Pennsylvania’s milk price regulator hopes to regain dairy farmers’ trust by reworking outdated policies and by better explaining its role.
The state Milk Marketing Board last week released the results of a farmer survey, which found that the board just isn’t very popular these days.
Only a quarter of respondents said the state’s current milk pricing system boosts their income, and less than 20% were confident that the over-order premium is distributed fairly.
The number of survey participants is listed as unknown due to distribution challenges, but based on the questions with the largest number of responses, it appears that close to 400 people provided feedback.
Some of those respondents even called for the board or its price-setting mechanisms to be abolished.
“We see that (criticism) as an opportunity, really,” said Carol Hardbarger, the board member who wrote the report.
Hardbarger and board Chairman Rob Barley were appointed last summer, vowing to reinvigorate the three-member panel and aid farmers pummeled by a multiyear price slump.
The first step was understanding what farmers wanted and how much they knew about the board’s responsibilities.
The board sets the state minimum retail price for milk and the over-order premium, which is paid to farmers on fluid milk produced, processed and sold in the state.
Despite the board’s name, “we aren’t tasked with marketing, but we do feel a responsibility to help clear up some of these misconceptions,” Hardbarger said.
The survey, conducted earlier this year, found that farmers lack knowledge about certain components of milk’s notoriously complex pricing system&tstr; and that they’re tired of the status quo.
Almost half of respondents said they are less competitive than farmers in other states, largely because of Pennsylvania’s minimum prices.
“They perceive that processors are bringing in milk from out of state to take advantage of the higher retail prices in Pennsylvania,” Hardbarger said.
Minimum prices were created during the Great Depression to protect farmers from price wars.
Nowadays, it’s true that a lot of milk processed out of state does get sold in Pennsylvania, but much of that milk was actually produced here, Hardbarger said.
By processing the milk out of state, companies avoid paying the over-order premium. To qualify, milk must be produced, processed and sold in the state &tstr; all three.
Though not all processors are using this loophole, the board estimates it could account for a 20-30% loss in premiums.
“The people that are not getting it certainly have the right to be upset about that,” Hardbarger said.
In the survey, a number of farmers suggested that Pennsylvania close its borders to outside milk, but that’s not going to happen. Such a prohibition would violate interstate commerce laws, Hardbarger said.
Education might allay some of farmers’ concerns.
Hardbarger contends that Pennsylvania farmers may not be at quite the disadvantage they perceive.
For example, some big processors list their national headquarters, not their local bottling plant, on their jugs.
As a result, milk might seem like it came from Texas even if it was produced and packaged in Pennsylvania, Hardbarger said.
And exporting is a two-way street. While some out-of-state milk is sold here, Pennsylvania also sells a lot of milk in other states, she said.
Cooperatives often pool premiums from multiple states, so while some over-order premium money is likely going to out-of-state farmers, some premiums from other states could be going to Pennsylvanians.
To Hardbarger, explaining these market intricacies to farmers clearly and tactfully is a top priority.
But the board is also acting to reduce the uncertainty surrounding the over-order premium.
The board has proposed a regulation to force co-ops to itemize the premium on farmers’ milk checks, something independent processors already do.
Co-ops argue that making the change would be too costly, but Hardbarger said the regulation sends a strong message about transparency.
That plan is undergoing regulatory review.
Another regulation, which would increase to 90 days the notice for buyers to drop dairies’ contracts, is close to being approved.
“That’s definitely something that benefits the farmers,” Hardbarger said.
And if federal rules are relaxed to allow whole milk back into the School Lunch Program, the board plans to assist with the transition.
Whole milk is more expensive than the low-fat and skim options currently allowed, so schools might be hesitant to make the switch without some help, Hardbarger said.
One of the trickiest decisions before the board is how to handle the high retail cost of milk.
Eliminating that price support, as some survey respondents urged, could be disastrous for independent processors, Hardbarger said.
In the meantime, Hardbarger and the board staff are trying to build better relationships through the industry &tstr; with co-ops, processors and especially farmers.
Board members are attending more producer meetings and making themselves more visible than previous members were, Hardbarger said.
She and the board staff are translating some of the highly technical documents on the agency website into language that is easier to understand.
Farmers deserve to know more about pricing without being accountants, Hardbarger said.
The board is also working on a series of articles explaining its role that will be published in Lancaster Farming, and in Farm Bureau and Center for Dairy Excellence publications.
Through these outreach and regulatory initiatives, Hardbarger hopes dairy farmers will see that the board does care about them and is acting on their concerns.
“Hopefully, over time they’ll believe that,” she said.
Ag Secretary Russell Redding is on board.
Redding, who oversees the state Ag Department but not the independent Milk Marketing Board, said he is glad the board has become more vocal about what it does, but he recognizes the board will need time to implement its solutions.
“They’ve gotten a lot better at telling their own story,” Redding said. “I think they’ve sent the right signals to the dairy community.”