At a Zoom meeting this week, the Producer Review Board wrestled with the reality that the current 32.5-cent per cwt. assessment on all California Grade A production is not raising enough revenue to cover all of the quota payments that are due to California producers with quota. This is not a surprise.
When the stand-alone quota program was initiated in November of 2018, the initial assessment rate was 38 cents per cwt. Last summer when the Producer Review Board looked at the amount of money that the 38-cent assessment had generated, they realized that it was collecting more money than was needed to make the quota payments. They made a recommendation then, which the California Secretary of Food Agriculture implemented, to temporarily lower the assessment to 32.5 cents per cwt. They knew that this reduced amount was less than what would be needed on an ongoing basis, so that the over collected money could essentially be returned to producers.
The extra reserves have now been drawn down and so it is time to reset the rate closer to what will be needed to fund the program. The Department staff recommended that the rate be reset to 36.5 cents per cwt., which works out to $0.04195 per pound of solids non-fat. After some deliberation, the Producer Review Board voted to recommend this rate change to the Secretary.
Geoff Vanden Heuvel
Director of Regulatory and Economic Affairs