Pa. creates new fuel adjuster formula for milk

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HARRISBURG, Pa. — The Pennsylvania Milk Marketing Board maintained the Class I over-order premium price for milk at $1.60 per hundredweight, but approved a new formula for determining the fuel adjuster add-on.

The new formula, which measures the monthly average price for diesel fuel and assigns an add-on based on that price, replaces the current fuel adjuster price formula that guaranteed a premium add-on of $0.25 per hundredweight of milk whenever average diesel fuel prices were $4.89 per gallon or lower.

Under the new calculations, there will be no fuel add-on when average diesel prices fall below $2.70 per gallon.

“We appreciate the fact that the board had some difficult decisions to make based on the testimony and exhibits presented, including the dynamics of addressing an oversupply of milk in Pennsylvania and the Northeast,” said Pennsylvania Farm Bureau President Rick Ebert.

“We were pleased that the over-order premium remained unchanged, because dairy farmers continue to face a variety of financial challenges ranging from trying to recover from two years of declining milk prices to addressing increased production costs,” he said.

Meanwhile, PFB did not take a position on the proposed reduction of the fuel adjuster.

“The fuel add-on to the premium was originally created to provide cost relief from drastic spikes in fuel prices that occurred several years ago. PMMB’s adjustment in the premium add-on recognizes the return in fuel prices to more normal levels and more long-term stability in prices experienced in Pennsylvania and around the nation. PMMB’s new formula will still increase the level of premium add-on, should fuel prices spike again in future months,” said Ebert.

PMMB’s pricing orders for the premium and fuel adjuster add-on are effective Oct. 1. The over-order premium and the fuel adjuster add-on mandated by PMMB are assessed on Class I (fluid) milk that is produced, processed and sold entirely within Pennsylvania.

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