SACRAMENTO CA—A decisive victory for small family dairy farms was won this week in what has been called a civil war in the California dairy industry. In a proceeding before The California Department of Food and Agriculture, Administrative Law Judge Timothy J. Aspinwall issued a much-awaited decision on a petition that could have put hundreds of California family dairy farms out of business. Fortunately for those farms, the administrative law judge ruled that the petition, which sought to eliminate California’s milk quota system was “not legally valid” and recommends that Secretary of Food and Agriculture Karen Ross deny the petition in its entirety.
Questions Arise Regarding Milk Quota
Edited by Patrick Cavanaugh
Dairymen and women throughout California are working hard to provide milk and other dairy products for consumers in California and the world. Because the industry has struggled over the past decade with price swings that have often landed dairies in red, many dairies have gone out of business. Still, other operations relocated to others states where regulations are a fraction of what they are in California.
In June 2018, California dairy producers voted to establish a new Federal Milk Marketing Order (FMMO) for the state. The vote was a paramount step in a long process that would culminate with the new order taking effect on November 1. The order will adopt the same dairy product classification and pricing provisions currently used throughout the FMMO system.
California accounts for more than 18 percent of U.S. milk production and is currently regulated by a state milk marketing order administered by the California Department of Agriculture (CDFA). Once this new FMMO takes effect, more than 80 percent of the U.S. milk supply will fall under the FMMO regulatory framework.
Western United Dairymen is a trade association based in Modesto. Annie AcMoody is the Director of Economic Analysis. She explained that there have been questions from the industry regarding the upcoming FMMO.
Among the often asked question revolves around when the state switches to FMMO in November, what will happen to their quota if a dairy ships milk out of state?
Annie AcMoody: When our California state system goes away to make way for the Federal Milk Marketing Order (FMMO) in November, the Quota Implementation Plan (QIP) will be the language in place to ensure the quota system’s smooth transition into the FMMO system.
When we enter that new world, all market milk received from California producers at a California plant will be assessed for quota. By “received”, the language defines “to convey milk physically into a milk plant where it is utilized within the plant, or stored within such milk plant and transferred to another plant for utilization.” This means that a milk truck driver cannot drive by a plant, wave hello to an operator, and keep on going out of state and still call this milk received in California. Basically, if your California milk leaves the state, you will not be assessed for quota.
But you also will not be paid for it. But, if your milk is 60% quota and only 40% of your milk goes out of state, you will be assessed on 60% of your milk and get paid quota on that same 60%. If your quota covers 100% of your milk and 40% of your milk goes out of state you will be assessed on 60% of your milk and get paid quota on that same 60%. In this instance, one could wonder if it makes much sense to keep your quota.
While it may not make much economic sense to hold on to quota you are not paid for, some reasons may validate that decision (perhaps it is expected milk will be shipped to a California plant in the near future). If you were to decide to hold on to that quota, it is important to keep in mind that “if quota is not made active by shipments of market milk to a California plant or cooperative association or is not transferred within the 60-day period, such quota shall revert to the Department”.
This excerpt from the QIP means that if your quota milk is not paid on for over 60 days, you will lose it, so you better sell it. This is likely going to be an issue if you ship to a proprietary plant and all your milk goes out of state. If you ship milk to a cooperative, there is more flexibility because that coop has the ability to combine quotas assigned to it by its members.
So as long as the quota total within the coop is not larger than the total amount of market milk produced and received in California, then there should be no issue for you as a quota holder.
What is defined as market milk?
Answer: Grade A milk.
If your milk is Grade B, you cannot have quota now and will not be able to under the QIP. You will not be assessed for it either. Currently, only around 3% of the milk in California is Grade B. WUD will keep an eye out on this topic to ensure that percentage does not deviate significantly. As a reassurance, this is not something that could grow from 3% to 50% in a month since fluid milk is not allowed to take in Grade B milk and the three largest coops in the state (CDI, DFA and LOL) committed to not taking in any more Grade B milk after the transition to the FMMO.
