The U.S. Department of Agriculture is being urged to move forward in the rule-making process for the establishment of a federal milk marketing order (FMMO) in California by releasing its final decision.
“Given the number of dairy operations that have closed in California and the chronic decline in milk production here, the more than three-year rule-making process for a FMMO in California should not be delayed,” according to a letter from the California Dairy Campaign, Milk Producers Council and Western United Dairymen.
Earlier in the week, it was revealed that USDA was waiting to make a decision on the marketing order until the Supreme Court renders a decision on the Lucia vs. Securities & Exchange Commission case, which has to do with administrative law judges (ALJs). Judge Jill S. Clifton, the judge who proceeded over the 2015 California hearing proceeding in Clovis, Cal., was an administrative law judge.
Annie AcMoody, Western United Dairymen director of economic analysis, explained that, in short, there is ambiguity around ALJs and if they should be nominated or simply appointed. According to USDA’s release, “at the time of the hearing, USDA believed ALJ Clifton to be an employee of the department, and her appointment was completed in accordance with agency procedures. However, if the court determines that ALJs are inferior officers of the United States rather than employees, then ALJ Clifton’s original appointment as an ALJ would be brought into question.”
The letter to Secretary of Agriculture Sonny Perdue detailed the harsh times facing California producers. During the past three years, margins on California dairy operations have been negative. As a result of recent economic conditions, California lost 171 dairies, representing 11% of the industry, during the four years ending in 2016, and it expects that a similar trend will be confirmed for 2017 when California Department of Food & Agriculture data are released.
The latest data (third quarter of 2017) showed a loss of 64 cents/cwt. of milk produced. While costs may not have moved much since then, the price of milk dropped by $2/cwt. in January 2018.
“The grim economic situation facing California dairy producers demonstrates the urgency of moving forward in the FMMO processing by releasing the final USDA decision,” the letter noted.
According to USDA’s “Regulatory Economic Impact Analysis of the Recommended California Federal Milk Marketing Order,” the all-milk price estimated change from the baseline for California would be 48 cents/cwt. The numbers illustrate California dairy families’ eagerness for a final decision to consider.
“While we can recognize USDA’s inclination to wait for the Supreme Court decision in the Lucia vs. Securities & Exchange Commission, before publishing a final decision on a California FMMO, it is not something we can support,” the letter concludes. “California dairy producers cannot wait until the Supreme Court renders a decision on this matter, which ultimately may not prove relevant to the FMMO proceedings. We urge USDA to release the final decision so that California dairy producers who are suffering under the uncertainty the delay in this process is creating have the opportunity to consider a pricing system that will be in alignment with rest of the major milk-producing regions in the country.”