Producers and processors launched a barrage of questions last week as USDA officials laid out how a new federal milk marketing order would work.
A major potential stumbling block is maintaining the state’s current quota system, farmers said.
Some 58 percent of California dairy farms own some level of quota certificates, which are equivalent to $1.70 per hundredweight of milk above the blend price they receive. Farmers wanted to know how their value would be recognized in a federal order.
Quota certificates, which can be transferred or sold, are valued at $1.2 billion, and producer groups have said the loss of the quota in a federal order would be a deal-breaker.
Under the state order, all milk is pooled, and the California Department of Food and Agriculture deducts $12 million to $13 million a month from producer milk payments to fund the quota program.
Under a federal order, only Class I fluid milk is required to be pooled.
With Class I utilization only about 10 percent of the state’s milk production, farmers have been concerned that the pool wouldn’t be large enough to fund the quota.
The California Department of Food and Agriculture would continue to administer the quota program and determine how money to fund the program will be collected and distributed, said Erin Taylor, USDA Agricultural Marketing Service dairy program acting director of order formulation and enforcement.
The program would remain separate from the federal order, but the FMMO proposal allows handlers of pooled milk to deduct a CDFA-determined quota assessment from regulated minimum prices they are required to pay producers.
“We can only deduct on pooled milk,” she said during the meeting in Clovis.
But she assumes the same milk that now pays for quota will continue to be assessed to pay for the program, with CDFA determining how to deduct the portion that would come from non-pooled milk.
“CDFA will still operate the quota program just like they do now, which is on all California milk. All we’re saying is a handler with pooled milk can deduct on this pooled milk in this federal order,” she said.
CDFA has indicated developing quota guidelines is a top priority but has not offered a definitive timeline for when it will make them public, she said.
Producers stated they’d like more time to review the state’s plan, which will be critical to evaluating whether the quota program is sustainable, and asked if the comment period could be extended until after that plan is made public.
As an interested party in the proposed FMMO, CDFA has the same May 15 comment deadline as everyone else. AMS will not wait on the state agency’s quota guidelines but will move forward on assumptions and expectations on how the program will operate, said Dana Coale, deputy administrator of AMS dairy program.
The industry can request an extension but needs to provide a reason, she said.
Source: Capital Press