For Immediate Release
12/9/09

Agriculture and Rural Affairs Committee Hearing Examines Milk Pricing Structure

HARRISBURG – In an effort to help struggling dairy farmers, the Senate Agriculture and Rural Affairs Committee examined the current milk pricing structure at a hearing in Harrisburg today, according to Committee Chairman Senator Mike Brubaker (R-36).

"Understanding the complex and convoluted milk pricing structure is the first step toward addressing the dairy crisis in our Commonwealth," Brubaker said. "While many of the solutions to the milk pricing crisis can only be made at the federal level, today's hearing was very useful in identifying some of the problems that dairy farmers are experiencing and what steps we can take at the state level to help dairy farmers."

Brubaker said that many dairy farmers have experienced a steep decline in prices for their product in the past year. Perry County producer Dan Rice cited a 37 percent decline in prices paid since 2008, and all four members of the dairy producers panel reported that current production costs are exceeding the prices they are being paid. Dairylea Cooperative, Inc. Vice President of Economics and Risk Management Edward Gallagher testified that the current crisis is the worst he has ever seen in his lifetime. He added that while prices have improved recently, it will take a sustained period of high prices to undo the damage done to the industry over the past year.

Brubaker noted that the complex milk pricing structure makes it difficult to determine the best course of action to help dairy farmers. Pennsylvania State University Professor of Agriculture Economics Dr. James Dunn and Westmoreland County producer Rick Ebert, who has a bachelor’s degree in dairy production and 27 years in the industry, each commented that they did not have a complete understanding of how each item included in monthly milk checks is calculated.

Pennsylvania Department of Agriculture Acting Secretary Russell Redding joined producers Logan Bower and Daniel Brandt in urging the adoption of a simplified pricing structure and greater transparency in the distribution of premiums paid by consumers to dairy farmers.

A number of testifiers voiced concerns about premiums that are paid by consumers but not returned to dairy farmers. Representatives from the Pennsylvania Department of Agriculture and the Pennsylvania Milk Marketing Board offered differing interpretations of how each penny of the retail price paid for a gallon of milk is allocated. Each member of the dairy producers panel also provided examples of their milk checks to the committee to offer additional information on the prices paid to dairy farmers in comparison to the price consumers pay for milk. Brubaker said the committee would take a closer look at how these premiums are distributed.

The hearing also featured testimony from Mid-East Order Deputy Market Administrator Paul Huber, Agricultural Law Resource and Reference Center Director Ross Pifer, and Pennsylvania Association of Milk Dealers Executive Vice President Earl Fink.

Video and audio of the hearing is available online at senatorbrubaker.com.

Contact:

Kristin Crawford
(717) 787-4420

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