HARRISBURG – Dairy farmers who lost an estimated $6.4 million due to a federal reporting error should be repaid, Gov. Edward G. Rendell said today in a letter to U.S. Department of Agriculture Secretary Mike Johanns.
Rendell has recommended changes to dairy reporting policies designed to prevent future errors.
“The effects of this error are being felt hard by dairy farmers struggling to pay feed, fuel and fertilizer costs,” Rendell said. “I urge the USDA to pay back those who have been wrongly underpaid, and adopt Pennsylvania’s recommended dairy policies to ensure this type of error is not repeated.”
The error incorrectly reported the price of nonfat dry milk and resulted in significantly lower payments for dairy farmers. Those reports, plus weekly price reports for cheese, butter and dry whey, are used to develop the federal milk marketing order price formulas to determine minimum prices paid to producers.
Some believe the errors may have been ongoing for eight to nine months and cost farmers tens or hundreds of millions of dollars. The USDA and Inspector General are conducting an investigation to determine the extent of the damages.
“Dairy farmers, not the market, have incurred the loss,” the governor said. “Action must be taken to correct dairy payments and avoid putting any of our farmers out of business.”
In order to avoid future reporting errors, the governor requested that the USDA immediately implement mandatory auditing of product prices and inventories, as directed by Congress in 2000 and 2002 and included in Pennsylvania’s federal dairy policy reform proposal for the 2007 Farm Bill.
Rendell has called for mandatory daily and weekly reporting of all dairy commodity transactions, including prices and quantities by location and product characteristic, and mandatory monthly reporting of all production of dairy products nationwide. Without regular audits, incorrect reporting of powder prices will not be caught.
Agriculture is Pennsylvania’s number one industry, and dairy accounts for 42 percent of agricultural revenues. Pennsylvania has 8,600 dairy farm businesses that produce over 10.6 billion pounds of milk annually.
For more information on Pennsylvania’s dairy reform recommendations, visit www.agriculture.state.pa.us, and click on “Federal Dairy Reform Recommendations” under “What’s New.”