A3O-Lancaster Farming, Saturday, September 12, 1998 PMMB Hears Requests To Reduce VERNON ACHENBACH JR. Lancaster Farming Staff HARRISBURG (Dauphin Co.) Representatives for the state’s major farm and dairy orga nizations presented testimony last week to the Pennsylvania Milk Marketing Board (PMMB) to low er the Class I over-order premium as of Nov. 1. The current over-order premium is set at 80 cents per hundred pounds of milk produced, pro cessed and sold in Pennsylvania for use as drinking milk. The purpose of the premium is to help maintain the instate pro duction of fluid milk, the most per ishable dairy product, during per iods when producers suffer tem porary economic difficulties. The loss of instate fluid milk production during temporary eco nomic bad times could eventually make the state dependent upon imported fresh milk, and in the long run, drive up the cost of living for all Pennsylvanians, school dis tricts, etc., or make fresh drinking milk difflcult to get or more expen sive to purchase in rural areas. The PMMB held the hearing as part of its normal operations. The current over-order premium level is set to terminate Oct. 31, and the agency regularly holds hearings in advance of such scheduled events. The over-order premium had been 50 cents and was raised in September 1996 to 80 cents, and raised from 80 cents to $1.20 from in Sept 1997. In April this year, though scheduled to drop back to 50 cents, dropped back to 80 cents because of continued profltability difficulties for producers. It is now scheduled to drop to 50 cents on Oct 31. Testimony about the effect of the scheduled premium level was received late last week from Bob Pardoe on behalf of the Pennsylva nia Slate Grange; David Hay and Bob Junk on behalf of the Pennsyl vania Farmers Union (Hay on behalf of the PFU Milk Producers Association, Junk on behalf of the whole organization); Joel Rotz, daily specialist with the Pennsyl vania Farm Bureau; David Eyster representing Dairylea; and Dennis Schad, representing the Middle Atlantic Cooperative Milk Mark eting Association (MACMMA), a marketing coalition of regional and national dairy cooperatives. All except Schad, represent ing MACMMA, and Dairylea’s Eyster requested that the over order premium be lowered from 80 cents to 50 cents, as is scheduled. given the better position presented to dairy producers for making profit better raw milk prices and lower grain prices. In the testimony presented, Schad said the multi-state/ national/global cooperatives he represents are seeking a reduction in the Pennsylvania premium to 40 cents. In his submitted testimony for Dairylea, Eyster requested that the PMMB maintain its 80-cent pre mium level. The cooperatives under MACMMA include Dairy Far mers of America (DFA), Land O’ Lakes, and the Maryland and Vir ginia Dairy Producers Coopera tive. Last year, DFA went global when it entered into a contract with New Zealand to supply cheese components for the cooperative’s United States Italian cheese manu facturing operations in the Mid West New Zealand is the world’s leader of inexpensive milk and daily products. Through its gov ernment it is a world leader in exporting dairy product. It also has lobbied heavily in Washington D.C. to influence American domestic daily policy. Drop It To 40 Cents While all arguments presented to the PMMB were based on inter pretations of statistical data, the MACMMA position was tem pered with apparent concern for LIQUID MANURE SPREADER WITH FLOTATION TIRES TO MINIMIZE SOIL COMPACTION Available with complete line of spreading tool bars and precise flow control to spread manure the ecological way eliminating spray drift and reducing odors. Our tool bars are designed to apply hog or dairy manure on growing fields, between rows of corn or on harvested fields. (Jtev Cedar Crest Equipment Krtl b [A Two Convenient Locations milk sales and marketing outside of the state. “MACMMA supports setting a 40-cent Class I over-order pre mium, based on the current method of premium distribution,” Schad stated, though his testimony didn’t specify what aspect of the current method of distribution would cause the organization’s leaders to seek lowering the over order beyond the 50-cent per hun dredweight (cwt) rate that has served as a minimum for years. “Further, MACMMA recom mends that this (40-percent) rate remain in effect until a chance in dairy production or marketing con ditions occurs, or a change in the distribution methodology warrants an adjustment to the Class I premium." Schad also urged the PMMB to move quickly on their decision. Schad stated that MACMMA markets the milk of mote than 50 percent of the daily producers in the state (though he didn’t state how much of the state’s milk pro duction is represented by those .producers.) The bottom line from MACM MA is that a 40-ccnts per cwt. over-order premium is all that is needed to ”... generate an adequate return to Pennsylvania dairy far mers and will reasonably align Pennsylvania Class I prices with competitive market prices.” Keep It At 80 Cents According to Dairylca’s Eyster, while the price of milk paid to the producer has been revived during previous months into the current month, the market indicators are that the price will drop significant- SPREADERS WITH SINGLE AXLE OR fls' TANDEM-2350 TO <OOO OS GAL. 