California Quota Sunset Referendum Fails

The referendum calling for the elimination of payments for California milk quota by March 1, 2025, failed to get a majority of producers voting according to an announcement from the California Department of Food and Agriculture issued on July 2.

This result means that the current Quota Implementation Program installed in November 2018 when the Federal Milk Marketing Order began will remain in place. The regional quota adjuster which would have been equalized if the referendum had passed at $1.43 per cwt will continue to pay different amounts based on the quota owner’s location. The range will continue from $1.40 to $1.70 per cwt paid to quota holders, in effect a bonus in their milk checks. To fund these payments and the administrative costs of the QIP, all Grade A producers are assessed 36.5 cents per cwt by CDFA. Only an estimated 29% of producers in the state own enough quota to realize income in excess of the assessment.

The CDFA announcement reported that 733 valid ballots were received, 78.56% of all eligible producers. Of those voting, 361 producers or 49.25% representing 54.47% of the milk voted in favor. In opposition were 372 producers or 50.75% representing 45.53% of the milk. While 20% did not vote, CDFA officials say this is the highest percentage of producers to vote on a market order issue in all of California agriculture, which has over 250 orders on its wide range of crops.

A producer group calling themselves the United Dairy Families of California using outside advisers and including producers in several meetings had petitioned CDFA for this vote after spending more than a year developing the sunset proposal as a way to find common ground among dairymen. Its leader is Dino Giacomazzi, now growing almonds near Hanford after his family has been in dairy for over 100

years. He explained that UDFC had sprung up when traditional dairy organizations – the cooperatives and trade associations – did not choose to get into the divisive quota issue. He said the effort had been to find a middle ground providing producers with a way to unite the industry. He said that now dairymen have spoken, and they have decided to continue to fight about this issue. With a note of resignation, he said UDFC will not be participating in future quota conversations.

Another group, Stop QIP,  had been actively trying to end the quota program even more quickly, but ended by supporting a favorable vote on the referendum. The leader of that group, Craig Gordon of Chino, Calif., told DairyBusiness News that he did not believe CDFA has properly tabulated the vote but that his group had already filed two more petitions with CDFA hoping to end quota. He said one is based on the notion that ending the QIP would require only a simple majority of producers and milk. He further explained that QIP will need to be re-approved in November 2023, a five-year term that applies to many California marketing orders requiring a 65% vote for approval. His group is petitioning that this five-year vote be moved up as quickly as possible. However, knowledgeable observers say there appears to be nothing in the enabling legislation for QIP that requires such a five-year vote. The term used is “review” after five years but there are no specifics for what that entails.

Before the ruckus over QIP began, quota had been selling for as much as $500 per cwt. In more recent months, the value had dropped to less than half that. One active broker who handles many quota sales said the while it’s too soon to say what effect the vote will have on price, he expects it may return to previous levels which provide a 12 – 15% return. He speculated the price may go higher now that the legal challenges have been settled in administrative cases and now by the producer referendum.