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Stakes Are High in May 1 Hearing on California Dairy Pricing Proposal

April 25, 2013
By: Catherine Merlo, Dairy Today Western and Online Editor
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The state’s dairy producer and processor sectors each say their very survival is at stake if AB31 doesn’t go their way.

The stakes could hardly be higher for the two main sectors of California’s dairy industry.

The state’s dairy producers and processors each say their very survival is at stake if AB31, the proposed legislation to change the state’s pricing system, doesn’t go their way. 

"This is the most important dairy legislation before the legislature since the inception of milk pooling in 1967," says Tom Barcellos, president of Western United Dairymen (WUD), which sponsored the bill. "If passed, this bill will ensure that prices paid to [dairy producers] are fair and competitive."

Processor interests, however, say the bill would ruin the ability of the state’s cheese-makers to compete nationally or globally while giving farmers false hopes for the future.

One showdown in the conflict is set for May 1, when AB31 will be heard by California’s Assembly Agriculture Committee at the Capitol in Sacramento. The bill, introduced by Assemblyman Richard Pan (D-Sacramento), would more closely align the whey value in California’s 4b formula with the regulated minimum price for whey found in surrounding states. Demand for whey, a byproduct of the cheese-making process, has increased significantly in world markets in recent years.

WUD is urging its members to contact the Assembly Agriculture Committee and push for the bill’s passage. Other supporters include California Dairies, Inc., Land O' Lakes, Dairy Farmers of America, Milk Producers Council, California Dairy Campaign, California Grain and Feed Association and California Cotton Ginners and Growers Association.

WUD’s CEO, Michael Marsh, says the bill is a solution ensuring the survival of California’s dairies and "will cost consumers nothing." California’s price paid for milk made into cheese is "shockingly less than the price paid for the same use of milk in the 49 other states," says Marsh.

The state’s dairy processors maintain that the proposed legislation declares war on cheese-makers.

"By arbitrarily inflating the cost of milk used to make cheese, and by making higher prices permanent, AB31 will force many California cheese-makers out of business or into other states, shrinking the very market dairy farmers depend on to buy their milk," says Rachel Kaldor, executive director of the Dairy Institute of California, a trade association that represents milk and dairy processors on legislative and regulatory matters. "Instead of encouraging new investment to grow the industry, AB31 eliminates it."

A better approach, she notes, is the California Department of Food and Agriculture’s (CDFA) task force of dairy farmers, cheese-makers and other milk processors assembled to arbitrate solutions "that are fair to all, and that prepare our state’s dairy industry for the new century."

The May 1 hearing, scheduled for 1:30 p.m., is the first step in moving AB31 thought the full legislative process, says Rob Vandenheuvel, executive director of the Milk Producers Council.

"It’s critically important that the Committee members understand the importance of providing California’s dairy farmers with a milk price that is comparable with prices paid for milk around the country," says Vandenheuvel. "We simply cannot afford to continue providing a state-sponsored $800 million discount (since 2010) on the milk we sell to cheese manufacturers. It is destroying California’s dairy farming community. The hearing on May 1 is an important step toward changing that."

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