California Dairy Co-ops Unite to Solve Industry Woes

July 5, 2009 07:00 PM
 

Four California dairy cooperatives representing 80% of the state's milk production have agreed to form a Marketing Agency in Common (MAC) to collectively seek solutions to the industry's economic crisis.

 

California Dairies Inc. (CDI), Dairy Farmers of America-Western Council, Land O'Lakes Inc., and Security Milk Producers Association have agreed to participate in the MAC.

 

The four will meet next week to sign and implement the agreement, Eric Erba, vice president of government relations for CDI, said today.

 

The MAC is significant because "co-ops are putting aside their past differences to work together for all producers,” said Erba.

 

"Everybody recognizes this is a critical time for producers,” he said. "This is a first step for a truly concerted effort. When you represent 80% of the milk, you have a chance of making something happen.”

 

Eighty percent amounts to 32 billion pounds of milk from the state's annual production of 40 billion pounds. California is the nation's leading milk producer.

 

Erba said it was too soon to say what solutions the MAC might pursue, although he said the group has ruled out a 5% cut in milk production as a way to bring supply and demand into better balance.

 

The group initially met last month to discuss a 5% reduction in the California milk supply from their production average in April and May of this year. But members concluded that the 5% reduction had already been achieved, and that further milk cuts would add financial stress to the co-ops' producer-members.

 

In the last six weeks, production from all cooperatives has decreased through naturally occurring events such as summer heat, changes in feed rations, and herd size reductions, Erba said. Dairy farms that have recently exited the business have also contributed to milk supply reductions. 

 

The group is encouraging other U.S. milk marketing cooperatives to consider forming similar MACs to work together to find solutions to the industry's marketing challenges.

 

Catherine Merlo is Western editor for Dairy Today. You can reach her at cmerlo@farmjournal.com.

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