Calif. Dairy Organizations Collaborate Regarding Quota Program

Groups Launch Exploratory Effort to Solicit and Analyze Proposals

News Release

Recently, the United Dairy Families of California, California Dairies, Inc., Land O’Lakes, Inc., Dairy Farmers of America, and the STOP QIP organization announced a multi-phase process aimed at soliciting and analyzing industry input on California’s historic quota program.

Included in this process is a series of meetings, starting later this month, open to all dairy producers and interested parties. These meetings are intended to solicit various pathways for the state’s quota program.

1) This multi-phase process includes three key parts: The Think Tank, Producer Feedback, and Analysis.

2) The Think Tank phase is for information-gathering from various segments of the dairy industry. This will include the meetings identified below, where producers will be able to voice their opinion and contribute ideas or concepts.

3) The Producer Feedback phase will allow producers to comment and challenge the ideas developed in the Think Tank phase.

In the Analysis phase, dominant ideas from the Producer Feedback phase will be analyzed for economic impacts, and legal pathways to adoption will be determined.

This process will be implemented with the assistance of dairy industry economist Dr. Marin Bozic and dairy market analyst Matt Gould. Dr. Bozic and Mr. Gould will be conducting an economic analysis of the proposed ideas.

The first series of meetings associated with the Think Tank phase are as follows:

● Tuesday, July 30 – 2 pm to 4 pm – Embassy Suites, Ontario

● Wednesday, July 31 – 9 am to 11 am – Heritage Complex, Tulare

● Wednesday, July 31 – 2 pm to 4 pm – Turlock Ballroom

● Thursday, August 1 – 9 am to 11 am – Washoe House, Petaluma

Meeting space is limited. All participants are strongly encouraged to register at

www.dairyfamilies.org/events

Federal Milk Marketing Order in California in Effect Nov. 1

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.

Hilmar Cheese Company Unveils Largest Dairy Mural in the U.S.

Scoop it Forward Event Collects Food for Hilmar Helping Hands 

News Release

Hilmar Helping Hands received thousands of food items on July 13 as part of a “Scoop it Forward” event to celebrate the official unveiling of the largest hand-painted dairy mural in the United States at the Hilmar Cheese Company Visitor Center.

Hilmar Cheese Company owners, employees, local officials and the community brought non-perishable food items to donate in exchange for a scoop of delicious ice cream made with Real California Milk as part of the mural celebration, which honors the partnership between the dairy industry and the local community.

“Dairy farm families are the backbone of many of our local communities,” said Jenny Lester Moffitt, California Department of Food and Ag Undersecretary. “But their impact goes well beyond that. They benefit the entire state—economically and by providing wholesome, affordable dairy foods.”

The mural is part of a national effort to celebrate the contribution of dairy farms and farm families to local communities. The Hilmar Cheese Company Visitor Center was selected by the Innovation Center for U.S. Dairy as one of seven locations across the nation to feature a custom mural as part of the Undeniably Dairy campaign. Undeniably Dairy is an industry-wide, national campaign that aims to increase consumer trust in the practices, principles, and people behind the dairy foods people know and love.

Standing 32 feet tall by 60 feet wide, the mural is a creation of muralist Ed Trask of Richmond, Va. The mural creation used 22 gallons of paint and 273 different colors. It depicts the Hilmar Cheese Company’s founding principles of farmers, family, community and faith—and its passion for Jersey cows. It also depicts a child’s journey from experiencing the visitor center as a youth and showing cows to discovering her devotion to dairy and pursuing a career in dairy innovation and research.

“This mural represents our values and foundation,” said Jim Ahlem, chairman of the Hilmar Cheese Company Board of Directors. “We are grateful to our local communities, our employees, the wholesome dairy foods we produce, the next generation of agricultural leaders developed through 4-H and FFA, and of course, the dairy farm families who ship their milk to us and the Jersey cows that produce it.”

“We appreciate that we were selected as one of the mural locations,” added David Ahlem, CEO and President of Hilmar Cheese Company. “We have thousands of families and school children visit each year. It’s important that people understand where their food comes from, and we hope this mural will bring a new connection to dairy.”

Young Dairy Owner Plans to Thrive in Future

Nevin Lemos Prefers Jersey Cows

By Patrick Cavanaugh, Editor

Nevin Lemos could be the youngest person to own a dairy in California. The 21–year-old owns Lemos Jerseys in Stanislaus County.

Lemos is a fourth-generation dairyman east of Modesto in the community of Lockwood. He grew up on his family’s dairy, and now he’s on his own. His family’s dairy is Lockwood III dairy, which is about five miles from his dairy.

