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DIC blasts Milk Producers Council over statements

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The head of California's largest dairy processor organization – the Dairy Institute of California – came to the defense of Karen Ross, secretary of the California Department of Food & Agriculture, in the long-simmering dispute over the Class 4b milk pricing formula.

Dairy Institute’s executive director, Rachel Kaldor, issued the following statement in response to what she termed were repeated attacks on California processors, especially those from the Milk Producers Council, a California dairy producers organization.

 

“Milk Producers Council (MPC) has been painting a deliberately inaccurate picture of both the dairy industry and dairy policy despite pleas to provide truthful arguments to back up its often repeated, seldom fact-based claims. Enough is enough. The MPC pattern of bullying and berating processors, the Department of Food and Agriculture and the Secretary is decades long. But for the past months, that bullying and berating is aimed at getting the Secretary to do something that will cause real damage for years to come, to California dairy farmers and processors.

“The facts: Feed prices are up and margins are squeezed. But, a mere four months ago when CDFA held its last hearing, California was drowning in milk – milk was going to calf ranches, to out-of-state processors at a deep discount, or even worse, hitting the ground. One cooperative cut off 17 farmers overnight to stem the flow of milk and every cooperative forced their members into production limits. These facts are incontrovertible. 

“What should regulators do when there aren’t enough plants or room in existing plants to handle that tidal wave of milk? Impose a price increase? Where would the additional milk spurred by that price increase go? The truth is there is no economic reality where increasing prices in an oversupplied market makes sense. No new large cheese plants have been built in California in the past 10 years, due almost entirely to the instability brought on by groups like MPC, who always advocate for higher regulated prices, whether conditions on the farm are good or bad.

“Despite the facts, the MPC mantra has been to tell a partial truth and a partial lie, and point to an illusory price difference between the federal Class III (which plants are not obligated to pay) and California Class 4b, (which plants must pay) and tell California dairy farmers that they are being cheated, by a “discount” milk price. MPC always fails to add the facts that: 1) despite the current short-term production pull-back, California is deficit in plant capacity with a long history of milk supplies pushing the limits of what the state’s plants can process, 2) California is the most distant from domestic commercial cheese markets and therefore has the highest cost of getting product to market, and 3) the Class 4b price must be a market-clearing price, because there is no “de-pooling” safety valve to allow milk to be price based upon demand and competition like there is under the Federal milk pricing system.

“So, MPC is shaving the truth as it’s been doing for decades. And it won’t tell dairy farmers the most recent facts: dairy farmers are seeing increases in their milk checks because commodity markets are responding to the very recent drought-driven reduction in milk supply, and premium prices paid by processors above the state-regulated minimum are on the increase. In spite of MPC’s innate fact-twisting, this is a natural market response to changing conditions. If MPC’s bullying had overridden all the facts, MPC would have been the cause of a continued glut of milk and prolonged lower prices with relief not yet in sight. Since MPC’s past prescriptions have clearly been wrong, why would they be right now? 

“Today, the stakes are much higher and real solutions are needed. Unfortunately, MPC isn’t even part of that discussion. The effort Secretary Ross is making to initiate constructive discussions about dairy policy between farmers and processors needs to be successful. Too bad that MPC continues to be the problem and not part of the solution.”

 

Dairy Institute has 29 member companies who operate plants in California, collectively accounting for approximately 80% of all fluid milk products, cultured and frozen products, and hard cheese produced in the state. Dairy Institute members also manufacture substantial quantities of butter and nonfat dry milk powder. Members include proprietary and cooperative processors of varying sizes, vertically-integrated grocery chains operating their own milk plants and producer-distributors.

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