After over a month of extensive witness testimony and nearly 200 exhibits that could potentially lead to more equitable milk pricing for California dairy producers, the United States Department of Agriculture concluded its public hearing on a proposed California Federal Milk Marketing Order.
This does not mark the end of the process, however, as the Dairy Institute of California said that the FMMO hearing and administrative proceedings will continue. This will include future filings of briefs, issuance of a recommendation and then a final decision outlining a proposed FMMO for California. Finally there will be a vote by California dairy farmers.
Dairy Institute of California Executive Director Rachel Kaldor said that the full process could take 18 months or longer.
“Producer representatives have continued to maintain that the prices they receive for their milk here in California are not the same as prices received in the upper Midwest,” said Kaldor. “Dairy institute members, as well as other expert witnesses, provided solid facts as to the differences in industry structure, competition for milk, and distance from markets that make a simple price comparison inaccurate.”
The California dairy industry represents 20 percent of all milk production throughout the nation and is currently regulated under a state marketing order, which means that farmers have been forced to undergo increasingly difficult market conditions.
The value of whey is lower than it has been in the last five years since the price gap between the state pricing system and the federal order pricing system began to widen, causing California dairy farmers to consistently be among the lowest paid nationwide.
According to the California Dairy Campaign, the average California dairy producer has been paid $1,254,000 less than the same sized dairy in the FMMO since 2011. Since then, producers throughout the state have also been paid on average $1.44 per hundredweight less and lost approximately $1,045 per cow.
The detrimental inequity between the prices paid to California dairy producers and the costs necessary to maintain dairy operations in the state has not only cost the industry upwards of $1.5 billion since 2010, but has significantly contributed to the loss of more than 600 California dairies over the last decade.
The 2014 Farm Bill allows for a California FMMO that recognizes certain state-specific aspects of the current order if recommended by USDA and approved by California in dairy producers.
California Dairies, Inc., Dairy Farmers of America, and Land O’Lakes, which represent over 75 percent of the milk produced in the state, submitted a public hearing proposal to the USDA for the establishment of a California FMMO. The Dairy Institute of California submitted a proposal as well.
“California dairy cannot remain a zero sum game, where for one side to win the other side must lose. California dairy producers need to understand how important the entire dairy supply chain is to all industry stakeholders,” said Kaldor. “We have to keep and build markets, and producers and processors have to build partnerships so that everyone can be on the winning side. The future of our industry depends on it.”
