Dairy farmers, processors debate milk pricing plan

Dairy farmers, milk processors and agriculture officials gathered Tuesday to review a plan that could give California dairy operators a boost in milk prices and revenue.

The hearing at the Clovis Veterans Memorial District Building is part of an effort by the state’s three largest dairy cooperatives to create a federal milk marketing order for California.

The cooperatives – California Dairies Inc., Land O’ Lakes and Dairy Farmers of America – say a federal pricing structure would fix the inequity that exists between the state’s farmers and the rest of the nation. All three have plants in or near Stanislaus County.

As part of what is expected to be a weeks-long hearing, an administrative law judge began taking testimony from witnesses and accepting evidence.

At issue for many farmers is what they say is an unbalanced system for regulating milk prices. They argue that farmers under a federal marketing order receive more money for their milk than they do.

The state’s dairy prices are regulated by the California Department of Food and Agriculture. And while it has increased milk prices, farmers say it hasn’t been enough to offset rising costs, especially feed.

“All we are asking for is a level playing field,” said Cornell Kasbergen, a Tulare County dairy farmer who attended Tuesday’s hearing. “Right now, we can’t operate under the current system. We are losing money.”

Kasbergen said the quest for a federal marketing order has been years in coming.

“This is a historic day for California’s dairy farmers,” he said. “No one thought that we would ever get to this point.”

Tuesday’s hearing began with a preliminary-impact analysis of the proposals for a federal marketing order. They also were submitted to the U.S. Department of Agriculture by the Dairy Institute of California, the California Producers Handlers Association and Ponderosa Dairy.

The USDA study found that the cooperatives’ proposal would increase the state’s dairy revenues by an average of $700 million per year from 2017 to 2024.

Rachel Kaldor, executive director of the Dairy Institute of California, who represents dairy processors, including cheese producers, said the cooperative’s proposal could put her members at a competitive disadvantage by requiring them to pay more for their milk.

California is home to several large cheesemakers that consume about 44 percent of the state’s milk supply. And a bulk of that – 59 percent – goes into making mozzarella.

“Dairy farmers have every right to explore a federal marketing order, but this isn’t just about price equity,” Kaldor said. “We could find ourselves in a position of not being able to compete.”

Federal officials said that once the hearing is completed, a “recommended decision” will be issued and the public will be allowed to provide comment. Once that is done, the USDA will issue a final decision.

If it recommends a federal milk-marketing order, California’s dairy farmers would vote on it. Passage requires two-thirds of the farmers or those representing two-thirds of the milk supply.

This story was originally published September 23, 2015 at 11:39 AM with the headline "Dairy farmers, processors debate milk pricing plan."