Since the end of last year, DPAC has continued to discuss necessary changes to Pennsylvania's Milk Marketing Law, and state lawmakers are listening. Other organizations are part of this effort, and will meet next week to discuss the language for five points that are currently being drafted into bill form.
Senator Mike Brubaker, who chairs the Senate Committee on Agriculture and Rural Affairs, has had two hearings since last December on the issue of milk pricing. He told a dozen farmers attending an Agricultural Town Meeting hosted by Sen. David Argall near Hamburg, Berks County Sept. 8 that, "The system has changed. It's time to take a look at the laws to deliver a sustainable benefit to the dairy farms."
Sen. Brubaker stated further that the 25-cent per gallon over-order premium paid by consumers on every gallon of milk, is, after all, "the farmers' quarter, and this issue of where that quarter is going needs to be solved."
Sen. Brubaker recognized that agriculture is the number one sector of the state's economy, and dairy farming is the number one agricultural activity in Pennsylvania, accounting for more than 40% of all agricultural cash receipts in the Commonwealth.
"We have to find ways to treat the dairy farmer fairly, so they -- along with the retailer, dealer, and processor -- have the opportunity to make a fair profit," said Brubaker. "You are not getting your cost of production back and business without profitability is not sustainable."
Efforts to move forward on changes to the Milk Marketing Law have gained momentum in the two months since the Senate Ag Committee had its June 29 hearing on the issue of "stranded" premiums. That hearing followed a December 9, 2009 hearing, which had scratched the surface of the issue.
In 2009, Pennsylvanians paid an average 25 cents per gallon in premiums intended for farmers that are built into the state minimum retail fluid milk price. The current over-order premium level is around $3.00 per hunderdweight and is set by the state's Milk Marketing Board.
In 2009, alone, an estimated $16 to $26 million of those premiums paid by consumers at retail were "stranded" in the middle and did not reach dairy farms last year. The amount of "stranded" premium has doubled as we are now three-quarters of the way through 2010, with consumers still paying the 25 cents and the same loopholes still existing in the state law, which allow retailers, dealers, handlers and cooperatives to control where that money goes.
The June 29 Senate hearing revealed that the "cost recovery" and "profit margin" on fluid milk sales in Pennsylvania are guaranteed in the law and its implementation for the retailers and the dealer-handlers. But, the implementation on the farmer side then turns "fuzzy." Proposed changes to the law would address existing loopholes and restore some measures of accountability that were previously in place.