Milk price fight escalates big-time in California

Hoard's Dairyman: 

Milk price fight escalates big-time in California

Date: 
Fri, 09/07/2012

Producer groups sue the state’s department of agriculture.

by Dennis Halladay, Hoard’s Dairyman Western Editor

Four of California’s major dairy producer groups have decided they aren’t going to keep rolling over and taking low milk prices from the state anymore. Instead they are fighting back – and hard.

A lawsuit was filed by them in State Superior Court August 31 against the California Department of Food and Agriculture for failing to bring California’s Class 4b price (milk used to make cheese and dry whey products) into reasonable alignment with Federal Milk Marketing Order (FMMO) Class III prices as the law stipulates.

Historically, producer groups have petitioned CDFA to hold hearings and then present evidence showing why adjustments should be made to various formulas used to compute producer milk prices. The results of those hearings have usually amounted to just fractions of the increases requested, and sometimes nothing at all.

That scenario was repeated in August, when an unusually unified request by producer groups to increase the cap on the whey value component of the Class 4 formula from 65 cents per hundredweight to $4, resulted in an increase of just 10 cents. The decision incensed producer groups. An industry-wide meeting scheduled September 20 in Tulare to discuss establishing an FMMO in California is no doubt part of the backlash.

“This issue is simple and straightforward,” says Rob Vandenheuvel, general manager of Milk Producers Council in Ontario, one of four groups for whom a “Writ of Mandamus” was filed in California Superior Court in San Bernardino County against CDFA. The others are Dairy Farmers of America, Security Milk Producers Association and California Dairy Campaign.

“The law is very clear that the prices announced by CDFA must be in reasonable alignment with prices paid for comparable milk produced and sold around the country,” he explains. However, he says the gap between California Class 4b and FMMO Class III during 2010 averaged $1.24 per hundredweight and since 2011 it has averaged $2 (see chart below).

Gap Between CA Class 4b and FMMO Class III

The result, according to Vandenheuvel, is that since 2010 a California dairy milking 1,000 cows has been underpaid by approximately $380,000.

Click the icon to subscribe to HD Notebook and get the blog sent to you.

Next webinar:

Gordie Jones“Take your management to a higher level” is the topic of the noon (Central Time) webinar on September 10 presented by Gordie Jones, D.V.M. Jones will share strategies to identify and remove bottlenecks from your dairy. As part of the webinar, he will discuss organizing this review into daily, yearly and two-year cycles, as well as understanding the value of standard operating procedures. This September webinar is brought to you by Kemin. To learn more about the sponsor, visit www.kemin.com/getmore.
To register for the free webinar visit http://on.hoards.com/HD-webinar-signup.