14 CapitalPress.com
September 11, 2015
Impacts of Calif. milk order proposals differ
By CAROL RYAN DUMAS
Capital Press
California dairymen and
their processors will be testi-
fying in favor and against var-
ious proposals when USDA
officials roll into Clovis on
Sept. 22 to launch a hearing
on establishing a federal milk
marketing order for the state.
USDA Agricultural Mar-
keting Service released an
impact analysis of the four
proposals in August. The pro-
posal submitted by three dairy
co-ops on behalf of dairy
farmers and the proposal sub-
mitted by Dairy Institute of
California on behalf of pro-
cessors address all segments
of a marketing order.
The proposal from Califor-
nia Producer-Handler Associ-
ation addresses quota exemp-
tion, and the proposal from
Ponderosa Dairy addresses
out-of-state milk.
The analysis looked at the
economic impacts on the Cal-
ifornia dairy industry but also
looked at the broader impacts
throughout the U.S. from
2017 through 2024.
It found the co-op proposal
would increase the California
all-milk price, the state’s milk
production and producer rev-
enue, but it would also cause
an increase in U.S. milk pro-
duction and a decrease in the
all-milk price and producer
revenue in all 10 existing fed-
eral orders.
The Dairy Institute’s pro-
posal would also increase
California’s all-milk price,
producer revenue and milk
production but to a much less-
er extent, and its effects on in-
dividual federal orders across
the U.S. were mixed.
The other two proposals
would result in impacts simi-
lar to the co-op proposal.
Comparing the impacts to
California, annual milk pro-
duction would increase an av-
erage of 540 million pounds
with the co-op plan and 60
million pounds with the Insti-
tute plan.
The all milk price would
increase an average $1.03 per
hundredweight with the co-
op plan and 10 cents with the
Institute plan, and annual pro-
ducer revenue would increase
$700 million with the co-op
plan and $70 million with the
Institute plan.
The impetus in pursuing a
federal order has been the siz-
able disparity between Cali-
fornia’s price for 4b milk used
Tim Hearden/Capital Press
Cows are milked at VanderWoude Dairy near Merced, Calif. The federal government is considering alternatives for a marketing order for
Class 4b milk in California. An analysis of the four proposals shows each produces different results.
‘Part of the discussion is whether what happens in California stays in California.
A rock this big would have an effect in other parts of the country.’
— Andrew Novakovic
Cornell University, professor of ag economics
to manufacture cheese and the
federal order Class III price
going to the same utilization.
That difference has aver-
aged $1.84 per hundredweight
per month since 2010, totaling
an estimated $1.83 billion,
according to producer orga-
nizations. The discrepancy is
largely due to the difference
in the value of dry whey in the
respective formulas, and pro-
ducers have been unable to
gain any resolve of the issue
from the California Depart-
ment of Food and Agriculture.
Prices
Andrew Novakovic, profes-
sor of ag economics at Cornell
University, said producers want
to join the federal order system
because they think the state sys-
tem doesn’t work and the Cali-
fornia secretary of agriculture is
no longer responsive.
After a few years of trying
hard to get a change, producers
decided they needed to change
the game and go to the federal
system, he said.
“But it’s no slam dunk;
the train could still go off the
track,” he said.
After hearing testimony,
USDA-AMS will draw up a
proposal for producers to con-
sider, which may or may not
be to their liking.
There’s a gigantic differ-
ence between the impacts on
California’s milk prices and
production response under the
co-op and Institute proposals,
Novakovic said.
The co-op proposal would
instantly solve the issue of
most concern for producers,
raising the cheese milk price
an average of $1.84 per hun-
dredweight. However, it would
dramatically affect cheese pro-
cessors, which could lead to
unfavorable consequences, he
said.
The co-op proposal would
raise the all-milk price about
$1 per hundredweight in Cal-
ifornia and other Western
(Non-FMMO) areas, but it
would also increase produc-
tion and lower that price to
producers elsewhere as much
as 25 cents, he said.
“Part of the discussion is
whether what happens in Cal-
ifornia stays in California. A
rock this big would have an ef-
fect in other parts of the coun-
try,” he said.
The ongoing drought could
challenge a production re-
sponse in California, but on
the other hand an additional $1
per hundredweight could have
its own impact, he said.
