There are disadvantages to dairying in California, not the least of which is Class 4b (cheese) milk prices that are consistently less than Federal Milk Marketing Order (FMMO) Class III prices.
It's a disadvantage that is getting more painful because the gap between the two is widening.
As Milk Producers Council in southern California points out in the graph above, the difference between California 4b and FMMO Class III prices has gone from annoying to life threatening in the last five years.
From 2000 to 2009, the monthly difference averaged 41 cents per hundredweight. That was enough to take a good bite out of producers' wallets, but since 2010 the bites have been at their throats.
The graph illustrates that since 2010 (including the first five months of 2014) the average 4b "price penalty" for California producers has been $1.71 per hundredweight. But this year it is even worse, averaging $2.01 for the first five months. May's difference was $3.23.
The effects of that difference have magnified as production per dairy in California has grown (an average of 27.23 million pounds in 2013), and Class 4b's share of total usage has increased (it was 45 percent in May 2014.)
The bottom line is that in May 2014 alone, the average California dairy's Class 4b penalty was $33,615 compared to the FMMO Class III price.
