MPC Board of Directors Votes to Support Assemblyman Richard Pan's California Milk Pricing Legislation

This week, Milk Producers Council's Board of Directors voted to support AB 31 (Pan), a bill that would provide much-needed changes to the way California calculates prices for milk produced in California. The bill, which was introduced this week by California Assemblyman Richard Pan (D-Elk Grove/Galt/Lodi), can be found at http://goo.gl/8Le1u. Western United Dairymen, a fellow dairy farmer trade association based in Modesto, California, worked with Assemblyman Pan to get the bill introduced.

AB 31 would specifically address the methods used by the California Department of Food and Agriculture (CDFA) in calculating a minimum price for milk that is produced in California and sold to our state's cheese manufacturers (a.k.a. the "Class 4b formula"). For the past couple years, California's dairy families have presented ample evidence to CDFA on the growing gap between the Class 4b price announced each month by CDFA and the price cheese manufacturers around the country are paying for their milk. Since 2010, the California Class 4b price has averaged $1.70 per hundredweight below the Federal Order Class III price, which is the benchmark price for milk being sold to cheese manufacturers in much of the U.S. To put that gap into perspective, California's cheese manufacturers have been on the receiving end of a state-sponsored discount on the milk they buy to the tune of more than $680 million since January 2010, all on the backs of the roughly 1,600 dairies that are left in California.

CDFA has the authority to modify their formulas and prices to be more closely aligned with what milk is sold for around the country. In fact, it's one of their primary responsibilities laid out in California law. However, despite ample evidence that an adjustment is warranted, CDFA has been unwilling to make significant modifications.

"AB 31 is an opportunity for the California Legislature to do what CDFA has been unwilling to do: provide California dairy families with a fair price that is reasonably aligned with prices paid for milk throughout the country," said Rob Vandenheuvel, MPC's General Manager. "As our dairy farms face record high feed costs, we cannot afford to have CDFA continue this unjustified practice of discounting California's milk. We greatly appreciate Assemblyman Pan's willingness to bring this important debate to the California Legislature."

12.5.2012