The Producer Review Board Moves Stand-Alone Quota Program One Step Further

By Geoff Vanden Heuvel

Editor’s note:  The author, a dairyman in Chino, Calif., is a board member and economics consultant for the Milk Producers Council.  This piece appeared in the MPC newsletter dated July 28 and is used here with permission.

On Aug. 2 the California Producer Review Board (PRB) met again in Modesto to conduct a page by page review of the Quota Implementation Plan regulatory language prepared by CDFA staff. The issue they wrestled with the most was how and when to set the level of the assessment, and how often should it be changed. The challenge is that while the amount of the payment to quota holders every month is very stable, the amount of milk that will be assessed to pay that cost varies quite a bit from month to month, mostly because of the seasonality of milk production. What the department staff had proposed was setting an initial rate and then adjusting it every three months based on the level of payments divided by the amount of assessable milk of the most recent three months. This was changed to “The Secretary shall review and/or adjust the quota premium assessment rate as needed. The rate of assessment shall be computed by dividing the quota premium paid to producers, net of Regional Quota Adjusters, for the most recent 12-month period by the pounds of assessable solids not fat produced in those 12 months.” This change deals with the seasonality problem and gives the Secretary the flexibly needed to make adjustments if necessary. They then set the initial rate at $0.38 per cwt.

The other issue in the draft language prepared by CDFA that attracted a strong reaction from the PRB was the provision that if the assessment rate increased by about 11% over the initial rate, a new producer referendum would have to be conducted to continue the program. The PRB was very unified in tossing this provision. What they did agree to was the conducting of a survey of producers every five years to get producers input on the functioning of the stand-alone quota program. This item does not require any action; it just requires review and discussion of the program by the Producer Review Board on a regular five year schedule. The PRB did work through the rest of the language, correcting typos, tweaking reporting dates, refining definitions, etc., but no more significant changes were made.

The next and final meeting is scheduled for September 12, 2017. Public Comments on the plan are being accepted until August 23, 2017. If you would like to submit any written comments on the Plan you can mail them to the CDFA. Address them to: Candace Gates, CA FMMO Coordinator, 1220 N Street, Sacramento, CA 95814. Better yet, email them to: [email protected]

At the Sept. 12 meeting, the PRB will review the comments and CDFA will have a final cleaned up version of the plan that the PRB will have one last crack at. It is anticipated that the Quota Implementation Plan will be adopted in total by the PRB then and forwarded to the Secretary for her approval and submission to the producers for a vote. A ballot will be mailed to every eligible producer in California and they will have 60 days to return it.

For the referendum to pass, at least 51% of the eligible producers need to vote, and either 65% of the voters representing at least 51% of the total amount of fluid milk produced, or 51% of the votes representing 65% of the milk need to vote yes for the referendum to be approved. The department anticipates the vote will occur in October and November of this year.

Remember, this plan only goes into effect IF California producers also approve establishing a Federal Milk Marketing Order for California.