Is change coming to California’s milk pricing system?

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California’s dairy industry has endured their share of headaches in the last few years, including high feed costs on top of a disastrous year in 2009. 

Another headache that continues is the state’s milk-pricing system. However, things may soon be changing if a bipartisan group of state representatives gets its way.

According to The Modesto (Calif.) Bee, the “California Milk Marketing Order Act” was introduced last week by six House members to give California dairy farmers a chance to potentially enter the federal milk marketing system.

"Our legislation would put control back in dairymen's and dairywomen's hands, and give them the option to choose what works best for their business," California Representative Jim Costa said.

If the bill is passed by state lawmakers, California dairy farmers could petition the USDA for entrance into the federal milk marketing order system. Once the petition is filed, an industry-wide vote would be held. If approved by at least two-thirds of dairy farmers, California producers would be put on what some have called a “level playing field.”

Read more The Modesto Bee.

Currently, the state's Class 4b pricing formula pays producers less than what producers get in neighboring states. Cheese-makers, on the other hand, say that raising this formula would push them out of the state. Read, “Milk Price Fight Boils Over” from The Wall Street Journal.

Although high feed costs have been the main culprit affecting dairy producers in California over the past few years, the Class 4b price is still an important factor, points out Rob Vandenheuvel, general manager of the Milk Producers Council in Ontario, Calif.

A Class 4b price that is closer to the Federal Order Class III price would have had a huge impact on California producers, particularly in being more prepared for the bad year that occurred in 2012 (following a devastating year in 2009), he told Dairy Herd Network.  

Had the California Class 4b price been in closer alignment with the Federal Order Class III price, cheese-makers would have had to put another roughly $400 million into the pool, Vandenheuvel said. "Would the $400 million have repaid the 2009 debt? No. But that's another $400 million that would have at least put California dairies in a better position going into 2012," he said.

Read more here.



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