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The USDA on Thursday put its official stamp of approval on California dairy producers’ desire to join the federal milk marketing order system, announcing that producers had embraced the move in a statewide referendum.
Voting closed on May 5 with the state’s three largest dairy cooperatives, representing at least 75 percent of the state’s milk production, voting in favor. But the outcome wasn’t official until USDA tallied the votes.
The agency did not reveal the breakdown of the vote, but dairy producer groups were confident that the bloc voting by the co-ops would clinch the deal.
The official approval moves California’s dairy industry from the state milk pricing system to the federal system, which producers are hoping will increase their milk checks.
“It’s good news and many years in the making,” Lynne McBride, executive director of California Dairy Campaign, said.
For too many years, California’s dairy farmers have received some of the lowest milk prices in the country. Joining the federal system will finally bring prices in line with those in other milk-producing regions, she said.
“We think it’s critical there’s a level playing field for California producers, especially given how depressed milk prices have been,” she said.
The state system has been failing California producers for many years, and joining the federal system is a critical step to ensuring dairy producers in California are paid an equitable price, she said.
“It’s nice to get the official confirmation and get moving,” Geoff Vanden Heuvel, board member and economic consultant for Milk Producers Council, said.
Producers have been “tremendously unhappy” with the California Department of Food and Agriculture, which continues to regulate milk prices below federal order prices, he said.
The conflict goes back 10 years, with CDFA unwilling to make changes. There was a period when the price for milk used to make cheese got completely out of line, trailing prices in federal orders by as much as $3 per hundredweight, he said.
Another issue is the state’s inability to regulate interstate commerce, wherein revenue from out-of-state milk used in California’s fluid milk markets isn’t shared with California producers through the state’s mandatory pooling system, he said.
“The bottom line is California dairy farmers got tired of battling the state over the regulatory system,” he said.
With CDFA unwilling or unable to put California producers on a level playing field with producers across the country, a federal order was the only shot to do something different, he said.
Producers with Western United Dairymen are looking forward to a new system of milk pricing, Anja Raudabaugh, the organization’s CEO, said.
“Optimism is in the air. We are very hopeful it means better prices for producers,” she said.
Processors are happy the issue is finally resolved, Rachel Kaldor, executive director of the Dairy Institute of California, said.
“At least we have some certainty going forward,” she said.
The approved proposal reflects processors’ proposal for an order that operates the same as other federal orders in regard to mandatory pooling and regulated prices, she said.
Unlike the state order in which virtually all milk is pooled and regulated — a provision producers wanted to maintain in a federal order — mandatory pooling and regulated prices will apply only to Class I milk.
With Class I milk accounting for 12 percent of California’s production, most of the state’s milk will not be automatically regulated by USDA — allowing manufacturers to decide whether they will participate in the pool, she said.
The new California order goes into effect Nov. 1.