California Dairy Future Task Force asked to evaluate long-term solutions

Despite the perfect storm of economic challenges affecting our dairy industry, cooperation and strategic reform can provide a more sustainable marketplace for our dairy farmers. Many dairies suffered steep financial losses as a result of the economic collapse in 2008 and 2009. Before equity recovery was complete, a nationwide drought struck in 2012, driving up feed prices and causing significant new problems. This belies the encouraging news released late last week that California gross farm receipts reached an all-time record of $43.5 billion in 2011, including a 30 percent increase in dairy. This gross revenue does not account for dramatic increases in input costs such as feed – an area where dairies are really struggling to compete.

This level of volatility is, unfortunately, the new reality for dairy farmers. If we have learned one thing from this crisis, it is that the current regulatory and pricing system needs to change and all sectors of the industry need to collaborate and develop reforms that can bring new markets and new stability to the marketplace. As CDFA tries to balance the interests of farmers with other dairy stakeholders—cooperatives, processors and consumers—it is clear to us that the pathway to future stability can be reached by tackling those reforms head-on

I am committed to working with the dairy industry to find long-term solutions. That is why I am forming the California Dairy Future Task Force. Last week, invitations were issued to 32 dairy farmers, cooperatives and processors to serve on the task force. It is imperative that task force members begin work as soon as possible and strive to develop recommendations by the end of the year.

All task force members and dairy stakeholders are being asked to familiarize themselves with a report by global management consultant Mc Kinsey and Company, which was commissioned by the California Milk Advisory Board in 2006 and provided concepts for long-term sustainability and industry growth over a 20-year period. The report is a common starting point upon which our task force can begin to build.

I am aware of the profound difficulties facing the dairy industry.  As a farm kid who now owns part of the family farm, I know first-hand the anxiety and stress these uncertain times cause. My lifelong service to agriculture has taught me that no group perseveres better, adapts faster and is more creative than our farmers. That is why I am confident in my belief that there are many promising opportunities ahead, specifically in the export market. I am determined to work with the dairy community to make the changes necessary to position farmers to take advantage of those opportunities and maintain California’s status as a world leader in dairy production well into the future.

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49 Responses to California Dairy Future Task Force asked to evaluate long-term solutions

  1. Bob Vander Eyk says:

    Dear Secretary Karen Ross, I am happy you are putting a dairy task force together. The problem is by the time you meet and discuss and implement any solutions a majority of dairies will be forced out of business by banks or will give up and dispose of there cows because they cannot take the stress any longer. I urge you to at least give us some emergency price increase to offset the huge losses we are suffering. Thank You.

  2. Dana says:

    Our California Dairy Farmers are in EXTREME crisis RIGHT NOW! We are asking for equality in milk price compared to the other states. The dairies are in need of short term action right now or California will not be a world leader in dairy production…they are been driven out of business! You also state about farmers being able to adapt, how do they adapt when they are losing money on a daily basis.
    You say you own part of a family farm so you can relate, is your family farm in California???

  3. Donald VanderPoel says:

    I am happy to see that the secretary recognizes the problems with the current pricing system but the two things that stand out for me is the the simple fact that our milk is priced below our neighboring states and it is the whey valuation in our formulas that does that.
    The second issue California has is a very unfriendly business climate. Regulations, tax codes, workers compensation policies and a mile of RED TAPE keeping new processors and existing processors from building or expanding current facilities. Lactalis is leaving next year moving the processing to Idaho. Nestlé, Chobani, Hilmar and a small handful of others have chosen to bypass the number 1 dairy state to build in other states that have basically rolled out red carpet to have them enter their state. All mentioned are not problems with the dairy climate or milk pricing in CA, they are a culmination of an anti business mentality gripping the state from an uneducated public and legislators who have thrown common sense out of the window in exchange for a environmental agenda that chases processors out of California.

    Thank you,
    Donald VanderPoel

  4. Brian Luis says:

    This is utter rubbish. We’ve already done countless studies and implemented task forces in this state. NOW IS THE TIME FOR ACTION! Save your “Task Force” study for after all these dairies go broke; then you’ll have plenty of time to try and figure out why it happened!

    Another instance of Government at work for the People!!! Does anyone any longer have a question as to why things are as screwed up as they are?

