The Producer Review Board (PRB) has been wrestling with the challenge of finding the correct assessment rate to fund payments to quota holders without collecting too much money in assessments. The Quota Assessment Fund had accumulated a large balance going into 2022, and in August of 2022 the assessment rate was lowered from 36.5 cents per cwt. to 27.4 cents per cwt. to draw down the accumulated surplus. By March of 2023 the fund balance had been reduced, and the PRB recommended the assessment go back up to 34 cents per cwt. The balance reversed course and began to grow so, the PRB recommended the rate be dropped to 28.7 cents starting in July of 2023.
California milk production for July and August of 2023 was down around 3% from the previous year, and with the lower assessment rate, the QIP fund balance fell enough for CDFA officials to be concerned. The PRB was shown the numbers and asked by CDFA to consider increasing the assessment rate starting in November. They agreed to do that and are recommending the rate be increased to 34.8 cents per cwt. starting on November 1.
The PRB did have questions about $5.5 million that was transferred into the QIP fund from the State Pooling Equalization Fund back in November of 2018. This $5.5 million has not been reported to the PRB over the past couple of years in status reports presented about QIP fund balances. There is a significant question about who this money belongs to. PRB board member Frank Konyn has done research on the origins of this money and made the case that this is producer money. CDFA committed to looking into the matter and reporting back to the PRB at their next meeting.
Geoff Vanden Heuvel
Director of Regulatory and Economic Affairs