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Bill Providing Better Protection of State's Milk Producers
Heads to Governor’s Desk
HARRISBURG -- Legislation
to enhance protection of Pennsylvania’s milk producers has gained approval in
both chambers of the General Assembly and now heads to the governor’s desk to be
signed into law, announced Rep. Art Hershey and Sen. Roger Madigan (R-23),
proponents of the bill.
“This legislation is designed
to protect dairy farmers from the possible lack of payment from dealers
receiving their milk,” said Hershey. “This has become a concern recently and my
legislation will provide dairy farmers with the security they need to continue
operations with the fear of financial loss.”
In recent months, financial
problems experienced by the parent company of a dealer licensed to purchase milk
from Pennsylvania farmers have created concern that dairy farmers might not get
paid for all the milk produced and shipped to this dealer.
Fortunately, in spite of the
Chapter 11 Bankruptcy filing by the dealer in question, no payments to farmers
in Pennsylvania have been missed thus far. However, this situation has revealed
potential shortcomings in the existing law and prompted the drafting of House
Bill 2512.
“It became apparent that the
current law allowed for dairy farmers to be far more exposed to risk of
financial ruin than was acceptable” said Madigan. “It’s just as important to me
to preserve farmers as it is to preserve farmland, this measure will help to
preserve both. The best farmland preservation policy is one that keeps farmers
in business.”
The bill includes a combination
of bonding requirements, Milk Security Fund deposits and prompt payment
provisions to make sure dairy farmers receive payment.
The two lawmakers noted that
the executive secretary of the Pennsylvania Milk Marketing Board and his staff,
were consulted before drafting an amendment to the Milk Producer’s Security Act
designed to enhance the producer security provisions.
The bill requires new dealers
to post a bond with the Pennsylvania Milk Marketing Board equal to 75 percent of
the highest aggregate amount owed by the dealer to producers for a 40-day period
during the preceding 12 months. It also does not allow any new participation in
the 30 percent bond/security fund option available under current law. Current
participants in the security fund are permitted to continue with this option.
The legislation also gives the
board the right to require a milk dealer to increase its bond during the license
year based on changes in the amount of milk it is buying or changes in milk
prices and gives the board discretion to require a larger bond based on a milk
dealer’s financial condition.
Hershey and Madigan have
worked cooperatively to move this bill through their respective chambers and
look forward to having the bill signed into law by the governor in the coming
weeks.
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