USDA’s FMMO Recommendation Released!

Turlock, Calif., (February 14, 2017) – After over a year of anticipation, it is finally here folks: USDA released its recommended decision for a California Federal Milk Marketing Order (FMMO). If you recall, USDA heard about two complete proposals at the Clovis hearing in Fresno during fall 2015. Proposal number 1, from the three largest coops in the state (CDI, DFA and LOL), requested a California FMMO that looked very similar to California’s current state order, while using FMMO pricing formulas. Proposal number 2, from the Dairy Institute of California, incorporated many components of other FMMOs and retained few aspects of the current state order. Two other partial proposals from the California Producer Handlers Association and Ponderosa Dairy were also considered. A period for post-hearing briefs and reply briefs unfolded through summer 2016 and USDA has been judiciously drafting the current recommendation since. Based on the 40 days of hearing and hundreds of pages in briefs, it is impressive USDA managed to summarize it all in a 213-page document. That document can be found here. Since that is still rather lengthy, below is a summary of the key points that matter to California producers. They are meant to be presented in a neutral way, while highlighting how they compare with what the coops’ proposal requested. WUD will be looking at the potential impacts in great detail in the next few days/weeks and will keep you informed as this process unfolds.

Pricing: USDA finds that the CA FMMO pricing formula should match those in other FMMO. This is what the coops asked.

Pooling: USDA finds that pooling of Class II, III and IV should not be mandatory. The coops had argued for mandatory pooling.

Quota: USDA finds that quota should continue operating. It would continue to be administered by CDFA (if CDFA agrees). Because it would fall under CDFA, USDA does not outline many details, and when such details will emerge is uncertain. The one feature that is outlined is the funding of the quota program would come through a deduction on producers’ milk check. This is not exactly what the coops asked, but USDA found a clever not to stray too far either (the coops wanted no change from what it is now, where monies are taken out of the pool and distributed to quota holders, prior to the blend price calculation).

Transportation allowance and credits: USDA finds that there should not be such a system funded through the pool. Instead, producer payments would be adjusted to reflect the applicable producer location adjustment for the handler location where their milk is received. The coops had asked for a transportation allowance system similar to what exists in California currently.

Producer payment: USDA finds that producer payments should be made on a multiple components basis. Producers would be paid for the butterfat, protein and other solids components in their producer milk and for the cwt of milk pooled. The coops had asked for a simpler calculation on part of it, but overall this is not too far.

There will be a meeting in Clovis on February 22 where USDA will go over details and attendees will be able to ask questions. WUD will be front and center to listen and ask the questions that matter to its members. The meeting will start at 9am at the Veterans Memorial District. If you have questions ahead of the meeting, please feel free to send them to me at aacmoody@westernuniteddairymen.com. If I don’t have the answer, I will make sure to find it.

Expected Timeline:

  • February 14, 2017: Official posting of the recommended decision to the Federal Register.
  • February 22, 2017: Informational meeting in Clovis, CA
  • May 15, 2017 (90 days after the official posting): end of public comment period
  • USDA recommends a final decision (90 days later?)
  • Dairy producers potentially covered by a California FMMO vote on its adoption

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