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Federal Order Controversy Brews in California’s Dairy Industry

September 21, 2012
By: Catherine Merlo, Dairy Today Western and Online Editor google + 
Fed Order mtg   Tulare 9 20 12 035
At Thursday’s meeting in Tulare, Calif., producer Cornell Kasbergen (right) tells a panel that California’s dairy sector would earn an extra $1 million per day if it were in a Federal Order.  

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State considers whether to abandon its longtime pricing system for a Federal Milk Marketing Order.

Controversy is brewing in California’s dairy industry.

An estimated 150 dairy producers and industry representatives filled the Heritage Complex Banquet Hall at the International Agri-Center in Tulare, Calif., Thursday, eager to learn more about the potential impact a Federal Milk Marketing Order (FMMO) might have on their milk checks and their industry’s future.

The meeting, sponsored by Western United Dairymen (WUD), was designed to educate local dairy producers about FMMOs and how they differ from California’s pricing system.

Dairies’ financial distress and discontent with recent efforts to change California’s pricing system have fueled interest in jettisoning the state’s marketing structure for an FMMO. Under the current system, California’s milk prices have trailed the national Federal Order average.

Thursday’s meeting saw no shortage of technical details from Bill Wise, Market Administrator for the Pacific Northwest and Arizona Federal Milk Orders. Wise presented an overview of Federal Orders, their rules and practice, the FMMO proposal request and the subsequent hearing process.

Nor was there a lack of questions or comments directed at Wise from an industry panel or the audience on how a Federal Order might work in a state that’s had its own pricing system since the 1930s.

“Our brains are scrambled,” producer Joe Machado said from a microphone in the center of the room after Wise’s presentation and the panel’s question-and-answer segment.

The industry panel consisted of Annie AcMoody, WUD’s director of economic analysis; Eric Erba, senior vice president and chief strategy officer for California Dairies, Inc.; Tom Wegner, director of economics and dairy policy for Land O’Lakes; and Bill Van Dam, CEO of the Alliance of Western Milk Producers.

They, and other attendees, asked about several aspects of Federal Orders, including pooling and de-pooling, the blended price, producer price differentials, what would happen to California’s quota price, and how long the hearing process would take. Wise frequently said he was not in a position to answer all the questions or to offer his opinion. He encouraged attendees to seek answers from USDA’s Agricultural Marketing Service and its administrators in Washington, D.C.

During the meeting, both AcMoody and Van Dam said there many “intricacies” and “qualifying aspects” – beyond simply looking at prices – in comparing California and FMMO prices.

“You can’t get an apples-to-apples comparison,” AcMoody said. “The answer is not clear-cut.”

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RELATED TOPICS: Dairy, Policy, Marketing, Milk, USDA

 
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