SB1 Proposed Taxes & Fees Are Detriment to Farmers
By Jessica Theisman, Associate Editor
SB1 was recently passed by the legislature in California. This bill affects everyone in the state and increases several taxes and fees to raise the equivalent of roughly $52.4 billion over 10 years in new transportation revenues. It is not likely that the governor will veto the bill. We spoke with Anja Raudabaugh, CEO of the Western United Dairymen about how this bill will affect California’s agriculture.
This bill proposes a 20 percent increase in fuel taxes, which is something that farmers cannot afford, especially the dairy industry. “As you know, we cannot pass on our costs to our consumers, so adding another regulatory cost of production is incredibly hurtful and harmful,” Raudabaugh said.
Western United Dairymen continues to lobby on a nosb1.com campaign. They are asking the governor to veto it, although it is highly likely not to occur given that this is his bill. “This is his policy coalition, his desire to tax the constituents in California to their grave,” Raudabaugh said.
Starting November 1, SB1 will increase the excise tax on gasoline by 12 cents per gallon and the tax on diesel fuel by 20 cents per gallon. The bill also creates a new annual transportation improvement fee (TIF) beginning January 1, 2018. This is based on the market value of your vehicle. This fee will range from $25 to $175. SB1 also creates the road improvement fee of $100 per vehicle for zero emission vehicles starting in 2020 for model year 2020 and later.
Western United Dairymen are asking that if you have not filled out a nosb1.com petition that you do so, because they are using it to geo-track the information and essentially target the areas that are subject to vulnerability in the upcoming 2018 election. It is systemized so that when you enter your zip code, it goes directly to your legislator, either Assembly, Senate or both.
“We can actually see then which counties in California using some voter referencing material are more inclined to hate the gas tax,” Raudabaugh explained.
SB1 is not just targeting people who drive gas and diesel vehicles. Electric vehicles will also be targeted and will receive new fees.
“What’s more outrageous is that there are no guarantees that it will actually fix our roads. None whatsoever,” Raudabaugh said.
There is a ballot measure that was negotiated as a result of SB1 so that several key Silicon Valley Assembly members would vote for the bill. “To actually suggest that you would need a ballot measure to ensure that the funds do that, at least 20 percent of funds, seems really ironic,” she said.
SB-1 Gas Tax Will Severely Hurt Ag
By Melissa Moe, Associate Editor
Governor Jerry Brown recently signed SB-1 into law. This bill will affect everyone in the state and increases several taxes and fees to raise the equivalent of roughly $52.4 billion over 10 years in new transportation revenues. We spoke with Anja Raudabaugh, CEO of the Western United Dairymen, about how this bill will affect California agriculture.
“A twenty-percent increase on fuel taxes is something that we can hardly, especially in dairy industry, afford. As you know, we cannot pass on our costs to our consumers, so adding another regulatory cost of production is incredibly hurtful and harmful,” Raudabaugh said.
SB-1 increases the excise tax on gasoline by 12 cents per gallon and the tax on diesel fuel by 20 cents per gallon starting November 1, 2017. SB-1 also creates a new annual transportation improvement fee (or TIF) starting January 1, 2018. This is based on the market value of your vehicle. This fee will range from $25 to $175.
SB-1 isn’t just targeting people who drive gas and diesel vehicles. Electric vehicles will also be targeted and will receive new fees. SB-1 also creates the road improvement fee of $100 per vehicle for zero emission vehicles starting in 2020 for model year 2020 and later.
“Everyone should be outraged over this. What’s more outrageous is that there are no guarantees that it will actually fix our roads. None whatsoever,” Raudabaugh said.
“There is actually a ballot measure that was called a lock box that was negotiated as a result of SB-1 so that several key Silicon Valley Assembly members could vote for the bill that says the public must award this transportation fund to go toward road repairs,” Raudabaugh said.
“It was sold to the Legislature as actually fixing roads and creating repairs where badly needed. To actually suggest that you would need a ballot measure to ensure that the funds do that, at least 20 percent of funds, seems really ironic,” she said.
Water Use Efficiency Grants: Beneficial or Double Jeopardy for California Farming? Or both?
By Patrick Cavanaugh, Farm News Director
Through a competitive joint pilot grant program, the Agricultural Water Use Efficiency and State Water Efficiency and Enhancement Program, the California Department of Water Resources (DWR) and the California Department of Food and Agriculture (CDFA) jointly intend to demonstrate the potential multiple benefits of conveyance enhancements combined with on-farm agricultural water use efficiency improvements and greenhouse gas reductions.
