Much of the discussion about the dairy provisions in the new Farm Bill law have focused on the new national Dairy Margin Protection Program (DMPP) to be launched later this year. One thing that hasn’t been talked about much is a short – but significant – provision included in the bill dealing with California dairy cooperative efforts to craft a California Federal Milk Marketing Order, noted Rob Vandenheuvel, general manager of California's Milk Producers Council.

“Specifically, the Farm Bill states that ‘the provision provides the Secretary of Agriculture with the discretion, if a California federal milk marketing order is requested, to recognize the longstanding California quota system, established under state marketing regulations, in whatever manner is appropriate on the basis of a rulemaking hearing record.’ In shorthand, this gives the U.S. Department of Agriculture the authority to craft a California Federal Order that incorporates our state-run quota program,” he said.

According to Vandenheuvel, having this provision in current law provides the authority the three major California cooperatives (California Dairies Inc., Dairy Farmers of America and Land O’Lakes) have demanded in order to push forward with the consideration of a California Federal Order.

“The cooperatives have been very clear from the start that their willingness to support a California Federal Order was contingent on this authority to maintain our state-run quota program,” Vandenheuvel said. “Now that the necessary authority is signed into law, the cooperatives have the certainty they were looking for.”

The next major step in this process is the submittal of a petition and draft order language to USDA in order to launch the hearing process that can ultimately lead to the implementation of a new California Federal Order. Dairy organizations at World Ag Expo were uncertain when that process would begin. Once it is initiated, it is a lengthy process; the hearing process can take up to 14 months.

A 12-page paper, Dairy Subtitle of the Agricultural Act of 2014 Information Letter 14-01, also includes a section lookig at the California issue. The paper is co-authored by Marin Bozic, University of Minnesota; Cameron Thraen, Ohio State University; John Newton, University of Illinois-Urbana/Champaign; Andy Novakovic, Cornell University; and Mark Stephenson, University of Wisconsin-Madison. According to the paper, a FMMO has always been an option for California producers, but until recently they have preferred the provisions and administrative structure of their state system. Changes in the relationship of prices under the California order and federal orders – especially related to the price milk milk used to produce cheese (Class III in FMMO, Class 4b in California) – have caused many California producers to re-evaluate their state system.