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Producer Review Board Has Another Meeting (And Another One is Planned in Less Than Three Weeks)

Back in the day, serving on the Producer Review Board (PRB) was easy duty. One meeting a year to talk about the pooling budget, maybe a hardship case or two, and you were done for the year. Not anymore. Big issues and controversies. Strong opinions and strong personalities. This is important stuff and the PRB is the forum where these items are discussed.

The agenda for the Monday, October 30, 2023, meeting stated that the it would begin at 10 a.m. and would be “in-person” only. The department expected the meeting would last four hours and there would be no lunch provided. Chairman Art Van Beek, a gentleman if there ever was one, arranged to have sandwiches available and at 12:30 p.m., during a particularly heated part of the discussion, announced the presence of food and called for a 15-minute break. That time provided nourishment, not only for the body, but also allowed everyone to take a few minutes to relax and refocus.

Walking through the agenda, the July 31 and October 2 meeting minutes were surprisingly approved without objection. Moving on to updates, the Department reported it had done an investigation of the approximately $5.5 million that was transferred from the old State Equalization Fund into the QIP fund back in November of 2018. There had been questions about the status of this money and CDFA announced that its investigation had determined that this is producer money. It was transferred over to the QIP fund to “manage the cash flow needs” of the QIP fund. Part of the challenge the PRB has been wrestling with over the past couple of years is how to manage the assessments to make sure there is enough money in the fund to make the quota payments without carrying too much of a balance. Until just recently, the PRB was unaware – because the Department had not included this $5.5 million in the QIP fund reports – that there actually was a lot more money in the QIP fund than was being reported. CDFA had indicated that it thought there needed to be about $2 million in funds to absorb the cash flow needs of the QIP fund, but that was in addition to the $5.5 million that CDFA knew was available, making the total cash available $7.5 million. Learning for the first time that the Department now considers this producer money, PRB members want to have a further discussion about whether $7.5 million in float is really necessary to run the program. This is topic #1 for the next PRB meeting tentatively scheduled for November 17 at the Tulare Farm Show facility.

There were brief updates reminding everyone that nominations for PRB positions are ongoing. See the PRB nomination form here. CDFA was asked if the quota ownership of individual nominees was considered in the appointment process. They answered that it was one of the considerations.

There was also an update on the petition that was received by STOP QIP for a referendum to immediately terminate the QIP program. CDFA was asked to describe the signature validation process. They said they looked at every signature and compared it to signatures they had on CDFA records from these dairies. They also validated that the person signing was identified as legally authorized to sign for the dairy. See the petition validation results here. Chairman Van Beek said that the required review of the petition for findings and a recommendation would be on the agenda of the next PRB meeting on November 17.

There was also a litigation update. CDFA has ongoing litigation with STOP QIP but had nothing to report. The Department also successfully defended in court the QIP assessment that had been imposed on a handler for milk. This paves the way to collect $400,000 in unpaid assessment from that handler. The Department also reported that the new auditing staff has been active and identified more than $2 million of potentially unpaid assessments they are pursuing. $500,000 of that amount has already been acknowledged by the handlers and will be paid. The rest is in some form of legal enforcement action.

Next on the agenda was a hardship request from a producer. Essentially the producer asked to be relieved of paying the QIP assessment because they were losing money. The Department had evaluated the request in light of the QIP rules for hardship and sent a letter to the producer indicating that the request did not meet the “framework for hardships” under the QIP. But because the producer was an active California dairy farmer, the request would be on the agenda of the next PRB meeting. The producer was invited, but not in attendance at the meeting. The PRB members discussed the request, and a motion was made and seconded to recommend approval of the hardship request. The observation was made that if this hardship was granted, hundreds of additional hardship requests asking for assessment relief could be forthcoming. The motion failed 8-4.

The last part of the PRB meeting was reviewing the required five-year producer study on the effectiveness of the QIP program. Research America, Inc. was contracted to do the study and their representative presented the results. You can see the presentation here.

There were 275 respondents to the survey. The mix of respondents is on page 5 of the presentation. The key findings and recommendations are on pages 7-9 of the presentation. Opinions are favorable as far as the “nuts and bolts’ of the program itself. Satisfaction with, and impact of, the QIP is strong among quota holders, but significantly less so among non-quota holders. In fact, quota holders are satisfied while non-quota holders are clearly not satisfied. There is no difference in size of farm or type of product sold; quota holding is the key determining factor in a respondent’s opinion. Research America made this recommendation, “The unrest and opinions that fall along quota holder/non-quota holder lines warrant further investigation and changes to the quota program should be considered.”

The PRB had a robust and passionate discussion about the study and the issue. Eventually this led to a number of motions by committee members. The first motion was to recommend to the Secretary of Agriculture that a referendum be held to reapprove the QIP with the same vote criteria as the original QIP was adopted. The intent of the motion was that if the QIP failed to obtain the super majority vote, it would terminate. CDFA legal representatives indicated that, in their legal opinion, the QIP was not subject to a continuation referendum requirement, as is the case for other dairy programs like the Milk Advisory Board. By this time, two PRB members had left the meeting and the motion failed on a 6-4 vote.

The next motion was to forward the Research America survey results to the Secretary and a summary of the PRB discussion of the issue, requesting input from Secretary Ross. This motion passed 8-2.

The next motion was, in light of the nearly 50/50 split in the survey responses – pro and con on the QIP – that the PRB requests the Department provide professional facilitation and technical support to help producers move forward on this issue. That motion passed 7-3.

The motion to adjourn was unanimous and the meeting ended at 1:45 p.m. Just under 4 hours.

Geoff Vanden Heuvel

Director of Regulatory and Economic Affairs

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