Wisconsin Makes Its Case Out West

Volume 140, No. 21, Friday, November 13, 2015

It’s tempting to dwell on the process itself. A federal milk marketing order hearing is part of a genteel, inefficient past that the current hearing in Clovis, California hasn’t improved.

When two Wisconsin cheese makers took the stand in Clovis last week, the hearing to create a new federal milk marketing order in California had reached Day 28 – a new record for order hearings according to one veteran lawyer present. As of this writing, the hearing has reached Day 34 and could exceed 40 days.

The hearing process includes daily introductions of every person present. All testimony is read aloud – whether two pages to 200 – and lawyers may cross examine a witness for an unlimited amount of time. During breaks in the action, the corps of consultants and lawyers, government staff and dairy industry economists who have spent their autumn away from home spoke of little else than when it all would end.

Replacing California’s state milk marketing order with a federal order is a complex proposition. California’s existing system of farm-level quota for milk production is unique in the US and according to the Golden State farmers that sought a new federal order, sun-setting or devaluing that quota would destroy the prospect of a new federal order.

Hearing participants are also discussing requirements for milk pooling and formulas for classified milk prices and transportation credits and rules for producer handlers and credits for California’s unique fortification of fluid milk and will this hearing ever end?

California’s existing system of farm-level quota for milk production is unique in the US and according to the Golden State farmers that sought a new federal order, sun-setting or devaluing that quota would destroy the prospect of a new federal order.


Two Wisconsin cheese makers addressed the hearing November 3 to describe the impact of the federal order’s Class III milk price formula on small to mid-sized cheese manufacturers. Why travel to a California hearing? Because California is America’s No. 1 milk producer, making 20 percent of all fresh milk in the country. Any change USDA may recommend for milk price formulas in the California order would require matching changes in federal orders across the US.

And the Class III formula is broken. “My cooperative is in favor of changing the way whey is priced in [Class III] milk pricing,” Steve Stettler from Decatur Dairy in Brodhead, Wisconsin testified. When the Other Solids value in the Class III price rises, he stated, the cooperative pays more for milk than the value they earn for their whey in the marketplace.

Like most cheese manufacturers across the nation, Decatur is too small to add sophisticated whey processing technology, yet the Class III price uses the value of dried whey in the Other Solids calculation in the Class III milk price. He noted that expanding the cooperative’s wastewater system to clean whey equipment would cost $2 million alone. Adding a new building and new whey equipment and piping, “The cooperative could easily be at $3 million plus in investments if whey investment was looked at,” Stettler said.

Next on the stand was Steve Buholzer, a co-owner of Klondike Cheese in Monroe, Wisconsin. Buholzer noted “there are months that Klondike Cheese cannot earn revenues on concentrated whey and permeate that meet the whey value in the Class III milk price.” Unlike Decatur Dairy, which sells warm, unprocessed whey, Klondike Cheese processes whey via ultrafiltration and reverse osmosis. In 11 of 12 months in 2014, Klondike earned less for its concentrated whey and whey permeate than the value demanded in the Class III milk price.

Making a specialty cheese can also deter whey processing, Buholzer noted. Feta cheese produced at Klondike generates a higher acid whey that must be blended with other whey in order to be dried, Buholzer testified. Because Klondike’s whey must be buffered with whey from other cheese plants, drying whey at the Klondike plant is not an option.

If this hearing ever ends, USDA will need months, if not years, to digest the mountain of data and testimony produced. But the spreadsheets submitted by these Wisconsin cheese makers verify a simple fact: smaller cheese manufacturers in Wisconsin, California and across the nation cannot afford to build multi-million dollar whey drying plants. Yet the Class III milk price demands that these cheese makers pay dairy farmers the value of dried whey.
It’s a mistake. The formula is broken. And USDA has this chance to fix it.

John Umhoefer has served as executive director of the Wisconsin Cheese Makers Association since 1992. You can phone John at (608) 828-4550; Fax him at (608) 828-4551; or e-mail John Umhoefer at jumhoefer@wischeesemakers.org


Other John Umhoefer Columns
 Dancing with the Devil in the Details

 Phosphorus’ Final Act
 20 Years of Change In One Bite
 The Whey Problem and California’s Solution
 The System Works - March 6, 2015
 100 Years of Success
 Thoughts for a Dairy Forum
 A Different Dairy Scene in 2015
 The Truth About Animal Care
 A Regulatory Hat Trick
 Flawed Security Program Bilks Wisconsin Dairy
 Leading Cheese Producers
 Success by the Numbers
 It’s Time for Training
 Exports Trump Farm Bill
 Wisconsin Specialty Cheese Institute’s 20-20 Vision
 Addressing Wastewater Head On
 Knowledge Opportunities Abound
 Say No to an Extreme Raw Milk Bill
 A Generation's Gift
 Government-Induced Uncertainty
 Decades Ahead on Food Safety
 Wisconsin’s Hot Winter
 A Successful Campaign for Babcock
 Ireland: Gearing Up For Growth
 Mired in Wash Water
 Less Government, More Dairy
An Interview With Jim Sartorii
The Other Solids Price Crush
 The Policy Answer Is Exports
 Rolling The Dice On Dairy Reforms
 Productive Changes In Wisconsin

 The Successful Idea Of DBIC
 Cheese Cuts Both Ways: Consolidation and Growth
 IDFA's Deep Dairy Reforms
 Wisconsin In The Spotlight
 An Overbuilt Foundation
 What the New Governor Means To Wisconsin
 No Man's Land
 Dairy & Wisconsin’s New Leadership
Wisconsin Cheese Is Investing, Expanding
 Talking Competition
 Being Big Dairy
Upper Midwest Prospects in 2010
Upper Midwest Growth: Perspectives From The Farm
Blue Skies or Bust
Pushing Back Against A Tough 2009
Support Demand, Not Price
Dairy: A Good Bet in a Bad Economy
Wisconsin's Future: Growth
Keeping Sustainability Real
Nose Dive
Dairy Dives into 2009
Consider This...
 Fulls Vats
Implement Make Allowances ASAP
Security Reforms
Spring Forward
A Week of Clarity

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