Federal Order Process for California Continues

The month of May saw several developments in the ongoing process of drafting a Federal Milk Marketing Order to be offered for consideration by California dairy producers.  Early in the month, Rabobank issued a study that predicted farmgate milk prices would increase under a federal order but not as much as the USDA prediction of 48 cents per hundred.  According to Rabobank’s James Williamson, the increased flexibility allowed in the draft FMMO for milk to be de-pooled could affect the pricing, but not automatically to the disadvantage of producer pay prices.  He predicts the removal of transportation allowances will change how milk flows to processors, as well.  On balance, the bank’s analysts suggest it could bring more stability to farmgate prices.

The on May 15, the period closed for organizations or individuals to submit their comments to USDA.  Notable among them was the formal submission by the California Dept. of Food and Ag (CDFA) that it is ready and willing to operate the California program independently from the FMMO as had been recommended in the USDA proposal.  All the comments as well as much of the other documentation about the FMMO for California can be found on the USDA website at the California Hearing Page (https://www.ams.usda.gov/rules-regulations/moa/dairy/ca)

The stated goal for CDFA Secretary Karen Ross is to have a detailed plan for quota administration before producers vote on the FMMO.  To that end, she expanded CDFA’s existing Milk Pooling Producer Review Board from six to 15 members.  The newly expanded Board met on May 30 in Modesto to consider questions posed by CDFA. A crucial topic is what milk will be assessed to generate the quota payment.  The decision by a vote of 9 in favor and 4 opposed was that all California milk would be included, Grade A and B, pooled or not pooled.  The vote was 10 to 3 in favor of maintaining the current quota payout calculation, a fixed $1.70 /cwt or 19.5 cents/lb. on SNF above the overbase price.  On three topics, the decision was unanimous:  1) CDFA can require industry entities to supply data; 2) the current Milk Pooling and assessment authority will apply; and 3) handlers will deduct the monies from producers required to pay the assessment and pay to a CDFA settlement fund.  The question of how producer-handler exempt quota would be handled was tabled.  Votes totaled 13 as two members were absent.

The next meeting is scheduled for June 15 and details may be found at the CDFA’s website… www.cdfa.gov

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