metal industry dropped 74 percent
‘Textile and garment employ
ment in Pennsylvania dropped 75
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percent during this same penoa.
“Do we want the same for the
Pennsylvania dairy industry which
generates approximately 38 per
cent of Pennsylvania’s agricultural
economy? Do we want our dairy
industry to migrate out of Pennsyl
vania and off-shore as has hap
pened to steel, textiles, and the gar
ment industry? I think not.”
He said his second principle was
the prevention of the loss of diver
sity in the dairy industry through
the attrition of family farms and
the take over of mega
corporations
“Big is not a bad word; but, it
should be possible for the indivi
dual dairy farmer to grow larger,
enjoy the economic advantages
offered by economy of scale, with
out the need to sell out to mega
corporations,” he said.
He said the third principle
should be to ensure that consumers
do not suffer a surge in shelf price.
“A few things should be noted.
While dairy farmers have exper
ienced a 30-percent drop in their
prices (received), consumer prices
for retail dairy products have
remained fairly stable. For sure,
consumer prices have not dropped
30 percent
“It should also be noted that for
every dollar spent only 23 cents
covered the hum value of food
purchases, and the rest 77 percent
was marketing costs.
(Turn to P«a* *25)