California Ag Secretary Grants Hearing to Consider Milk Pricing Amendment

August 6, 2013 11:32 AM
California Ag Secretary Grants Hearing to Consider Milk Pricing Amendment

September meeting will address "inequities" in the state’s whey pricing formula and a proposal to replace a recent price adjustment.

In response to a July petition by California dairy producer groups, California Department of Food and Agriculture (CDFA) Secretary Karen Ross has agreed to hold a public hearing to consider amendments to the state’s milk pricing program.

The hearing will be held Sept. 12 at 8 a.m. in CDFA’s auditorium at 1220 N Street in Sacramento.

"California Dairies Inc. (CDI) appreciates that a hearing has been called to address the inequities in whey valuation and looks forward to presenting its point of view on behalf of its 430 member-owners," the cooperative said today in a statement to Dairy Today.

CDFA received the hearing petition July 22 from producer organizations CDI, Milk Producers Council, Western United Dairymen (WUD) and California Dairy Campaign. The petitioners proposed a modification in the sliding scale that determines the dry whey factor in the Class 4b formula and replacing the temporary price adjustment now in place with another.

In January of this year, CDFA raised minimum prices paid to the state’s dairy producers by an average of about 25 cents per cwt. That temporary increase remained effective from Feb. 1 through May. In June, the agency again increased minimum milk prices by an average of 12.5 cents per cwt. The state’s dairies, struggling with high production costs and unprofitable margins, reacted with disappointment.

In July, producer and processor groups agreed on a short-term fix of $110 million in new money that cheese processors will pay into a milk pool to be shared by dairy farmers. The $110 million will come from increasing the price of California’s Class 4b milk (the milk used to make cheese) up to 46 cents, and by expanding the whey scale from its existing cap of 75 cents per cwt. of milk to $1.

"We are pleased that Secretary Ross has taken the first steps necessary to implement the landmark deal struck between members of the California legislature and the state's cheesemakers for the benefit of California dairy families," WUD CEO Michael Marsh told Dairy Today. "While cheese companies have been enjoying record profits, dairy farm families have been forced to sell their herds, lay off their employees and shutter their barns and often forced to file for bankruptcy protection. The call of this hearing is the first step in bringing long needed relief to our dairy families and moves us in the direction of mitigating the pricing inequity in our formula for milk going into cheese."

Dairy processors and producers groups agree the state’s milk pricing system is outmoded and in need of a major change. CDFA's Ross has formed a task force to seek long-term solutions for the state’s dairy industry. A proposal for California to explore and perhaps adopt a Federal Milk Marketing Order in place of a state pricing system has also gained traction.

California is the nation's leader in milk production.

Read CDFA’s notice for the Sept. 12 hearing here

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