By John Vogel - Farm Futures
Eastern region Land O Lakes milk producers received an early-warn letter in September that the cooperative was working on a fix for its long-time Eastern region milk oversupply situation. In early November, the bad news arrived – a supply management (quota) system setting a lid on base daily production.
Beginning Jan. 1, the cooperative will implement a milk supply program that "allows us to better align member milk production with our operating capacity and provide access to the most profitable markets," explained, Bill Neary, Land O Lakes' senior director of member relations.
The specifics
Each member will be assigned a production "base" established based on the 12 months between September 2014 and August 2015.
That base will be computed based on the highest daily production volume average achieved for each of those months.
Members producing more than that base volume will be charged any incremental costs (freight, market discount, etc.) associated with marketing that milk in "non-profitable channels".
One member-producer meeting was held last Friday in Mechanicsburg, Pa. Three more are scheduled: Dec. 9 in State College, Pa.; Dec. 10 in Chambersburg, Pa.; and Dec. 11 in New Holland, Pa.