    The milk supply will be gone in CA in 5, 4, 3, 2…

  5. Corry & Jane Vanderham says:

    Dear Secretary Karen Ross: Thank you for putting together a California Dairy Future Task Force to evaluate long term solutions. Relief is needed now while the CDFTF is searching for solutions to the crisis. Granted milk prices have gone up 30% but feed cost have doubled. There are weekly bankruptcy filings from dairies. California milk prices need to stay in line with the surrounding states. We are at our wits end juggling the costs of dairying. Basically we need a fair price for our milk ASAP, like now!!!!

  6. Tony cabral says:

    Dear secretary,

    you should be embarrassed of mentioning a program: ( California dairy future task force evaluation). Long term-solutions, that’s very funny, there is no long term solutions. What future?
    What do you want to evaluate?
    How many more dairy farms, years of hard work, families entire lives have to perish before something is done to regulate this industry?
    How many bankruptcies will it take for something to be done?

    I have one more question.
    Who are the 32 dairies invited for YOUR evaluation? Or is that also a big secret?

    I have a dairy and I didn’t receive an invitation, and neither have the other twenty plus dairies that I have spoken to.

    Thank you,

    Tony Cabral

  7. Loren Lopes says:

    To: Secretary Ross
    For you to put together another dairy task force such as the DIAC in DC or the Vilsack dairy go no where for producers committee is a mistake. The only part of the dairy industry that is in critical financial trouble is the Dairy Farmer. Stop stalling and initiate meaningful emergency relief. The relief should be based on producers average cost of production and surrounding states minimum milk prices. For you to stall through this 32 person committee is political suicide. The processor, distribution, food service , and retail colusion is running out of control and will be exposed.
    Thank you for the access you have given the dairy farmers to tell their story and now that you fully understand the situation please act for emergecy price relief .

    Loren Lopes

  8. Reis says:

    Thank you for your words of effort, but words without action are meaningless. Emergency relief was needed yesterday. CDFA failed the dairy producer with the last hearing decision and failed us again with the denial of the petition for an emergency hearing. It was time to act yesterday. A long term solution will be too late.

  9. Lucia Brasil says:

    Dear Secretary Ross:

    Do you detect a common thread running among all these posts?

    A sense of impending DOOM maybe?

    I get the sense from your press releases and latest comments that you believe there was an equity recovery in the CA dairy industry. Where are you getting your numbers? From the accrual-basis dairy accounting firms that capitalize heifer raising costs and value dairy capital and fantasy LaLa land prices instead of mark-to-market?

    If you have real cash-flow based mark-to-market accounting done and then compare to the average dairy balance sheet, you will see that the best dairies have recovered 40% of the loss from 2008-09 and the average dairies have recovered little to nothing.

    Do you ever talk to vendors who sell to dairies??? You shouldn’t wait until large dairy feed/supply firms go bankrupt themselves to talk to them. If there was an equity recovery in the dairy industry, then why do all dairy feed/supply firms have the worst ever accounts receivables right now? If dairies nearly completed an “equity recovery” as you state, then why is nearly no dairy able to borrow on that “recovered equity”???

    Hint: The equity recovery among dairies was nil.

  10. jim says:

    To: Secretary Ross
    Our blood is in your hands and you still choose to ignore the fact that you are the one that is breaking our industry. Sure our operating costs have soared, but your failure to give us fair pay price for our milk is giving California Dairy Famlies a unfair dissadvantage from our surronding states. Its ironic that when the processors ask for more make allowance its usally granted. But when the Dairymen asks for help we always get a study shoved down our throats.

  11. Save AG says:

    40 to 60 (that I know of) Dairy’s in the Kings/Tulare area are applying for bankruptcy RIGHT NOW, in the Dairy capital of the world and THIS is the best you can come up with? Denying them a price hike in Milk prices and then forming a task force to chat about how they are losing their livelihoods. Pahleese. Or is that the plan? You used the word “sustain” so are you in bed with the envirowacko’s to destroy the Central Valley as well?

  12. Brian Luis says:

    To all:

    In other words, in 2006 the McKinsey Firm was contracted to do a study of what was wrong with the California dairy industry and then issue a report on the findings and prospective solutions.

    This was in 2006– 3 years before the 2008/09-ongoing disaster.

    The report cost *A LOT* of money.

    Now after completing the study and doing nothing all this time, and allowing the wound to fester and become ever more infected, we have decided to…. drum roll…. commission a group to study the findings of the study we already did and then report back on the findings and what the perspective solutions would be.