The grant funding provided in this joint program is intended to address multiple goals including:
- Water use efficiency, conservation and reduction
- Greenhouse Gas Emissions Reduction
- Groundwater Protection, and
- Sustainability of agricultural operations and food production
Are these competitive grants promoted by DWR and CDFA providing financial support for further compliance or insulting to farmers who have already met and exceeded these stockpiling regulations? Or both?
I would like to address each goal, one by one.
Water Use Efficiency
I challenge DWR and CDFA to find one California farmer who is using water inefficiently or without regard to conservation. Grant or no grant, many farmers in the state have lost most of their contracted surface water deliveries due to the Endangered Species Act, which serves to save endangered species, an important goal we all share, but does so at any cost.
In addition, DWR is now threatening to take 40 percent of the surface water from the Tuolumne River and other tributaries of the San Joaquin River from February 1 to June 30, every year, to increase flows to the Delta to help save the declining smelt and salmon. This will severely curtail water deliveries to the Modesto Irrigation District (MID) and Turlock Irrigation District (TID)—population centers as well as critical farm areas.
This proposal, which disregards legal landowner water rights and human need, would force MID and TID to dedicate 40 percent of surface water flows during the defined time period every year, with no regulatory sunset, for beneficial fish and wildlife uses and salinity control. The proposal disregards other scientifically acknowledged stressors such as predatory nonnative non-native striped bass and largemouth bass, partially treated sewage from Delta cities, and, according to the Bay Delta Fish & Wildlife Office of the U.S. Fish & Wildlife Service Pacific Southwest Region, invasive organisms, exotic species of zooplankton and a voracious plankton-eating clam in the Delta from foreign ships that historically dumped their ballast in San Francisco waters.
While many farmers have fallowed their farmland, other farmers across the state have resorted to reliance on groundwater to keep their permanent crops (trees and vines) alive. The new DWR proposal to divert 40 percent of MID and TID surface water will force hundreds of growers in this region—the only groundwater basin in the Valley that is not yet critically overdrafted—to use more groundwater.
In a joint statement, MID and TID said, “Our community has never faced a threat of this proportion. MID and TID have continued to fight for the water resource that was entrusted to us 129 years ago.”
The deadline for submitting public comments is September 30, 2016.
Greenhouse Gas Reduction
Have regulators forgotten Assembly Bill (AB) 32, the Global Warming Solutions Act of 2006, that requires the state to reduce its greenhouse gas emissions by 25 percent (back to 1990 levels) by 2050? Ag is already accommodating this regulation.
Now Governor Brown has signed SB-1383, “Short-lived climate pollutants: methane emissions: dairy and livestock: organic waste: landfills” into law that mandates a 25 percent reduction in methane emissions from cow burps, flatulence and manure from all dairy cows and other cattle to achieve the 1990 statewide greenhouse gas emissions level by 2020.
Now CDFA and DWR are asking for grant requests to reduce greenhouse emissions even further. Really?
The deadline for submitting public comments is September 30, 2016.
Ironically, farmers want to reduce their groundwater needs because groundwater has always functioned in the state as a water savings bank for emergency use during droughts and not as a primary source of irrigation. But massive non-drought related federal and state surface water cutbacks have forced farmers to use more groundwater.
Golden State farmers are doing everything possible not to further elevate nitrates in their groundwater. Some nitrate findings left by farmers from generations ago are difficult to clean up.
But the DWR and CFA grant wants California agriculture to do more!
The deadline for submitting public comments is September 30, 2016.
Sustainability of Agricultural Operations and Food Production
Virtually, no one is more sustainable than a multi-generational farmer. Each year, family farmers improve their land in order to produce robust crops, maintain their livelihoods, enrich the soil for the long term, and fortify the health and safety of their agricultural legacy for future generations.
California farmers will continue to do all they can to improve irrigation methods and track their crop protection product use.
And so, I ask again, is this beneficial or double jeopardy for California farming? Or both?
The deadline for submitting public comments is September 30, 2016.
