Milk prices jumped this month and Joe Fasula, co-owner of Gerrity’s Supermarkets, was surprised the price hike wasn’t steeper.
The price for a gallon of whole milk increased 11 cents to $4.15 from November to December and is up 17 cents, or 4.3%, over last December.
“It really should have gone up more because there’s no way they’re covering the increased costs these farmers are incurring, but it’s controlled by the Pennsylvania Milk Marketing Board,” Fasula said. “The cost of everything else is going up so significantly, I’m very surprised they haven’t passed along more cost increases. I’m happy for the consumers, but not for the farmers.”
Fasula added he was told by Valley Farms Dairy in Williamsport, the supplier for Gerrity’s grocery stores, that they don’t anticipate any immediate additional price increases.
Arden Tewksbury, manager of Meshoppen-based Progressive Agriculture Organization, feels the increase to $4.15 will benefit some farmers but won’t be enough to compensate for all their production costs.
“It’s going to help the dairy farmers in Pennsylvania who ship their milk to a Pennsylvania handler, but it’s still not going to put them up to a price that they really need,” he said.
Annette Kuzma, co-owner of Milky-Ray Dairy Farm in Vernon, Wyoming County, has been scrambling to keep up with rising costs.
“I pay the bills and they’re not getting paid because the price of milk is so terrible,” she said. “The price of feed is up and the price of milk has been at a standstill or below for years. It’s really frustrating.”
The pricing formula that determines how much farmers are compensated for the milk is set by the U.S. Department of Agriculture, not the state, and Tewksbury said it doesn’t consider the farmer’s production costs.
Tewksbury has proposed the Federal Milk Marketing Improvement Act which would amend the Agricultural Adjustment Act to require the secretary of agriculture to determine the price of all milk used for manufacturing purposes by using the national average cost of production.
Carol Hardbarger, secretary of the Pennsylvania Milk Marketing Board, noted the state differs from the rest of the country with its pricing procedures.
“Pennsylvania is really the only state that regulates prices at all three levels — producer, wholesale and retail,” she said. “A large portion of Pennsylvania counties are not included in a federal milk marketing area, so the state decided to create Pennsylvania milk marketing areas and that would allow minimum prices for producers to be established throughout the state.”
Hardbarger said the minimum wholesale prices are determined by considering the minimum producer price, and the costs of procurement, production and transportation. The minimum retail price factors in the minimum wholesale price along with the cost of storage and checkout process at the stores.
“The increased cost of transportation is partly responsible for the increase to $4.15 a gallon,” Hardbarger said. “We evaluate the average diesel fuel prices on a monthly basis.”
She added the state’s milk marketing board is taking a further look at it’s procedures given a shift in where the milk is going.
“We’re reviewing a lot of the older milk marketing regulations in Pennsylvania because they were either amended, reinforced or developed in some way when 60% to 70% of our fluid milk was staying in the state,” Hardbarger said. “Now, we have an almost reverse situation in which 60% to 70% of our milk is going out of state. We definitely produce more than we consume.”