Last PRB Meeting is Behind Us: Referendum Likely Coming to California Producers Next Month

Modesto Calif., (September 19, 2017) – That’s it, folks – the Producer Review Board (PRB) finally completed their recent mission to develop a recommendation outlining the criteria for a stand-alone producer funded quota program. The fourth and last meeting occurred on September 12, where the group of 15 dedicated producers reviewed the draft language alongside a myriad of written comments submitted by industry. While the PRB may have given the approval to move along its recommended Quota Implementation Plan (QIP) to the Secretary, the PRB is still in existence and may be assigned another mission in the future.

So, what does the QIP look like? For one, it is very similar to the revised draft the PRB submitted to CDFA after the August 2, 2017 meeting. Most importantly, it is very similar to the current quota program. Producer costs and payments remain virtually the same (along with regional quota adjusters). The main difference is that with the QIP, producers will see the quota program funding directly come out of their milk check. This means that all California Grade A milk producers will see a deduction on their milk check that should range between $0.37/cwt to $0.40/cwt. The amount is not different from what is currently happening with the quota program; the difference comes from the fact that right now the program’s funding comes out of the pool, which means that unless you work at CDFA, you don’t see that amount each month.

That said, despite the fundamental similarities there are a few details that are different between the current and the proposed program. On one hand, some of those details were deemed impossible to fix by the PRB according to CDFA due to a lack of legislative authority. On the other hand, other details could have been changed but the PRB made the decision not to. The mandated producer survey at least every five years is an example that comes to mind. This survey is not something that currently exists, but despite some voiced disagreement on the concept (notably by WUD in its comment letter) CDFA suggested it was added and the PRB did not remove it from the language. While this is not the same as a mandatory referendum, it does bring the quota program under the microscope more frequently than it currently is. When producers buy quota, they do so because they feel it is a safe asset – not something up for review every five years. That being said, the PRB ultimately has shown dedication to protecting quota, which should help with what they decide to do with the results of such a survey.

Now that the PRB is done with their mission, we wait for the Secretary to review the proposed QIP. If all goes well, you should receive a ballot in your mailbox sometime in October (see timeline below). Keep an eye out for a large 9X12 envelope with an indication on the front that a ballot is enclosed. Inside will be the Plan language, a ballot (in a different color), a cover letter and a postage paid return envelope.

By Annie AcMoody, Director of Economic Analiysis

 

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