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California Dairy Producers Zero In on Federal Orders

February 13, 2013
By: Catherine Merlo, Dairy Today Western and Online Editor google + 
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Today's federal order meeting at World Ag Expo in Tulare, Calif., drew numerous questions and comments from the audience.  

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Major dairy co-ops agree that they won’t pursue a federal order without assurances that California’s quota will be protected.

California’s interest in adopting a federal milk marketing order (FMMO) continues to draw intense interest from the state’s dairy producers, as evidenced by the standing-room-only crowd today in Tulare, Calif.

Held at World Ag Expo, the meeting drew more than 300 producers and industry representatives to hear about the ins and outs of adopting a federal order. Talk surfaced during the meeting that California could be carved into more than a single FMMO. Another idea emerged that the state’s financially stressed dairies could benefit from a two-pronged effort to seek change at both the state and federal levels.

If a federal order is to move forward, "it’s critical that producers be unified behind the proposal," Tom Wegner, director of economics and dairy policy for Land O’Lakes, told the audience during his presentation on federal orders.

The complex route to adopting a federal order will have to address issues such as pooling and California’s quota pricing system. The three major dairy cooperatives doing business in California -- Land O’Lakes, Dairy Farmers of America and California Dairies Inc. – all agree that they will not pursue a federal order without assurances that California’s quota will be protected. All three were represented on a speakers’ panel today.

LOL, DFA and CDI have jointly funded a study of federal orders in California. Conducted by the University of Wisconsin, that report is due in March. While that analysis will help guide decisions about a federal order, more steps must be taken, Wegner said.

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Land O'Lakes Tom Wegner explains federal order details during today's meeting.

The FMMO effort must pursue congressional assurances that California’s quota system will be retained under the federal order. In addition, producer interests must be aligned so that the industry can move forward with developing a proposal to USDA. "We need to understand your thought and concerns," Wegner said, speaking on behalf of LOL, DFA and CDI.

Ultimately, a two-thirds majority of producers will be needed to approve the adoption of a federal order. The entire process could take 12 to 24 months.

The California Department of Food and Agriculture (CDFA) has regulated the state’s milk pricing system for more than 60 years. Producer interests have repeatedly requested formula changes to boost their milk prices, but many feel CDFA has failed them. Financial stresses among the state’s dairies and hopes that a federal order could bring them at least $1 more per cwt. have fueled the movement for change.

One audience member, James Netto, asked if a parallel effort of working simultaneously for both state and federal pricing reform might produce faster results for California’s beleaguered dairies. He said seven months have already been lost since the federal order was first seriously proposed.

Another producer, Joey Airoso, said he supported that two-pronged effort, adding, "Why do California dairymen have to take less [in prices] than the rest of the country? CDFA doesn’t really listen. We [producers] are subsidizing processors. . . . CDFA is going to let half of us go broke before it figures out [there's not] enough milk."

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