The Pennsylvania Farm Bureau (PFB) asked the Pennsylvania Milk Marketing Board (PMMB) on Wednesday to keep the Class I over-order premium price for milk at its current rate, citing declining retail prices and increased costs.
Testifying before the PMMB, a PFB official also referenced uncertain crop conditions due to an unusually wet summer season. Although dairy prices were healthy in 2014, the bureau said, a market surplus of milk points to uncertainty.
“The current milk prices have been a shot of reality,” Somerset County dairy farmer Glenn Stoltzfus, PFB’s state dairy committee chairman, said. “And though feed costs have inched down, the price of milk has dropped much more quickly. All of a sudden, we’re barely breaking even.”
Stoltzfus, who operates Pennwood Farms in partnership with three of his brothers, said that rapid price drops combined with variable crop quality makes profitable harvests difficult, pointing out that corn and hay yields may not be nutritionally adequate for their farm’s dairy cows.
Mike Evanish manages MSC Business Services, an affiliate of PFB providing financial services to farmers for farm operations. He said that from 2008 to 2013 the percentage of milk income required to fund crop production averaged more than 44 percent—far above the typical 30 percent industry average.
“The need to set aside a greater portion of milk income for the purchase of feed and feed crop production inputs has become the norm on today’s dairy operations,” Evanish said. “Milk income that was previously available to finance other costs must now be diverted toward feed and crops.”
The over-order premium and the fuel adjuster add-on mandated by PMMB are assessed on Class I (fluid) milk that is produced, processed and sold entirely within the commonwealth. PFB asked the board to keep the premium at $1.60 per hundredweight and to maintain the current fuel adjuster for the six-month period beginning Oct. 1.
Pennsylvania is the nation’s fifth largest dairy producing state; PFB is the state’s largest farm organization with a volunteer membership of more than 61,400 farm and rural families.
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