Legislature(2001 - 2002)

04/03/2002 03:40 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ 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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