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  October 2, 2010

To listen to an audio replay of the Pa. Senate Ag Committee hearing, click here and scroll down to Sept. 29 Committee Agenda entry.

S.B. 1480 not 'buried,' Senate Ag Committee will 'dig in' for next session

By Sherry Bunting, Farmshine, Oct. 1, 2010 edition  

HARRISBURG, Pa.—Pennsylvania Senate Bill 1480 did not get “buried” this week. Instead, the Senate Ag and Rural Affairs Committee demonstrated Wednesday they are “going to dig in and come back to this issue” with full fervor. 

At issue is a comprehensive overhaul of the state’s Milk Marketing Law. As reported last week in Farmshine, state Senator Mike Brubaker (Lancaster County) introduced S.B. 1480 on Sept. 15. It was then referred to the Ag Committee, which he chairs, and was put on the schedule for consideration this Wednesday, Sept. 29.   

In what Brubaker called “a relatively unconventional committee meeting without a bill,” the contents of S.B. 1480 were discussed at the Capitol even though the bill had been withdrawn from the 2010 legislative session late in the afternoon of Sept. 28 because Committee members requested more time for additional information, and there were only four days left in the current legislative session. 

Brubaker used Wednesday’s meeting time to give Committee members and the audience of 25 in room 461 at the Main Capitol Building an opportunity to speak on the issue.   

“It is my intent as chairman to modify the Milk Marketing Law Act passed in 1937 and S.B. 1480 does that,” said Sen. Brubaker matter-of-factly before he opened the microphone to Committee members and an audience of about 25 people, eight of them dairy farmers associated with the Dairy Policy Action Coalition (DPAC), along with lifelong dairy farmer and former ag secretary Dennis Wolff representing DPAC, Joel Rotz, state legislative director for Pa. Farm Bureau, and Marvin Beshore, attorney representing the Greater Northeast Milk Marketing Agency made up of eight cooperatives marketing more than 50% of Pennsylvania’s milk.  

“There are people in this audience, in the Capitol, across the Commonwealth of Pennsylvania, and dairy producers, who want this bill to become law. And, of course, there are people who don’t,” said Brubaker. “What this meeting is designed to do is to listen to both sides to better inform members of the Senate Ag and Rural Affairs Committee.”   

Brubaker went on to explain that, “Every consumer in Pennsylvania pays a 25 cents per gallon premium on their milk. That’s undisputable. That 25 cents a gallon ought to be going in the pocket of the dairy producers,” he said, asking anyone in the audience who disagrees with that statement to come to the microphone, state their name, and tell their disagreement.   

 “Something in the order of 40% of the premium is not going into the pocket of the dairy producer, and I’m not happy about that,” the Senator said. “It seems like everyone is making money in milk… everybody that touches milk makes money, except for one component of the chain: That’s the dairy producer, and I’m not happy about that.”   

Brubaker stressed the complexity of this issue and how the complexity of this law can add to the tendency to just “leave the status quo go because very few people in this building or in this Commonwealth, truly understand (the Pa. Milk Marketing Law). It needs to be simplified, and to allow the Pennsylvania dairy producer to be competitive for long term sustainability.”   

In short, Sen. Brubaker stated that as long as dairy producers have trouble meeting their cost of production, he will continue to be focused on this issue—hearing both sides—but “not content to simply do nothing.”   

Sen. Mike Waugh (York County), vice-chair of the Committee, said he “fully supports” the Chairman’s intent to amend the Milk Marketing Law. “I believe he is on the right track and has his arms around this thing in such a way that he will pursue it and follow it until we get to a final conclusion,” said Waugh. “One of the things all committee members seem to agree on is that this entire distribution process, the administration of it, is so convoluted that it’s difficult for us as policymakers to wrap our arms around it.   

“I happen to believe it’s challenging to understand, by design, so those who know how can manipulate it,” Waugh added. “I think it can be made pretty simple and basic, and I support the Chairman’s efforts to get to that point: Whatever I can do and whatever time it takes, I’ll be there.”   

Sen. John Eichelberger (Blair County) echoed his thoughts that, "This is one of the most complicated issues anyone can work on in this building. We all agree there are big problems with milk pricing, so we’ll all roll up our sleeves and go to work on it,” he said.   

Sen. Bob Robbins (Mercer County) agreed, thanking Sen. Brubaker for taking the time to move this issue forward and for making the commitment to deal with it in depth in the next legislative session. “I think we have to take this on as a major issue and get a full review of it,” said Robbins.   

From the audience, Dennis Wolff thanked Sen. Brubaker on behalf of the dairy farmers “for stepping forward and showing the leadership to really look at the current statute and to open it up and deal with some of the problems that have been identified within it for many years.   

“These problems are abundant and they have been around a long time,” said Wolff. “Dairy farmers have decided the way to change the problems is through amending the statute. The current (Milk Marketing Law), as written and implemented, is an embarrassment to state government. There are many loopholes that need to be closed. We look forward to working with the Senate Ag Committee to make available any information they need to explain changes that are aimed at aligning the implementation with the original intent of the statute.”  

In response to questions, Wolff added that, “The current law has built in margins of profit for the retailer and the processor, and this over-order premium intended for the farmers was started back in the severe droughts of the 1980s,” he explained. “It has kept getting larger and larger, especially last year with low milk price and high input costs, when the premium was at a record high. This just put the exclamation point behind the problems in terms of the millions of dollars collected at the retail level that were not being received by the dairy producers.”   

