The big problem for dairy farmers is the fact that their pay price does not in any way reflect their cost of production. It is time for this to change.

We feel it is time for dairy farmers to have their cost of production used in determining the prices that are paid to all dairy farmers.

Right away, many people would say you can’t use the cost of production because every dairy farmer has a different cost of production. We agree. However, these people who use that argument that dairy farmers’ cost of production can’t be used in a pricing formula, these people forgot to tell you that approximately 70% of a dairy farmer’s milk is used to manufacture dairy products, and this price is the same in all eleven Federal Milk Marketing Orders. Yes, the same but no one shouts that this can’t be done because all the dairy farmers have a different cost of production.

Here is an answer: We believe that a dairy farmers’ cost of production should be the starting component in the dairy farmer’s pay price. The Economic Research Service, a division of the USDA, determines the national average cost of pricing milk twice a year. We think this should be done at least four times a year. Presently this price is $22.67 per cwt. (hundred pounds). This price will be updated on May 1. This price will also be the value of manufactured dairy products and will be classified as Class II.

Presently any buyer of milk that is used to manufacture dairy products doesn’t know the price he must pay for his milk until the first Wednesday of the month after the purchase. Our formula would also solve that problem.

Please remember any buyers of milk that is used as bottled milk knows his price about 8 or 10 days before he purchases the milk. Our formula is simple: to determine the price for fluid milk, we would add the existing cost of production figure of $22.67 (Class II) along with the existing $3.50 differential in Order One, and come up with a Class I price of $26.17. This price is comparable to the present announced Class I price in March of $26.13. This price could vary in each of the eleven Federal orders.

I would assume that the existing differentials would stay in the federal order as they presently exist. It is now or never for a real, new formula that would be good for everyone. All milk handlers would know in advance what they would pay for milk, and for the first time, dairy farmers would know in advance what their pay price would be, and the prices to consumers would stabilize.

Arden Tewksbury, Manager of Pro-Ag, Meshoppen, Pa.