California dairy farmers will soon be voting on a stand-alone quota program to be administered by the state if they also vote to join the federal milk marketing order system.
The state’s secretary of agriculture on Monday approved the program as recommended by the producer review board tasked with developing a plan.
Ballots on the quota plan will be mailed to eligible producers sometime in the first two weeks of October. Producers have 60 days to vote and return their ballots. Results will be published after the referendum is certified. The plan will pass if 65 percent of producers representing 51 percent of the milk or 51 percent of producers representing 65 percent of the milk vote yes.
The Quota Implementation Plan would continue the long-standing, producer-funded program that now operates within the state’s marketing order. Producers have been adamant that the quota value must be maintained if they join the federal order system.
Quota programs don’t exist in the federal order system, but a provision in the last farm bill and USDA will allow the state to administer its program outside the federal system.
California’s quota system came about in the late 1960s as a means of compensating milk producers selling into the higher Class I market and gain their support for establishing a state marketing order, which would pool milk and distribute payments more evenly to producers of milk across all utilizations.
It pays quota certificate holders $1.70 per hundredweight above the state blend price for the amount of milk covered by their certificate. Those certificates are worth $1.2 billion, an asset that can be transferred or sold.
Maintaining quota value is a critical piece in the process of establishing a federal order for California, said Lynne McBride, executive director of the California Dairy Campaign.
Quota is unique to California and important to producers, she said, adding that the CDC commends the producer review board for its open, transparent and participatory process in developing a stand-alone program that would continue to operate.
“We see this as a really important step toward a federal order. We’re definitely urging California producers to vote yes on this,” she said.
The program would continue to be operated by the state, and quota will still be transferable, able to be bought and sold and pay a premium, said Geoff Vanden Heuvel, a Chino dairy producer and Milk Producers Council board member and economic consultant.
“I think the producer review board did a really good job. Their task was to protect the value of quota, and I think they accomplished that,” he said.
All grade A milk produced in the state will be assessed at an estimated 35 to 37 cents per hundredweight to generate about $12 million a month needed to fund the quotas, he said.
The plan that will now go to a producer vote is much the same as the current program. The major difference is that producers will be directly assessed and see a deduction on their milk check. The current program is funded by the milk pool and producers are not directly assessed.
The other significant change is that the state’s four producer handlers will now be assessed on milk that has been exempt from the milk pool.
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