Marvin Beshore, counsel to GNEMMA, stated that the cooperatives market milk on a day-to-day basis and have “a tremendous stake in the marketing law and the system.”   

“We appreciate what the Chairman has done to initiate this process of looking at the Milk Marketing Law. It is necessary and important,” said Beshore. “We will appreciate the opportunity to be part of the process as it goes forward.”   

Beshore emphasized the “tremendous wealth of expertise in the cooperatives,” and that the cooperatives are “owned by the producers.”   

There was discussion between Beshore and the Senator regarding how cooperatives make their policy decisions, how producer owners are represented and how open their “books” are to member-owners seeing how much of the state’s over-order premium the cooperative actually receives.   

Brubaker also asked Beshore if the eight cooperatives comprising GNEMMA made a profit last year, to which Beshore responded that he did not know the combined aggregate balance sheets as the cooperatives have business in other states besides Pennsylvania.   

Lebanon County dairy producer Daniel Brandt also gave his input. He stated that on his last milk check he received 12 cents per hundredweight reflecting the state over-order premium.  

“My cooperative is getting this money and using it for operating expenses and other bonuses. They are getting 28 cents right now and they return to me 12 cents. That’s disturbing," he said.  

Also at issue is a divide between 10% of the state’s dairy farmers who ship to private dairies, a few of which are returning the full premium of $3/cwt.

“We have worked on this issue for over a year,” said Brandt, who is a DPAC vice-chair, a county director for Pa. Farm Bureau and a state director of the Pa. Holstein Association.  

“Even if there are portions that you didn’t like, a 90% fix is better than what have now,” said Brandt.   

Joel Rotz noted that PFB is on the record for wanting to get a bigger piece of the pie to the dairy producers.  

“The main issue is greater transparency, which is what this bill is trying to achieve,” he said. “but the 900-lb gorilla in the room no one is talking about is we have the 'haves and have nots,' and who can blame the few who are getting a large premium for being concerned about what a change in the law would mean.”   

Rotz noted that PFB’s policy supports market-wide pooling of the premium.   

Berks County dairy producer Zachary Meck thanked Senate Brubaker and the committee for their willingness to continue to look at this issue. He said a dairy plant in his area sent letters out to shippers last Thursday and Friday telling them to call Senators to vote against this bill. They told shippers they would lose 40 cents/cwt.  

“I had one dairy farmer show me his milk check and wonder how can that be when I’m only getting 30 cents to begin with?” Meck noted. “As we look at this, the real question is: Why are the dairies not paying more for milk? They pay the minimum price, nothing over and above comes back to me as a dairy producer. The clock is ticking for many dairy farmers in the state of Pennsylvania.”   

Tom Krall, a Lebanon County dairy producer, attended the meeting with his wife Shirley. He told the Committee they started their dairy farm in 1987 and the very next year, the over-order premium was put in place because of a severe drought.   

“The premium has not gone away since then,” said Krall. “We have had some good years when no premium was needed, so it should have gone back to zero, but it did not. That shows something is broken, and that the premium is going to others and not to the farmers. The processors run the (Milk Marketing) Board, the farmers follow, and the consumers have no say at all, and it is their money. The system should be fixed or scrapped. It is an embarrassment. It is wrong, and we need to address it.”   

Sen. Brubaker concluded the meeting by reminding everyone that, “We are on the verge of losing a significant number of dairy producers in Pennsylvania, and as long as that’s the case, the Assembly will take action,” he said. “This is not going away. One of the first orders of business in the new year, if I am chair of this Committee, will be to bring this identical bill up or a version of it.”   

“The message here is that we shot for the stars, and now it’s time to regroup and further define what the state’s dairy producers would like to see happen from this point,” said Franklin County dairy producer Cliff Hawbaker after the meeting. Hawbaker chairs DPAC, a grassroots producer coalition that formed last November to address issues and policies on milk pricing at national, state, and regional levels. In addition to Hawbaker, Meck and Brandt, DPAC vice-chair Rob Barley of Lancaster County and board member Dale Hoffman of Potter County also attended Wednesday’s meeting.   

“This process has helped us learn who and where our opposition is,” Hawbaker added. “It was really asking a lot of the Senators to consider this complex issue late in the session, but the important thing is that this has been a good process: The issue is out in the open, and there seems to be a general attitude among some lawmakers that something needs to be done. Senator Mike Brubaker has shown tremendous leadership in calling hearings, drafting a bill, listening to all sides who will come forward and communicate their positions in the open. As Pennsylvania dairy producers, we are thankful for what Senator Brubaker has had the courage to do in starting this important process. The meeting today set the stage for producer groups, like DPAC, to regroup and work together.”   

Hawbaker noted that dairy producers are really learning a lot through these processes.   

“This exercise both in Washington D.C. and in Pennsylvania is showing us how legislation will only bring a small return for the amount of effort we put into it,” he said. “This is something we as dairy producers need to be involved with, but the reality is starting to show that we as producers need to take more responsibility in the marketing of our milk.”

To read about dealers' lawsuit against PMMB on 'stranded premium' rule, click here



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