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Can federal milk order save California dairies?

Rumors suggest voting on the California FMMO is not a "sure thing" as history suggests poor producer participation in recent referendum related to quota management

The day California milk producers sought is finally here: Voting is now under way that will determine the future of the state’s dairy industry.

It’s an exciting time following last month’s decision by the U.S. Department of Agriculture to propose a federal milk marketing order for California. The ball is now in the court of California dairymen, who will decide whether they want the Federal Milk Marketing Order to set their prices, or if they’ll stick with a state system they so dislike.

After posting its proposed order in the Federal Register, the USDA opened a 35-day referendum that closes May 5. That referendum allows eligible milk producers in California the right to vote up or down on the proposed FMMO. For members of a California milk cooperative, those votes can only take place one of two ways: The cooperatives can vote on behalf of their members or allow all individual members to vote.

The FMMO becomes effective if approved by two-thirds of the voting producers, or by producers of two-thirds of the milk represented in the voting process.

One dairy industry leader I spoke with said it “behooves” the cooperatives to bloc vote, meaning they will cast one vote on behalf of their membership, which is the direction at least one of the cooperatives is said to be leaning at this point. It’s not known publicly how the cooperatives will vote, nor which voting option they will allow.

Producers during the 2015 hearing indicated they wanted the right to vote individually on the matter, and not cooperatives voting on their behalf. Another dairy leader said for one cooperative to bloc vote, while the others allow members to vote individually, could create problems if voter participation is anything like what was seen during the quota vote late last year.

California’s Quota Implementation Plan referendum apparently needed to be extended several times, as dairymen failed to muster a minimum number of votes needed for the process. That’s highly ironic, given that during the FMMO hearings dairymen indicated they were much more concerned with keeping quota in any proposed federal order than they were about possible price improvements they might see. It was the price disparity between federal order milk prices and the state order system that drove the cooperatives to petition the USDA for an FMMO.

On one hand, this is a grand opportunity for the California dairy industry to change course after decades of complaining about unprofitable milk prices. On the other, perhaps this just prolongs the pain, as it appears the entire U.S. dairy industry is on an unsustainable path of unprofitability because of the very federal milk marketing order system that California dairymen seem to favor.

Until the dairy industry becomes more savvy with marketing, and can improve demand and better respond to the drive towards plant-based proteins by others in U.S. agriculture and abroad, it’s days are numbered.

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