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Dairy farmers milk out better deal with cheese makers

POSTED July 16, 2013 10:53 p.m.

Dairy farmers in California received some good news last Thursday, after striking a deal with the state's cheese makers to tentatively bump up the price of milk paid for cheese production.

Both parties came to an agreement last week in a Senate Agriculture Committee special hearing held in Sacramento. The deal would call for cheese producers to pay an extra 46 cents per hundredweight of milk sold for processing.  Additionally, it would expand the whey scale to $1 from its existing cap of 75 cents.

Michael Marsh, CEO of Western United Dairymen, said that although the deal still does not match the federal market price paid by other states for milk, it will provide some relief for dairy farmers.

“This deal doesn't get us to exactly where we wanted, but it is a step in the right direction," said Marsh.

The proposed milk increased would add roughly  $110 million directly into the pockets of California's dairy farmers, according to Marsh.

Coupled with high feed prices and strains from cheese producers, California’s dairy industry has suffered more than $2 billion in losses in the past five years, forcing nearly 400 dairy farms in California out of business. The remaining 1,500 dairies are still fighting for survival.

However, reports from this year seem to be on the up side.

As the market improves, dairy farmers in the state are expected to receive an additional $445 million in revenue this year, numbers that seemed impossible only a few years ago.

Rachel Kaldor, executive director of the dairy institute that represents California's cheese makers, said cheese makers want to ensure a successful market for California's dairy farmers.

“We’ve been really happy to see a recovery in the farm price,” said Kaldor.

Kaldor said that although a deal was passed, both parties still disagree on how it’s going to be applied. She said the stipulations of the deal will be based on the agriculture secretary's judgment, economic conditions and current market competition for milk.

“We’ve made an agreement,” said Kaldor. “But we haven't agreed on how it’s going to be implemented.”

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