CDFA schedules April 11 hearing on milk pricing

The California Department of Food and Agriculture has called a public hearing to consider amendments to the dry-whey scale found in the state pricing formula for Class 4b milk, which is used to make cheese.

The department, which sets minimum milk prices paid to dairy farmers, said the hearing—to be held April 11—will consider alternative proposals to the Class 4b pricing formula.

"Proponents of any alternative proposal shall address, at a minimum, the economic conditions that would support extending the effective date of the temporary dry whey scale or adjustments to either the temporary or permanent dry whey scales contained therein," the hearing notice said.

CDFA amended the state milk pricing formula last summer after a similar hearing to address 4b pricing. The change was to be temporary and is set to expire in August.

Specifically, CDFA adjusted the dry-whey scale used to determine the whey-factor value in 4b pricing, first by changing the current sliding scale for the whey value from five-cent steps to three-cent steps. The department also raised the cap of the whey ceiling from 75 cents per hundredweight to $2 per cwt.

CDFA said it has called the hearing on its own motion, but the decision may have been prompted by a letter, sent earlier this month, by the state's dairy organizations.

Lynne McBride, executive director of the California Dairy Campaign, said her group, along with Western United Dairymen, the Milk Producers Council and the state's three major dairy cooperatives—California Dairies Inc., Land O'Lakes and Dairy Farmers of America—have been "continuously communicating" with the department about the "dire circumstances dairy farmers in California are facing due to the depressed milk price" and the need to extend the temporary dry-whey scale.

"It was designed as a relief measure when it was passed last year," McBride said. "Conditions this year are even worse than last year in terms of dairy producer prices. We continue to see dairies go out of business, so we welcome any and all relief measures that can occur at the state level."

She noted the overbase milk price has been in the $13 per cwt. range, while cost of production has been an average of about $19 per cwt.

"I am pleased that the department is trying to find ways to help out the producer and we're going to continue to work with (CDFA) through this hearing process to try to increase the prices for all producers in the state," said Tulare County dairy farmer Frank Mendonsa, president of Western United Dairymen.

Rob Vandenheuvel, general manager of the Milk Producers Council, also welcomed news of the hearing, saying dairy groups "have certainly been talking amongst ourselves about the need to extend a version of temporary, adjusted Class 4b formula beyond July 31."

The three dairy groups said they intend to work together with the three cooperatives to develop a plan for the upcoming hearing. Alternative proposals must be received by the department by March 28.

McBride said while extending the temporary dry-whey scale will help, what the dairy groups and cooperatives have been working toward is a more-permanent solution to what they say is a pricing disparity between the state Class 4b price and the federal equivalent Class 3 price.

The groups agree that establishing a federal milk marketing order for the state could be that solution and are currently awaiting a decision from the U.S. Department of Agriculture on whether it recommends such an action. A hearing on establishing a California federal order concluded in November.

There are still two more post-hearing procedural steps before USDA can begin to make a recommendation: Post-hearing briefs are due March 31 and reply briefs are due May 16. After that, it is expected to take six months or longer for USDA to issue an initial decision.

Meanwhile, the CDFA hearing will be held April 11 at 9 a.m. at the department auditorium, 1220 N St., Sacramento.

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