California Makes Whey Formula Payment Permanent

The California Department of Food and Agriculture (CDFA) made permanent its adjustment to the Class 4B whey factor that has been temporarily in place since last August. The adjustment will be effective June 1, following a hearing in April.

The adjustment will bring California’s milk pricing structure in closer alignment to the Federal Order Class III formula.

The adjustment, however, doesn’t mean much to California milk checks because of current whey prices. It could add a few cents once whey markets improve. “Looking at the futures market, where dry whey settled at 29¢/lb. for November-December 2016, it appears this whey scale could result in approximately 8¢/cwt cents more per hundredweight on the overbase,” says Annie AcMoody, with Western United Dairymen.

Had it been in place over the past five years, however, it would have increased the Class 4b price by 44¢/cwt.

“Once dairy product markets improve, this adjustment will provide a needed increase in revenue to producers to promote a stable milk supply,” says Karen Ross, CDFA Secretary. “I still believe adjustments to the pricing formulas are inadequate to address long-term structural challenges facing the dairy industry. However, we must continue to respond to changing conditions in our industry by using the only tools available through the current milk pricing system.”

“Dairies across the state are going out of business at an alarming rate and although we welcome the milk pricing decision that Secretary Ross announced, it will not be enough to sustain many more dairies on the brink of closure,” warned California Dairy Campaign President Joe Augusto. “The grim reality is that our state dairy pricing system has underpaid California dairy farmers by more by than $2 billion since 2010.”