    Question: When is the study of the study of the study scheduled to begin?

  13. Brian Luis says:

    To All Dairymen:

    Sorry for all my sarcasm and pessimism. But look– What are we doing?

    We dairymen make the raw material that everybody in the milk industry relies and depends on. We shed our blood, sweat, and tears every day- either directly through physical labor or the daily grind of keeping the business held together with duct-tape and paper clips with nobody’s help. We bare all the risk in this industry on our backs and then we are told by the bankers, vendors, and government that it’s our fault because we “have to hedge” to cover our costs or whatever.

    Hedging is extremely difficult. And what makes it the hardest is that here in California our pay price is a different system than the rest of the country and so when we hedge our hedges are flawed hedges. It is possible to hedge feed and milk at the same time and still lose money due to the basis risk between the pricing systems.

    Take risk off of the dairymen and move it onto the processors and buyers, etc so that it is spread out and each party bears some and not all. Reform the pay price to correspond to the national markets in a way that allows for precise hedging without having to go out on a limb. Make them have to hedge as well, for as the dairymen have been told, “the tools are there- use them”.

    The way things are right now, the expectations on dairymen to hedge their way to safety is _unreasonable_ and ridiculous. To hedge every aspect of our pay price is very complex and requires selling into illiquid and dangerous markets that are very capital intensive and exclude most dairymen due to capital requirements (yes even the big dairies don’t have the money to do it).

    Major reforms need to be implemented, but there is no time to wait for them. We need an instant boost right now to buy time to implement the reforms. This is SERIOUS.

    For sure if this trainwreck is allowed to continue the processors, milk buyers, and consumers (not to mention banks and dairy supply/vendors) are going to suffer the end-game consequences– nobody forget this.

    We need to band together. We need to break loose from the existing organizations and coops that have done nothing for us except waste time and consume valuable money.

    This task force will take forever and we need to stop this insanity now. Everyone needs to speak up! Don’t be afraid to make a comment. You must make your voices heard or we are going to continue this until the dire consequences unfold to their full extent.

  14. dunbeingskrewd says:

    If your tired of your co-ops, dairy organizations & CDFA doing nothing for you.
    Lets go make some noise and let the media, public & politicians hear what we have to say. It’s up to us as Dairymen to get this DONE !

    DEMANDING A FAIR AND EQUAL PAY PRICE FOR OUR MILK IMMEDIATELY.

    Come show your support September 13 @ 11:00 a.m. at the Capitol in Sacramento. ( Rally For Dairy Releif )

    Spread the word

    For Dairyman By Dairyman Follow us on facebook (PROTEST CDFA)

  15. Elane says:

    As CDFA tries to balance the interests of farmers with other dairy stakeholders—cooperatives, processors and consumers—it is clear to us that the pathway to future stability can be reached by tackling those reforms head-on.

    The above sentence tends to be part of the problem. The price for producers is set for us while the processors, coop’s and consumers benefit from low producer prices. It is sad indeed when in an industry, you pray to be the last man standing. Producer pricing must be set on a cost of production index.

  16. Kevin Kruse says:

    Secretary Ross,
    While it is encouraging that you recognize and are committed to working with the dairy industry to find long-term solutions, and announced the formation of the California Dairy Future Task Force, it is imperative that emergency price relief be initiated as a stop gap measure to help stabilize the economic crisis currently facing California dairy producers.
    As the President of Western Milling, a third generation family business that has supplied feed to the California Dairy industry since 1935, we alone have had over a dozen dairy farming customers file bankruptcy over the past four months, many of which have been family dairymen for generations. In fact, a recent article in the Fresno Bee indicated that in the past eight months, 28 dairies in the San Joaquin Valley have filed for bankruptcy. Over 60 other customers of Western Milling are now on COD (cash on delivery) as we can no longer afford the financial risks of extending credit. Western Milling alone currently employs over 300 hundred people and faces having to reduce its work force by as much as 20%.
    With the over $2 billion in 2009 equity losses many more California dairy producers are simply closing operations or at the brink of financial ruin. I have witnessed firsthand the overwhelming emotional toll and stress families have endured during this catastrophe. In my family’s 77 year history severing the California Dairy Industry a crisis this severe has never been seen; we are in completely unchartered territory and if immediate action is not taken to bring California milk prices in parity with others states the irreversible negative economic ripple effect will extend well beyond dairy farm producers as many of the aforementioned industry segments are also experiencing financially difficulty and risk going out of business.

