Milk Marketing Order in CA Worries Other Dairy States

By Kyle Buchoff, Assistant Editor

Tom Van Nortwick, owner and publisher of Agribusiness Publications in Fresno for the last 35 years, has been attending the USDA dairy hearing in Clovis to adopt a Federal Milk Marketing Order in California. Van Nortwick warned that should California go with the Federal Milk Marketing Order, the move could hurt prices for all milk producers across the nation.

“Dairymen in other parts of the country have expressed concern that if California dairymen were paid more for their milk, they may go ahead and produce more milk,” Van Nortwick said. “California is a milk-making machine with comparatively fewer dairies. More milk on the market has been proven to create volatility and huge price fluctuations up or down, depending on demand. So California producers’ getting paid more and producing more milk would reduce the price of all milk throughout the country.”

“We found that 2-3% too much milk in the market at any one time can create up to a 40% reduction in price paid to producers,” Van Nortwick explained. “And of course, California is not the only overproducing state; Wisconsin, Minnesota and other midwestern states are also overproducing at this time.”

Van Nortwick also pointed out, “Domestic demand is strong, but exports have shrunk by about 50%, which is about 8% of last year’s market. So when you add an 8% oversupply of milk volume to the market as we broach the time for holiday season orders, and there are strong indications that inventories of milk, butter, powder, and cheese are rising across the country, prices paid to producers will fall.

“Nobody needs prices to go any lower,” stated Van Nortwick. “Our counterparts in New Zealand, Australia, and the European Union are suffering mightily, even more than we are, with record-setting low prices because they think they can just produce more than they can sell. If you produce more than you can sell, you are going to take a hit, and unfortunately it is the producers who end up taking that hit.”

Cornell Kasbergen On Federal Milk Marketing Order

Continued Coverage of Milk Hearing

Dairyman Cornell Kasbergen: We Need Federal Milk Marketing Order

By Patrick Cavanaugh, Deputy Editor

Cornell Kasbergen, a dairyman in Tulare County, is fed up with the flawed California State Milk Marketing Order. So much so, that he and other dairymen and women have a great desire to switch to the Federal Marketing Order.

This idea is presently front-and-center in Clovis, CA as USDA officials are holding an historic hearing that may extend into early November.

“It started three to four years ago when our milk prices were dramatically less than those in the rest of the country, and we wanted to get our industry on a level playing field. It has been a lot of work getting the co-ops together, but we are just at the beginning of this whole process.”

Having the USDA here is, in itself, a big beginning,

Kasbergen has worked hard to drum up interest in the idea. “When I was a co-op board member at Land O’Lakes, Inc. [a national, farmer-owned food and agricultural cooperative milk cooperative], we worked with other dairy co-ops and their members to get educated.  We discovered, for the last three to four years, California’s whey value in its milk pricing formula deviated from national prices, and California producers were losing money. Once we realized we were leaving a lot of money on the table—over a million dollars a day—it opened people’s eyes. That’s why we are having this hearing.”

“The California Department of Food and Agriculture intentionally left the state’s whey prices lower than the rest of the nation, and though we’ve been petitioning them over and over again to rectify the issue, they have failed,” said Kasbergen. “That’s why we have gone this route in getting our milk prices formulated by the federal government rather than by the state. Our state has really let us down.”

“The CDFA has taken hundreds of millions of dollars out of the dairy farmers’ pockets, the loss is killing the dairy industry in California,” said Kasbergen.