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Its Time To Examine The Laws
Another sigh of relief was felt on Wednesday afternoon (December 31), when Parmalat Milk Company was able to post adequate bonds to cover the milk they purchased in New York State. While hundreds of dairy farmers are jittery about Parmalats future (and rightfully so), presently, Parmalat is meeting its financial responsibilities. Parmalats next test will come around the middle of January when the Federal Order #1 pool settlements have to be met. They were met in December, 2003 on a timely basis.
While many producers are inquiring about new markets, those new markets may not be that plentiful. In Pennsylvania, a producer must give a milk handler 28 days notice before they can move their milk. We will check with both Pennsylvania and New York officials to see if there are enough red flags surfacing regarding Parmalat to allow the 28 days to be waived.
The Pennsylvania Marketing Board has informed Parmalats PA producers of the coverage that Parmalat has for the dairy farmers and the diary cooperatives. This is two weeks milk. It appears New York producers could be nearly covered.
The most exposure a milk handler can have is around the 16th of a month. At that point they owe for the first 15 days of the current month, plus all of the milk for the last 15 days of the preceding month, plus the difference between the advance price and statistical price for the first 15 days of the preceding month. This now represents over 30 days milk. This is too much.
It certainly is time to examine the bonding laws, especially in Pennsylvania. Those of us who witnessed the horrible bankruptcies of the late seventies and early eighties know the bonding laws were improved at that time. However, the coverage is inadequate and changes must be made. We are already talking to key legislatures in Pennsylvania about possible changes in the bonding laws. There are other avenues that Parmalat independent producers should be thinking about if the company defaults. However, at this time, everything looks good for Parmalat. We will carefully monitor the situation.
Dont forget the next milk hearing on January 12 at the Tioga County Fairgrounds in Whitneyville, PA. The hearing will begin at 10:00 a.m. Nearly 30 farmers, business people, and consumers are lined up to testify. Aides from Senator Specter and Senator Santorums office will be there along with aides from Congressman John Petersons office.
The hearing is taking on additional concerns with Parmalats potential problems and the Mad Cow Disease in Washington. Everyone is welcome to attend.
Pro Ag can be reached at (570) 8335776.
Manager, Pro Ag
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