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Comments Address Pros, Cons Of California Federal Order Proposal

Issues Addressed Range From Mandatory Pooling And Class III Prices To Transportation Credits And Economic Impact

Washington—USDA’s Agricultural Marketing Service (AMS) received more than 30 comments from dairy entities in response to its proposal to establish a federal milk marketing order for the state of California.

AMS had issued its proposed rule establishing a California federal order in February, and accepted comments on that proposal through Monday, May 15.

Several comments addressed the issue of whether a California federal order is justified based on the hearing record. The three dairy cooperatives that originally petitioned USDA to hold a hearing on a California order — California Dairies, Inc. (CDI), Dairy Farmers of America (DFA) and Land O’Lakes (LOL — believe it is.

A California federal order “is justified because it will establish and maintain orderly marketing conditions,” the three co-ops said.Through federal order mechanisms, “orderly marketing conditions will be provided so that handlers are assured uniform minimum raw milk costs and producers receive minimum uniform payments for their raw milk, regardless of its use.”

Milk Producers Council (MPC) believes that USDA “correctly found that conditions in California justified the promulgation of a FMMO for California. We agree that bringing California into the FMMO system will help insure the integrity of the FMMO system in the entire country.”

Select Milk Producers, Inc., agrees with AMS that a California federal order “will provide for more orderly marketing conditions” in California. And as “equally important, bringing California into price alignment with the remainder of the federal order system will provide for more orderly markets in the remainder of the FMMO system.”


“Unless an angel lands nearby with the money, equipment and land to convert our liquid whey to solids, we are at a grave disadvantage to recover the costs given back to the producers.”
—Cacique, Inc.

While USDA “commendably” proposes a federal order that generally follows decades of precedent, “the initial fatal flaw in the underlying proposal, together with an unexplained failure to consider all the record evidence or rely on California’s current market conditions,” means USDA’s proposal “is not supported by substantial evidence and cannot withstand legal review,” Dairy Institute of California said. “No California FMMO is justified on this Record.”

“At the California hearing, it seemed as if we were engaged in an effort to impose a solution to a market where witness after witness testified that no disorderly market conditions existed. In fact the fully functioning California State Order has been routinely addressing issues within the market, to keep market conditions orderly,” commented Michael Suever, senior vice president, HP Hood LLC, a buyer and processor of milk in California.

If there is not a preponderance of disorderly marketing today in California, then federal intervention “is not necessary and only creates increased costs along with another layer of bureaucracy,” Send me more information