    Kevin Kruse
    Western Milling, President

  17. Danny Agueda says:

    To: Secretary Karen Ross,
    You mentioned in your letter that you are part owner of your family farm and i’m assuming that it is not a Dairy Farm.The fact is that our California pay price is totally outdated there are so many benefits of byproducts of milk including Whey, powder and etc. California Dairy Farmers need a fair share for there hard work,sweat,and tears and we need it now. Our milk standards quality are the best out there yet we receive the lowest pay price in the nation. We have not even come close to recover what we lost in 2009. I dont know where your getting your information from But you ought to rethink the decision’s you have made on behalf of all California dairy Farmers every dairy farmer in California is expericing finacial losses and the CDFA is to blame for not giving us dairy Farmers a fair price for the product. We hope and pray everday that you Secretary Karen Ross will reach down deep inside and do whats fair and right for all California Dairymen and women. Many livelihoods are at stake and in your hands to do something. All we ask for is for a fair price for our milk and we need it now.

  18. Brian Luis says:

    We are not asking for a welfare check here by any means. We are asking for fair pay according to the rest of country.

  19. Race to the Bottom says:

    Dairymen, please, we in California have perpetrated this demise upon ourselves. It has not been that long ago and many times in our history that we (through our coops) have asked CDFA to reduce our pay price and increase make allowances to entice processor expansion, because we all wanted to produce more milk in our race to the bottom.

    The current outcry response of ours to seek a higher price from government, protest government, sue government, is misguided and is a diversion from the truth about how we have arrived here.

    What I’m saying is that higher prices can be and need to be negotiated from the market. For example cheese processors should be compelled to pay a Whey Premium” above the state government minimum price. That being said, the negotiator needs to have cards to play, to win in this negotiation. We, in our race to the bottom have given our salesmen negotiators (coop managers), a very poor hand of cards to play in our constant demand to allow us to produce more milk unrestrained. Even when we finally succum to being put under a base, we allocate more base than we even have market for.

    Processors will pay more to insure a supply of milk, but not when it is in abundant supply. Some cooperative plant capacity needs to be reserved for “balancing”, and at times to short a certain market for negotiation purposes.

    The real problem we have here is a lack of leadership, willing to face the truth. The market will win, it always does.

    • Brian Luis says:

      Dear “Race to the Bottom”:

      Thanks for your transparency.

      Over the coming months as we enter 2013 we are all about to get a Refresher in Econ 101 with respect to the milk supply and demand situation. In fact this lesson is already now underway. The nature of this industry is that it is extremely difficult to contract supply when left unchecked (as is the case in all modern animal agriculture sectors, but most so in dairy), but once we pass the tipping point, as I suspect we are now doing so, the supply contraction will be severe and have long lasting effects. When this situation becomes evident, I have little doubt that processors, coops, and milk buyers will be in a big pickle and will be begging CDFA to take some kind of drastic action.

      “Race to the Bottom”: I suspect you either belong to a coop or a processor. Short-term Greed has motivated this pillaging of the dairy farmers, and what you do not comprehend is that it will lead to widespread ruin.

    • Brian Luis says:

      The problem in CA is that market forces are not functioning properly due to the price system being broken and also that there are not proper hedging vehicles available to producers as a result.

      The easiest way to cope with the broken market in CA is for producers to make more milk to try to get a bigger milk check as a result.

  20. Brian Luis says:

    When the severe supply tightness that is coming in conjunction with Global demand forces finally come to a head, it will become evident to CDFA that they have NOT regulated milk prices in the best interests of processors, buyers, and consumers.

  21. Brian Luis says:

    You say that market forces should incline processors to pay for whey premiums. The price we are paid for dry whey is arbitrary and far out of line with the rest of the country. Indeed class iii milk prices that the rest of the country receives as pay incorporates $.06/cwt for every penny of the dry whey price. Here in california we are paid only a fraction of the whey value in the class iii price.

    Why set the price of the dry whey component arbitrarily at a price far out of touch with the rest of the country? Indeed there are cheese processors throughout the nation that do not produce dry whey products and still have to pay the class iii price. There are also cheese processors that pay the full class iii whey price and there businesses run fine- it works. Cheese processors in the rest of the country can take advantage of the cme futures markets for these commodities and mange their risk– because they are paying prices for commodities that are directly hedgeable on the futures market.

