April 13, 2012 Ask state lawmakers to support bill to close loopholes on 'stranded' premium
By Sherry Bunting, reprinted from Farmshine April 6 and 13, 2012
HARRISBURG, Pa. -- While the “milk bill” introduced recently by Pennsylvania State Representative John Lawrence (R-13th) awaits an official bill number, sources close to Representative Lawrence indicate the cosponsor memo has prompted the support of over 30 members of the Pennsylvania House of Representatives.
Once the bill receives a bill number, the full text will be made available at the House Committee on Agriculture and Rural Affairs website.
The purpose of the bill is to modify Pennsylvania’s existing Milk Marketing Law, which has been in existence since the 1930’s, setting a minimum retail price for all fluid packaged milk sold in the state.
Cost recovery and profit margin (2.5 to 3.5%) for retailers and bottlers have always been built into the minimum retail and minimum wholesale prices.
Then in the 1980’s, during a time of drought, the law was amended to give the Milk Marketing Board the authority to set an over-order premium for fluid milk produced, processed and retailed in Pennsylvania, which is intended strictly for the dairy farmers to cover increased costs of production.
For the past three years, that over-order premium -- paid by consumers and intended by law for the dairy farmers -- has been set at around 25 cents per gallon, and it includes a fuel adjuster. For April of 2012, the base over-order premium is $2.15 and the fuel adjuster is 83 cents for a total over-order premium of $2.98 per hundredweight of milk. This premium is collected at a rate of over 25 cents per gallon on every sale of packaged fluid milk at retail in the state of Pennsylvania.
The law mandates the premium be paid to producers for fluid retail sales that are produced, processed and sold within the state. But the premium is actually collected at the retail level on all packaged fluid milk sales.
An estimated one-third of the amount paid by consumers at retail is “stranded,” meaning not all the funds are making their way back to farm milk checks, as evidenced by testimony at Senate Agriculture Committee hearings in 2009 and 2010. Estimates of “stranded revenue” range from $16 to $26 million per year at the current rate of 25 cents per gallon paid by consumers.
State Representative John Lawrence -- a Chester County Republican representing Pennsylvania’s 13th district and serving on the House Agriculture Committee -- has been watching this issue and its impact on the dairy farmers of the Commonwealth of Pennsylvania and in his district.
Last week, Rep. Lawrence introduced his bill with a reported 30-plus cosponsors in the House.