Pennsylvania Farm Bureau (PFB) asked the Pennsylvania Milk Marketing Board (PMMB) to keep the Class I over-order premium price for milk at $1.60 per hundredweight and to maintain the current fuel adjuster for the six-month period beginning October 1, 2015.
During testimony before the PMMB, Farm Bureau noted dairy farmers are facing declining milk prices, increased costs from purchased feeds and fuel, and an uncertain crop harvest due to a wet summer. While dairy farmers enjoyed higher prices in 2014, a glut of milk on the market is shrinking profitability and ushering in a time of uncertainty.
“The current milk prices have been a shot of reality,” said Somerset County dairy farmer Glenn Stoltzfus, chairman of PFB’s state dairy committee. “And though feed costs have inched down, the price of milk has dropped much more quickly. All of a sudden, we’re barely breaking even.”
Stoltzfus, who operates Pennwood Farms in partnership with three of his brothers, said the farm tries to prepay expenses during times of market volatility, but the rapid drop in prices, coupled with questionable crop quality, may make that difficult. Looking ahead to harvest, Stoltzfus said crop quality varies greatly by field, ranging from very good to very poor, and corn silage and hay harvests may not be enough to meet the nutrition needs of the farm’s dairy cows.
Dairy farmers are now spending a greater amount of their income for the purchase and production of feed, said Mike Evanish, manager of MSC Business Services – an affiliate company of PFB that provides an array of financial services helping farmers manage their farm operations. From 2008 to 2013, the percentage of milk income needed to purchase feed and pay for crop production inputs averaged more than 44 percent – well above the typical average of 30 percent, according to Evanish.
“The need to set aside a greater portion of milk income for the purchase of feed and feed crop production inputs has become the norm on today’s dairy operations,” Evanish said. “Milk income that was previously available to finance other costs must now be diverted toward feed and crops.”
The over-order premium is essential to help Pennsylvania dairy farmers weather this time of uncertainty, Stoltzfus said.