Capital Press

Idaho dairymen have always been an independent bunch, but the Idaho Dairymen's Association is rethinking its policy of opposing federal milk marketing orders.

IDA's resolution committee has approved changing its policy in support of federal and state marketing orders, IDA Executive Director Bob Naerebout said during the Idaho Milk Processors Association convention in Sun Valley on Aug. 10.

"We want to be in a competitive position. If money is there we want it," he said.

Federal markets set formulas for minimum milk prices and were introduced in 1937 to improve price stability in fluid milk markets and ensure a sufficient quantity of Class I fluid milk.

One of Idaho's two federal orders was lost in 2000 when order reform combined the two orders. The final order, 135, was eliminated in 2004 when proposed changes were not approved by producers of the majority of the milk in the order.

In addition to establishing milk pricing formulas, the marketing orders impose a premium price -- a differential -- based on the distance from Eau Claire, Wis., to where the milk is produced.

Without the federal order system, that Class I differential that helps balance the market is gone, and puts Idaho producers at a disadvantage, Naerebout said.

"We are in a competitive position with other federal order systems in the nation. We have to make sure we're doing the best job we can to make sure we're in a competitive position and not a negative position," he said.

The Class I differential is $1.90 per hundredweight in Salt Lake City and $1.60 per hundredweight in Boise. That's money no one is realizing, he said.

The bigger issue is finding a home for excess capacity of 2 million pounds of milk a day that is going out of state and often at a discount, he said.

Some of those plants are receiving milk at $4 under the Class IV price, which was $14.45 in July. Class IV milk goes to manufacturing dry milk powder and butter. Most of Idaho's milk goes to cheese vats, and the federal order Class III price was $16.68 in July.

Idaho needs to find a way to balance the milk supply, bring in more processing and increase producer pay prices, Naerebout said.

Dairy economist Mike Brown of Glanbia Foods, however, said Idaho producers should be careful what they ask for. A marketing order could discourage processors from setting up shop in Idaho.

"Why do you think Chobani came here? It's not because we're regulated. It's because we're unregulated and you can do a better job of pricing your milk," he said.

He pointed out that companies like Chobani can go where they want to get the price of milk they want. He also noted that California's state marketing order amounts to permission to underpay for Class 4b milk, used for cheese, and producers have been petitioning the state Ag Department to change the formula.

It would be better to let everyone else have a marketing order, which will bring Idaho prices up, and leave Idaho's market unregulated to attract processors, he said.

The proposal to support federal or state marketing orders will be put before IDA membership this fall at the United Dairymen of Idaho annual convention. Solicitation of the USDA for an order would have to come from milk processors, Naerebout said.

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