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State Rep. Stephen Kulik seeks return of money from Milk Producers Security Fund to dairy farmers

A 30-year-old state fund created to protect dairy farmers from losing their milk payments if their processor goes belly up has been swelling like an udder over the years, building interest even though dairy farmers are no longer paying into it.

So legislation now pending in the House would return about $1 million in interest to about 100 independent farmers who paid into the Milk Producers Security Fund. The bill, filed by state Rep. Stephen Kulik, D-Worthington, on behalf of dairy farmers could return about half of the $2 million fund to the farmers who paid in.

That could break down to between $10,000 and $20,000 per farm.

The money, which those farmers are now seeking, could be better used by them than having it continue to build up in state coffers, Kulik said.

“This would help dairying, which is a tough business,” said Kulik, who filed the bill for a second time this year and help shepherd it through the House Ways and Means Committee, of which he is vice chairman. The bill is now awaiting its third reading before being considered by the full House.

When a series of milk processors went out of business in the late 1970s, they left farmers waiting to get paid for their milk from bankrupt companies. Those farmers then asked the state to create a voluntary fund they could pay into depending on how much milk they produced.

By the early 1990s the problem had largely passed, said Kulik, and then-state Agriculture Commissioner Jonathan L. Healy ruled that the state should stop collecting funds, with $1 million collected being held for “the worst-case scenario” to protect farmers if another processor went out of business.

A state task force, of which Kulik was a member when it was created in 2007 to deal with a crisis in dairy farming, recommended returning the interest to farmers, but it was relatively low on the panel’s list of priorities.

Kulik’s proposed legislation, which is cosponsored by 21 other House members including Reps. Paul Mark, D-Peru, and Denise Andrews, D-Orange, would return an estimated $10,000 to $20,000 to farmers who have paid in, including Deerfield’s Bar-way Farm.

Although Bar-Way paid an estimated $1,000 to $1,500 per year, “We haven’t put money in for five or six years,” said Peter Melnick, who said his farm is among many that do not belong to the dominant Agri-Mark milk marketing cooperative. “We’re considered independent,” as members of the Massachusetts Milk Producers Cooperative, he said.

Melnick agreed that the fund is not as needed now, since most of the few remaining dairy processors are insured against sudden failures.

Kulik said that since many of the farmers have since died, the money can be paid to their heirs.

Warren Facey of Leyden, executive director of the Massachusetts Association of Dairy Farmers, said, “They really deserve that money. They paid into it, and they need to get their money back. The big question is what to do with the guys who went out of business that paid into it. They really deserve that money, even though they’re not milking now.”

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