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PA STATE GRANGE REQUESTS PMMB MAINTAIN DAIRY OVER-ORDER PREMIUM |
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For information contact: Carl Meiss, Public Relations Director Ph: (717)-737-8855 or (800)-552-3865 Email: publicrelations@pagrange.org |
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December 9, 2009 |
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FOR IMMEDIATE RELEASE
Contact: Carl Meiss Public Relations Director
PA STATE GRANGE REQUESTS PMMB MAINTAIN DAIRY OVER-ORDER PREMIUM HARRISBURG, Dauphin Co. (Dec. 9) – Citing continued depressed milk prices for dairy farmers, the Pennsylvania State Grange has asked the Pennsylvania Milk Marketing Board (PMMB) to maintain the $2.65 over-order premium for milk produced, processed and sold in the state. Testimony on behalf of the Grange was offered by Matt Espenshade. Espenshade is a seventh generation dairy farmer from Lancaster County. He and his father milk 75 cows on a farm that has been operated by their family since 1867. Espenshade also serves as Master of Elizabethtown Grange #2076. During his testimony at the December 2 hearing, Espenshade shared how low milk prices have affected his business. For the past 14 months, the price for milk has been below their cost of production of approximately $17.00 per hundredweight. “Our blend price for the past month was $12.07. During that time, our feed costs per hundredweight stood at $8.00, leaving just $4.07 to pay every other expense on the farm, a mere 35 cents for every gallon of milk sold,” said Espenshade. Like many farmers, the Espenshades have taken cost saving measures where possible. Cattle rations have been reformulated several times to maximize all purchased feeds. “Many producers have opted to leave the dairy industry. Many more are left hanging on in a perilous financial situation. Each dairy farmer that stays in business and continues to see financial loss risks losing everything”. Espenshade pointed out that for every day that milk is priced at lower than $12.00 per hundredweight, it will take a day of milk priced at over $22.00 just to make up the difference. “It will literally take record milk prices for an unheard of length of time to recover,” said Espenshade. At the annual convention of the Pennsylvania State Grange, held in October, the delegates overwhelmingly called for a milk price that was “beneficial to the dairy farmer.” The National Grange continues to advocate for change in our current milk pricing system. At the National Grange Session in Grand Rapids, Michigan, delegates approved policy, seeking reforms in the Federal Milk Marketing Order system. The National Grange also supports measures that would revamp the Dairy Product Price Support and Milk Income Loss Contract programs. In concluding his testimony, Espenshade reminded the Board of the importance of the over-order premium. “The money you choose to invest in the over-order premium is not just supporting the local farmer, but the businesses they depend on as well. To be honest, the premium you approve will not spend much time in the pockets of the average farmer. This premium will help dairy producers maintain farm equity and pay down the debt that has accumulated.” The Pennsylvania Milk Marketing Board is expected to announce their decision on December 16, 2009. Mr. Espenshade's entire testimony follows: Pennsylvania Milk Marketing Board Hearing Testimony Matthew D. Espenshade On behalf of thePennsylvania State Grange Pennsylvania Department of Agriculture Building December 2, 2009 To the Members of the Board, My name is Matt Espenshade. I am a seventh generation dairy farmer from Lancaster County. The farm has been a part of my family since 1867. My father and I milk 75 cows, with a 21,000-pound rolling herd average, and we raise our own heifers as well. We have no hired help to assist in the daily operation of the farm. I am here on behalf of the members of the Pennsylvania State Grange. Today, the Grange requests that the Pennsylvania Milk Marketing Board extend the $2.65 over-order premium payment. I would like to begin with a thank you to the Board. On June 3, I had the opportunity to address you for the first time. After hearing the testimony presented that day, this Board approved an over-order premium of $2.15. Several months later, at an emergency meeting, the Board raised the over-order premium to $2.65. The steps you have taken have surely aided dairy producers in our state during these difficult times. It has been five months since I spoke to you, and I honestly wish I had better news to share. But the truth is, our dairy farmers in Pennsylvania continue to suffer under depressed milk prices. As I shared previously, our cost to produce a hundredweight of milk is approximately $17.00. The last time the milk price was above that level was October of 2008. For the past year, the price we have received for our milk has averaged $12.89. Thus, our farm, like many others in Pennsylvania, has been operating at a financial loss for the past 14 months. Our blend price for the past month was $12.07. During that time, our feed costs per hundredweight stood at $8.00, leaving just $4.07 to pay every other expense on the farm, a mere 35 cents for every gallon of milk sold. The MILC payments have been helpful during these trying times, but their financial impact to our bottom line is dwindling, and they will soon expire. Hoard’s Dairyman magazine reports that we will see 40 cents for November milk, and December milk will garner a nickel. We have taken cost