HARRISBURG, Pa. — The Pennsylvania Milk Marketing Board has adjusted the over-order premium for the remainder of 2013 to be more in line with premiums in nearby markets.
From July 2013 through December 2013, the over-order premium on Class I milk produced, processed, and sold in Pennsylvania will be at least $1.85 per hundredweight, consisting of a base over-order premium of $1.60 per hundredweight (down 25 cents) and a variable fuel adjuster of at least 25 cents per hundredweight, down from 58 cents.
The new price is a total decrease of 83 cents (or 31 percent) for the six-month period beginning July 1, 2013.
The Pennsylvania-mandated premium will remain higher than the premium paid on all classes of milk in nearby markets.
Most of the adjustment was accomplished through a re-set of the fuel adjuster.
The over-order premium fuel adjuster has been in place since July 2004 and since then has adjusted the over-order premium based on diesel fuel costs and market conditions at that time.
The board concluded that the fuel adjuster order no longer properly accounted for current diesel fuel costs and market conditions. The board issued a new fuel adjuster order to bring the fuel adjuster up-to-date.
Meanwhile, the Pennsylvania Farm Bureau expressed concern over the decision.
Pennsylvania Farm Bureau President Carl T. Shaffer said the decision translates into already tight margins on dairy farms becoming even tighter with smaller milk checks to support family operations.
Farm Bureau noted that the PMMB’s decision sends a discouraging message to farm families, particularly the next generation of milk producers.