Legislature(2001 - 2002)
04/03/2002 03:40 PM Senate RES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 354-PRICES PAID BY MILK PROCESSING PLANTS
CHAIRMAN TORGERSON announced SB 354 to be up for consideration.
MS. JANEY WINEGAR, staff to Senator Lyda Green, sponsor of SB
354, said this bill has to do with farmers receiving fair pricing
for their milk, which has become fairly complex in today's market
place and is based upon a combination of factors including
protein, butter fat, non-fat solids and bacteria content of the
milk. This bill injects fairness into the milk market place in
Alaska by stipulating that if a milk processor opts to penalize a
dairy farmer for a low milk fat content, the processors must also
reward those farmers whose product has a high milk fat content.
MR. WAYNE BROST said he was from Mackenzie and supported SB 354.
He got a letter from the processing plant telling him that the
butter fat of his cows' milk was a little lower than the
standard, which is 3.25%. In the summer he turns his cows out to
graze and they get a higher volume of high moisture feed and the
butter fat drops. Most of the time it's above 3.25%. He remarked,
"I was threatened there to get a dock on my pay if it was below,
but I was never offered anything when it was above. So, I'm in
support of this bill so there's some reciprocity and fairness for
the producer here."
MR. LARRY DE VILBISS said it has been 20 years since he ran a
dairy, but he remembered that he was actually penalized for too
much butter fat. He commented, "But we're living in a different
world and there's a commercial value there that I think dairymen
ought to be getting so I support it."
MS. LADERE said she had been in Alaska for 55 years and ever
since she was nine she had been involved with agriculture. She
explained:
Very simply, more butter fat figures into a higher
value product for the processing plant. That increased
butter fat has a dollar advantage and so anyone who
produces a milk, a dairy product or milk that goes into
a processing plant should logically get a higher price
for his milk and I think it just is that simple.
SENATOR WILKEN asked if a milk producing plant under this
legislation must pay a premium for more than 3.25% butter fat,
whether the plant has the option of buying milk elsewhere so that
it doesn't have to pay the premium. He questioned, "Doesn't that
give the supplier a reason to go somewhere else?"
REPRESENTATIVE HARRIS responded that there is a national standard
for whole milk. If Matanuska Maid purchases that milk, generally
it will skim it down to the standard and buy it at a certain
price. This bill basically says if your milk has a higher fat
content than that standard, then it has a value. He added:
If the processing plant decides to dock you for a
reduction in that value, then they must pay you the
same value on the other end. So, we're not saying that
they have to pay a premium. All we're saying in this
legislation is that if the plant decides to dock you
for not having high enough butter fat, then they must
also pay you when you are above the national standard.
SENATOR WILKEN asked if they also docked the outside supplier.
REPRESENTATIVE HARRIS explained when they bring milk in from the
Lower 48, generally they specify what fat content they want and
they pay for that value. He said, "If Mat-Maid says instead of
3.25%, we would like 3.5%, then they would pay for that
additional fat when they bring it in."
SENATOR WILKEN asked if this bill jeopardizes their ability to
market greater than 3.25% butterfat milk.
REPRESENTATIVE HARRIS answered no.
SENATOR STEVENS asked if there is a relationship between a
standard plate count [SPC] and butterfat content.
REPRESENTATIVE HARRIS replied:
Indirectly. It's pretty involved and I can explain it.
Standard plate count is your bacteria count and so
usually the standard plate count comes from dirty
equipment and that causes your plate count to go up.
However, dirty equipment can cause your e-coli to go up
and your e-coli can affect the quality of your milk and
it could reduce the percent of butterfat that is
produced by the milk cow. So, it could have an effect.
SENATOR STEVENS read from a rate sheet released by Mat-Maid on
January 1, 2001, about a quality bonus incentive program. He
asked if that was based on the quality of the facility, for
example the use of clean equipment, or the quality of the milk
produced by the animal.
REPRESENTATIVE HARRIS responded:
No, when the standard plate count and the coliform
counts are indications of what's in the milk, it
doesn't necessarily determine how it gets there, but it
helps determine how it gets there. So, if you milk a
cow with some equipment that hasn't been kept up to the
standard, then your plate count will go up in your tank
of milk and if your plate count goes up, then the value
of your milk drops. That's why they have the quality
bonus. The same thing with e-coli. If a cow happens to
have an e-coli bacteria in their mammary system, it
comes through and gets into the whole tank of milk and
if that's the case, the value of that milk drops.
SENATOR STEVENS said on the flip side, if you had a lower SPC
count, the bonus goes up.
REPRESENTATIVE HARRIS said that was right.
SENATOR STEVENS asked if there was no correlation between
butterfat content and the SPC or coliform.
REPRESENTATIVE HARRIS replied, "Not that it can be directly
proven. Generally, the SPC and the e-coli counts have to do with
either equipment or the health of the mammary system."
SENATOR STEVENS asked if the butter fat plan had ever been
revised from 3.3% for Grade A, currently priced at $19.75 per
cubic weight ton.
REPRESENTATIVE HARRIS said that was for a hundred weight of milk.
SENATOR STEVENS noted that it said they would dock a penalty of
1/10th of 1% for content under 3.25%.
REPRESENTATIVE HARRIS replied there was more documentation from
Mat-Maid saying that the standard for whole milk is 3.25.
4:25 p.m.
TAPE 02-15, SIDE B
REPRESENTATIVE HARRIS said:
In the Lower 48 they have milk marketing orders, which
is a federal system that helps provide for guidance and
money for the farmers to get together and establish a
milk marketing order and then establish what these
standards are. The milk marketing order - they go to
the processing plant and say if you want all of our
milk, this is the price that we need to have. The State
of Alaska has a state-owned processing plant and one
private plant and we have - I think we're down to eight
dairy farms. So, we just don't have the volume of
people to be able to dictate what we have to get,
because Matanuska Maid is already bringing in 75% of
the milk from Outside. So, it's just as easy for them
not to negotiate.
SENATOR STEVENS asked if the other cooperatives use a structure
so that if you have high fat content, you're rewarded and if you
have low content, you're penalized. He asked if that is an
industry norm.
REPRESENTATIVE HARRIS replied, "Yes."
SENATOR WILKEN asked if Mat-Maid had commented on this bill.
REPRESENTATIVE HARRIS said that the Director of Agriculture, Rob
Wells, had seen the bill. Matanuska Maid has the creamery board,
which meets and dictates the policy of the creamers and Mr. Wells
attends those meetings, but he had nothing in writing.
SENATOR WILKEN asked what will keep them from buying milk
somewhere else where they don't have to pay the premium.
REPRESENTATIVE HARRIS replied that there's no place else in the
Lower 48 where they don't have a premium.
CHAIRMAN TORGERSON said he wanted to pass this bill, but they
would set it aside for lack of a quorum.
SB 354-PRICES PAID BY MILK PROCESSING PLANTS
CHAIRMAN TORGERSON announced SB 354 to be back before the
committee.
SENATOR WILKEN moved to pass SB 354 from committee with
individual recommendations and attached zero fiscal note. There
were no objections and it was so ordered.
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