Pennsylvania Milk Board Rejects Premium Hearing
The State Grange had asked the board to begin administrative proceedings aimed at restoring the supplement. The payment historically added between 50 cents and $1 per hundredweight, plus a fuel adjustment, to Class I fluid milk prices. The petition was submitted as producers faced higher operating expenses.
Licensed Pennsylvania milk dealers and processing plants had previously been required to pay the premium on Pennsylvania-produced milk processed and sold as Class I fluid milk within the state. Its suspension removes that charge from transactions handled by commercial dealers, while leaving a 24.16-cent-per-hundredweight cooperative procurement allowance in the state’s minimum-price calculations. That allowance is intended to cover hauling and market-balancing expenses.
The premium’s absence has also affected the competitive position of fluid-milk processors. Pennsylvania processors had argued that the state requirement put them at a disadvantage against bottling facilities in Maryland, New York and Ohio that send packaged milk into Pennsylvania without the surcharge. The change has also reduced the number of premium-related items in settlement calculations for regional distribution routes.
Supporters of the former system have said it supplied direct payments to farms. Large marketing co-operatives and some independent producers have questioned how evenly the arrangement distributed its benefits because it applied only to Class I fluid milk. Farms selling mainly to cheese, butter or milk-powder operations received little or no direct return from the premium.
Class I utilisation has declined within the Northeast Federal Milk Marketing Order, known as Order 1, reducing the total volume eligible for the supplement. Pennsylvania also lost almost 500 commercial dairy herds in one year, according to official census revisions. That represented about 40% of all farm departures recorded nationwide during the period.
Producers are dealing with lower blend prices while diesel and commercial feed costs remain high. For smaller herds, the missing payment removes revenue that had been used for seasonal debt service or hauling expenses. Lenders are reviewing farm cash-flow projections before the winter feeding season, while processing co-operatives in Pennsylvania are covering balancing costs without distributions from the state-administered premium pool.
The board’s decision comes as legislative discussions about changes to Pennsylvania’s milk-marketing system remain unresolved in Harrisburg. Dairy Farmers of America and legislative leaders have supported proposals that would distribute the premium directly to producers or replace it with wider market-stabilisation measures. In the absence of a legislative change, farm-level prices are set by Federal Order minimum formulas and market transactions.
