HARRISBURG, Pa. — The Pennsylvania Milk Marketing Board approved a change to the formula used to calculate Pennsylvania milk dealers’ over-order premium payments to producers supplying their plants.
About the formula
Board-established minimum wholesale prices include an amount for producer milk purchases that assumes that dealers purchase all of their milk from Pennsylvania producers.
The current formula for calculating dealers’ over-order premium payment obligations to producers, though, accounts for a ratio of Pennsylvania produced milk purchased by the dealer to total milk purchased by the dealer.
This results in a situation where a dealer that purchases all of its milk from Pennsylvania producers is required to pass the entire amount of over-order premium received in minimum wholesale prices to Pennsylvania producers, while a dealer that purchases milk from both Pennsylvania and out-of-state producers does not necessarily have the same requirement.
What it means
The change approved by the board will remove the ratio of Pennsylvania-produced milk purchases to total milk purchases from the formula. This change will result in a higher mandated Pennsylvania over-order premium payment to Pennsylvania producers who ship to plants that also purchase out-of-state milk, while maintaining the current over-order premium payment to Pennsylvania producers who ship to Pennsylvania milk dealers that receive all of their milk from Pennsylvania producers.
No longer voluntary
The evidence presented at the hearing by both the Board Staff and the Pennsylvania Association of Milk Dealers showed that Pennsylvania milk dealers are paying producers at least the minimum amount due plus the amount of the Pennsylvania over-order premium collected by the dealers in board-established minimum wholesale prices.
Currently, however, some of those payments are made by the milk dealers voluntarily.
To ensure that the payments continue at a level at least equal to the amount collected in minimum wholesale prices, the board approved the change to the over-order premium obligation.
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