Milk producers in California are asking their state to raise milk prices. The Western United Dairymen and the California Dairy Campaign jointly petitioned the Department of Food and Agriculture for an emergency hearing to request 35-cents per hundredweight over the California milk marketing order’s overbase price. CDFA has 15 days in which to grant or deny the petition for hearing.
The groups say the January price of $13.29 is 12% below 4th quarter prices of 2017, and far below their estimated $18.00 per hundredweight cost of production. California milk production has declined in 32 of the past 36 months. Economic conditions appear even more dire going into 2018, with milk prices projected to fall below $13/cwt, yielding potential losses of $5/cwt.
“The significant negative margins witnessed every quarter since January 2015 have placed many producers in a dire financial situation,” says Annie AcMoody, WUD director of economic analysis in WUD’s January 18 on-line newsletter. “According to CDFA’s cost of production data, the smallest loss recorded these past three years was 23¢/cwt of milk produced during the first quarter of 2017.”
Though USDA has completed the hearing process for a Federal Milk Marketing Order in California, it has not yet issued a final rule or scheduled a producer referendum. That process could take months. “California dairy families clearly need additional revenues and we believe the CDFA should provide pricing assistance while we await USDA’s final decision,” notes AcMoody.