A364.«ncMter Farming, Saturday, February 26, 2000 Bailey Reports On Milk Pricing At Lancaster Dairy Days JAYNE SEBRIGHT Lancaster Farming Staff LANCASTER (Lancaster Co.) Changes in the milk pricing system and the 22-year low in the on-farm milk price have lots of farmers talking lately. Some even feel like they’re in the dark about what’s going on. During Lancaster County’s Dairy Day on Tuesday, Dr. Ken Bailey from Penn State shed some light on the situation. Bailey is the milk marketing and dairy policies specialist for Penn State. Part of his job at Penn State includes objectively analyzing the milk pricing system and what’s going on in the milk marketing scene. According to Bailey, a lot is happening nationally on milk pricing. President Bill Clinton talked about a safety net for family farms in his State of the Union address. Clinton’s budget also called for a two-year exten sion of the milk price support programs. The Secretary of Agriculture recently held a two-day session with legislators to look at federal marketing orders and how Class 111 and IV milk prices are for mulated. Although a lot of things were discussed during the two-day session, the group didn’t come to any conclusions PORTABLE „ HYDRAULIC UNITS ♦ Honda Powered ♦ 13” Tires for easy maneuvering ♦ Unit can be easily removed for stationary mounting ♦ Also Custom Hydraulic Units (stationary or portable) Silk 343 Christiana Pike Igoraetciwi Christiana, PA 17509 JS&liLcs Answering Service 1-610-593-2753 Duraßed* COW MATTRESS The Only One Of Its Kind 80 ox. sURL Waterproof 0 The Heaviest 0 The Driest 0 The Most Effective 0 The Strongest 0 The BEST Why Buy Anything Else? Duraßriskef Easy to install 8 ft. sections SX2. 00 per stall M/ North Brook Farms oeb mmm Toll Free; 877-624-2638 on the situation. “It’s been an interesting week a lot has been happening, but the current milk pricing system keeps going,” said Bailey. The first question Bailey ad dressed is why are milk prices so low. “The west is expanding like crazy,” said Bailey. “Cheap feed and good milk prices drove the expansion.” “The problem was that there weren’t enough people in the west to drink the milk. So they built huge cheese plants and drove cheese stocks up,” ex plained Bailey. “People did eat a lot of cheese last year, which caused stocks to fall at record numbers. But, at the end of the year, they didn’t decline enough.” Bailey mentioned that several farmers asked him what they’re going to do with $lO milk. “When we talk about $lO milk, we’re talking about Class 111 price,” said Bailey. “The farm er’s price is going to be higher.” The farmer’s milk price is a combination of the farmer’s Class 111 price for butterfat, pro tein, and other solids, along with the producer price differential, over-order premiums, and qual ity premiums. The producer price differen tial is the adjustment added to the Class 111 price to account for HDPE POLYBOARD Milk houses, manger liners, MUDGUARD non woven geotextile Get out of the mud l Class I, 11, and IV prices. This price is fortnulated based on milk delivered in Boston. Since not all milk is delivered directly to Boston, a location ad justment is made for milk deliv ered to other areas. Bailey expects farmers in Lancaster will get 3S cents less for their producer price differential than the price set in Boston. According to Bailey, the bene fits of the new milk pricing system include more transpar ent pricing, more up-to-date pricing, pricing based on compo nents, and no more basic for mula price. “Farmer’s milk prices will re spond more quickly to changes in the cheese and butter prices than in the past,” said Bailey. “If the cheese or the butter prices increase, the higher price Martin’s Farm Supply Greencattle 717-597-4283 Martin Construction Co. 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Com puting the other class prices is the next step. “The farmers don’t need to know what the Class I, 11, 111, and IV milk prices are,” said . * I Bailey. “But the market admin istrator and cooperatives need to know what these prices are to compute the producer price dif ferential.” The fourth step is computing the pool value of the milk, which is the producer price differen tial. This takes the price at the federal level and brings it down to the local federal order. The fifth step involves taking the federal order price and ad justing it to where the farmer’s milk is delivered. This is when the location adjustment is estab lished. The final step is computing the farm price. Every farmer’s price will differ based on the components in his milk. 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