While the direction of US-
DA-AMS projected changes
Online
Read the USDA analysis of proposals for establishing a federal
milk marketing order for California:
http://www.ams.usda.gov/sites/default/files/media/Preliminary%20
Impact%20Analysis%20-%20Final.pdf
are consistent with what econ-
omists would expect to see,
the model probably overstates
the increase to California’s all-
milk price, and the pressure on
prices elsewhere seems pretty
high, said Mark Stephenson,
director of dairy policy anal-
ysis at the University of Wis-
consin.
But those prices have a
bearing on other factors in
the proposals, primarily milk
pooling and quota payments.
Pool quota
While producers say the
intent is to bring California
milk prices in line with those
in federal orders, they’ve
also stood firm that loss of
the state’s quota system —
which pays more to produc-
ers holding quota certificates,
representing a physical asset
— and optional processor par-
ticipation in the milk pool are
deal breakers.
Considering the estimated
increase of $1.84 in the cheese
milk price and the decrease in
the cheese milk price else-
where, that would be almost a
$2 change in competitive po-
sition, Stephenson said.
If processors were allowed
to opt out of the pool (as they
are in the federal system),
they would. That would re-
duce the overall milk price,
and there wouldn’t be enough
to support the pool, from
which quota payment is de-
rived, he said.
If the quota system is dis-
continued in a new federal
order, dairy farmers would
lose a lot of value on their bal-
ance sheet because quota cer-
tificates can be sold. It’s not
just a matter of a higher milk
price, Novakovic said.
The whole point of switch-
ing to a federal order is a high-
er cheese milk price, but pro-
cessors wonder where they’re
going to get the money to pay
higher milk prices and the
preferential price on quota if
pooling is mandatory, he said.
The Institute proposal al-
lows processors to opt in and
out of the pool with certain
restrictions.
If cheese makers can and
do opt out of the pool, the
pool would crumble, Nova-
kovic said.
“That’s at the root of the
debate. It’s a fundamental
conflict” between producers
and processors, he said.
California’s cheese indus-
try is quite big. If a big chunk
of cheese processors decided
not to be part of the system,
it would be difficult for the
remainder of the industry to
make the pool work, he said.
The higher cheese price,
quota and automatic pooling
reinforce each other in the co-
op proposal, which combines
aspects of the existing state
order and the federal system.
The processors’ proposal is
more aligned with federal or-
ders, he said.
Outcome
The federal order process
will take nearly two years,
leaving all kinds of opportu-
nity for things to happen and
making an outcome hard to
predict, Novakovic said.
But he sees three possible
scenarios.
Producers can wait until
USDA-AMS finishes the pro-
cess and see if the proposal is
something they can live with.
They could wait, end up with
a terrible proposal and vote it
down. Or, California ag offi-
cials could change the rule
and give producers a lot of
what they want, he said.
“A number of people in the
dairy industry are a little sus-
picious the last thing will hap-
pen. It’s a distinct possibility,”
he said.
In fact, the issue would
have been put to rest if Ag
Secretary Karen Ross hadn’t
put a time limit on the tempo-
rary (one-year) cap increase
to the whey value in 4b pric-
ing that she assigned in July,
he said.
Stephenson expects the
USDA-AMS proposal to con-
tain aspects from each of the
proposals.
He thinks dairymen will
be very disappointed if quota
and mandatory pooling aren’t
included, he said.
“But if it provides im-
provement in price, would
they not take half a loaf?” he
posed.
It might not be as much
as they want, but it might be
better than what they have, he
said.
Johnson named interim chair of WSU animal sciences department Stripe rust
New interim
chair looks to fill
expertise gaps
By MATTHEW WEAVER
Capital Press
Kris Johnson is the new
interim chair of Washington
State University’s animal sci-
ences department.
She replaces Margaret
Benson, who retired. Johnson
said she hopes to fill some of
the vacancies in the depart-
ment created by retirements.
Johnson hopes to work
with WSU and College of
Agricultural, Human and
Natural Resource Science
administrators to prioritize
vacant research, outreach and
teaching positions and “build
back some of that expertise,
get some new expertise.”
Johnson sees need in re-
search and sustainable sys-
tems, which include animal
well-being, food quality and
animal and human health.
Johnson hopes to “make
certain we provide our stake-
holders the cutting-edge sci-
ence, the information they
need, the technology they
need to be successful and
sustainable.”