    Meanwhile here in CA, cheese processors pay only a fraction of the price for the dry whey component of milk, while some of their most lucrative business comes from the whey products. And California has the advantage of being much closer to the primary ports of export to the key Asian market.

    Why not make the CA 4B milk price equal to the class iii price– or at least base the 4B price directly off of the cme class iii price. Is this not a FAIR market-derived price? The whole nation pays class iii derived prices for cheese milk; why not CA? And if we did so then processors will have great flexibility to hedge prices for themselves through the CME.

    How much more of a straight forward, market driven, common sense solution could we ask for? Am I asking for a welfare check or am I asking for market transparency and fair pay?

    You say whey premiums should be paid if the market dictates it, yet your logic is flawed– the markets should dictate premiums paid on all dairy products and classes of milk, and this includes whey. So from that stand point, “Race to the Bottom”, you and I agree. However the arbitrary base price for the dry whey milk price component in this state is set at a level so low it is a far cry from being reasonable to the class iii whey component price.

    This is like saying that even though corn is $8.00/bu on the CME right now, we are going to arbitrarily set it’s price for corn growers in CA by fiat at 1/6th of the CME price and then “let CA market forces dictate what premium should be paid on top”. How about we just settle at the CME price like everybody else and maintain market transparency and leave all else out?

    Where is it that I am crying out to government for a handout? Now look at it from the opposite perspective: has government been giving processors and milk buyers a subsidy- a handout- at the dairymen farmers expense?

    To put it concisely; market forces _already_ dictate premiums paid for all classes of milk. The problem here with dry whey is that it’s base price is set arbitrarily low compared to the rest of the nation. So let’s establish the dry whey milk price factor correctly, then lets let the market drive premiums paid.

    • Race to the Bottom says:

      First, I am a dairyman in the central valley.

      Second, I do believe we produce milk in a broken system here. The whey factor in our system is flawed and needs to be changed.

      The current effort to place blame on government for our over producing the market is misguided, because it is the single focus of producers. The focus should be on compelling our leaders to seek ways to control production, bringing a better balance to the market place (control), thus giving us a better hand in negotiating premiums above state minimums. The marching up to Sacramento gives our coop board members a pass on being real leaders making market decisions to enhance producer income. They convince us that Sacramento is the problem not over producing the market, then they and we add more cows.

      In federal orders around the country, the “order” price is again the minimum. In many regions producers are able to negotiate premiums above “order” minimums. Unless there is an abundance of milk in that given area or they are just not smart enough to negotiate.

      You can choose to agree or disagree with my more broad approach to marketing and the situation we are in. But we do agree the market is in the process of naturally reducing production, banks will tighten, price will increase, banks will loosen, we will add more cows, (repeat) etc. Each time, some will win and some will loose.

      But I believe we can do better. We market collectively through our coops, we do this to have a greater hand of cards in the market place, thus receiving a higher price than if we marketed individually.

      But over time we have lost this producing to the market focus. Board members vote individually (I want to grow) vs. collectively (restrain growth for better price). And they avoid the scrutiny by the sheer existence of a CDFA or a Federal Order, someone else to cast blame on. It’s quite convenient.

  22. Brian Luis says:

    We also have to come up with a mechanism to make sure Dairy Producers are sufficiently represented to CDFA and USDA. Right now this is lacking, whereas those who buy milk are well represented.

    It should be clear to dairy farmers out there that our voices haven’t been heard correctly. Let’s establish a more democratic and direct transmission mechanism for our voices to be heard.

    Electronic media like this seems to be very helpful now that I reflect on it.

  23. Loren Lopes says:

    Secretary Ross.
    How can you watch this industry eat it self alive? Either you are insulated from what is happening on the ground or by your own department. The department has been anti producer from the begining ignoring a flawed system that allowed the Co-operatives and private processors to discount market their own dairymen out of business. They have the cost study at their hands. They have economists on staff to keep you up to speed on this crisis. I think you are aware, however not clearly aware or just reacting like someone that walked up on a tangled train wreck and now you are appointing a committee to resolve the catastrophe. This could have been resolved if the CDFA had taken the correct action. There has been great conflict of interest between the processor the producer and the department. This will not change within the new committee. You must take charge to save the California Dairy Industry before it implodes. This is in your hands.

