It’s official — California’s dairy producers voted to approve a Federal Milk Marketing Order (FMMO) for the entire state of California.

Now the heavy lifting begins.

“The new California FMMO will officially be implemented October 17, 2018, when USDA releases the first Announcement of Advanced Prices and Pricing Factors,” wrote Anja Raudabaugh, CEO of Western United Dairymen. “Affected parties will be required to comply with all provisions starting on November 1, 2018.”

So that all involved can prepare for that eventuality, USDA officials tapped Cary Hunter to serve as the acting market administrator for California’s new federal milk marketing order. Hunter had been the market administrator for the Southwest order based in Dallas.

“He was one of the team members from USDA who came out in April and conducted producer meetings around the state,” commented Geoff Vanden Heuvel with the Milk Producers Council in an article to the organization’s membership. “He is a very skilled administrator and a very approachable guy and will lead the effort to get the FMMO apparatus up and running in California.”

USDA also established a website at www.cafmmo.com and a phone line 530-662-2037.

To say the least, there is a lot of work to get done before the system goes live on November 1, 2018.

Co-ops also play a big role
“On the processor side, the cooperatives will have quite a task evaluating milk movement logistics,” suggested Vanden Heuvel. “The experience in other FMMOs is that if producers stick together with their cooperatives, very positive terms can be negotiated to extract the needed extra money to cover the transportation costs out of the market,” he wrote.

Impact on prices and products
“The higher minimum milk prices to be paid by handlers manufacturing cheese and whey (Class III in the federal order system) would result in less cheese production, contributing to higher cheese prices,” wrote Jerry Cessna in his June dairy market analysis for the USDA publication Livestock, Dairy, and Poultry Outlook. “As less cheese is produced, more milk would move into butter and nonfat dry milk production, lowering prices for those products,” Cessna continued, citing economic analysis by USDA’s Agricultural Marketing Service.

“For California, the largest milk-producing state, milk prices received by dairy farmers are expected to be higher under the new FMMO than they have been under the California state order,” he wrote. “In other regions, dairy farmers would receive either higher or lower prices depending on class utilization in the region.

“On average, the U.S. All-Milk price would be higher,” noted the USDA economist.

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(c) Hoard's Dairyman Intel 2018
June 25, 2018
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