New law adds protection for Pa. dairies

CAMP HILL, Pa. – Pennsylvania Farm Bureau strongly supports a new law signed earlier this month by Gov. Edward Rendell that provides greater protection for Pennsylvania milk producers by placing stricter requirements on new dealers.

The law, which amends the Milk Producer’s Security Act, requires new dealers to post a bond with the Pennsylvania Milk Marketing Board equal to 75 percent of the highest aggregate amount owed by the dealer to producers for a 40-day period during the preceding 12 months.

It also forbids any new participation in the 30 percent bond and security fund option available under current law.

Get paid. “The law will help protect dairy farmers from the prospect of not getting paid for milk they have already sent to dealers,” said Pa. Farm Bureau President Guy Donaldson.

The legislation also gives the state’s milk marketing board the right to require a milk dealer to increase its bond during the license year based on changes in the amount of milk it is buying or changes in milk prices.

It also gives the board discretion to require a larger bond based on a milk dealer’s financial condition.

Security.“The law provides added security for dairy producers in Pennsylvania who are concerned about the potential vulnerability of lost revenues due to dealers that default or delay payment for milk,” added Donaldson.

The bill includes a combination of bonding requirements, Milk Security Fund deposits and prompt payment provisions to make sure dairy farmers receive payment.

Safe from fallout. The need for the legislation became apparent recently when the parent company of a dealer licensed to purchase milk from Pennsylvania farmers filed for bankruptcy, creating concern that dairy farmers might not get paid for all the milk produced and shipped to the dealer.

“The extra protection under the new law should increase the confidence of dairy farmers that they are adequately protected if a dealer has financial problems or goes bankrupt,” concluded Donaldson.