  24. Brian Luis says:

    Too late. The implosion is already underway. This should be clear to all commenting here. The only question is if emergency price increases occur to mitigate the damage and reduce the magnitude of the implosion (likely saving many grateful dairy farmers from ruin) or if we allow the trainwreck to continue as is– to which the result will surely not benefit the overall dairy farmer community, nor the processors/commercial buyers, nor the coops who will surely lose membership and market share, nor the end consumers.

  25. Brian Luis says:

    Agreed on the points that you raise that coops have done a terrible job and are at fault to a degree for what you mention. This is a classic example of tyranny of the minority over the majority, in the sense that a few dairy farmers on the boards of the coops (CDI, DFA, etc) vote in their own best interest or that of their friends, while the masses of dairymen have their interests thrown to the greedy wolves.

    Let’s start NOW by raising the dry whey milk factor to correspond to the national factor value in class iii. Then all dairyman who feel like me need to approach their coop board members and the few with much power, in groups not individually, and let them know we are mad as heck and NOT TAKING THIS GARBAGE ANY MORE!!!

  26. Brian Luis says:

    Indeed there are many of us out there that have watched as some individuals have said, “Let all who can’t hold their own go out of business”. Now many of these people have gone bankrupt and are seeking employment.

    This is a poor way to approach this problem and it is too late for many.

  27. Loren Lopes says:

    I would think there would be more individual dairy producers commenting on this blog. It gives support and solidarity to all if more were involved in the debate. However, there has been one individual that is definitely on top of his game and this gives me confidence that this train wreck can be untangled and the train can be put back on the track. We cannot depend on Co-op boards and the independent CEO’s to solve this because they will hang on to their make allowance like a baby holding his shu shu before they will give in to doing what is right. It has been said that some of these leaders have been rolled out of business from their own convictions and policy of knocking out their neighbor to gain prosperity. They lived by the sword and died by their own sword instead of helping as many as possible to survive. I agree the industry has already imploded and to stay the same course is insanity. The main cause of this is the pricing of milk under the current pricing formulas that are below the average cost of production. This will not change until these formulas are replaced either by direct cost of production or indexed cost of production as the minimum price. The producer needs to have the same guarantee as the processor and both have to be profitable for the train to roll again.

  28. Brian Luis says:

    Yes I am disheartened that I know dairyman out there and those who do business with them are reading these pages, yet are not posting.

    I am even more disheartened that nobody from CDFA, including Karen Ross, even seems to care to make a comment, even if it is just “hello, Good morning”. They really care like they say they do, obviously.

    How about addressing some of our questions and concerns here?!?!?!

  29. Christina Clayton says:

    With all due respect, Secretary Ross is a well-groomed appointed official. Do you dairy folks really think anyone in her career position is even willing to roll up their shirt sleeves, grease up the elbows and allow their ruby-red slippers to touch where the dairy herds roam?

    On another note, when you want something done right, do it yourself. Go get it done. Be courageous. All the resources are available to you. Effect the change needed.

  30. Pete says:

    Secretary Ross,
    Whey protein is a very real and emerging market that is a price mover for every milk market in the country except California. I would encourage you to take a look at the ingredients in some things you might find in the grocery store or health food store such as protein shakes or protein enriched anything and you will probably find whey as a top ingredient. A fellow dairyman from Texas reported to me that there were months that he received 4$ a hundred weight more than California based almost entirely on the whey factor. How can we remain competitive with this inequity? Thank you.

  31. Brian Luis says:

    KEEP IT UP DAIRY FARMERS! KEEP THE COMMENTS POURING IN! NO BODY WILL DO THIS BUT US!

  32. Brian Luis says:

    Also: What were the criteria for the invitations sent out for the 32 member task force? Why wasn’t this a democratic process? I guess once again, CDFA knows better than us dairy farmers. Why wasn’t there at least some kind of raffle or something in which all farmers had an opportunity to provide input?

    More of the same old same old. Gotta make sure the Status Quo is maintained.

  33. Brian Luis says:

    Bureaucratic transparency. My favorite Oxymoron.

  34. Loren Lopes says:

    Your comments are so true. I hope many dairymen will attend the rally thursday.

    • Brian Luis says:

      So do I. But we must understand that just showing up and protesting is good and shows our will to fight for our interests, but we must keep hammering away with phone calls, emails, blogs, and visits to the CDFA office. Sitting on our hands has got us here, only the opposite can get us out.

      I hope many of you out there read these words and take action *now*.

