By Delimarket.TV Staff
A dairy bill in the state Assembly that would raise milk prices is highlighting a fight between producers and processors.
The bill is being strongly supported by dairy operators who have seen months of losses due to drought and high feed costs, according to The Sentinel.
Producers say the price they are paid is being undervalued because it doesn’t include the value of whey, a cheese byproduct that was once thrown away but is now manufactured into a wide variety of protein-based consumer products.
AB 31, sponsored by Western United Dairymen, would raise the whey component of the price to reflect prices paid to other states under the federal milk marketing order.
“We just can’t survive anymore with our current pricing system, and AB 31 brings our prices into closer alignment with the prices in other states,” said Hanford dairy farmer Dino Giacomazzi.
But the Dairy Institute of California, a lobbying organization supported by cheese processors like Marquez Brothers and Leprino, says the bill could drive processors out of business.
“Our take is, it’s quite shortsighted and is really a lose-lose proposition,” said Rachel Kaldor, executive director of the Institute. She said that many mid-size California cheese plants don’t have the capacity to process whey into valuable products.AB 31 would lock in a minimum price without giving any flexibility to California processors.
Kaldor said that there’s already more supply of milk in California than plants available to process it, and she believes AB 31 would only make the situation worse by stimulating oversupply.
But for Western United Dairymen and Dino Giacomazzi, it’s a simple matter of fairness given the power producers have over dairy operator to set price. Producers like Giacomazzi argue that since milk is a perishable product, it puts producers at a market disadvantage.
“This is the most important dairy legislation ... since the inception of milk pooling in 1967,” said Western United Dairymen President Tom Barcellos. “If passed, this bill would ensure that prices paid to us are fair and competitive.”
“Dairy producers have no leverage,” Giacomazzi said. “We are slaves to the processing side.”