Pa. approves over-order milk premium

HARRISBURG, Pa. — The Pennsylvania Milk Marketing Board approved two producer pricing orders March 21, including an order establishing the over-order premium at $1.60 per hundredweight through September 2017. The board also approved an order that would modify minimum Pennsylvania producer pricing through September 2017 for milk not priced by a federal order.

The board is also continuing the current fuel adjuster of 25 cents per hundredweight for a six-month period beginning April 1, 2017.

In setting the over-order premium at $1.60 per hundredweight through September 2017, the Board relied on evidence presented by Pennsylvania Farm Bureau, Pennsylvania Grange, and Progressive Agriculture Organization. Each of those groups supported the $1.60 request originally made by Pennsylvania Farm Bureau.

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.

Marketing assessment

Dairy Farmers of America and Dairy Marketing Services requested the board modify its producer pricing order for a six-month period to address increased costs of marketing milk due to the imbalance between milk supplies and processing capacity in the Northeast and Mid-Atlantic region. Cooperatives have assessed their members a market adjustment charge since July 2014 as a result of those increased costs.

DMS markets milk for approximately 280 independent Pennsylvania producers who have not been assessed a market adjustment charge even though their milk is indistinguishable from the cooperative member milk marketed by DMS.

For milk not priced by a federal order, the order approved by the board will allow DMS to deduct a market adjustment charge from those independent producers it markets that is no greater than the lowest market adjustment charge applied to cooperative members.

Could depool producers

DMS has indicated that it may depool from the federal order its Pennsylvania independent producers (read the request letter). If those producers are depooled, the DMS independent producers would continue to receive a minimum Pennsylvania producer price based on the Pennsylvania Class I price plus over-order premium and the Class II, III, and IV price based on federally announced skim and butterfat prices, less the market adjustment charge.

The board adopted the order allowing the market adjustment charge with the expectation that if DMS did depool Pennsylvania independent producers, it would be for the minimum amount of time required.

Progressive Agriculture Organization and National Dairy Producers organization testified in opposition to the DFA/DMS request, however, the board was concerned that without the producer price modification, DMS would choose to terminate its Pennsylvania producers.

Copies of both orders are available on the Board’s website at mmb.pa.gov.