A 'Real California Milk' sign posted on a farm.
A 'Real California Milk' sign posted on a farm.

The three largest dairy cooperatives in the state are moving ahead with a petition to create a federal milk marketing order (FMMO) in California. This week, California Dairies, Inc. (CDI), Dairy Farmers of America, Inc. (DFA) and Land O'Lakes, Inc. submitted a joint proposal to USDA, petitioning for milk producers in the state to begin operating under a FMMO.

Copies of the proposal may be found on USDA Ag Marketing Service Dairy Programs website at http://www.ams.usda.gov/CAOrder.

As the first step in what some estimate is a 14-month process, the proposal requests USDA to announce a regulatory hearing that will provide opportunity for other dairy industry organizations, companies and producers to provide input. Before deciding to conduct a hearing, USDA is providing the opportunity for interested parties to submit additional proposals regarding the provisions of a potential California FMMO. Additional proposals may be submitted electronically to AMS Dairy Programs at amsdairycomments@ams.usda.gov. Proposals must be submitted by April 10.

Proposals amending existing federal milk marketing orders will not be accepted in conjunction with this invitation.

USDA plans to conduct a series of public outreach meetings throughout California in early May 2015. Information regarding these meetings will be released soon.

Under existing regulations, California dairy farmers operate under a statewide milk pricing plan. The majority of farmers in the U.S. operate under a FMMO, which provides uniform dairy prices for milk based on market prices. According to the three cooperatives, shifting to a FMMO for California supports their desire for dairy farmer members to receive more equitable, market-based milk prices.

 

Price disparity cited

Of particular concern is the relationship between prices for FMMO Class III and California Class 4b milk, both of which go into cheese production.

In 2014, the FMMO Class III price averaged $22.34/cwt., while the California Class 4b price averaged $19.93/cwt., a difference of -$2.41/cwt. In 2013, the Class III price averaged $17.99/cwt., while the Class 4b price averaged $16.42/cwt., a difference of $1.57/cwt.

Changes made to the California state order before 2011 resulted in California's dairy farm families enduring unsustainable pricing for their milk, the groups said. Cooperative leaders from CDI, DFA and Land O'Lakes began advocating for a FMMO to work with the California Department of Food and Agriculture (CDFA) to correct pricing disparity, but efforts repeatedly failed.

To find differences between FMMO and California price formulas, visit:

Current Federal milk order price formulas

Current California State milk order price formulas

 

California order studied

The three cooperatives, representing approximately 80% of the milk produced in California, collectively funded a comprehensive modeling study to examine the issues and benefits of replacing the California state milk marketing order with a federal milk marketing order. In fall of 2012, they contracted with Dr. Mark Stephenson, director of dairy policy analysis at the University of Wisconsin-Madison’s College of Agricultural and Life Sciences, and Dr. Chuck Nicholson, clinical associate professor of supply chain management at Penn State University.

The findings of the five-month study indicated a properly written federal milk marketing order for California would benefit the state’s dairy farm families.

The process also required a provision included in the 2014 Farm Bill that requested a California federal order recognize the state’s quota program.

 

FAQs

USDA’s Ag Marketing Service-Dairy Programs published a working document with a series of frequently asked questions surrounding the potential creation of a California federal order. The document is posted the document on their website at: http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5106626.

Once the proposal works its way through the hearing process, establishing a new FMMO or changing an existing order must be approved by dairy farmers through a referendum. Of those participating in a referendum, either two-thirds of the dairy farmers voting, or producers representing two-thirds of the milk produced during a designated month, must approve.

 

About California Dairies, Inc.

California Dairies, Inc. is the largest member-owned milk marketing and processing cooperative in California producing 47 percent of California's milk. Co-owned by more than 410 dairy producers who ship 18 billion pounds of Real California Milk annually, California Dairies, Inc. is a manufacturer of quality butter, fluid milk products and milk powders. In addition, California Dairies, Inc. is the home of two leading and well-respected brands of butter – Challenge and Danish Creamery. California Dairies' quality dairy products are available in all 50 United States and in more than 50 foreign countries. For additional information on California Dairies, Inc., visit www.californiadairies.com.

 

About Dairy Farmers of America, Inc.

Dairy Farmers of America (DFA) is a national dairy marketing cooperative that serves and is owned by nearly 15,000 members on nearly 9,000 farms in 48 states. DFA also is one of the country's most diversified manufacturers of dairy products, food components and ingredients, and is a leader in formulating and packaging shelf-stable dairy products. For more information, call 1-888-DFA-MILK (332-6455) or visit www.dfamilk.com.

 

About Land O'Lakes, Inc.

Land O'Lakes, Inc., one of America's premier agribusiness and food companies, is a member-owned cooperative with industry-leading operations that span the spectrum from farm production to consumer foods. With 2013 annual sales of more than $14.2 billion, Land O'Lakes is one of the nation's largest cooperatives, ranking 199 on the Fortune 500.  Building on a legacy of more than 93 years of operation, Land O'Lakes today operates some of the most respected brands in agribusiness and food production including LAND O LAKES® Dairy Foods, Purina Animal Nutrition and WinField. The company does business in all 50 states and more than 60 countries. Land O'Lakes, Inc. corporate headquarters are located in Arden Hills, Minn.