Letter from PA Dairy Producers about rbST – January, 2007

To Pennsylvania Milk Producers:

The October grassroots producer meeting held in Schaefferstown, PA to examine the so-called “rbST-free” issue is getting some results, and it looks like we can keep this technology available to us if we take action now.

A few local milk processors like Wengert’s Dairy and Clover Farms have decided to back off earlier demands that producers sign a no-rbST affidavit. And we are hearing that other co-ops and processors like Maryland Virginia Cooperative have decided not to pursue rbST free milk. They need the milk and there is no sustained consumer demand for this new rbST free category.

Since that meeting, attended by about 100 producers and industry professionals, we have had a chance to compare some retail prices and learn what kinds of “commissions” producers are getting. The bottom line is that the milk processors stand to make a big profit from the new milk category, and producers are getting peanuts.

For example, in Philadelphia, regular 2 % milk is selling for $3.89 per gallon. Organic milk is selling for $3.99 per half gallon. We could not find any rbST-free milk. However, in the Northern New Jersey and New York City market, regular 1% milk is $3.05/gallon while 1% rbST free milk is $3.40 – 4.09/gallon. Organic milk is selling for $5.29/gallon. For every 8 cents a retailer charges for a gallon of milk it is equal to $1/cwt. Thus, a $3 gallon of milk sells for $37.5 /cwt.

Depending on the locale, retailers are making $5 to $13 (40 cents premium /8 cents = $5 profit) per cwt on rbST free milk, but dairy producers are only receiving 3 to 12 cents per hundredweight or .6-2.4% of the premium, if that, for giving up the right to use this technology. Even 75 cents only represents 10-15% of the premium. There have even been some examples of processors trying to get the milk from non-treated cows without paying any premium at all.

It remains to be seen if consumers will respond to this new category. If they do respond and we all have given up our right to use the technology, the “rbST free” category will become commodity milk, and the price will come down. Any premiums you are getting will go away, and we as dairymen will have lost an important tool that makes us more efficient and profitable.

Consumers have not been demanding this milk (see http://blogs.das.psu.edu/tetherton/?p=109), but big companies hope to create a demand by scaring shoppers. It’s a loser for consumers, and there is nothing in this for the hard-working dairyman, not in the short run and certainly not in the long run when this new category is a commodity. We need to defend our right to use safe and effective technologies and practices on our farms. And we must resist any campaign that makes consumers think milk is not safe.

All dairy farmers need to challenge the coops, processors and retailers that create milk labels and/or advertisements on controversial products such as rbST. Milk labeling and advertising should clear-up fears, not stir-up fears; eliminate confusion, not create confusion; promote dairy, not demote dairy. Our promotion dollars are lost if dairymen allow retailers and bottlers to cannibalize the final products that the customers purchase.

We as dairymen can put a stop to this by ensuring that food companies are unable to provide enough “rbST-free” milk to continue this marketing charade. So, if you have signed an affidavit, we urge you to contact your processor or coop and tell them that you are rescinding your signature. Tell them this “no-rbST” trend is unfair to you, and to consumers and that you want no part of it.

As dairymen our reputation is on the line. Dairymen should be unified in a resounding proclamation. We must demand truth from our food companies. They are part of our team and the consumer deserves honesty in labeling and advertising. We have always produced a product that is totally safe, wholesome and healthy to the consumer and we will continue too. For this reason, we as dairymen should and will not be part of any false advertising or marketing tactics that create false perceptions that the milk consumers’ purchase is not safe, wholesome and healthy.

Sincerely,

Dan Brandt
Annville, PA

Tom Krall
Schaefferstown, PA

Nelson Martin
Robesonia, PA

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