“Pennsylvania’s 7,400 dairy farm families are hurting financially and this decision will help alleviate some of that pain by ensuring these producers receive what’s fair and what’s rightfully owed to them,” said Governor Rendell. “As one of the few states with the ability to affect pricing, Pennsylvania is taking decisive action to help its dairy producers.

Under the Milk Marketing Board’s ruling, a milk processor who purchases milk from both Pennsylvania and out-of-state dairy farmers will be required to pay the entire over-order premium on the Pennsylvania milk.

Under the existing system, the amount paid to producers is reduced by the ratio of milk purchased from Pennsylvania producers compared to the total purchase amount. For instance, if half of the milk a processor purchased is from Pennsylvania, the over-order premium obligation to those farmers is reduced by half.

Under the new calculation, the over-order premium would be paid on 100 percent of the Pennsylvania milk as long as the processor sold that much milk at wholesale in Pennsylvania. This is because the mandatory minimum price for every gallon of milk sold in Pennsylvania includes an amount to cover these payments, which is approximately $0.25 per gallon.

The decision was the result of a joint petition filed by Governor Rendell, Agriculture Secretary Russell C. Redding, and the Pennsylvania Milk Marketing Board staff following discussions on how the state could bolster the dairy industry during a period of historically low milk prices.

The Governor said the General Assembly could provide further relief to dairy farmers by acting on the remaining recommendations the Milk Marketing Board outlined to improve the financial stability of Pennsylvania’s dairy farms.