Extend the over-order premium

PENNSYLVANIA — Citing continued challenges facing dairy farmers across the commonwealth, the Pennsylvania State Grange asked the Pennsylvania Milk Marketing Board (PMMB) to extend the $1 per hundredweight [11.63 gallons] over-order premium placed on fluid milk produced, processed and sold within the state. 

The over-order premium is paid for Class 1 milk that is produced, processed and sold in PA. Consumers pay for it when they buy milk.  

The grange requested the extension at a public hearing held August 30 in Harrisburg. They asked that the PMMB preserve the over-order premium to help dairy farmers, and to to bring everyone to the table to work on a more uniform solution.  

Matt Espenshade, a seventh-generation dairy farmer from Lancaster County, testified first on behalf of the Pennsylvania State Grange. His family milks 75 cows with a 20,600-pound herd average, and are members of Mount Joy Farmers’ Cooperative. Approximately 30 to 35 percent of the milk produced by the cooperative qualifies for the over-order premium. Mount Joy Farmers’ Cooperative is affiliated with Dairy Farmers of America (DFA). 

During his testimony, Espenshade said that the lingering effects of COVID-19 continue to impact profit margins.

“During these hearings in the past, much of the testimony presented before this board revolved around income over feed costs.  Obviously, this is a critical metric, as feed is one of, if not the greatest daily expense in dairy production.  However, I believe we need to note that the supply chain issues, record inflation rates and price increases that have impeded daily life for Americans, have hit Pennsylvania’s dairy sector very hard.”

Espenshade gave examples of dramatic increases in feed costs, planting, utility and animal care expenses over the past year. These situations, which would be challenging in a normal year, are exacerbated by emergency production caps placed on farmers by their cooperatives, and steep price deductions on excess milk produced over their base limits.

Also testifying on behalf of the PA State Grange, Douglas Sattazahn, owner of Zahncroft Dairy, LLC in Berks County. Sattazahn is a member of Marion Grange #1853. Sattazahn’s milk is sold to Clover Farms Dairy Company in Reading, the largest independently owned milk processor in Pennsylvania, which sources milk from over 150 farms in the state. 

“COVID-19 brought to light the precarious position of independent dairies. In April of 2020, we dumped over 40,000 pounds of milk when Clover’s storage capacity was reached, as store demand virtually came to a halt. Fortunately, the plant did not have to shut down for an extended period. But this experience pointed out how demand disruptions can affect the independent producer who cannot rely on the protections afforded by a cooperative.” 

Sattazahn talked about the benefit of the premium to the operation of a young producer who chose to make an investment in PA, and stated that he hoped the board will choose to continue that investment in these producers. 

The Pennsylvania State Grange testimony concluded with a reminder that all parties represented at the hearing wanted the same thing, “that Pennsylvania milk be the first choice served on Pennsylvania dinner tables.”

In addition to its support of the over-order premium, the Pennsylvania State Grange is seeking an amendment to the Pennsylvania Tax Code to establish a dairy farmer tax credit. This production-based tax credit would be triggered by predetermined statewide average profit margins and metrics. It could act as an additional safety net when either milk prices paid to farmers fall, or when the costs of production rise relative to one another. 

As of September 9, the PMMB had not yet announced its decision regarding the over-order premium. The current order expires at midnight, September 30.

Information contributed by the Pennsylvania State Grange. The grange was founded in 1873 to be an advocate for PA farmers, families and the communities in rural PA. Learn more about it at www.pagrange.org.