“I’m 21 years old, and I decided to start my own. I wanted to expand the business, and get a little bigger so we can all stay in business, be competitive,” Lemos said.

“We have a plan someday to consolidate the two, and this was our way to grow.”

“It’s my baby here, my business, my passion here,” Lemos explained.

He thinks that it’s a good time to get into the dairy business.

“I’ve had some dairyman that I look up to, and they gave me some advice that even though the milk price is down, this is the best time to get started,” he said.

“That’s if you can … weather through some of the bad times because it’s a long-term investment. This is not a business that you get into for a short while, so if you can buy the cattle at a reasonable price and keep that input down, you’re in pretty good shape,” Lemos said.

His operation is 400 Jersey cow dairy with a double six-herringbone parlor.

“You know, my parents have the Holsteins. I’ve grown up around the Holsteins all my life. I showed Holsteins in 4-H growing up and love the Holstein breed but decided to go with the jerseys for a few reasons. One is they’re high in fat and protein components. I ship to Hilmar Cheese, so there’s good incentive there to get a premium off the fat and protein. Also with the reproduction, the Jerseys breed back so well.”

Lemos said he gets a 30% pregnancy rate.

A lot of the dairy cow feed is grown around the dairy operation.

“My landlord farms the 50 acres with the dairy. And I purchase the feed from them,” Lemos said. “Of course, that’s one of the significant inputs into the dairy. Feed is a bit of a high right now with exports. I put all my corn silage in Ag-Bags … to minimize my shrink, and that’s been going pretty well.

Lemos said in June, he can say he’s been going after it and his dairy for one year, and he knows he’s going to keep on going.

“I will most definitely keep going. Just getting started is the most challenging part, especially in a year like this year. I’m breaking even … if not slightly in the black. But I look forward to seeing what it does in years to come,” Lemos said.

Just building the herd and establishing it, Lemos is going to sit on some money for a little while before he starts to see it again.

Still, he said of operating his own dairy at 21 years old, “It’s the dream, my passion, it’s really what I love, and I would not have it any other way.”

Dairyman Xavier Avila on Federal Milk Marketing Order

Continued Federal Milk Marketing Order Hearing Coverage

Kings County Dairyman, Xavier Avila Worked Hard to Get Federal Milk Marketing Order on the Docket 

By Laurie Greene, Editor

Xavier Avila, a dairyman in Kings County, is monitoring the USDA Federal Milk Marketing Order (FMMO) Dairy Hearing in Clovis very closely. “Well, I was one of the ones who pushed for it five or six years ago. It’s kind of dear to me to get it done,” he said.

Avila explained, “As a kid growing up in the sixties and seventies, all my family members who were in the dairy business talked about how bad it was before the orders. Milk needs to be picked up everyday, so it it’s really easy to mess the market up if you don’t pick up a guys’ milk or threaten not to pick it up. So the California marketing order was established to bring order to California milk.”

Avila said the California marketing order worked for many years when dairies across the country were making the same amount of money per hundredweight. But prices are not equal now, and California dairy farmers are getting paid much less than those other parts of the country.

“We set up a solution on end-product pricing. Yet in California, the CDFA was not following the rules. If the rules had been followed, we wouldn’t have a need to go to the FMMO,” said Avila. “But CDFA just wouldn’t follow the rules regarding end-product pricing and the USDA does follow the rules; so it is just a simple matter of going with the people who are following the rules.”

“For the past ten years,” Avila said, “our whey prices have been much less than the national whey price, so the California dairy industry has lost billions of dollars.”  “It’s really simple. There are six pounds of whey per every 100 pounds of milk. Basically for the last few years, whey was 60 cents/pound. Doing the math, 60 cents times 6 pounds; you come up with a total of $3.60 for the whey in each 100 pounds of milk. With the California Milk Marketing Order, we were paid just 25 cents towards that total and the plant kept the rest. The Federal order is basically the reverse; not quite, but almost the reverse.”

Avila is bullish on the California dairy industry’s conversion to a FMMO. “I think it’s going to happen. Nothing is for certain, but the industry is united. Milk is the same everywhere, and I think it is in California dairy farmers’ hands because we are going to vote on this. Whenever you produce the same product and earn far less for it, it is inevitable that something is going to happen.”

Avila noted it will take some time, “but I knew that from the start, it would not be quick and easy. We are looking at anywhere from one to two years,” Avila said, affirming his belief the California dairy industry can hang on for two years. “We’ve got not choice. Now with the drought, there are other crops you can do better with. Some dairy farmers will leave the business just because they have something better to do than milk cows. So we see this as saving the California dairy industry,” Avila said.

Click here to view Video of Xavier Avila, September 22, 2015.