  35. Corry & Jane Vanderham says:

    Did you see the email from Karen Ross about visiting schools to teach about the farm to school programs? The California Foundation for Ag in the Classroom & California Bountiful Foundation are sponsors for the program. The program in this article promoted healthy foods grown locally & the commitment of farmers to grow food consumed here & around the world.
    Not a word was mentioned about milk or milk products. To leave information out like this is just not right. Young people need to know about the available nutrients in milk & milk products. A very important factor in a healthy diet.

  36. Brian Luis says:

    It is also just as important to contact your coop board members and tell them to take action as well. That we won’t settle down until something is done.

    I urge coop members to ask the following question of their coop board members:

    Ask them about how those who sell powder at Dairy America get paid. Ask them if those individuals get paid on volume of product sold or on price of product sold. In the old days sellers were paid on volume. If that is still the case today, then that is a reason for our CA powder price to always be lower than the rest of the country and respond so slowly (except when it goes down).

    The reasoning here is that when demand slows for powder, a coop wouldn’t want it to pile up– they would want to sell it to prevent inventory from piling too high. In turn, the vast majority of powder sold in CA is sold through dairy america, and we HAVE TO MAKE SURE that those selling the powder are not paid purely on volume. Otherwise, there is an incentive to push our powder prices down (as smells like it was the case earlier this year when powder crashed), because the best way to move more volume is to lower the price. So if someone was being paid on volume, then they would be inclined to sell at lower prices to maximize their pay.

    That would be a conflict of interest for an entity that sells the powder manufactured by coops to be inclined to sell at a cheaper price on higher volume in order to maximize pay. It would mean that our own representative sales channels would be acting opposite of the interests of dairy farmers.

    I have not heard nearly anyone talk of this and I encourage all coop members out there to contact their board members, inquire about this to make sure it is not the case, and demand speedy and clear response to this question.

    Dry Whey mispricing is a serious matter, but so is the potential powder sales conflict of interest I just mentioned.

  37. Brian Luis says:

    Here is a link to an article about a class-action lawsuit currently underway in the 9th circuit court, filed by dairy farmers against Dairy America:

    This is public knowledge and everyone has a right to know:

    http://www.capitalpress.com/dairy/mp-milk-lawsuit-080712

  38. Brian Luis says:

    There are many things dairy farmers may be ignorant about and need to know. Like how those entities that have a hand in setting our prices should have incentive to keep them up and hedge product if need be in order to do so and prevent coops from taking losses that eventually are passed on to members. If that is not the case, then it is imperative that it is made the case.

  39. Loren Lopes says:

    I challenge all Concerned California Dairy Producers to come together and form a committee for the purpose of defending the majority of California Dairy Producers from the predictable conflict of interest of not all but the majority this 32 person task force. The dairy producer interest must be addressed seperately from the processor interest.

  40. Darren says:

    Secretary Ross,

    With all due respect, there seems to be a real disconnect in what you apparently believe to be true and the real world. It’s unforturnate that this disconnect continues to destroy dairies and their families on a daily basis. This disconnect could easily be addressed by in part reading these posts as well as coming out to the dairies and seeing the destruction.
    As a vendor in the industry, I have witnessed the destruction on a daily basis. I have been involved in sales and brokering for 10 years now and never in my wildest nightmares would have imagined what we are seeing. I’ve had conversations with many that have been in the industry for 30 plus years and they have never seen a time when things were even close to today’s losses. I see the numbers on a daily basis and what’s owed to me in my business and it is not pretty. Since 2009 the numbers have been steadily getting worse. In 2009, the dairies had equity to live on, today it is gone.
    There needs to be action taken, now. There need not be any more task forces formed (we did this with the McKinsey Report) we simply need action now. I believe all the dairies are asking for is parity with the other states. We are at the point of no return and need the pricing structure to change. If this relief is not put into place now, we will continue to witness this epic meltdown of the dairy industry and the supporting business that work hand in hand with the dairies. Billions will continue to be lost.

