Modesto, Calif., (July 24, 2017) – The dairy industry has had a rough few decades. Although milk prices have always had a boom or bust cycle, the regulatory cost of production has really created challenges for all dairies in the state. Since 2005 over 650 dairies have shut their doors in California. In more recent years, the milk production numbers showed a year-over-year-over-year decline for 22 consecutive months. The end of 2016 briefly went positive and now we’re in decline again. The lack of certainty in the dairy business has generally been accepted on the pricing side, especially as we have become a much more global industry. But what’s really new as of the last 20 years, is the crazy uncertainty the State environmental regulations have caused to our businesses. Before it’s through, more dairies that are my neighbors will be closing their doors because they’re just tired of working so hard to get so little in return. This will have a massive impact on jobs and ancillary jobs in the Central Valley, potentially to the tune of $200 million in net economic benefit annually.
One thing is certain though, we can’t keep doing things the way we’ve always done in the dairy industry, because it’s not working. When an opportunity came for the dairy industry to get some certainty on the regulatory side, Western United Dairymen and many other ag organizations took it.
With the help of Assemblyman Devon Mathis (AD 26), the passage of AB 398 this week (known as the extension of Cap and Trade) really helped to secure some certainty for the dairy industry. The cap-and-trade program is a plan that provides certainty to our dairy processors, which means there is some cost certainty for our dairies. No other choice was on the table that provided a sense of regulatory and cost certainty.
What would have been the outcome with no Cap-and-Trade extension? The state would implement more rules and impose mandatory reductions to meet the rules with no market mechanisms. So we made a choice, and Devon Mathis helped us make the choice by committing to save jobs and businesses. We protected our member dairy families and their employees.
Our organization and the industry must remain humble and vigilant that this choice doesn’t become an empty promise by the State, and sometimes opportunities show up in strange places. The passage of AB 398 and the extension of a Cap-and-Trade program are the only viable methods to make this possible so that the dairy industry isn’t regulated into the ground.
by Frank Mendonsa, President of Western United Dairymen