Citing continued challenges facing dairy farmers across the Commonwealth, the Pennsylvania State Grange asked the Pennsylvania Milk Marketing Board (PMMB) to extend the one-dollar over-order premium placed on fluid milk produced, processed, and sold within the state until June 30, 2024. The Grange made this request at a public hearing held Dec. 6, in Harrisburg.
Matt Espenshade, a seventh-generation dairy farmer from Lancaster County, testified first on behalf of the Pennsylvania State Grange. The Espenshade family’s farm milks 70 cows with a 20,700-pound herd average, and are members of Mount Joy Farmers’ Cooperative. Approximately 30 to 35% of the milk produced by the cooperative qualifies for the over-order premium. Mount Joy Farmers’ Cooperative is affiliated with Dairy Farmers of America (DFA). During his testimony, Espenshade shared that rising costs and economic challenges continue to impact profit margins and make continuation of the premium necessary.
Speaking to the Board, Espenshade noted dairy farms today are still affected by the impact weather had on 2022 crop production, along with unseasonable drought conditions in the spring of 2023.
“Much of our 2023 was spent dealing with the repercussions of the 2022 cropping season. While we are blessed that drought and extreme weather seldom affect our area in south central Pennsylvania, last year was apparently our turn. An excessive heat wave, coupled by no rain during the critical pollination stage, led to a drastic decrease in yield for a majority of our corn acres. The kernels on the ears did not fully develop, leading to a significantly lower energy levels in the silage. The lack of rain also limited growth in our hay fields. As a result, we closed the 2022 harvest season with a lower feed inventory than normal. Drought conditions in the spring of 2023 had many concerned, as a second consecutive dry year could have a devastating effect on our farm and others across the state.”
Higher feed costs in 2023 were compounded by a steadily declining milk price paid to dairy farmers. Espenshade stated that his farm was paid a blend price of $23.65 per hundredweight of milk in January 2023. By April it had fallen to $20.86, and down an additional $3.73 in May to $17.13 per hundredweight.
“The price paid to farmers for milk continued to slide. In August, we received $16.18 per hundredweight. September milk fell even further to $15.46 per hundredweight. We did see our situation improve in October as milk price edged higher to $16.82.” While an improvement over the previous month, it is still an almost 30% decrease from what dairy farmers earned in January.
Lower quality and shortages of home-grown feeds led to purchasing more corn and dry hay, cutting into already narrow profit margins. Along with the higher input costs, the decreased milk price made it a challenge to cover expenses.
As important as the declining income over feed costs margins are, Espenshade cited other economic factors like supply chain issues, inflation and price increases which are hitting the dairy sector hard. Espenshade said, “With no-till farming practices comes the need to manage weeds to give young plants the chance to establish and flourish. Many here are familiar with the herbicide ‘Roundup’, and perhaps its generic equivalent Eraser. Eraser is sold in 2.5-gallon containers in a concentrated form, and in November 2020 cost $69.95. Prices spiked during the pandemic, but certainly have not eased since then. During a recent trip to our local farm store, I noticed each now costs a staggering $159.99.”
“Over the past year, our farm has also dealt with dramatic increases in our electric utility bill. Comparing June 2023 to June 2022, our daily electric usage decreased 1%. However, our farm’s daily utility cost rose 30%. July 2023 had a 4% decrease in daily usage compared to the previous year, but the average daily cost was 26% higher. I certainly hope these ‘year over year’ trends do not continue into 2024, but even leveling off will still have a significant financial impact on our state’s dairy producers.”
The Pennsylvania State Grange intends to foster productive conversations around a fairer system for all. While it feels there will never be a “perfect’ solution, it believes there can be a better program. The Grange also believes that communication on this issue with stakeholders is imperative. The work of the Dairy Future Commission needs to be in the forefront of these conversations.
The Pennsylvania Milk Marketing Board is expected to announce their decision regarding the over-order premium in the coming weeks. The current order expires at midnight, December 31, 2023.
