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California implements new Federal Milk Marketing Order

Implementation of California FMMO concludes a rule-making process begun in 2015.

U.S. Department of Agriculture undersecretary Greg Ibach joined dairy farmers in Tulare County, Cal., on Nov. 7 to celebrate implementation of the new California Federal Milk Marketing Order (FMMO) that went into effect on Nov. 1, 2018. California is the largest milk-producing state in the country.

“America’s dairy farmers face many challenges at home and abroad, so working together is more important than ever,” Ibach said during remarks at the Rancho Teresita Dairy owned by Cornell and Terry Kasbergen. “This new Federal Milk Marketing Order decreases regulation for processors, moving industry into a less regulatory system, and also helps put California’s producers on equal footing with producers across the country.”

California represents more than 18% of all U.S. milk production, and with this new order, more than 80% of the total U.S. milk supply will be covered by the 11 orders overseen by USDA’s Agricultural Marketing Service.

FMMOs are voluntary, industry-initiated, industry-driven marketing tools intended to prevent damaging price competition inherent in the marketing of highly perishable commodities. FMMOs establish the terms of trade between the farmer and the first buyer of milk by enforcing timely payments from milk processors to milk producers and developing minimum milk prices based on market values with respect to supply and demand conditions.

The implementation of the California FMMO concludes a rule-making process begun in 2015 when three California dairy farmer cooperatives -- California Dairies Inc., Land O’Lakes Inc. and Dairy Farmers of America Inc. -- jointly petitioned USDA to establish a federal marketing order for the state.

A 40-day formal rule-making hearing was held in the fall of 2015 to collect evidence and testimony, and the resulting hearing record consisted of more than 8,000 pages of hearing transcripts, 200 exhibits and 30 post-hearing briefs. Based on this evidentiary record, USDA published a recommended decision proposing the establishment of a California FMMO in February 2017. A final rule announcing industry approval was published on June 7, 2018.

The final rule established Federal Order 51 incorporating the entire state of California. Following the publication of this rule, USDA began the process of educating dairy handlers who will be regulated by the FMMO and those who will be able to opt in. The entire record of the rule-making is available at www.ams.usda.gov/caorder.

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