    Thanks

  41. steve lawrence says:

    If you owned a family restaurant or even a chain of restaurants and your specialty dinner were t-bone steaks that you sold for $10.00 and let us say the cost of the steak is $6.50. Not including labor, overhead and all your other expenses, you have an expectant profit of $3.50 a meal. In this hypothetical situation, you would be content but now let us say that the cost of that t-bone goes up to $13.00. What would likely happen next? You would scramble to re-price your dinners to reflect the added cost because you cold not afford to sell your dinners at $3.00 below your cost. This is exactly what has happened to the California Dairyman. Last year the cost to the Dairyman for rolled corn was $180.00 a ton today it is 340.00 a ton and yet the price for his milk is still the same!!!! This can’t be. The California Dairyman is prohibited by law from setting their price. It has been left up to CDFA to set the price for milk with the excuse being to insure adequate, uninterrupted supply of Milk because it is viewed as a necessity of life and is a perishable product. Why is the Department of Agriculture turning its back on the producers it is suppose to protect? How is letting hundreds of Family owned dairies go broke going to help insure an adequate supply of milk? California Dairymen have been subject to every environmental whim that could be thrown at them and still they could survive by dealing with the perceived notions and correcting them. However this pricing situation is something they can not overcome. Today there is no relief, no way of spraying a coral or covering a lagoon or a silage pit that is going to make this situation go away. The Department must take action on behalf of the California Dairymen or there will not be a supply of milk left for them to protect. DO YOUR JOB AS IS MANDATED BY OUR STATE LEGISLATURE!!! See you at the rally

    Steve Lawrence, former California Dairyman

  42. How long before the dairy producers here California and throughout the country come to the realization that the existing managment team of the US dairy industry including the state and federal governments and bueracrates of these governments have not, do not and will not put the needs of the dairy producer sector of the US milk industry ahead of the Co-ops, processors and manufactureres and the various organizations who say they represent you, while they are specifically working for the needs and interests of their members. Get it their members, not you.

    How long before you get and adjust to the fact that they have planned it this way. They don’t really want change. They want to keep you just where you are and they have things to the point where you not only help them perpetuate their plan, but are now and have been as predictable as the sunrise in how you, the dairy producers will react to low prices, high prices and everything in between.

    How long and how many producers will fall to fiancial ruin before the dairy producers unify behind a business minded plan that will forever change the death grip that government and those who lead the government plans and thinking have on the industry.

    The good news for producers is that there is a plan in play. Solutions do exist. Problems can be solved, but it won’t happen by going to the government for resolution. You, and all of the dairy producers must unify. You have to take full responsibity for your own circumstances and outcomes. You will have to work together; you will have to work with the rules as they are, because government and those who lobby government to do what they do, will not allow the rules to be changed. Those who still believe you can change the rules by going to or through the governmental or legal process also believe in the toothe fairy or the Easter Bunny. Sorry, but they won’t help you either.

    It is going to take producers working with producers. It takes a bold plan, with far reaching and unlimited resources and inovation. Such a plan exists. Such a possiblity exists. The question is will producers take full responsibility for the current conditions, accept the fact that no one else is coming to save you and will likewise take full responsibility for affecting needed solutions.

    That is what it is going to take. No more talk. Just unfication behind the plan and policies brought forward by the National Dairy Producers Organization, Inc.; it’s dairy producer led board of directors and its hundreds of producer members who even today have a day to day operational plan in play and are taking needed steps to solve the multitude of problems that exist, and that if left unchecked will continue to break the backs of the best men and women on the earth today and will forever change agriculture as we know it.

    This problem will not go away unless you change how you play their game. It’s time for new managment in the US dairy industry. It is time for a change in how producers respond to market conditions. It is time for producers to start using market “driving” forces and available tools fostered by a totally business minded approach to what happens to the milk once it leaves the farm. These governments and your so called partners in the dairy industry have left you no other choice.

    You want to fix things, then log on to http://www.nationaldairyproducers.org and see how you can make a difference. Don’t just stand there letting every last dollar be sucked out of you, find out what they need you to do and lift where you stand. What to do is right there for you to do. It is working. It will change the whole game. Stop complaining and start helping.

    Nothing will change the price of milk, establish and maintain a higher value on all milk and milk products faster than will; well managed production on the farm and a tenaciously managed market after the milk leaves the farm. Its all about business. Its a business and you need to treat it like business. NO emotion, just business. You have the milk. Use every possible resource to affect your own long term sustainability. That is what this plan is all about.

    Dairy Producers of California and the US, get the money you need to sustain your business and lifestyle out of the market place, not out of the government trough. It can be done. It will get done. Come and do your part. http://www.nationaldairyproducers.org.

  43. Wagner says:

    Bureaucratic transparency.

What do you think?