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California Department of Ag to Hold Dairy Pricing Hearing

May 31, 2011
 
 

Hearing will consider proposed pricing changes from California Dairies Inc., Land O’Lakes.

Source:  CDFA Dairy Marketing Branch

In response to petitions from California Dairies Inc. (CDI) and Land O’Lakes (LOL), the California Department of Food and Agriculture (CDFA) will hold a consolidated public hearing to consider amendments to the Stabilization and Marketing Plans for Market Milk for the Northern California and Southern California Marketing Areas (Plans).

The hearing will be held June 30 and July 1, 2011 in the CDFA Auditorium, 1220 N Street, Sacramento, Calif. The hearing will begin both days at 9:00 a.m. The hearing on the second day will close once all testimony has been received.

On May 11, 2011, the Department received a petition from CDI requesting a public hearing to consider amendments to the Plans. The CDI petition proposes changes to the butter and nonfat dry milk manufacturing cost allowances and the butter f.o.b. price adjuster in the Class 4a pricing formula.

On May 24, 2011, CDFA received a petition from LOL requesting a public hearing to consider amendments to the Plans. Specifically, the LOL petition proposes changes to the manufacturing cost allowance and f.o.b. adjuster for cheese and the whey portion of the Class 4b pricing formula.

CDFA’s Dairy Marketing Branch is proposing to make administrative changes to the Class 4a and 4b pricing formulas to include language to implement the collection of security charges provided by the Milk Producers Security Trust Fund (Fund) as found in Section 62561, Article 4, Chapter 2.5, Part 3, Division 21 of the FAC.

The recent financial evaluation of the Fund by an accounting firm (performed every two years) indicated that Section 62561 of the FAC amended CDFA’s authority to collect Fund charges on all classes of milk. Fund charges would take effect if the Fund goes below $30 million.

The Plans are now in conflict with Section 62561 of the FAC. Originally, money collected for the Fund came from assessments on milk in Classes 1, 2 and 3. However, in 2006 (effective Jan. 1, 2007) A.B. 2343 modified the Fund so that assessments from all classes of milk, including Classes 4a and 4b, are collected.

The hearing will consider the CDI proposed changes to the Class 4a pricing formula and the LOL proposed changes to the Class 4b pricing formula. The hearing will also consider the Department’s administrative changes to the Class 4a and 4b pricing formulas and any other aspect of the Class 4a and 4b pricing formulas that are raised by alternative proposals received in the time and format specified.

All Interested parties are entitled to submit alternative proposals detailing alternative adjustments in the Class 4a and 4b pricing formulas, to be received by CDFA’s Dairy Marketing Branch no later than 4 p.m., June 10, 2011.
 

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