On September 9, there was a formal hearing held by the California Department of Food and Agriculture (CDFA) to receive information and testimony from the public on the changes to the Quota Implementation Plan (QIP), which were recommended by the Producer Review Board (PRB). In short, the PRB recommends adjusting the quota differential from the current $1.70 per cwt. to $1 per cwt. to more closely reflect today’s California Class I revenue. This change would reduce the producer QIP assessment from the current 35 cents per cwt. to about 22 cents per cwt. Secondly, the proposal eliminates the Regional Quota Adjuster (RQA) which would make the differential identical in all regions of the state. And third, the proposal clarifies what a QIP hardship is by bringing back the historical hardship definition language that existed in the quota system as it existed in the State Order.
The first witness at the hearing was a CDFA staff person who formally entered a long list of relevant documents into the hearing record. While there was an opportunity for the public to ask this person questions about these documents, no questions were asked.
The first public witness to be sworn in and testify was dairyman Frank Konyn who is also a member of the PRB. Frank was instrumental in bringing this proposal to the Producer Review Board for their consideration. His testimony, which you can read here, lays out the reasons and justification for making this change. In a nutshell, quota came into being at the beginning of the milk pooling program in 1969 as a Class I revenue program. It was modified in 1994, becoming a $1.70 fixed differential that approximated what class I revenue generated at that time. And now 30 years later, the dollars generated from Class I have deteriorated to a point where fairness dictates that an adjustment be made in the differential.
The second witness was Craig Gordon, who has been the leader of the STOP QIP group. Craig outlined his opinion that there are many reasons not to trust CDFA with this referendum decision. Obviously, there is a long history of conflict here, but Craig did urge producers to vote for the referendum to change the differential.
The only other member of the public to speak up was dairyman Alex De Jager who had asked for the consideration of dividing the three different items being considered in the referendum into three separate votes. CDFA responded that they did consider separating the items but stated that the PRB in passing the recommendation has discussed that this proposal is a compromise and that all three items (the change to a $1 differential, the elimination of RQAs and the definition of hardship) needed to be considered and voted on together. Therefore, CDFA concluded that separating the items would depart too far from the PRB recommendation.
The hearing then concluded an hour and 15 minutes after it started. At most, I saw 44 people online participating. The hearing officer announced that a formal hearing finding from the Department could be expected within 30 days. It is likely that the hearing finding will result in a formal order from the Secretary initiating a producer referendum.
Geoff Vanden Heuvel
Director of Regulatory and Economic Affairs
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