Pa. milk formula staying put, changes likely unconstitutional

SALEM, Ohio — Milk marketing in Pennsylvania is expected to continue as it has in the past, after the state’s milk marketing board approved an amendment to over-order premiums.

A year ago, in response to a petition by former Gov. Ed Rendell and Sect. of Agriculture Russell Redding, the board approved a change in the formula for over-order premiums by removing the ratio of Pennsylvania-produced milk purchases, to total milk purchases.

The expectation was it would result in a higher mandated Pennsylvania over-order premium payments to Pennsylvania producers who ship to plants that also purchase out-of-state milk.

But, a lengthy legal battle over the formula’s constitutionality and an injunction issued by the federal court to prevent the new formula from going into effect caused the board to reconsider.

Unconstitutional

Doug Eberly, the milk board’s chief counsel, said a couple out of state milk dealers and the Pennsylvania Association of Milk Dealers opposed the new formula on the basis it was unconstitutional under the commerce clause.

The legal fees and the injunction caused the board to amend the formula outside of court.

“The more discovery we did … the more apparent it became that the (milk) board was going to lose and the court would find that the order was unconstitutional,” Eberly said.

In a released statement, the board concludes “the board determined that it was in the best interests of the entire Pennsylvania dairy industry to settle the litigation. There was very little likelihood that the board would prevail at trial and the board would be liable for significant plaintiffs’ attorney fees.”

Earl Fink, executive vice president of the Pennsylvania Association of Milk Dealers, said he thinks “the board realizes they’re not going to win the federal case and they’re going to comply.”

Fink said about seven-eight milk dealers buy milk from Pa. and out of state farmers, and some of them spent part of the last year testifying against the change.

Potential harm

In testimony he gave to the Pa. Senate Agriculture Committee in June, of 2010, he warned of potential harm to in- and out-of-state dairy farmers in what he called a costly regulation of interstate commerce.

The amendment keeps in place the current methodology for calculating the state’s mandatory over-order premium payments.

The Pa. over-order premium has been in place since the fall of 1988 and currently stands at about $2.80 per 100 pounds, paid to the state’s milk producers.