Lot of Holstein Cow eating in a milk production farm

The Pennsylvania Milk Marketing Board voted on Aug. 11 to accept a consent order with Upstate Niagara Dairy Cooperative (Upstate), located in Buffalo, New York.

The consent order resolved a staff-issued citation the company received for bidding under Pennsylvania minimum prices under The Emergency Food Assistance Program, or TEFAP.

You may remember that I wrote about this situation recently, but I did not mention any names or refer to any companies.

Upstate was issued a citation by the board on June 2 that stated the co-op had made specific violations of Section 807 of the Milk Marketing Law and that it could be subject to revocation or suspension of its license to sell milk in Pennsylvania.

According to TEFAP award documents, Upstate planned to deliver milk to Pennsylvania locations primarily from its Williamsport processing plant.

The plant’s location had nothing to do with the issuance of the citation; rather, it was the submission of bids for below minimum prices.

Upstate was issued a citation with a warning for the first-quarter violations, mainly because individuals at USDA had communicated that it did not have to honor Pennsylvania law regarding minimum pricing for federal bids and we wanted to be fair.

This communication, however, directly conflicts with USDA’s own statements on bid solicitations assuming bidders will honor respective state laws, including those on prices.

The first quarter warning letter informed Upstate that it should contact board staff with any questions related to pricing of milk sold in the commonwealth.

Along came the third-quarter violation, which we view as more serious since a warning had already been issued. Rather than contact board staff, Upstate chose to ask an accounting firm for advice about possible allowable discounts that might be used to calculate a bid price for the third-quarter TEFAP awards. The accounting firm provided inaccurate information, leading to where we are at the present time.

Imperfect Result

In my previous article I spoke about these violations, and my hope that USDA would release the offending company from the particular contract as it had done before.

This would allow board staff time to work with other dealers to secure donations and provide Pennsylvania food banks with much-needed fresh milk supplies. Also, as in the past, portions of the contracts could be rebid by other dealers and only a few weeks’ deliveries would be disrupted.

Unfortunately, my hope was not realized, and the board and staff have undergone several months of frustrating discussions with both Upstate and USDA.

The consent order that was accepted by the board by vote on Aug. 11 is the result of those weeks of discussions. The legal case disposition can be viewed on our website, section Legal, and under Sunshine Meetings.

USDA is another matter. This government agency has chosen to be what I would personally consider less than cooperative in working toward a solution to ensure that Pennsylvania food banks — serving over 200,000 citizens of the commonwealth each month — received much-needed fresh milk deliveries. Our attorneys have been advised that our law “is our problem” and that USDA cannot discuss particular TEFAP awards with us.

The agency has refused to allow Upstate to pull out of its contract so that certain awards could be rebid. It has, however, chosen to waive the contract compliance on a weekly basis, and we do not have information in a timely enough manner to seek donations from other dealers. This is happening with USDA awareness of how its decisions are negatively impacting milk deliveries to food banks.

Having been told that USDA would not discuss the issues with our staff, I asked the Pennsylvania Department of Agriculture to attempt to resolve the issue by convincing USDA to allow Upstate to deliver milk to food banks and invoice at Pennsylvania minimums. USDA has refused to do this.

The board’s only solution would be to allow Upstate to sell milk at below minimum prices in the commonwealth, something we do not feel is appropriate and is in direct conflict with our commitment to enforce regulations equitably in all situations.

The best we can do at this time is to continue to monitor the TEFAP award process to ensure that contracts are given to those dealers who have bid, at least, the Pennsylvania minimum prices. We hope that in doing this that some of our Pennsylvania milk processors will fairly win some of the contracts.

The Pennsylvania Milk Marketing Board is always available to address questions and concerns. I can be reached at 717-210-8244 or by email at chardbarge@pa.gov.

Carol Hardbarger is the secretary of the Pennsylvania Milk Marketing Board.

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