By Philip Gruber
After years of farmers clamoring for change, Pennsylvania officials are taking another shot at rebuilding the state’s dairy premium.
The latest effort began with Pennsylvania Farm Bureau two years ago and continued in 2022 with hearings by the Milk Marketing Board, which sets the over-order premium.
Now it’s the Legislature’s turn to get involved.
The Pennsylvania Senate Agriculture and Rural Affairs Committee will hold a hearing on the premium 10 a.m. April 25 in Hearing Room 1 of the state Capitol’s North Office Building.
Here is what you need to know about the concerns with the premium, and the possibilities — and difficulties — of reform.
What is the over-order premium?
The over-order premium is a state-mandated payment to Pennsylvania dairy farmers. It is generated by milk that is sold as a fluid product, not turned into cheese or butter, that stays in Pennsylvania for processing and retail sale.
The premium is “over order” because it is paid on top of the Federal Milk Marketing Order price.
The idea is that consumers pay a little extra for milk as a way to support local farmers and maintain a robust supply of milk.
The Milk Marketing Board created the premium on Sept. 1, 1988, to help farmers through a drought that inflated feed costs during a time of low milk prices.
The premium was set at $1.05 per hundredweight, nearly identical (ignoring inflation) to today’s rate of $1 per hundredweight plus a fuel adjuster.
The Northeast’s statistical uniform price — a benchmark milk price — was $20.75 per hundredweight in February, so the premium is a relatively small part of a farmer’s milk check.
But it is the only part of the milk check that the state can control, and it is believed to provide millions of dollars annually to Pennsylvania farms.
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