New California federal milk marketing order now in effect

California dairy farmers joined U.S. Department of Agriculture Undersecretary Greg Ibach in Tulare to commemorate the start of the new California federal milk marketing order, which went into effect this month.

"This new federal milk marketing order decreases regulation for processors, moving industry into a less regulatory system, and also helps put California's producers on equal footing with producers across the country," Ibach said during remarks last week at Rancho Teresita Dairy, owned by Cornell and Terry Kasbergen.

California represents more than 18 percent of all U.S. milk production and, with this new order, more than 80 percent of the total U.S. milk supply will be covered by the 11 orders overseen by USDA Agricultural Marketing Service.

USDA described federal milk marketing orders as marketing tools intended to prevent damaging price competition inherent in the marketing of highly perishable commodities. They establish the terms of trade between the farmer and the first buyer of milk, by enforcing timely payments from milk processors to milk producers and developing minimum milk prices based on market values with respect to supply and demand conditions.

Implementation of the California FMMO concludes a rulemaking process begun in 2015, when three California dairy-farmer cooperatives—California Dairies Inc., Land O'Lakes and Dairy Farmers of America—jointly petitioned USDA to establish a federal marketing order for the state. A 40-day formal rulemaking hearing was held in 2015 to collect evidence and testimony. The resulting hearing record consisted of more than 8,000 pages of transcripts, 200 exhibits and 30 post-hearing briefs. Based on this evidentiary record, USDA published a recommended decision proposing the establishment of a California FMMO in February 2017. A final rule announcing producer approval of the order was published in June.

The final rule established Federal Order 51, incorporating the entire state of California. Following the publication of this rule, USDA began the process of educating dairy handlers who will be regulated by the FMMO and those who will have the option to opt-in. The entire record of the rulemaking is available at www.ams.usda.gov/caorder.