Dairies Seek Federal
Dairy farmers and their
representatives say they are moving forward with other efforts to bring more
equity to the state's milk pricing system, including joining the federal milk
marketing order, after the California Department of Food and Agriculture denied
another request to further raise the price of milk used to make cheese.
In a decision announced last week,
CDFA extended an overall temporary price increase of 12.5 cents per
hundredweight of milk that had been in place since July and was set to expire
at the end of the year. The temporary price increase will now continue through
June 2014 and apply to all classes of milk, including an increase of 15 cents
per cwt. for Class 4b milk, which is used to manufacture cheese.
Producers have long contended that
the state's milk pricing system underpays them compared to what dairy farmers
in other states earn under the federal milk marketing order. They say the main
problem is the undervaluation of whey in the state milk pricing formula. Dairy
organizations petitioned the department this summer to raise the 4b price up to
46 cents per cwt. and to change the sliding scale used to determine the whey
The groups said they petitioned the
hearing thinking the proposed increases were part of a deal negotiated with
processors, who later said during the September hearing that there was no
a recent letter to dairy stakeholders, CDFA Secretary Karen Ross acknowledged her decision would bring disappointment
"in light of the publicity surrounding the perceived agreement between
producers and processors during the legislative session." But she said the
hearing testimony "failed to provide justification for the petitioners'
position that price relief be based solely on the whey factor and the 4b
formula," he said.
The CDFA hearing panel recommended
keeping the current temporary price increase in place until the end of the
year, but Ross said she decided to extend it despite "positive signs in
the marketplace" because she felt the country's economic recovery remains
fragile and because she wanted to "provide a consistent level of revenue
to producers to ensure a stable milk supply."
County dairy farmer Dino Giacomazzi said next year's outlook for producers
appears better because feed costs have come down and are expected to drop
further due to the anticipated large U.S. corn crop, but he also said he
doesn't think corn prices should figure into a discussion about California milk
here trying to find the fair and correct way to determine milk price to
producers in California. Just because our costs are coming down doesn't mean
that the CDFA should sit on their hands and do nothing to solve the
problem," he said.
Rob Vandenheuvel, general manager of the
Milk Producers Council, said the message he got from the secretary's decision
is that there's still a need for additional producer revenue, even though the
department chose not to apply it "in a way that we felt was
wanted to apply it across the board for all classes (of milk) and we thought
that the problem was isolated to the 4b price," he said.
said she simply couldn’t do what some producers have asked, "because
there's not the economic data for the formulas, or there are legislative and
administrative hurdles to doing what some people want us to do."
said producers have been "exploring alternatives," noting that the
state's three dairy cooperatives plan to petition the U.S. Department of
Agriculture to replace the current state milk marketing order with a federal
Lynne McBride, executive director of
California Dairy Campaign, said joining the federal order is now "the only
viable way to bring our state dairy producer prices in line with prices paid
across the country."
not all producers believe joining the federal order is the panacea for their
Michael Marsh, CEO of Western United
Dairymen, said one concern about going this route is the risk of losing the
state quota system, which he described as a billion-dollar asset for California
dairy farmers. The latest CDFA decision, he said, will "continue to foster
momentum towards just finding something other than CDFA."
said his organization will now go back to the state Legislature to ask for
guidance, because some of its members have been sympathetic to dairy farmers'
plight and had testified at the last CDFA hearing about the need for milk
Bill Schiek, an economist for the
Dairy Institute of California, which represents the state's processors, said
his group respects the secretary's decision and her desire to balance the needs
of producers and processors.
think she understood that conditions are improving for dairymen. The secretary
has been responsive, and processors and cheese makers have been responsive,"
he said, noting that CDFA had already granted emergency price relief twice this
year and has now extended it again.
also said the institute is "committed to the work" of the California
Dairy Future Task Force, a group of producers and processors that Ross formed
last year to work on reforming the state milk pricing system.
said work of the task force had been pushed aside earlier this year as dairy
groups introduced legislation to try to change how the state determines the
said a group of "industry technical experts" is now working on
"potential alternative pricing scenarios" that could replace the
current formulas, and that the department has contracted economist Dan Sumner, Director, UC Agricultural Issues Center based at the University
of California, Davis, to analyze those scenarios. She said CDFA staff is also
drafting pricing proposals needed to make the changes, and she expects those
proposals by Dec. 15.
Source: California Farm Bureau
Labels: California Dairy Campaignm, California Dairy Producers Explore Alternatives, Dairies Seek Federal milk Marketing Order, Milk Producers Council, state milk marketing order