Dairy farmers get 15-cent fuel premiumLevy will be in effect from April through June

www.yorkdispatch.com Article Last Updated: Friday, March 21, 2003 - 12:02:44 PM EST By RICHARD FELLINGER Harrisburg bureau

Responding to high motor fuel prices, state regulators have applied a special premium on milk prices to help dairy farmers cover the cost of shipping milk.

The Milk Marketing Board has added a 15-cent premium to every hundred pounds of milk. The premium, approved unanimously by the three-member board, will take effect in April and last through June.

Farming advocates including the Pennsylvania Farm Bureau petitioned the board for the special fuel premium because of soaring diesel costs, and the board agreed to it after holding an emergency hearing March 5.

"It's going to help a little bit," said Richard Waybright, co-owner of Mason Dixon Farms in Freedom Township, Adams County.

Waybright said his diesel fuel costs have nearly doubled since November. He now pays a wholesale price of $1.42 per gallon, compared to just above 70 cents in November. Retail diesel prices in the Harrisburg area averaged $192.8 yesterday, according to the Pennsylvania AAA Federation.

A dairy farmer with about 100 dairy cattle should receive nearly $360 extra per month from the 15-cent premium, said farm bureau spokeswoman Jayanna Yeakle. Though the farm bureau sought a 15-cent fuel premium, Yeakle said "nobody's getting rich off it."

The extra premium comes as the state is scaling back its over-order premium, which is the amount farmers receive for milk above government-mandated prices, in an attempt to keep Pennsylvania milk competitive with milk from other states. The over-order premium, now at $1.40, is down from $1.65 in December 2002.

The board's latest action means dairy farmers will receive a special fuel premium for the first time in more than a year. Farmers received a 25-cent premium from April 2000 to January 2002, said Milk Marketing Board spokeswoman Tracey Jackson.

Fuel prices have spiked in recent months because of the potential war with Iraq, a recent strike in Venezuela, cold temperatures and low inventories.

But there are signs that gasoline prices already have peaked, said Ted Leonard, executive director of the Pennsylvania AAA Federation. Crude prices dropped this week as producers cranked up supply and Saudi Arabia announced it would make up any shortfalls from Iraq, Leonard said.

"And I think some of the situation in the Middle East is becoming a little clearer. There will always be some volatility until that issue is settled, but I think we're on the road to settling it," Leonard said.

The Milk Marketing Board is expected to consider in May whether to extend the fuel premium past June. The over-order premium also expires in June, and they will likely be asked to extend the fuel premium as they consider setting the over-order premium for the last six months of 2003, Jackson said.