U.S. farm officials will consider installing a federal pricing system for California’s $7.6 billion milk industry, replacing the current state-run pricing scheme, during a public hearing beginning Sept. 22 in Clovis and expected to run for several weeks.
Because the U.S. Department of Agriculture will base any decision solely on testimony and evidence placed on the hearing record, it will include arguments and counter arguments, and an administrative law judge will oversee the proceedings.
California milk producers have struggled in recent years in a highly volatile market for their milk and sought reforms in the state pricing system. However, disputes within the dairy industry, primarily clashes between producers and dairy processors, tripped up those efforts.
That same sort of scenario is shaping up for the federal hearing.
Dairy cooperatives, mutual companies owned by producers, first proposed a federal milk marketing order. But three competing proposals have since been filed, primarily one from the Dairy Institute of California, which represents processor interests.
Annie Acmoody, an economist for Western United Dairymen, which supports the cooperative proposal, said dairy producers see the California pricing system as faulty.
“They feel the price here in California is lagging,” she said.
What they seek is somewhat higher wholesale milk price.
“Not really higher prices than in the rest of the country, but a higher price than they have now, putting them on a level playing field with the rest of the states,” Acmoody said.
Bill Schiek, an economist for the Dairy Institute, said his processors group sees no need to change pricing systems.
“We don’t feel there’s any disorderly market that needs to be addressed by a federal order,” he said.
Schiek said the institute’s proposal differs from that proposed by the dairy cooperatives in how it calculates the minimum milk price; rules for milk-pricing pools; and in handling the so-called quota, essentially a price premium for milk production in place before the state system was imposed.
“We think our proposal is more reflective of how the other orders in the U.S. operate and how they are designed to operate,” he said.
Both the state and federal systems determine minimum prices milk processors pay to producers for milk going to various uses, such as liquid milk, cheese, butter and milk powder. There are no price controls on processed dairy products at wholesale or retail levels.
The California dairy industry is the nation’s largest, accounting for 20 percent of all U.S. milk production. Milk is perennially among the leading commodities in San Joaquin County, with an estimated value of $429 million in 2013.