Jun. 17, 2015

HARRISBURG – The House Agriculture and Rural Affairs Committee, chaired by Rep. Martin Causer (R-Turtlepoint), held an informational meeting Wednesday to discuss legislation designed to bring transparency to the payment of certain state-mandated premiums to Pennsylvania milk producers.

House Bill 1265 would require any payment made to a dairy farmer to clearly delineate the dollar amount of the total that consists of money collected from the state mandated over order premium. The over order premium was established in 1988 to support Pennsylvania dairy farmers and help protect them from fluctuations in the national and global markets. The premium is included in the price of milk paid by Pennsylvania consumers.

“The meeting today was very informative,” Causer said. “It really helped to shed some light on how our dairy farmers are being paid for the milk they produce, how premiums paid by Pennsylvania consumers are being used, and the complexities of the system overall.”
Several perspectives were offered during the meeting, including those of the bill’s sponsor, along with dairy farmers, cooperatives, milk dealers and the Pennsylvania Milk Marketing Board (PMMB).

“A Pennsylvania family farmer has the right to know how much of the payment he is getting for the milk sold off his farm comes from a state-mandated premium, regardless of whether that farmer sells his milk to a cooperative or a milk dealer,” said Rep. John Lawrence (R-Chester County), the author of the bill. “The state-mandated over order premium should be transparent at all levels, but particularly to the family dairy farmer.”

Dairy farmers Rob Barley of Lancaster County, Nelson Troutman of Berks County and Dan Brandt of Lebanon County each indicated their support for the legislation, saying it would bring an added level of transparency and help build trust among dairy farmers, milk dealers and cooperatives. Brandt noted that Pennsylvania consumers are told the over order premium they pay is specifically supporting the state’s dairy farmers, and it is important to ensure that’s the case.

William Beeman, co-chairman of the Northeast Council of the Dairy Farmers of America (DFA), a nationwide milk cooperative, said he has not “heard any resounding complaints” about the way the state’s over order premiums are being paid and believes the legislation is unnecessary. He indicated DFA combines all the premiums it collects on behalf of its members and then returns the money to members in the form of premiums on things such as quality and volume.

“House Bill 1265 would disrupt the way we pay our members and change the way we conduct business,” Beeman said. “The Pennsylvania Milk Marketing Law specifically authorizes cooperatives to blend the proceeds of all sales and make payments to member farmers as the members determine through their cooperative governance. Federal law provides the same right.”

Beeman was joined by Dan Risser, president of the Mt. Joy Dairy Farmers Cooperative Board, and both men indicated the legislation would create additional administrative costs for their organizations and did not believe it would help dairy farmers.

Under current law, payment and full disclosure of the state-mandated milk premium is required when a “milk dealer” makes a payment to a “producer.” However, the law views cooperatives and their members together as a single “producer,” so there is currently no statutory requirement for cooperatives to delineate payment of the over order premium to their members.

Earl Fink, executive vice president of the Pennsylvania Association of Milk Dealers, indicated that the dealers who are members of his organization have been showing the amount of the state over order premium on monthly producer statements for nearly 18 years.

Following the meeting, Causer spoke with Dale Hoffman of Kar-Dale-Acres in Shinglehouse, who traveled to Harrisburg to watch the proceedings. Hoffman, who is a member of a milk cooperative, said he has never seen a line item on his check representing the state over order premium. He supports the measure. “We need transparency to ensure the money is being used like it’s supposed to be used – to support Pennsylvania dairy farmers,” he said.

For additional information, including written testimony and video of the full hearing, visit www.repcauser.com/agcommittee.aspx.

Representative Martin T. Causer
67th District
Pennsylvania House of Representatives

Media Contact: Patricia A. Hippler
RepCauser.com / Facebook.com/RepCauser