4B Cheese Price Adjustment
a decision that has angered California dairymen and women, California
Department of Food & Agriculture (CDFA) Secretary Karen Ross on Tuesday rejected the 4b cheese milk price adjustment
requested in a petition from dairy producers and the subject of a public
hearing on Sept. 12.
“Dairy farmers are furious,” said Michael Marsh, Chief Executive Officer with the Modesto-based
Western United Dairymen. “A milk producer was in my office
today stating that we have to get rid of CDFA and go to the Federal Marketing
Order,” noted Marsh. “And even though there are real problems with the Federal
Marketing Order for California, there is more stability with the Federal
government that you cannot get with the state government.
|Ross' Decision is Sure to Close more California Dairies.|
said he would not be surprised if the milk co-ops in California were already petitioning USDA to consider a Federal Milk Marketing Order for
California. “But the Federal Order is not all-around better for California because certain cheese makers are not required to pay the regulated
minimum price and instead pay whatever they want.
“Also, the hearing process is quick (about 60 days) in California, but much longer in
the Federal Order, which may require more than two years and hundreds of
attorneys to prepare for a hearing. It’s good for the cheese makers if they to
not have pay a regulated price, and, again, bad for dairy producers,” noted
needs to be a lot of education for dairy producers before they sign on to the
Federal Marketing Order,” Marsh said.
extended the current temporary price relief across all classes of milk. The
overall price increase, estimated at about 12.5¢/cwt. set to expire on Dec. 31,
2013, is now extended through June 30, 2014.
temporary price relief is not at all helping the milk co-ops," said Marsh. “It just takes the price from the right pocket and puts it
into the left pocket. It hurts the coops who want to expand to take advantage
of the global marketplace.”
“The rejection of the
adjusted factor in the 4b cheese milk formula is devastating to dairy
producers already hurting, with many going out of business,” said Marsh. “And
the dairy industry is not happy with cheese makers as they renege on their
early agreement,” noted March. “They came to the hearing and said: “What Deal?”
“Early on, all cheese makers were in full support of the changes due to economic conditions affecting the
dairy industry," Marsh said. “Apparently some cheese makers were negotiating in good faith and others were not.”
The requested 4b adjustment was part of AB 1038, authored by Dr. Richard Pan
(D-Sacramento). The adjustment was unanimously approved by the Senate Ag Committee on a 3-0 vote,
with Chair Cathleen Galliano, (D-Livingston) and her republican colleagues,
Tom Berryhill (R-Twain Harte) and Anthony Cannella, (R-Ceres). The committee agreed to move the bill
after being informed that a deal had been struck between the cheese makers
and dairy producers. The deal was negotiated on behalf of the California dairy families,
represented by Pan, and the cheese makers.
deal was both to adjust the whey factor in the 4b cheese milk formula by
raising the cap from 75 cents per hundredweight (CWT) to $1 per CWT, and to provide an additional surcharge on milk going into
cheese-making of 46 cents per CWT during the next year.
to Marsh, “The value of whey is capped at 75 cents per CWT, which is
ridiculous, as we have seen whey values as high as $4 per CWT in other states
back when we were getting 25 cents per CWT as our cap.”
"The entire deal was
intended to reconnect our cheese price as best we could back to the
marketplace," Marsh noted.
Secretary A.G. Kawamura, at the request of California cheese makers in 2007,
disconnected the cheese milk price from the marketplace, and we have been
struggling ever since to reconnect it. It is unfortunate that Kawamura agreed
to transfer wealth from the famers to the cheese makers, especially given everything else
that hit California dairy farmers beginning in 2008,” said Marsh.
“Essentially, we were asking
Secretary Ross to fix the blunder that A.G. Kawamura created in favor of the
cheese makers,” Marsh said.
“Since the disconnection change, there
has been a transfer of very close to $1 billion dollars from the dairy farmers
to the cheese makers. It was just another nail in the coffin for so many
dairies that have since gone out of business,” said Marsh. “The decision by the
secretary is sure to put more dairies out of business,” he added.
“The rejected increase would have added an additional $110 million to the pool of California dairy
farmers. At the same time, it would not have cost consumers a penny as
it would simply redistribute assets from cheese makers back to the farmers,”
In her decision announcement, Ross said the
extension was warranted; however, she remained convinced that continued
adjustments to the minimum price would be inadequate to address the ongoing
difficulties in the state’s dairy industry, and the state’s “antiquated
state pricing system demands structural reform.”
“I understand there will be disappointment with this
decision in light of the publicity surrounding the perceived agreement between
producers and processors during the legislative session,” Ross wrote. “However,
the Department was not jointly petitioned by producers and processors – only
some producers – and when questioned by the hearing panel, processors responded
that there was no agreement.”
|CDFA Secretary Again Sides with the Cheese Industry|
Ross said hearing testimony failed to provide
justification for the petitioners’ position that price relief be based on the whey factor and the 4b formula.
“In fact, the testimony supports the Department's
position that the manufactured milk pricing formulas need to be changed to
equitably return value to producers and recognize that only a few processors
are realizing the full value of whey,” Ross said.
“California’s 1960’s system of regulated milk pricing
is outdated and impairs the ability of the dairy industry to meet 21st century
challenges and opportunities in national and international markets,” she
continued. “These markets have changed dramatically, as have product
distribution, costs, and feed and production patterns.
Marsh emphasized, "The only thing that will help the dairy industry right now, would be an increased consumer demand for California milk products. The public should purchase more California milk, ice cream, yogurt, cream cheese, sour cream, cottage cheese, and more. This would help."
Labels: 4B Cheese Price Adjustment Rejected by CDFA, Anger among Dairymen and Women, California Dairies Close, Closed Dairies, Dairy Farmers are Furious