Any Deal is too late for Dairies Out of Business

Any Deal is too late for Dairies Out of Business

September 26, 2013

Dairy Industry Waiting for CDFA Decision


By Patrick Cavanaugh, Editor


Out of business dairy #1
The dairy industry continues to engage the California Legislature with any information to educate them about the ailing California dairy industry, following a special hearing Sept. 12, with CDFA Secretary Karen Ross.


The hearing was to consider a deal that would adjust the whey factor in the 4b cheese milk formula by raising the cap from 75 cents per hundredweight (CWT) to $1 per CWT, and provide an additional surcharge of 46 cents per CWT during the next year on milk going into cheese-making.


Ross must make a decision by 62 days following the hearing date.


Among the witnesses in support of the dairy petition was Dr. Richard Sexton, who is the chair of the Agricultural and Resource Economics at UC Davis. Sexton is also the presiding president of the American Society of Agricultural Economists.

 

Out of business dairy #2

“We are waiting for a decision from Secretary Ross and continuing to update the legislature on the dire financial situation in the dairy industry,” noted Michael Marsh, Chief Executive Officer with the Modesto-based Western United Dairymen.


According to Marsh, “The value of whey is capped at 75 cents per CWT, which is ridiculous, as we have seen whey values as high as $4 per CWT in other states back when we were getting 25 cents per CWT as our cap.”


“This increase would add an additional $110 million to the pool of California dairy farmers. At the same time, it would notcost consumers a penny as it simply redistributes assets from the cheese makers back to the farmers.” said Marsh.

 

Out of business dairy #3

“This current process is an outgrowth of our original AB 31 legislation that we introduced last December on the first day of the legislature,” said Marsh. “Since that time, there have been ongoing negotiations between members of the legislature and cheese makers trying to get some relief for the dairy families of our state.”


AB 31was intended to reconnect our cheese price as best we could back to the marketplace. “Unfortunately, CDFA Secretary A.G. Kawamura, at the request of cheese makers in California in 2007, disconnected the cheese milk price from the marketplace, and we have been struggling ever since to reconnect it. It was unfortunate that Kawamura agreed to transfer wealth from the famers to the cheese makers, given everything else that hit California dairy farmers beginning in 2008,” said Marsh.


“Since the change, there has been a transfer of 940 million dollars from the dairy farmers to the cheese makers. It was just another nail in the coffin for so many dairies that have since gone out of business,” said Marsh.


Out of business dairy #4

We need to close the gap, between what we receive for milk going into cheese making in California and what dairy farmers outside the state receive for the same type of milk,” said Marsh.

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