Pennsylvania Agriculture Secretary Russell Redding applauded changes to milk pricing, announced Nov. 5 by the Pennsylvania Milk Marketing Board (PMMB), benefitting both Pennsylvania dairy farmers and consumers. The changes may adjust prices paid to dairy farmer cooperatives upward and adjust prices paid by consumers downward.
“We congratulate the PMMB for acknowledging that the state’s milk producer-owned cooperatives, and not just its milk dealers, bear costs for services, which ensure a fresh, safe and abundant fluid milk supply is delivered from the farm gate to consumers,” says Redding. “Both should be compensated equitably in the setting of producer milk prices.”
The PMMB issued an order announcing they would develop a reporting mechanism for cooperative costs similar to that in place for milk dealers that will allow the board to accurately determine relevant cooperative costs in the price to producers.
The order was the result of a hearing initiated at the request of Pennsylvania milk cooperatives, who believe the current PMMB producer pricing formula results in inequitable treatment of cooperative member dairy farmers versus independent dairy farmers.
When milk dealers buy milk directly from individual dairy farmers for use as fluid drinking milk, the dealers incur the costs of providing field services associated with procuring this milk, which they pass on to consumers through the minimum retail price. But when milk dealers instead buy milk from cooperatives, the cooperatives provide all of those field services.
“The field services that cooperatives provide to their members make it unnecessary for milk dealers to incur certain costs, yet the value of those services was not previously being recognized in setting prices,” Redding adds. “We urge the board to develop the mechanism to accurately determine these costs without delay, and then take the necessary steps to ensure the cooperatives are adequately compensated in the minimum producer price for the costs of the services they provide.”
The cooperatives had also asked for changes to the retail price formula, alleging it currently results in Pennsylvania consumers paying some costs for some fluid milk that ends up being sold out of state.
In its order, the board agreed with the position of the Pennsylvania Department of Agriculture that Pennsylvania consumers should not pay for costs for that milk and announced that the board will review the current formula to determine whether changes are necessary.
“We also believe that the PMMB championed the interests of Pennsylvania’s farmers and consumers in ruling that the retail price should not reimburse dealers for costs incurred to acquire milk that is subsequently shipped out of state,” Redding adds. “The retail milk price established by the board for Pennsylvania consumers should be calculated precisely enough to eliminate those costs entirely. No amount should be charged to our state’s consumers to pay for milk going out of state.”
Pennsylvania Department of Agriculture officials urged the board to undertake the measures outlined in the Nov. 5 order as soon as possible. PD
—From Pennsylvania Department of Agriculture news release
