HARRISBURG, Pa. — The Pennsylvania Milk Marketing Board decided April 1 it would not try to capture additional premiums on Pennsylvania milk sold in other marketing areas.
The board declined a three-year-old request from Pa. Gov. Edward Rendell to expand the scope of the board-mandated over-order premium to include packaged milk distributed in New Jersey.
The proposal, if adopted, would have required Pennsylvania processors to pay a mandated premium on Class I milk produced and processed in Pennsylvania and sold in New Jersey.
About the premium
Milk produced, processed and sold within the state receives a premium above the current federal order milk price, but if milk is processed or retailed in another state, the producer does not receive the premium.
Approximately 15 percent of the milk produced in Pennsylvania is directly benefiting from the current program, which has been in place since 1988. The current over-order premium, effective through June 30, is $2.15 per hundredweight.
Board members were not persuaded that adopting the proposal would benefit for Pennsylvania producers. (Read the official general order as .pdf.)
The governor’s first petition was filed in August 2006. The board denied the petition, so a second was filed in June 2007 seeking to capture premiums on Pennsylvania milk sold in neighboring states with overprice premiums.
The board acted on the 2007 petition April 1.
“Dairy farmers are going out of business and cannot cover their operating costs,” said state Agriculture Secretary Dennis Wolff, expressing disappointment at the board’s decision.
“This is the time for the board to use every ounce of authority they have to help dairy farmers in any way they can.”
A prepared statement from the board said “affected milk dealers would most likely, rather than pay the mandated premium, either reduce voluntary payments to Pennsylvania producers or seek to buy milk from non-Pennsylvania producers.”
The board was also concerned that increased costs could cause Pennsylvania processors to lose New Jersey business.
Farm Bureau not happy
The Pennsylvania Farm Bureau was also disappointed at the decision, saying the board missed “a good opportunity to provide some needed income to Pennsylvania producers.
The farm group said the premium would have been equivalent to the board’s fuel cost adjuster, which compensates dairymen to help combat high diesel fuel prices.
The fuel adjustment for February 2009 was 38 cents per hundredweight of milk.
“While the extra income provided by the expansion proposal would have been modest, it would have come at a time when Pennsylvania dairy farmers need it the most,” said Farm Bureau President Carl Shaffer.