The Necessity of Keeping the California Dairy Industry Competitive
By Brian German, Associate Broadcaster
Anthony Raimondo, an attorney with 15 years of experience working with farmers and farm labor contractors, is concerned the California government is placing the state’s agricultural industry at an economic disadvantage compared to other states. Raimondo used the California dairy industry as a prime example in which arbitrary in-state legislation is giving other states an advantage.
“The state government tells the dairy farmer how much they get to charge for milk,” explained Raimondo. “They have now raised minimum wage and overtime, with AB-1066 becoming law, but they do not tie any of that [added cost] to the milk price. Farmers will lose money,” he said.
“The California dairy industry is still fighting to be a part of the USDA’s Federal Milk Marketing Order (FMMO),” Raimondo continued. “But until that happens, the added costs are causing many California dairymen to weigh their options.”
Increasing government regulation is making it difficult for California dairies to compete with other states, Wisconsin in particular. Raimondo elaborated, “For many years, Wisconsin’s milk production was on the decline and California’s milk production was on the rise; that trend has now reversed. Wisconsin is now on the rise again and California is on the decline because our dairies can’t make it with the level of regulation and the level of cost,” he said.
“Some dairies have reduced hours to keep costs low,” said Raimondo. “Other dairies are closing either because they are going out of business or because they are moving to places like Idaho and Texas where the milk price is better and the cost profile is more favorable.”
The move to a FMMO would help even the playing field for California dairies. Raimondo warned there is a lot at stake if nothing is done to lower milk production costs in the number one Ag state. “We are going to lose a segment of agriculture that is 100% family farms. Family farming is one of those things that is precious to our state, and it can’t be brought back once it’s gone,” Raimondo said.
Governor Signs AB 1066 With Good Intentions
By Patrick Cavanaugh, Farm News Director and Laurie Greene, Editor
TODAY, Governor Jerry Brown signed AB 1066, the overtime bill for farmworkers, despite pushback from agricultural groups and farmworkers in the state. Ian LeMay, director of member relations & communications of the Fresno-based California Fresh Fruit Association, anticipates that not only will farmers in the state lose, but farmworkers, exports, and possibly consumers will lose as well.
For years, California farm employees accrued overtime pay only after working a 10-hour day, instead of an 8-hour day, like most other employees in California. AB 1066 changes the overtime rules for farmworkers by gradually lowering overtime thresholds in steps over the next four years so farmworkers will eventually earn overtime after an 8-hour day.
The California farm industry has appreciated the prior overtime policy, according to LeMay, because agriculture is not a typical 52-week type of job. The workload of farming ebbs and flows with the seasons, weather, cultural practices and tasks.
For instance, harvesting of crops such as strawberries, citrus and table grapes, normally occurs during short 2- to 3-week periods in the state and is accompanied by an increase in demand for labor. As one might expect, the need for labor declines during non-harvest and non-planting phases, to the extent that farmworkers may endure periods of no work, and hence, no pay. So farmworkers have appreciated the opportunity to work extra hours and earn overtime during busier phases.
Labor costs for California growers of all fresh fruit, avocados and many vegetable crops will be most affected by this change. “This is going to have a very, very big impact on crops that require a high degree of labor like our stone fruit, table grapes and the rest,” said LeMay, “It’s definitely going to change the way our members have to approach doing business,” he said.
“When you compare it to the other states in the union that we are going to have to compete with,” LeMay elaborated, “when you take into account recent changes in minimum wage, piece-rate compensation, increasing farm regulations and now overtime, it’s going to be very difficult to compete not only in a domestic market, but also internationally. That’s the disappointing part about this.”
LeMay also explained that over the last 40 years, the California legislature has crafted labor law to create the highest worker standards in the U.S. “California was the only state in the union that had a daily threshold for overtime of [only] 10 hours per day, and we were one of four in the union that had a weekly threshold for overtime of [only] 60 hours. So in terms of ag overtime, California was already the gold standard.”
And, although lawmakers intended AB 1066 to help farmworkers, LeMay noted, “ultimately, the measure will impact farmworkers the most because farmers in the number one Ag state will find a way to keep its bottom line from eroding any further.
