Milk Marketing Board

Producer payments must be accurate and on-time, partly depending on weighing and sampling of milk at the farm. Milk truck drivers are licensed by demonstrating knowledge of pickup procedures including sampling. Dealers then can determine minimum value for milk based on weight and use. Auditors review monthly reports for milk value and payments to producers. In FY 2020-21, 99.90 % of producer payments were accurate and on-time; underpayments found by Board auditors were paid on the next checks.

The Milk Producers’ Security Act protects producers against non-payment by milk dealers. Most dealers provide bonds for about a 30-day purchase of producer milk. Each year new and renewal dealer applications are reviewed for bond requirements. New or renewal licenses are not approved until bond or security fund requirements are met. Producers who do not receive payments as required by Law are entitled to file claims against dealers’ bonds. This year there were no producer claims against dealer bonds.

The Board held two hearings to set level and duration of the over-order premium (OOP), an amount over Federal Order class 1 milk produced, processed and sold in PA. At both hearings, the Board accepted industry recommendations to provide the most benefit to producers, while not threatening markets and providing milk to consumers at reasonable cost. OOP flows from retail sales to wholesale and is then paid by dealers to PA producers. Monthly audits by Board staff ensure producers are paid correct OOP.

The Milk Marketing Law requires the Board to set minimum cost-based wholesale and retail prices for fluid milk products. Prices are based on audited costs provided by Board staff and industry representatives at public hearings held for each of the six Milk Marketing Areas. The average dealer costs are added to minimum producer prices to arrive at minimum wholesale prices. In-store handling costs are then added to the minimum wholesale to arrive at minimum retail prices per product and container size.

The Board uses milk dealers’ monthly reports to verify compliance with minimum producer prices. This includes how milk is used and determines class and value. Monthly value of milk ensures minimum producer payments and allows a review of dealer bond requirements. Inadequate payments must be added to the next month’s payments.  Audits of the milk values and payments provide assurance to PA dairy farmers that they are being paid properly.  Board staff conducted 948 audits in FY 2020-21.