Pennsylvania Milk Marketing Board extends over-order premium to June

The Pennsylvania Milk Marketing Board extended the state’s over-order premium another six months, against the wishes of some industry groups.

The board extended the $1 per hundredweight premium for six months starting Jan. 1, saying it needed more time to consider a change to the system.

“We do not intend to in effect ‘kick the can down the road,’” the board said, in its Dec. 14 general orders.

The move went against a request for a shorter extension made by the Pennsylvania Farm Bureau and Pennsylvania Association of Dairy Cooperatives during a Dec. 7 hearing. The groups wanted only a three-month extension to push the milk marketing board to reform the system.

Pennsylvania Agriculture Secretary Russell Redding tested that he did not oppose the six-month extension but that the milk price premium could not continue indefinitely in its current form.

Redding proposed three criteria be a part of an adjusted premium structure: premium dollars be evenly distributed among dairy farmers; The amount charged to Pennsylvania consumers is not substantially more than what is distributed back to farmers; and the distribution system not provide incentives for “shell games” where processors avoid paying premiums by selling or purchasing milk across state lines.

The Pennsylvania Grange released a statement applauding the six-month extension, saying the move “demonstrates a commitment to explore ways to further assist Pennsylvania dairy farmers.” The Pennsylvania Association of Milk Dealers and several independent milk processors also supported the longer extension.

Next steps

The over-order premium, conceived in 1988, is built into the minimum retail milk price, which is also set by the Pennsylvania Milk Marketing Board. Whether it works as intended has been a hotly debated topic among dairy farmers and other groups for years.

Currently, milk qualifies for the premium only if it is sold as a fluid product, and farmers have no control over how their milk is used. Additionally, only milk that stays in the state for processing and retail sale is eligible.

The milk marketing board began holding hearings on the over-order premium in 2019. Since then, nine hearings have been held, including a five-hour long hearing in August that saw testimony from dairy farmers, independent processors, cooperatives, lawmakers, farm groups and Redding.

Changes to the premium system would likely require legislative action. State Sens. Elder Vogel, R-Beaver, and Judy Schwank, D-Berks, chairs of the Agriculture and Rural Affairs Committee, said in a letter they hoped to begin work in the 2023-24 legislative session to examine the over-order premium and possible draft. legislation to address any issues.

(Reporter Rachel Wagoner can be reached at 724-201-1544 or rachel@farmanddairy.com.)

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