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Calif. producer group fires back at processor group

Published on October 31, 2012 3:01AM

Last changed on November 29, 2012 6:51AM


Capital Press

A California dairymen's group is firing back at the Dairy Institute of California following last week's statement by Institute Executive Director Rachel Kaldor taking the Milk Producers Council to task for its "repeated attacks on California processors."

Kaldor accused the dairymen's group of painting a deliberately inaccurate picture of the dairy industry and the state's dairy policy and "bullying and berating" processors and California Ag Secretary Karen Ross.

At issue is Milk Producers' repeated discussion of and claim that processors are purchasing milk at a "discount" due to Ross' unwillingness to bring California's Class 4b pricing in line with Class III in federal milk marketing orders. Class 4b and Class III formulas set minimum prices for milk used to manufacture cheese.

Producers say they aren't getting a fair or comparable price for their milk because the Class 4b formula undervalues whey in the equation and have advocated for a change in the formula.

Kaldor said, "Despite the facts, the MPC mantra has been to tell a partial truth and a partial lie, and point to an illusionary difference between the federal Class III and California Class 4b and tell dairy farmers they are being cheated by a 'discount' milk price."

"I guess we hit a nerve," Milk Producers' General Manager Rob Vandenheuvel said.

He said Kaldor's attacks deserves no response, but he questions the Institute's integrity in calling Milk Producers a liar.

The whey value has been an issue in California for the last decade. But the debate really began heating up when the difference in California's 4b price and the Class III price began expanding in 2010 and lagged the federal order price by an average of $2 per hundredweight of milk in 2011.

Milk Producers Council isn't the only one calling for equitable change in the pricing formula, but the issue and Secretary Ross' "inaction" on the matter have been at the forefront of the organization's weekly newsletter and press releases for the past several months.

The organization states figures claiming dairymen have lost nearly $600 million dollars in discounted milk to processors from January 2010 until now, and the issue has been a regular topic in Milk Producers' weekly newsletter.

Milk Producers, along with a coalition of other dairy groups, including large co-ops California Dairies Inc, Dairy Farmers of America and Land O'Lakes filed a lawsuit against the California Department of Food and Agriculture on Aug. 3. The groups allege the department has failed to follow state law in setting minimum milk prices in a "reasonable and sound economic relationship" with what comparable milk is sold for around the country.

The Dairy Institute provided Capital Press with Kaldor's statement and additional background information.

In her statement, Kaldor said Milk Producers' efforts to raise the 4b price ignore the facts that:

* California has been drowning in milk production and a price increase would exacerbate the problem;

* California has deficit in processing capacity and has the highest cost in the country of getting product to market;

* The Class 4b price must be a market-clearing price because all California plants must pay the set minimum price, leaving no safety valve to allow milk to be priced on supply and demand.

Vandenheuvel counters, saying:

* It is not the state's or processors' responsibility to manage milk production;

* Processing capacity has not expanded due to California's hostile business environment, including environmental laws, uncertain cap-and-trade regulations, business taxes, and labor regulations;

* There is no mandate that the Class 4b price must be a market-clearing price, but there is a mandate that states California's milk prices shall be in that reasonable and sound economic relationship.


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