Petition Seeks to End California Quota

A law firm in Bakersfield, Calif., representing Eugene Azavedo and a  “coalition of dairymen” has submitted a petition to the California Department of Food and Agriculture asking for termination of the California milk quota program, the Quota Implementation Plan (QIP).

 

 

In the letter to Secretary of Agriculture Karen Ross, posted on the CDFA web site, attorney Kristin Hagan says she has submitted a petition signed by 285 market milk producers. This number represents more than the 25% threshold needed for a producer vote to be held.  The current count of California dairies is 1,183.

According to the procedures for submitting such a petition, posted on the CDFA web site on Apr. 3, the next step would be that the market administrator verifies the validity of the names and signatures.  If approved, the request for a vote would be submitted to the Producer Review Board (PRB) for its consideration.  The Board would then submit its recommendations to the Secretary.

The timeline by rule shows that the administrator has 90 days to verify the petition and then the secretary has 60 days to schedule a meeting of the PRB.  The Secretary will have 30 days to review the PRB recommendation and to determine if the Quota Plan “no longer tends to effectuate the purpose intended.”  If that is her decision, CDFA would have 45 days to organize a vote of all producers.

California’s Quota Implementation Plan had been approved by a big majority of producers and was put in place on Nov. 1, simultaneous with the  move into the Federal Order System.  The original quota program was established in 1969 as a part of the creation of a California milk marketing system that specified minimum prices to be paid to producers and a production base for producers at that time.

Until the CA FMMO was put in place, the cost of administering the quota program was taken out of the total revenue for all milk production pooled in California, before producers were paid.  The QIP specified that while the CDFA would administer the stand-alone quota program after Nov. 1, the cost, assessed to all producers, would be taken out by handlers with the deduction shown on producer milk checks, currently running about $.40 / cwt. Observers suggest that this assessment, now visible, is the driver for those wanting the quota program terminated.

According to a CDFA report in January, 674 producers own at least some quota which is expressed in lbs. of fat and SNF produced per cow per day. While quota is an asset that can be bought and sold, only licensed milk producers are eligible to own it. Last year, 67 producers sold quota for an average price of $514 per lb.  In 2017 the price was $540 and the year before, $544.  Estimates of the total value of quota held by producers is in excess of $1 billion.