Dairy farmers and their representatives say they are moving forward with other efforts to bring more equity to the state's milk pricing system, including joining the federal milk marketing order, after the California Department of Food and Agriculture (CDFA) denied another request to further raise the price of milk used to make cheese.
In a decision announced last week, CDFA extended an overall temporary price increase of 12.5 cents per hundredweight of milk that had been in place since July and was set to expire at the end of the year. The temporary price increase will now continue through June 2014 and apply to all classes of milk, including an increase of 15 cents per cwt. for Class 4b milk, which is used to manufacture cheese.
Producers have long contended that the state’s milk pricing system underpays them compared to what dairy farmers in other states earn under the federal milk marketing order. They say the main problem is the undervaluation of whey in the state milk pricing formula. Dairy organizations petitioned the department this summer to raise the 4b price up to 46 cents per cwt. and to change the sliding scale used to determine the whey value.
The groups said they petitioned the hearing thinking the proposed increases were part of a deal negotiated with processors, who later said during the September hearing that there was no agreement.
In a letter to dairy stakeholders, CDFA Secretary Karen Ross acknowledged her decision would bring disappointment "in light of the publicity surrounding the perceived agreement between producers and processors during the legislative session." But she said the hearing testimony "failed to provide justification for the petitioners' position that price relief be based solely on the whey factor and the 4b formula."
The CDFA hearing panel had recommended keeping the current temporary price increase in place until the end of the year, but Ross said she decided to extend it despite "positive signs in the marketplace" because she felt the country's economic recovery remains fragile and because she wanted to "provide a consistent level of revenue to producers to ensure a stable milk supply."
Kings County dairy farmer Dino Giacomazzi said next year's outlook for producers appears better because feed costs have come down and are expected to drop further due to the anticipated large U.S. corn crop, but he also said he doesn't think corn prices should figure into a discussion about California milk pricing.
"We're here trying to find the fair and correct way to determine milk price to producers in California. Just because our costs are coming down doesn't mean that the CDFA should sit on their hands and do nothing to solve the problem," he said.