Gains coming for cheese suppliers
SACRAMENTO – The California Department of Food and Agriculture (CDFA) has changed the method used to calculate minimum farm gate milk prices for the state's dairy producers. The amended formulas were based on testimony and evidence presented at a public hearing held January 29 and 30 in Sacramento. The changes will take effect on April 1.
The new formulas will mean that the farm gate price for milk used in the production of cheese will increase a projected 3 cents per gallon in April. The projection is based on futures prices at the Chicago Mercantile Exchange.
“These are very difficult times for dairy producers,” said CDFA Secretary William (Bill) J. Lyons, Jr. “These changes are intended as a way to help producers survive.”
The major factors in the new formulas include the addition of a first-ever whey allowance, and a minimum price floor based on the baseline federal price paid for processed dairy foods.
“The current price structure has been a threat to the economic stability of our state’s producers,” said Michael Marsh, C.E.O. of Western United Dairymen. “This decision brings much-needed relief in a time of historically low prices. We thank the department and Secretary Lyons for recognizing the urgency of this crisis.”
The average California farm milk price has declined to its lowest level in 25 years, with many dairy producers selling product below their cost of production. Dairy economists indicate that farm milk prices may not improve much until the general economy and consumer demand for dairy products begin to strengthen.
“This is a step in the right direction for us,” said Linda Lopes, President of the California Dairy Women Association. “We will continue to work with CDFA to seek other methods to restore profitability to dairy farms.”
The price adjustment applies to all milk used in manufactured dairy products, including ice cream, yogurt, and butter in addition to cheese. The steadily growing cheese market utilizes 45 percent of California’s entire milk supply.
The impact on consumers is projected to be minimal. The formula used to establish minimum fluid milk prices was not changed.
For more information
Steve Lyle (916) 654-0462
California Department of Food and Agriculture Office of Public Affairs
1220 N St., Ste. 214, Sacramento, CA 95814