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California Producers Ask for $1/cwt Surcharge

19:25PM Oct 22, 2008
The California Department of Food and Agriculture (CDFA) will hold a hearing on October 30 and 31 to consider implementation of a six-month, $1/cwt "surcharge” on the regulated minimum prices for Class 1, Class 2, and Class 3 milk.
           
The petition for the surcharge has been submitted by the Alliance of Western Milk Producers, Western United Dairymen, and the California Dairy Women's Association. They cite extraordinary high feed prices and fuel costs producers as well as the extreme volatility in the cheese market.
           
Two alternative proposals have been filed with CDFA. The alternative submitted by the Dairy Institute of California calls for a $1.35-per-hundredweight decrease in Class 1 prices and an approximate $0.26-per-hundredweight decrease in Class 2 and Class 3 prices. The Dairy Institute cites competitive concerns, structural changes in interstate Class 1 price relationships, and structural changes in intra-state price relationships between various classes of milk as a basis for the decrease.
           
The alternative submitted by Milk Producers Council (MPC) supports the addition of a "transportation surcharge” that would increase the Class 1 revenue by an amount sufficient to recover the revenue being removed to fund new transportations subsidies. According to MPC, this would amount to an approximate 14¢/cwt  increase in the Class 1 price.
           
The hearing notice can be downloaded from the CDFA website at http://www.cdfa.ca.gov/dairy/pdf/hearings/2008/HearingNotice.08-19-08.pdf.