Three California dairy cooperatives, which represent over 75 percent of the milk produced in the state, have submitted a proposal to the United States Department of Agriculture that could potentially result in more equitable milk pricing for California dairy producers.
California Dairies Inc., Dairy Farmers of America, and Land O’Lakes submitted a public hearing proposal for the establishment of a California federal milk marketing order, wherein interested parties from the public will be invited to testify on the proposed change.
Currently not part of the FMMO, California dairy farmers have undergone increasingly difficult market conditions.
"Dairy producer prices have fallen well below production costs making it all the more critical that California producer prices are in brought in line with prices paid in federal order states," said California Dairy Campaign executive director Lynne McBride. "By joining a federal order system, all California dairy farmers would be paid a uniform price for manufactured milk, especially cheese milk."
According to published industry estimates, the current lack of regulations to establish minimum prices paid to California producers which accurately demonstrate national values for classified milk uses has cost California dairy farmers upwards of $1.5 billion dollars since 2010.
The inequity between prices paid to farmers and costs needed to maintain dairy operations has led to significant losses for the dairy industry.
According to the California Dairy Campaign, the state’s pricing formula has cost producers millions of dollars, since the average California dairy producer is paid $1,254,000 less than the same sized dairy under the FMMO system since 2011.
Additionally, the California Dairy Campaign reports that California diary producers have been paid on average $1.44 per hundredweight less, effectively losing $1,045 per cow.
“The benefits of joining the FMMO system are clear,” states the campaign on its website. “Given the high cost to operate a dairy in California, dairy producers cannot afford to be paid the lowest prices in the nation. Joining the federal order system will restore equity to dairy producer pricing in California and give dairy producers the right to vote for a fair milk price.”
If approved, California dairy producers will shift to the federal pricing formula, which could potentially lead to 4b, or cheese milk, prices to be raised to be closer to prices paid in other states.
“I think the biggest thing this proposal is going to do is to get people talking more seriously about pricing solutions that will work for all dairymen,” said local dairy producer Ray Prock Jr. “I encourage all dairymen to read this proposal and see how this is going to affect them.”
USDA will not make a decision to hold a public hearing until after it conducts an internal analysis of all proposals received. The department is currently requesting additional proposals concerning the formation of a potential California FMMO.