Rules Might Force Some California Dairy Farmers to Sell Their Quota
The implementation of the new Federal Milk Marketing Order November 1 in California means a small number of dairy farmers there might have to sell their quota.
Only milk that is received in California will be assessed for quota or receive quota payments, says Annie AcMoody, Director of Economic Analysis for Western United Dairymen (WUD). “Basically, if your milk leaves the state, you will not be assessed for quota. But you will also not be paid for it,” she says.
“If your quota covers 100% of your milk and 40% of your milk goes out of state, you will be assessed on 60% of your milk and get paid quota on that same 60%,” she notes. But you will not be assessed nor paid for the 40% that leaves California. So it might make sense to sell that 40%, unless you expect to ship that milk to a California plant in the near future. Ownership of quota that is not qualified in a state plant or is not transferred within 60 days reverts to the California Department of Food and Agriculture.
Most of the farms affected are organic, says AcMoody, because there have been some shifts in that market recently. “I think overall it will not be a big number, I’m thinking under 10 producers. Most will try to make it work so they don’t have an issue,” she says.
AcMoody also notes that cooperatives will be able to combine quota assigned to it by its members. “So long as the quota total within the co-op is not larger than the total amount of market milk produced and received in California, they there should be no issue for you as a quota holder,” she says.
The key thing is that for producers who own quota and ship some or all of their milk out of state, they need to be aware of the issue and contact their handler now if they have questions. For a more complete discussion, click here.