“California farmers will need to solve the puzzle of how to achieve the same amount of work in fewer hours per day,” said LeMay. “They will consider hiring double crews, increasing mechanization in packing facilities, orchards and vineyards, and reducing farm acreage to match their workforce. Or, for those commodities that require increased labor, you could see a transition to commodities like nut crops that use less labor.”
LeMay explained that during down periods on the farm, farmworkers generally collect unemployment, which is based on gross annual income. Now, by giving the farmer an incentive to reduce worker hours, farmworkers’ unemployment compensation may decrease as well.
Furthermore, for the consumer who desires fresh local food from small farms, the phase-in schedule AB 1066 provides to smaller companies is actually a competitive disadvantage. “While AB 1066 allows small farmers—those with fewer than 25 employees—more time to phase in changes,” LeMay asked, “why would a farmworker stay at small farm under the prolonged 60-hour per week overtime threshold rule, when he or she could work at a larger farm under the phased-in 40-hour per week threshold?”
Are consumers willing to pay for increased labor costs on the farm? “As the saying goes,” LeMay quipped, “generally farmers aren’t price makers, they are price takers. Consumers are usually unwilling to pay extra for their produce, so farmers usually have to absorb increased costs.”
“Economically,” LeMay summarized, “the legislature has taken us from high labor standards to economically disadvantaging farmers and farmworkers. Lawmakers are not paying enough attention to keeping California companies viable, sustainable and successful.”
Public Enemy #1: Cow Flatulence
By Patrick Cavanaugh, Farm News Director
While not a popular or sexy topic of discussion, flatulence is a very natural activity. Who amongst us hasn’t occasionally burped, belched, or otherwise passed a little gas? When guilty of passing waste gases such as hydrogen, carbon dioxide, methane and other trace gases due to the microbial breakdown of foods during digestion, we may say, “Excuse me.”
But for dairy cows and other cattle, manners do not suffice; the California Air Resources Board (ARB) has a low tolerance for such naturally occurring and climate-altering gaseousness. The ARB is planning to mandate a 25% reduction in burps and other windy waftage from dairy cows and other cattle, as well as through improved manure management.
Anja Raudabaugh, CEO of the Modesto-based Western United Dairymen (WUD), said, “The ARB wants to regulate cow emissions, even though the ARB’s Short-Lived Climate Pollutant (SLCP) reduction strategy acknowledges that there’s no known way to achieve this reduction. The ARB thinks they have ultimate authority, even over what the legislature has given them: two Senate Bills—SB 32 and SB 1383—to limit the emissions from dairy cows and other cattle.”
“We have a social media campaign addressing the legislative advocacy components,” Raudabaugh explained, “to make the legislatures aware that this authority has not been given to ARB by the legislature, and to bring that into perspective.” Raudabaugh said while SB 32 is not that popular because it calls for raising taxes, SB 1383 is worrisome, “because if anybody wanted to achieve something of a win for the legislature this year with respect to greenhouse gas emissions, this is the only bill left,” she said.
Raudabaugh said that in order for the ARB to achieve their mandated 75% reduction in total dairy methane emissions, they are proposing that 600 dairy digesters be put on the methane grid by 2030. According to the ARB’s own analysis that could cost as much as several billion dollars—more than $2 million, on average, for each of California’s remaining 1,400 family dairy farms.
“That is not only expensive, but digesters do not work for every dairy. They can be an option for some, but because of their expense and the reality that not everyone ‘dairies’ the same way, digesters cannot be a mandated solution,” noted Raudabaugh. “All dairy personnel and other interested Californians should contact your state legislature and urge them to veto both bills and not allow the ARB more powers than they actually have.”
Cattle Ranchers Hit Hard in the South Valley, Move to Greener Pastures
by Emily McKay Johnson, Associate Editor
Josh Davy, a University of California, Division of Agriculture and Natural Resources, Cooperative Extension livestock, range and natural resources advisor in Tehama County reported good news for the cattle industry despite dry weather conditions around the state.
Heading into last fall, the feed year started off relatively dry, according to Davy; however the end-of-season crops produced a better forage than the year before. Though prices slid for the cattle farmer, Davy said optimisticly, “We’re happier on our range conditions—as compared to the previous years that we’ve had—by a long shot.” he said.
