Dairy cows Todd Fitchette
California dairy farmers may see a slight price improvement in their milk checks later this year when the federal milk marketing order for California goes into effect.

California dairymen win divorce from state milk marketing order

USDA ratifies producer referendum with Federal Register announcement of California Federal Milk Marketing Order. Dairy economists expect small producer price improvement under new FMMO.

California dairy producers approved the referendum allowing them to join the Federal Milk Marketing Order (FMMO). The new order will be implemented Oct. 17 with publication of advanced prices and pricing factors. Affected parties must comply with the new order on Nov. 1.

In a statement from the three dairy cooperatives responsible for requesting the federal order hearing – Land O’Lakes, California Dairies, Inc., and Dairy Farmers of America – the trio of milk processors that represent about 70 percent of the state’s milk supply said they bloc voted for their members in favor of the referendum.

“Three years ago, farmer leaders of our cooperatives agreed to work toward a change in the regulatory structure, one that would benefit California dairy farm families,” said the three cooperatives in a joint statement.

“Following careful consideration of the final decision issued by USDA, we believe the proposal will better address disparities between farm gate prices in California and the rest of the nation,” the statement continues.

Since the referendum the cooperatives and dairy trade associations such as Western United Dairymen held informational sessions to educate dairymen on the impacts the federal order could have on their milk prices. Early indications by dairy economists suggest milk prices could rise slightly for California dairy producers.

California represents over 18 percent of all U.S. milk production and is currently regulated by the California Department of Food and Agriculture (CDFA). Once the new FMMO is established over 80 percent of the U.S. milk supply will be federally regulated.

Dairy groups hailed the decision, saying it is a positive step for the state’s milk industry, which has languished under milk pricing formulas that typically pay California producers less than their counterparts under federal orders.

“Since our organization was founded we have called for California to join the federal order system and we applaud all the dairy producers across the state who voted in favor of establishing a federal order for California,” said California Dairy Campaign President Joe Augusto of Visalia.

Augusto went on to praise California representatives Jim Costa, D-Fresno; Rep. David Valadao, R-Hanford; and Sen. Dianne Feinstein for their efforts to help craft the federal order. Western United Dairymen Chief Executive Officer Anja Raudabaugh likewise praised the federal delegation for its efforts, which included help to ensure that the California milk quota program would be retained.

Dairy quota will continue to be regulated by the California Department of Food and Agriculture.

Western United Dairymen Chief Executive Officer Anja Raudabaugh said California’s dairy economy has “been too challenging for too long,” adding that “we all hope the FMMO will help level the playing field on farm milk prices for California’s dairy family.”

The most immediate of these economic challenges was the shuttering of a California Dairies, Inc. processing plant in Los Banos in March due to shrinking milk volume in a state wrought with unprofitable producer milk prices. The facility had been in operation since 1925. Its closure affected 63 employees.

Kevin Abernathy, general manager of Milk Producers Council, called the positive vote the “end of the insanity of the California state system.”

“We at MPC are very excited and very appreciative of the leadership of the three cooperatives on promulgating the California FMMO,” Abernathy said in a statement to Western Farm Press.

After the three dairy cooperatives filed their petition in early 2015 requesting state inclusion in the FMMO, dairy industry leaders and representatives testified for and against that and several counter proposals in a hearing later that year that lasted two months.

The USDA announced its proposed rule earlier this year, right after dairy producers told USDA Secretary Sonny Perdue at the World Ag Expo in Tulare, Calif. that they wanted the opportunity to join the federal order. The proposed rule was then published in the Federal Register and voting took place April 2 through May 5. Approval of the referendum required a positive vote by two-thirds of the voting dairy producers, or by producers representing two-thirds of the milk in the voting process.

The federal rulemaking record is available at https://tinyurl.com/y8y2jmt2 with the Federal Register notice available at https://tinyurl.com/y7yelmd5.

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