Staff from the three major California cooperatives – California Dairies Inc., Dairy Farmers of America and Land O’Lakes – continue their work towards finalizing language to be submitted to the U.S. Department of Agriculture (USDA) that would establish a Federal Milk Marketing Order (FMMO) in California. There are 10 FMMOs around the country (a map can be found at: http://goo.gl/DTvyVf), and while there are some things that are the same in all 10 of those Orders (such as the Class II, III and IV prices), there are other things that are unique to each order. While USDA ultimately decides what to include in the final Order language, the three cooperatives are looking closely at those unique aspects of a potential California FMMO as they put together their draft language to be submitted to USDA.
In the meantime, just because there are many details “T.B.D.,” that hasn’t stopped some from analyzing and pontificating about what could possibly be in the final draft, and how that could impact both producers and processors in California. One such analysis was published by a trio of dairy economists: John Newton from the Univiersity of Illinois, Cameron Thraen from The Ohio State University and Andrew Novakovic from Cornell University. Their full publication can be read at: http://farmdocdaily.illinois.edu/pdf/fdd270314.pdf.
Much of the five-page report was factual in nature, and certainly highlights some of the issues that will be debated at length in a USDA hearing process. However, there was a recurring theme that really caught my attention, and will undoubtedly be repeated many times throughout this process. The report stated, “What’s commonly overlooked in the debate of the milk price divergence are the implications of imposing higher FMMO classified prices on California’s competitive position in the dairy processing sector.”
Let me rephrase: Apparently, the California dairy producers are failing to consider whether California’s cheese manufacturers can survive if they have to pay a price for their milk that is in line with what their out-of-state competition has to pay.
California dairymen face some of the highest feed costs in the country. Our environmental and labor regulations (and their associated costs) are second-to-none. Our taxes are high, our fees are obscene, and every year, the State Legislature seems to find new ways to make doing business in California more difficult. And yet, according to this line of thinking – and this is not the first, nor will it be the last time we see this – one additional major consideration should be how we can provide the lowest cost milk in the country to our manufacturers. Really?!?