The college also aims to
prepare students so that they
are career-ready the first day
they begin a new job in ani-
mal agriculture, she said.
The department also
works to provide outreach to
farmers and ranchers. John-
son said the department is
developing programs about
weed management and
levels are low
this summer
Kris Johnson is the new
interim chair of Washington
State University’s Department
of Animal Sciences.
Johnson said her priorities
include filling gaps in the
department and making sure
experts are available to work
with farmers and ranchers.
By MATTHEW WEAVER
Capital Press
Courtesy Washington State University
grazing strategies during
wildfire recovery. She wel-
comes rancher and farmer
comments and ideas for pro-
grams.
Johnson expects to hold
the interim chair position for
a year, with the option of a
second year.
WSU extension promotion leaves tree fruit endowed chair open
Lane named the new
director of the WSU
Agricultural and Food
Systems program
By DAN WHEAT
Capital Press
WENATCHEE, Wash. — An en-
dowed chair faculty position at the
Washington State University Tree
Fruit Research and Extension Center
in Wenatchee may be refocused fol-
lowing the promotion of the person
who has held the job for the last two
years.
Desmond Layne, endowed chair,
professor of pomology and tree fruit
extension leader at the center, be-
came the new director of the WSU
Agricultural and Food Systems and
Dan Wheat/Capital Press
Des Layne, director of the WSU
Agricultural and Food Systems and
Integrated Plant Sciences programs, will
be teaching and involved in curriculum
development.The programs have more
than 400 students.
Integrated Plant Sciences programs
in Pullman on Sept. 1.
The programs have more than 400
students and Layne will be teaching
and involved in curriculum develop-
ment and program assessment.
The move leaves vacant Layne’s
position in Wenatchee. It will be
up to WSU administrators and the
WSU Tree Fruit Endowment Advi-
sory Committee to decide what hap-
pens with industry endowment fund
dollars that supported it, said Jim
McFerson, center director and man-
ager of the Washington Tree Fruit
Research Commission.
The position could be changed
depending on industry needs, said
Jake Gutzwiler, a committee mem-
ber and quality control manager at
Stemilt Growers LLC in Wenatchee.
The seven-member committee
is made up of industry members.
Gutzwiler said he has no opinion
right now on what should be done.
“I need to look at it more,” he said.
Rhizosphere ecology (soils and
roots) and post-harvest systems are
the next two endowed chair posi-
tions to be activated, Gutzwiler said.
Searches are underway, or soon will
be, for people to fill those positions,
he said.
WSU pays the salaries and bene-
fits of the endowed chairs but the in-
dustry endowment pays for support
staff.
The state’s apple and pear grow-
ers voted in 2011 and cherry grow-
ers voted in 2013 to assess their
tonnage for eight years to raise $32
million for endowments, whose in-
terest earnings support personnel
and equipment for six faculty po-
sitions and research orchard oper-
ations.
Layne was state extension horti-
culture program leader at Clemson
University in South Carolina be-
fore he was hired at WSU in 2013 at
$167,693 per year.
Dry weather helped keep
stripe rust from infecting spring
wheat in the Northwest this
year, a USDA expert says.
The disease got off to an
early start in several locations,
reaching severe levels in the
Pullman and Walla Walla,
Wash., winter wheat crops, said
USDA Agricultural Research
Service plant research geneti-
cist Xianming Chen.
But as the weather got hot-
ter, the rust stopped developing.
“Usually, when stripe rust is
severe on winter wheat, spring
wheat is likely to get severe
rust, but some years can be
different, like this year,” Chen
said.
Early applications of fungi-
cide and an early harvest also
played a part in easing stripe
rust pressure.
Chen doesn’t expect many
rust spores to be in the air now,
except in some locations in
higher elevations that have re-
ceived more moisture.
Current signs point to a
lighter rust level next year, but
it’s too early to tell for sure,
Chen said. Winter and spring
conditions will be a determin-
ing factor.
“Rust is low, but it will nev-
er completely go away from
this area,” he said.
In recent years, stripe rust
races in the region have be-
come the same as races else-
where in the U.S. In the past,
the Northwest hosted unique
races. Some cultivars that were
susceptible to the region-spe-
cific races have regained their
resistance, Chen said.