Dairy farmers file petition to end quota system

The California Department of Food and Agriculture has received a petition from a coalition of dairy farmers seeking to end the state's 50-year-old quota system.

In a letter dated March 29, Kristin Hagan, the group's attorney, said she has submitted to the department a petition signed by 285 market milk producers. The number of signatures, the letter noted, exceeds the 25% threshold that CDFA needs to initiate a producer-referendum process for terminating the quota program. The letter names Eugene Azavedo as the petitioner.

Until last November, CDFA operated the quota program along with regulating state milk prices. After California joined the federal milk marketing order, CDFA began operating the standalone quota system—now known as the quota implementation plan—under an agreement with the U.S. Department of Agriculture.

Maintaining the quota implementation plan, which 87% of dairy farmers voted to keep in a producer referendum in 2017, was a key condition for many producers who supported a California federal order.

Calls to eliminate the state's quota program are not new. Since last fall, there has been a petition effort to end quota, a program established in 1969 that entitles dairy farmers who own it additional revenue for their milk. Quota can be bought, sold or transferred.

The additional income from quota amounts to anywhere from $1.40 to $1.17 per hundredweight, according to the Stop Dairy QIP Tax Coalition. The group's website, at www.stopqipdairytax.com, describes the program as providing "an unfair pricing advantage to certain dairymen at the expense of others" and says it wants to terminate quota and "establish a level playing field for all California dairymen."

The group points out that 38 cents per cwt. of Grade A milk pooled in the current federal milk marketing order in the state go to pay quota holders; that amounts to about $12 million a month. If more dairy farmers go out of business or if Grade A shippers become Grade B shippers, the group says, the 38 cents per cwt. could climb to 60 cents.

Because the Quota Implementation Plan did not have a process for dealing with petitions, CDFA asked the Producer Review Board, which advises the department on milk pooling and quota issues, to develop procedures, which CDFA posted along with the petition letter.

With receipt of the petition, CDFA will need to verify within 90 calendar days that the signatures are valid. If CDFA certifies the petition, it will schedule a Producer Review Board meeting within 60 calendar days to review the petition, adopt findings and make a recommendation. After reviewing the recommendation, if the department decides that the quota program "no longer tends to effectuate the purpose intended," it has 45 days to initiate the referendum process.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)