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California Announces Temporary Increase in Minimum Milk Prices

June 24, 2013
By: Catherine Merlo, Dairy Today Western and Online Editor google + 
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Dairy producers are disappointed with the 12.5-cent price hike.

California dairy producers are reacting with disappointment to a decision by the California Department of Food and Agriculture (CDFA) to grant them a modest, six-month price hike.

The price adjustment applies to all classes of milk and has a net effect, or average increase, of 12.5 cents per cwt., effective July 1. It expires at the end of the year.

"It’s a joke," says Tom Barcellos, a dairy producer from Porterville, Calif., who serves as president of Western United Dairymen.

Barcellos believes CDFA has sided with processors and is working to alleviate their production costs at the expense of dairy producers. "If plants need help on their expenses, they should request an increase in their make allowance," Barcellos says.

"We’ve been asking for a reasonable price fix," adds Barcellos. "The processor community has offered us absolutely nothing."

CDFA Secretary Karen Ross explained her decision in a June 24 letter to California’s dairy stakeholders. 

"I’ve taken this action despite the fact that I believe, and have stated, the Department cannot address ongoing difficulties within the dairy industry through increases in the minimum price," Ross wrote.

In her letter, Ross called California’s system of regulated milk pricing "an antiquated one that impairs the ability of the dairy industry to rise" to the challenge of meeting global dairy demands.

At least one processor agrees. "We respect Secretary Ross’ difficult position and her attempt to balance producer, processor and consumer needs, but the Secretary cannot address ongoing difficulties within the dairy industry through increases in the regulated minimum price," says David Ahlem, vice president and general manager with Hilmar Cheese Co.

Hilmar Cheese owns and operates a dairy processing plant in Hilmar, Calif., and one in Dalhart, Texas.

"The only sustainable way to increase the size of everyone’s share of the pie is to grow the entire industry through innovation and investment in market-based products," Ahlem adds. "I think we can all agree the current system does not work in today’s global market. We fully support the Secretary’s focus on the California Dairy Future Task Force to develop a long-term price system which encourages competition for milk, innovation and rewards those who invest."

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