This week, California Department of Food and Agriculture (CDFA) Secretary Karen Ross ordered that a referendum be conducted on the petition submitted by the United Dairy Families of California (UDFC). The petition seeks to immediately change the Regional Quota Adjusters (RQAs) to equalize the Quota payout to $1.43 per cwt. statewide, followed by termination of the Quota program on March 1, 2025. The producer voting period will open March 4, 2021 and close June 1, 2021.
The issue of the Quota Implementation Plan (QIP) has been a topic of significant interest in the California producer community since late 2018 when the Federal Milk Marketing Order (FMMO) took over regulation of California’s dairy industry. Under the California State Milk Pooling Plan, Quota’s impact on a producer’s milk check was not as clear, but under the FMMO, the cost of Quota payments were daylighted, appearing as an assessment on a producer’s milk statement.
The Road to Referendum
An organized group of producers named STOP QIP emerged in late 2018 and began circulating a petition to eliminate the Quota program. They submitted their original petition on March 29, 2019 with 285 signatures. CDFA reviewed that petition and determined that the number of valid signatures was insufficient to move the petition forward.
At about the same time as this was going on, another group of producers organized, known as the United Dairy Families of California. Its stated purpose was to provide a forum for all California dairy families to discuss the future of Quota and to oppose any referendum that would eliminate Quota without compensation. UDFC organized a process that was endorsed by the three major cooperatives in California, the three established trade associations, and STOP QIP.
A team consisting of Dr. Marin Bozic from the University of Minnesota and market analyst Matt Gould was hired to conduct a five-phase process to address the Quota issue. The process kicked off with a “Think Tank” phase, where meetings were held throughout the state to solicit ideas for dealing with Quota. The next phase focused on producer feedback, where the ideas generated from the Think Tank phase were organized and presented for producer review and input. The third phase took ideas that had some level of producer support, further refining them for another round of producer feedback. The fourth phase narrowed down the ideas to the single proposal that garnered the most support in producer surveys. This final proposal was presented to the industry at the Farm Show in February of 2020. While the idea was submitted for consideration to Secretary Ross that day, CDFA told UDFC it would need to submit a petition with the required valid signatures for the proposal to be considered.
Meanwhile, STOP QIP had been circulating another petition that sought to terminate Chapter 3.5 of the Food and Agriculture Code, which contained the language that authorized the QIP. This petition had enough valid signatures and a hearing in front of an Administrative Hearings Judge was conducted on June 9 and 10, 2020. Another producer group named SAVE QIP also participated in this hearing.
After the hearing, the Judge came back with a ruling that no referendum should be called as a result of the STOP QIP petition. STOP QIP also filed some lawsuits, which to date, have not been successful.
UDFC gathered signatures for its petition and submitted it to CDFA on June 23, 2020. After verifying that a sufficient number of valid signatures had been submitted, CDFA held a Producer Review Board (PRB) meeting on August 27, 2020. The PRB recommended holding a hearing, which was then scheduled for September 30, 2020. The hearing was short, with no opposition to calling a referendum on the UDFC petition.
The Judge issued a recommended ruling on December 11, 2020 calling for a referendum, and this week, on January 25, 2021, the Secretary ordered a referendum to take place, scheduling it to run from March 4 through June 1, 2021.
For the referendum to pass, 51% of eligible producers must vote. According to a CDFA letter to the Judge in October, there were 948 eligible Market Milk Producers in California. Obviously, this number changes a bit every month, but this means that about 485 producers will have to cast a vote regarding the referendum for it to be valid. Then of those who vote, 65% of the voters producing 51% of the voting milk OR 51% of the voters producing 65% of the voting milk must vote yes for the referendum to pass.
Based on my experience, getting 51% of dairy producers to vote has always been the challenge for any referendum in California. My guess is that it will be no different this time.
Geoff Vanden Heuvel
Director of Regulatory and Economic Affairs