The drought that plagues California still directly impacts cattle ranges, and ranchers are not quite out of trouble. Davy had to resort to feed supplementation through the month of December. “We didn’t have to supplement as much as in the previous few years,” he said, “but we definitely did this fall.” Fortunately the winter months were short and the spring rainfall produced good growth—good assurances that will help Davy and his team make it through next year.
Davy has fortunately sidestepped hardship with a tinge of luck, but it hasn’t been as easy for ranchers in the south of the state. When cattle lack enough sustenance, a domino effect is felt all across the state of California; a lactating cow may not produce enough milk to feed her calves.
The cows like lush grass, a rarity in the Central and South Valley summer months. Winter options for cattle are either winter range ground or mountain meadow ground where greenery is still prevalent. Some ranchers haul their cattle to summer pasture feedlots to graze, while some prefer Oregon instead.
“We’re dried off here to where you might find a swell with a little rye grass in it that’s still green,”Davy said regarding the disappearance of lush land, “but pretty much everything else, the oats and all that stuff, they’re done here.”
Looking forward, Josh Davy is hoping irrigation water will sustain not only the beef cattle, but the pastures as well, to keep the herds stationary and munching on green grass.
National Dairy Month Encourages Americans to Eat More Cheese
By Patrick Cavanaugh, Farm News Director
Across the country, National Dairy Month will be celebrated during the month of June to promote the consumption of dairy products. Though California is the number one dairy state, California dairy farmers have been experiencing a decline in dairy production amidst high labor costs, competition from other states and declining profit.
Founded in 1937 as National Milk Month with the goal of increasing milk consumption to stabilize the dairy surplus, the holiday was renamed National Dairy Month to encompass all dairy products.
Anja Raudabaugh, CEO of Western United Dairymen in Modesto, Calif., is hopeful that celebrating National Milk Month will educate more consumers about the health benefits of diary products, increase dairy consumption opportunities, open more markets and enable the lagging dairy industry in California to better compete with other states.
States such as South Dakota and Wisconsin have ramped up their milk production significantly, which has stressed California producers to even the gap. According to Raudabaugh, the term oversupply doesn’t necessarily apply to the dairy conditions in this state. She remarked, “We’re actually in a 17-month decline at the moment, which is the longest decline [in milk production] we have ever been in.”
The dairy industry has managed to be very competitive with wages, another stressor, but the high labor costs are hurting production companies. “As things get more and more competitive globally,” said Raudaubaugh, “we are going to continue to struggle to figure out how those margins play out.”
“The margin is going to continue to shrink, especially as wages get more and more competitive,” Raudaubaugh observed. “Being a worker on a dairy farm is certainly very wage-competitive throughout the agricultural industry. We cannot keep workers at anything less than about $16 or $15 an hour as it is, so it’s a good time to be a worker in the dairy industry. It’s a good craft and skill to have if you become a milker.”
Given Western United Dairymen’s mission to promote and administer programs and policies aimed at maintaining the longevity of the dairy industry on the West Coast, and as the milk industry struggles and continues to face tough times, Raudabaugh has a solution: “Eat more cheese.”
Enter: National Cheese Day every June 4! According to the California Milk Advisory Board website and California Department of Food and Agriculture (CDFA) 2014 data, California is the #2 cheese producing state—right behind Wisconsin—and the #1 producer of Monterey Jack cheese. An amazing 43% of California’s cow’s milk is used to make California cheese, which is produced by more than 50 California cheesemakers.
Even beyond cheese, Raudabaugh said, “There is a tremendous amount of diversity in the way people have exposure to dairy products they don’t even know about. There are yogurts and sour creams, ice creams, and whey products.” She believes market sectors should understand more about the dairy products consumers are exposed to every day to increase not only more milk consumption, but higher-value dairy as well.
“The diversification of the product line is really what has kept us in business,” reflects Raudabaugh, “It’s what keeps us looking to the horizon and looking to the future optimistically, even in the face of some pretty bad milk prices right now.”
Remember California dairy producers, particularly, this month—National Dairy Month, and try a new dairy product. And discover a new cheese tomorrow, June 4, National Cheese Day!