California’s FMMO plan will keep quota

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California’s FMMO plan will keep quota

California's state capitol

by Dennis Halladay, Western Editor

California’s three largest dairy cooperatives are very close to having a draft petition ready to submit to USDA asking that a Federal Milk Marketing Order (FMMO) be implemented there.

If adopted it will be a monumental change for the state’s dairy industry, which thrived for decades under its own pooling and pricing plan created in 1969. But since the feed and milk price disasters of 2008-09, the program has come under blistering attack by producers, who say it generates huge profits for processors as farms go bankrupt.

What won’t see any change is something that many producers worried might be totally eliminated under an FMMO: their California pool quota.

It was literally a $1 billion concern, since that’s the approximate total market value of all pool quota. But the three co-ops have made no secret that the continuation of quota will be part of any FMMO petition they submit.

Quota generates a $1.70 per hundredweight milk price bonus via special allocation of the first $12.5 million in pool revenues each month. As a result, it has a significant asset value for producers who own some. Holdings of $1 million or more are not rare, although there are also many producers who own little or none.

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(c) Hoard's Dairyman Intel 2014
January 27, 2014