California dairy producers approve Federal Milk Marketing Order

(Agri-Pulse) – California dairy producers have voted to approve a Federal Milk Marketing Order for the entire Golden State.

The new FMMO will be implemented Oct. 17, with publication of the Announcement of Advanced Prices and Pricing Factors, USDA said today in a release. Affected parties must comply with the provisions of the order beginning Nov. 1, and the department said it will work over the next few months to educate handlers who will be regulated under the new FMMO.

The proposed order was published in March and needed to be approved in a referendum of dairy producers before taking effect.

Milk marketing orders promote orderly marketing conditions by applying a uniform system of classified pricing through the farm milk market. There are currently 10 FMMOs governing different regions throughout the country, but California, which produces over 18 percent of the nation’s milk, has been operating on a state order administered by the California Department of Food and Agriculture (CDFA). Once the new FMMO is established, over 80 percent of the U.S. milk supply would fall under the FMMO regulatory framework.

“The proposed order would recognize the unique market structure of the California dairy industry through tailored, performance-based standards to determine eligibility for pool participation,” USDA said in a news release when the proposed order was published. The order also “provides for the recognition of producer quota as administered by the CDFA.”

FMMOs are legal instruments that regulate the sale of milk between dairy farmers and the first buyer, USDA said. Where appropriate, the California FMMO adopts the uniform order provisions contained in the 10 current FMMOs in the national system. These uniform provisions include, but are not limited to, dairy product classification, end-product price formulas, and the producer-handler definition.

Producers are hoping a California FMMO will make sure their milk prices keep up to par with other major milk-producing states. California’s three largest dairy cooperatives – California Dairies Inc., Dairy Farmers of America Inc. and Land O’Lakes Inc. – submitted a proposal for a FMMO in February 2015. At the time they said shifting to an FMMO for California reflected the desire of their members to receive more equitable, market-based milk prices.