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Milk Bonding Laws, Pricing, Debate

The recent scare to the dairy industry by the large milk company, Parmalat, clearly illustrates the need to update the existing milk bonding laws, especially in Pennsylvania. Meetings are going on with key officials in Pennsylvania to examine the present bonding laws, as well as reviewing suggested new changes to the law.

Once again, Senator Roger Madigan (R., Bradford County) will be taking the lead in proposing amendments to the bonding law. 100% bond coverage and/or three payments a month to dairy farmers will be considered, along with other proposals.

Now that Parmalat has filed voluntary bankruptcy, it might mean that dairy farmers shipping to the giant company might even be better protected than before. At least Parmalat’s actions will now be scrutinized by the bankruptcy courts.

Parmalat has asked the courts to give payments to dairy farmers top priority. Actually, as you examine Parmalat’s record in paying dairy producers, the record is not all that bad. We can think of some organizations that pay producers later than Parmalat did in January, 2004.

One of Parmalat’s biggest mistakes was not to notify their producers that their milk checks would be a couple of days late. However, a bad situation was made into a real turmoil with some of the techniques used by some organizations in recruiting Parmalat’s producers. Many producers did not know which way to go with their milk. Only time will tell if the barnstorming tactics used by some people will be a benefit to the dairy farmers. A few producers have returned to Parmalat because of the tactics used to obtain their milk. Parmalat’s problem clearly illustrates the need to update the bonding laws in Pennsylvania.

With the value of butterfat escalating dramatically (butter averages $1.80 per lb.) along with cheese prices hitting $1.50 per lb., dairy farmers will start to see their milk prices climbing in the next few months. The statistical prices could reach $16.00 this spring.

However, please remember at the two milk hearings we conducted, the 50 dairy farmers that testified all said they needed between $16.00 and $18.00 per cwt. pay price, year around for their operation. The same dairy farmers also said they wanted milk priced differently by using the average dairy farmer’s cost of production as a main ingredient in a new pricing formula.

We are patiently waiting for the proposed National Dairy Act to be introduced. This act could be the first step in pricing milk correctly to the dairy farmers. The proposed act is no way geared to gouge the consumers.

Recently, I invited Dr. Ken Bailey from Penn State to come into Northern Pennsylvania and discuss or debate some remarks Dr. Bailey has made concerning elements that affect the dairy farmers’ prices. Dr. Bailey has declined our offer. Dr. Bailey indicated (among other things), that his role at Penn State is educational and he does not care to join in a political debate. Does this mean that Penn State is non-political? Has anyone checked how much money is given to Penn State from our legislators in Harrisburg? Are you aware of the lobbying effort to obtain these funds? More later on this subject.

Sincerely,

Arden Tewksbury

Meshoppen, PA

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