WUD files petition asking for California emergency price relief, changes to whey value

Limited to a small whey value cap increase in a previous request for adjustments to the California milk marketing order’s Class 4b milk pricing formula, Western United Dairymen (WUD) filed a petition with the California Department of Food and Agriculture (CDFA), Aug. 6, asking for an emergency hearing on two proposals:

1) emergency price relief due to the current financial pressures on dairy producers, notably due to extremely high feed costs. WUD is requesting a six-month (October 2012 through March 2013) increase of 50¢/cwt. on the minimum milk prices for all classes of milk (Class 1, 2, 3, 4a and 4b). 

 

2) changes to the whey value of the Class 4b pricing formula. WUD is requesting the cap of 75¢/cwt. to be removed, proposing a scale that mirrors more closely the whey value under the federal milk marketing order Class III milk pricing formula. Both the Class 4b and Class III milk pricing formulas are used for milk processed into cheese.

 

WUD also proposed a dry whey exemption on the first 100,000 lbs. of milk processed daily by cheese makers. The exemption would be only on the whey portion of the Class 4b formula.

 

Following a hearing on May 31-June 1, a CDFA panel recommended no change in the state’s Class 4b milk pricing formula whey factor. However, CDFA secretary Karen Ross gave the state’s dairy producers a small concession, increasing the whey factor  cap by 10¢/cwt., effective Aug. 1.

 

WUD and a separate coalition of dairy producers had petitioned CDFA to consider Class 4b formula adjustments to account for the higher value of dry whey, returning a larger portion of that value to dairy farmers. They said the formula used in California’s state milk marketing order created a large gap between prices for California 4b and federal order Class III milk.

 

The panel determined the “current Class 4b pricing formula maintains a sound economic relationship between the state’s milk production and marketing conditions for manufactured dairy products.” However, Ross, citing negative impacts of high feeds costs on producer income, increased the whey factor cap from 65¢/cwt. to 75¢/cwt., while maintaining the current floor of 25¢/cwt. For each 5¢ “step” in the dry whey commodity price, the corresponding whey factor will increase in 6.25¢ increments. The effect is a 10¢/cwt. increase in the Class 4b price when the dry whey market is at the upper end of the new scale. In making the small adjustment, Ross said she was attempting to balance the needs of producers, processors and consumers.

 

WUD’s latest proposal recognizes the concerns of smaller cheesemakers who often don't have the resources to process and market dry whey.

 

“Recognizing the panel’s concern for smaller cheesemakers inability to process whey, we propose an exemption on the first 100,000 lbs. of bulk milk processed daily. The exemption would apply to cheesemakers of all sizes, therefore it is not discriminatory in nature,” the petition stated.

 

“WUD is deeply concerned about the current plight of dairy families and, while a 50¢/cwt. temporary price increase will not make dairy margins positive again, we believe that such an emergency price relief is required to at least “slow the bleeding," said WUD president Tom Barcellos. 

 

To download a copy of the petition, please click here.