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Dairy Petition for Emergency Price Relief Denied by California Ag Department

August 27, 2012
By: Catherine Merlo, Dairy Today Western and Online Editor google + 
 
 

The denial “has removed all hope for a lot of people,” dairy producer says.

Western United Dairymen’s (WUD) petition for emergency price relief and changes to 4b pricing formula was denied last week by the California Department of Food and Agriculture (CDFA).

“Total frustration,” is the reaction of Tom Barcellos, a California dairy producer who serves as WUD’s president. “CDFA’s petition denial has removed all hope for a lot of people.”

WUD’s petition earlier this month sought a new whey pricing hearing. It was the dairy group’s second this year to CDFA.

WUD’s latest request asked for changes to the whey value of the Class 4b formula. The producer group requested the cap of $0.75 per cwt. to be removed by proposing a scale that mirrors more closely the whey value in Federal Class III. WUD also proposed a dry whey exemption on the first 100,000 pounds of milk processed daily by cheese makers. The exemption would be only on the whey portion of the Class 4b formula.

In addition, WUD also had asked for emergency price relief from the financial pressures on California’s dairy producers, notably due to extremely high feed costs. WUD requested a six-month increase of 50 cents per cwt. on all classes of milk.

CDFA gave the following reasons for its denial in the letter signed by Kevin Masuhara of the Division of Marketing Services:

Temporary Increase on All Classes of Milk. As the secretary [Karen Ross] stated in her letter to industry dated July 20, 2012, she is committed to finding long-term solutions to the problems facing our dairy families. You acknowledge yourself in the petition, “a fifty cent temporary increase will not make dairy margins positive again.” Current fluctuating feed costs and milk prices combined with the short period of time since our last decision makes it premature to convene a hearing at this time.
Dry Whey Credit. The Food and Agricultural Code does not provide for the implementation of the dry whey credit you have proposed.
Replacing of Why Factor Sliding Scale. This issue was considered during the recent milk price hearing and rejected. In the very brief period between the issuance of CDFA’s previous decision and your petition, circumstances have not altered to the extent that requires reconsideration.

“The secretary wants to work with the industry to help create long-term solutions for the problems now facing our dairy families,” Masuhara wrote. “It is important for WUD and all other industry organizations and individuals to participate in the process and work together to ensure a better future.”

Barcellos says he and other WUD representatives met with Ross soon after the dairy organization filed the petition in early August.

“We shared data with her about the high number of dairy bankruptcies and foreclosures and the credit being pulled from dairies,” he says. “Now, there’s nothing on the horizon that will give us hope that prices will move fast enough to save people in real trouble.”

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