MODESTO — The state's dairy farmers and processors have moved a little closer to a compromise on milk prices, while still nipping at each other over the issue.
Their tentative deal will be presented at a Sept. 12 hearing before Karen Ross, food and agriculture secretary for Gov. Jerry Brown.
The compromise calls for a temporary increase in the minimum amount that processors must pay for milk that's made into cheese, and a separate increase reflecting the value of whey, a cheese byproduct sold to other food companies.
The increases would be added to the monthly minimums that long have been set by the California Department of Food and Agriculture.
Dairy farmers say milk prices need to rise if they are to cover their feed and other costs and recover from a profit squeeze that started in 2008.
"We are confident that we finally will experience a small measure of relief after years of fighting to stay afloat," said Mike Marsh, chief executive officer of Modesto-based Western United Dairymen, in a news release. "California's dairy farmers have lost out on millions of dollars over the past decade because of a bureaucratic policy that allows cheese producers to pay less to California dairy farmers than those in other states. Our dairies are drowning in debt."
Processors acknowledge the farmers' troubles but say excessive prices would put California at a disadvantage against other dairy states.
The Dairy Institute of California, a Sacramento-based processor group, noted CDFA figures showing that farmers' margins improved in the first six months of 2013.
"That $400 million in additional revenue translates to about $250,000 more per dairy farm this year," said Rachel Kaldor, the institute's executive director. She added that the trend was expected to continue for the rest of the year because of strong global demand for dairy products.
Milk is the top-grossing farm product in the Northern San Joaquin Valley and generates several thousand jobs at processing plants.
The compromise calls for cheese makers to pay an extra 46 cents per 100 pounds of milk, which is about 12 gallons. The minimum set by the CDFA was $15.65 as of July.
Under current policy, the value of whey fluctuates between 25 cents and 75 cents per 100 pounds of milk. The compromise would raise the upper end to $1.
The combined increases are less than what Western United Dairymen and its allies had sought in an earlier CDFA hearing a surcharge of $1.20 per 100 pounds of milk bound for cheese plants.
Ross instead approved a six-month surcharge adding 12.5 cents per 100 pounds on average for all classes of milk. It started July 1 and applies to milk bound for the fluid market and to plants making cheese, butter, ice cream, yogurt and dozens of other products.
Bee news services contributed to this report.
Bee staff writer John Holland can be reached at email@example.com or (209) 578-2385.