saving measures as well, including moving away from the more expensive bagged feeds to getting bulk deliveries whenever possible. All of our cattle rations have been reformulated, trying to maximize every bit of feed we have to purchase. Shortly before I spoke before this Board in June, my father and I sat down with our lender to discuss our situation. We asked if buying cows and expanding during this time was the answer. His response was, “Why, are you looking to lose more money?” In the end, we were given an extension of $60,000 to our line of credit. It allowed us to catch up on many bills, and even bring in a hoof trimmer to tend to our cows for the first time in a year. However, when you factor in a $10,000 a month feed bill, the extension did not last long. Currently, our family is losing $4.00 per cow per day, while milking 75 cows. We have been seeing this type of loss every day for the past year. Naturally, the money to cover this loss has to come from somewhere. It is no wonder that Farm Credit has called the burn rate on farm equity “catastrophic”. I shudder to think just how long it will take to pay off the debt our farm has collected. For every day that milk has been at $12 per hundredweight or lower, it will take a day of milk priced at greater than $22.00 per hundredweight, just to make up the difference. It will literally take record milk prices for an unheard of length of time to recover. Many producers have opted to leave the dairy industry. Many more are left hanging on in a perilous financial situation. Each dairy farmer that stays in business, and continues to see financial loss risks losing everything. I have a difficult time understanding how these could be our only two options. I have been to two dairy dispersal sales in the recent weeks. Afterwards, I realized that what a local dairy producer pointed out was true: in the early months of this dairy collapse, when farmers would gather, it was all anybody would talk about. However, today, nobody talks about it. Everyone is facing the grim reality that they might not make it through, and has at least given consideration to their own exit strategy. It is generally agreed that there are too many cows making too much milk. The number of cows must decrease in order to tighten the milk supply. The decrease in cow numbers, though not often talked about, is expected to come from farmers going out of business. However, if you look around, not as many farms are selling as we might expect. The reason being that right now, many dairy producers cannot afford to sell. Cows and equipment are selling at a fraction of their value. I have stood in empty barns with much nicer milking facilities than I have at home. And what of the farmer? What kind of job opportunities are available today for a 55 year old unemployed farmer with a high school education, entering the job market for the first time. How will that person support a family? The thought alone is enough for many farmers to press on. It is simply that they have no other viable choice. At the annual convention of the Pennsylvania State Grange, held in October, the delegates overwhelmingly called for a milk price that was “beneficial to the dairy farmer.” In addition, policy was adopted, stating “any facility where a monetary incentive is accepted, as part of the dispersal, no dairy cattle should be allowed on that facility for a period of five years”. While I grant that this length of time may not be attainable, personally, I believe the one-year waiting period required in the CWT program needs to be extended. This herd buyout program, funded by dairy farmers themselves, should be an honorable way to exit the dairy industry, not just a means to bypass these difficult times, only to reenter dairying when the markets rebound. In addition, in herds that accept the buyout, I believe a substantial percentage of heifers and young stock should be removed as well. The National Grange continues to advocate for change in our current milk pricing system. At the National Grange Session this past week in Grange Rapids, Michigan, delegates approved policy, seeking reforms in the Federal Milk Marketing Order system. The National Grange also supports measurers that would revamp the Dairy Product Price Support and Milk Income Loss Contract programs. Next Tuesday will be at the local middle school, speaking to eighth graders at a Career Day event. I am to address these students about careers in agriculture. After the past 14 months, I am sure one might expect that my recommendations would be less than resounding. However, at heart, I remain optimistic. I honestly believe that four years from now, when these students are graduating high school, and selecting college majors or entering the workforce, jobs in agriculture in Pennsylvania will be viable and attractive. The money you choose to invest in the over-order premium is not just supporting the local farmer, but the businesses they depend on as well. To be honest, the premium you approve today will not spend much time in the pockets of the average farmer. This premium will help dairy producers to maintain farm equity and pay down the debt that has accumulated. The decision you make today will have a direct impact on my family, and other farm families across the state. I sincerely hope that you will maintain, if not increase, the over-order premium for milk sold in Pennsylvania. Thank you for your assistance to dairy farmers in the past and your consideration of the matter before you today. ---END---
PA State Grange 20 Erford Road Suite 216 Lemoyne, PA 17043 800-552-3865 |