Agriculture Secretary: Reforms Needed to Improve PA Dairy Farms' Financial Stability

Jun 29, 2010, 11:45 ET from Pennsylvania Department of Agriculture

Changes at State Level Needed to Bolster Diary Industry, Restore Lost Equity

HARRISBURG, Pa., June 29 /PRNewswire-USNewswire/ -- Agriculture Secretary Russell C. Redding today told the state Senate Agriculture and Rural Affairs Committee that while significant work by the Rendell administration has boosted support for Pennsylvania's 7,400 dairy farms, further reforms are necessary to bring about positive, long-term benefits for the state's largest agriculture sector.

"For the past 18 months, Pennsylvania dairy farmers have been dealing with a crisis of price and a crisis of confidence in the marketplace. Today's hearing is an important opportunity to discuss the challenges facing the dairy industry and the work being done to support Pennsylvania producers," said Redding, who thanked senators for convening the hearing.  

"Through the work done to bring 'stranded premiums' back to producers, we have addressed part of the price crisis. Today's hearing and subsequent reforms are critical to addressing the confidence crisis and will bring much needed long-term changes to milk marketing activity in Pennsylvania," Redding added.

The Senate committee hearing represents the first public discussion focusing on the dairy industry since the Pennsylvania Milk Marketing Board's June 2 decision to change its method of calculating over-order premium payments on milk produced, processed and sold in the state.

This change, which takes effect on Oct. 1, is projected to bring $6.7 million in so-called "stranded premiums" – funds paid by consumers at the retail level that are kept by out-of-state processors and do not return to in-state producers.

Governor Edward G. Rendell and the Department of Agriculture have worked since 2006 to encourage the Pennsylvania Milk Marketing Board to use its full authority to influence price at the state level. The board's recent change in payment calculation came as a result of a petition filed by the Governor, Redding and the Pennsylvania Milk Marketing Board staff.

Among the recommendations Redding made to the Senate panel were to amend the Milk Marketing Law to enable the Milk Marketing Board to assess the over-order premium on two subsets of milk it does not cover: milk produced by a Pennsylvania dairy that leaves the state for processing, but re-enters and is sold at retail; and milk produced and processed in Pennsylvania that leaves the state through a wholesale transaction, but re-enters for retail sale.

"Pennsylvania's Milk Marketing Law remains a viable and responsive law capable of providing true benefit to our dairy producers," Redding stated. "As one of only a handful of states to have such an advantage, it is important we be proactive in ensuring the law accurately reflects not just today's dairy industry, but the industry that will exist in the years to come."

The full text of Redding's testimony is available at by clicking on "Newsroom."

For more information on Pennsylvania's dairy industry, visit

Media contact: Justin Fleming, 717-787-5085

SOURCE Pennsylvania Department of Agriculture