To the Editor:

(April 2012) After recently attending a meeting in Pennsylvania and two meetings in New York state, it becomes very clear there are still some misconceptions regarding S-1640. There are many important sections of S-1640, but the two main ones are a new pricing formula and a milk supply management program.

We acknowledge that not everyone may support this bill; however, I think everyone should understand the bill.

First, we should look at the past. Number one: prices paid to dairy farmers have been very erratic since the dairy price support program was altered several times since 1981. Second: Order Reform, which surfaced Jan. 1, 2000.

Pro-Ag and a few others testified against the proposed concept of Order Reform at hearings in Alexandria, Vir. We were totally against the “end product formula” that was being proposed. Now many of the people who proposed the end product pricing formula want the formula abandoned (so do we) and to replace the formula with a competitive pricing formula, which in our opinion will not be kind to dairy farmers.

Third: all dairy farmers must remember that the value of manufactured milk in all Federal Milk Marketing Orders is the same regardless of the dairy farmers’ cost of production.

We are not a newcomer on having two classes of milk. We proposed two classes long before Order Reform.

S-1640 clearly uses two classes of milk. One for all milk used for manufacturing purposes, and one class for milk used for fluid purposes; however, we strongly feel the national average cost of producing milk as determined by the Economic Research Service, a division of the USDA, should be used to determine the value of Class II milk.

On May 1, the cost of production for 2011 will be announced, and in all probability the national average cost of production will be at least $23 per hundred weight. This means the pay price to dairy farmers shipping milk to milk handlers in Order No. 1 will be more than $24 per cwt.

In order to maintain this fair price to dairy farmers, we strongly feel there has to be a milk supply management program. Let’s get one thing straight: the milk supply management program in S-1640 does not tell dairy farmers how much milk they can produce and is geared not to cost the government any money.

What S-1640 does say is if the Secretary of Agriculture determines there is too much milk being produced, then all dairy farmers will participate in the first phase of the milk supply program. This must be done to protect the fair price that dairy farmers will receive.

If the Secretary determines there is still too much being produced, then the dairy farmers that over-produce will be charged a fee on their over-production. This fee will be charged only on the over-production of milk, but not on the dairyman’s normal production.

We feel a milk supply management program is necessary to sustain a fair price to dairy farmers. The new pricing formula will cover the dairy farmers’ average cost of production, plus a chance to return profitability to the dairy farmer.

It is impossible to have a pricing formula with which everyone will be satisfied. One reason is that every dairy farmer has a different cost of production. But, this is true today with the present pricing formula. S-1640 gives the large majority of dairy farmers a fighting chance to continue their operations, and we certainly need all dairy farmers.

Many times we have tried to evaluate how dairy farmers in various states will benefit from S-1640. We have tried this by taking unpaid labor out of the formula and with unpaid labor in the formula; however, the Economic Research Service definitely contains unpaid labor, so S-1640 will use the same formula.

Here is the kicker. Since Jan. 1, 2011, the USDA is not publishing the cost of production by individual states as they have for countless number of years. This means the comparison of one state versus the other state will be hard to do, if not impossible.

Please remember that S-1640 will give all dairy farmers a fair, fighting chance to survive. Pro-Ag can be reached at (570) 833-5776.

Arden Tewksbury, Manager, Progressive Agriculture Organization, Meshoppen, Penn.