't *~ ni tg)(y • “V" shap« bottom for mor« • Standard axtarior ftnlah: eomplota claan out. apoxyprlmar and urathana paint. • Low prollla lank for maximum vlalbility and atabillty. ItMMlijl Spreaders & Pumps In Stock for Immediate Delivery & Rental Units Available CfldM 608 Evergreen Rd. Lebanon, PA 17042 (717)270-6600 1-800-646-6601 Over-Order Premium ly between October and January. He based this opinion on the Chicogo Mercantile Exchange Basic Formula Price futures contracts. Dairy producers have been advised for the past year and more, with the elimination of effective dairy support prices and wildly fluctuating prices, how to manage their operational profits through the purchase of future’s contracts. (The goal is to minimize fluctua tions in profits, both highs and lows, by locking in a price with a future cash contract, so that profits or lasses from the future contract are used to offset the price received for actual dairy product sold.) The CME Basic Formula Price contracts are relatively new, but based on the fact that the U.S. Department of Agriculture pricing of milk is based on an official Bas ic Formula Price. The market BFP levels, while speculative on what the actual USDA BFP will be, arc considered to be fairly close to what the actual BFP will be, since those involved with the buying and selling of them are considered to be balancing forces. Eyster said that CME BFP future’s contracts indicate a drop in the price of milk by about $2.73 per hundredweight from the cur rent price. “Instead of giving consideration to lowering the Class I over-order premium, it is more appropriate to consider an increase in the pre mium to offset the erosion in farm income that will be occuring due to Class I prices that ate expected to be sharply below year-earlier levels, in early 1999." AGI-POMPE 32’ and 42’ for Lagoons QMM PIEPIF@PIMIM€[E 1-Highly articulated nozzle deaigned 2-24” dia. mixing propeller providing to slice and break the top crust full time agitation up to 21,500 US from above the manure level as the G.P.M. even when loading a propeller homogenises the liquid spreader, with th. remaining doming chunks. 4 . RoUtiv , dirMtlon|| v#lve 3- Hydraulic controls can be operated to be operated at low R.P.M. without from tractor seat stopping the P.T.O. Gear box oil bath protected by a greasable 3 seals mechanism on each shaft. mml&ibls mm miLnPiNtmsg ®mm m mm mm m® ©mmm nre w re w i». Rent the ILUlliUr Steering Axle Spreader Though not directly related to the issue of the premium, Eysler also requested that the PMMB issue its public support for Pen nsylvania to join the North East Dairy Compact. 50 Cents Is Fine For Now David Hay spoke on behalf of the Farmers Union Milk Producers Association, with its 110 members who market 8 million pounds of milk per month. He emphasized, in his com ments, that the PFUMPA mem bers’ farms are located along the western edge of Pennsylvania. While most of Pennsylvania dairy producers may have exper ienced good crop weather and low predation. Hay said western Pen nsylvania didn’t receive that benefit. He said his members didn’t receive good crop weather earlier this year and are short in quality forages, which are essential to a good milk-producing diet for cows, despite the low grain prices. He urged the board to “hold (he line" on the 50-cent premium, and that he didn’t understand how it could be justiGed at 40 cents. On behalf of the Pa. State Grange, Bob Pardoc a Northum berland dairy farmer with 150 ani mals and 360 acres, said that while dairy producers have recovered some of their losses from last year and early this year, that the market will bear the 50-ccnt premium. Joel Rotz, representative for the Pennsylvania Farm Bureau, pre sented evidence of the price/cost of production factors for dairy pro ducers, and requested the PMMB keep its scheduled over-order pre mium change to 50 cents per cwt TRAIL RD 2 Box 271 East Earl, PA 17519 (717)354-0584
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