California milk producers seek benefits of federal pricing program

McClatchy NewspapersMarch 22, 2013 


A automatic cow milker is attached to a cow

KAREN T. BORCHERS — San Jose Mercury News/MCT

— California’s huge dairy industry that has played by its own set of rules since the 1930s could partially end its unique way of doing business under new legislation that’s united lawmakers throughout the state.

Citing lost revenues and hard times, six House members from the rural Central Valley introduced a bill this week opening the door for California dairy producers to eventually enter a federal milk marketing system. The lawmakers, echoing the views of industry leaders, say it may be time for a change.

“Put us on a level playing field,” Rep. David Valadao, R-Calif., said in an interview Friday. “We’re desperate now.”

Valadao’s bill would allow California dairy producers to petition the Agriculture Department for entrance into the federal milk marketing order system. If the producers go ahead and file that petition, the Agriculture Department would hold an industry vote. Approval by two-thirds of the producers would be required for the move to succeed.

Though California remains the number-one dairy state, producing about 41.5 billion pounds of milk in 2011, farmers have also complained about low prices and troubling times. Last year, the state reported that 105 dairy farms went out of business.

“Our legislation would put control back in dairymen’s and dairywomen’s hands, and give them the option to choose what works best for their business,” said Rep. Jim Costa, D-Calif.

The bill, though, could also face “some pushback” from the dairy processors who buy milk, Valadao acknowledged.

Marketing orders, among other things, establish the pricing formula that determines how much milk processors pay for the milk they use, depending on the type of dairy product being made. Ten federal milk marketing orders currently exist.

California operates under its own system, established by a 1935 state law. For some time, California producers have complained about being paid less than producers in other states, who are part of the federal marketing order system. Valadao said Friday his bill would help “put us on a level playing field with the rest of the country” as far as dairy pricing.

California’s unique milk marketing order also includes a two-tier pricing system, part of which is called the quota. The quota entitles a producer to a higher milk price for some quantity of milk. Quota can be bought and sold. The legislation introduced Thursday contemplates California retaining this quota system even if the state’s dairy producers decided to join the federal milk marketing order system.

“Many of the farmers in the state have quota, and it has value,” Lynne McBride, executive director of the California Dairy Campaign said Friday.

A freshman House member, and himself a dairy farmer, Valadao took the lead in introducing the legislation late Thursday that mirrors some past efforts. In 1996, Congress included similar authorization language in a farm bill, but California dairy farmers never put the matter to an industry vote.

Last December, before Valadao took office, 17 California lawmakers, including Democratic Sens. Dianne Feinstein and Barbara Boxer, urged that similar authorization language be included in the latest farm bill. So far, problems in the Republican-controlled House have stymied farm bill rewrite efforts.

Valadao and his allies now have several options.

Although the legislation was introduced as a stand-alone bill, the typical vehicle for a measure like this would be a larger farm bill, as happened in 1996. This would give the measure more political momentum, as lawmakers from outside California have their own reasons for pushing a larger bill. Potentially, the measure could also move on its own, or even secure inclusion in another bill altogether.

Valadao added that “the fastest way” for dairy producer prices to rise would be for California state officials to adjust the pricing formula, a step he said his new legislation is designed in part to encourage.

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