California Dairy Crisis Might Make Your Cheese Plates Pricey
It's no secret that California's dairy industry -- and its cows -- are suffering. Almost 400 dairies in our state have closed in the past five years, with 105 of those being shuttered in 2012. Farmers are facing all sorts of financial hardships, with some allegedly killing off entire herds just to save money. Thankfully, lawmakers are stepping forward in an attempt to offer at least two proposals to help dairy farmers squeezed by low prices and high costs.
CA's dairy farmers have been feeling the hurt because of high feed prices and a regulatory system that keeps the price of the raw product -- which is sold to bottlers and cheese makers -- artificially low, according to the dairy farmers.
The solution could be one of two options.
First comes a proposal from Assemblyman Richard Pan, which would require the set market price -- which is currently based on the price of butter and cheddar cheese -- to include the price of whey, the raw product sold from dairy farmers to cheese makers to make cheese. The bill would exempt small cheese producers, but it could make cheese from larger production fascilities much more expensive.
The second proposed plan, according to the L.A. Times, would give both parties a little bit of freedom from government regulations:
In Washington, six House Republicans from California are backing a bill that, if dairy farmers approved, would create a new federal milk marketing order for California that would incorporate some unique complexities of the existing state system. The change would make the dairies' milk subject to higher minimum prices, but it would also allow cheese processors to opt out of the pooling arrangement. Such flexibility wouldn't necessarily help the dairies, but it would move the system a step closer to letting buyers and sellers determine prices without the government's manipulations. The potential drawback with simply raising the price that cheese makers must pay is that it would encourage more milk production at a time when there's arguably too much supply. Only recently has California's milk production begun to dip, despite prices that farmers say are ruinously low. Even in a market as distorted as this one, the low price paid by cheese processors is a sign that there's still too much supply. A crude and painful way to correct that problem is to maintain the status quo, reducing the supply of milk by driving more dairy farmers out of business.