California dairy farmers aim for higher prices

Published 21 October 15

California dairy farmers are hoping to realise higher prices by using the federal system for pricing milk. California accounts for 20% of all US milk production, and uses around 44% of its milk for cheese production. At present, California uses a regional pricing system, which offers a lower price for milk used for cheese production than what may be achieved if it was priced using a federal milk marketing order (FMMO).

Under an FMMO, milk is classified according to its use. For example, liquid milk is paid the Class One price and receives a higher price than milk used for cheese (Class Three) or ingredients (Class Four). Currently, a public hearing is under way to set up an FMMO in California. Analysis conducted by the USDA suggests this could increase milk prices in California by more than $0.02/litre. Concerns from local processors regarding the competitive impact of paying higher prices, along with the complexity of changing legislation, means it will likely be a long time before any decision is made.