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California federal milk marketing order gets widespread support

dairy cows
California Dairies Inc., Dairy Farmers of America and Land O'Lakes unified in support of proposed federal milk marketing order.

The three largest milk marketing cooperatives in California -- California Dairies Inc. (CDI), Dairy Farmers of America (DFA) and Land O'Lakes Inc. -- announced that, on behalf of their respective members, they have voted in support of the California Federal Milk Marketing Order (FMMO) as proposed by the U.S. Department of Agriculture.

USDA held a referendum from April 2 to May 5, 2018. USDA also mailed ballot materials to all known eligible dairy producers supplying milk to the proposed marketing area. FMMOs are legal instruments that regulate the sale of milk between dairy farmers and the first buyer. The California FMMO would become effective if approved by two-thirds of the voting producers or by producers of two-thirds of the milk represented in the voting process.

California represents more than 18% of all U.S. milk production and is currently regulated by a state milk marketing order administered by the California Department of Food & Agriculture.

Since the very beginning, the three cooperatives collaborated to create a potential California FMMO as a means of helping the state's dairy farmers receive more equitable, market-based milk prices. 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.

"Three years ago, farmer leaders of our cooperatives agreed to work toward a change in the regulatory structure -- one that would benefit California dairy farm families. Following careful consideration of the final decision issued by USDA, we believe the proposal will better address disparities between farm-gate prices in California and the rest of the nation. It is our pleasure to now conclude this administrative process with joint support for the proposed federal order language," CDI, DFA and Land O'Lakes said in a joint statement.

After USDA's release of the final decision on March 30, the three cooperatives held educational sessions for their member-owners to provide an overview of the final decision, address specific questions and discuss their voting preferences. Each of the cooperatives then participated in bloc voting, meaning a single affirmative vote from each cooperative represents the voting cooperative's total membership in the state.

USDA will officially announce the results of the referendum in the coming weeks. If the results support approval of the California FMMO proposal, the new system is expected to be in place by Nov. 1, 2018.

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 a similar trend for 2017.

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