“The significant negative margins witnessed every quarter since January 2015 have placed many producers in a dire financial situation,” says Annie AcMoody, WUD director of economic analysis in WUD’s January 18 on-line newsletter. “According to CDFA’s cost of production data, the smallest loss recorded these past three years was 23¢/cwt of milk produced during the first quarter of 2017.”
California milk production has declined in 32 of the past 36 months. Economic conditions appear even more dire going into 2018, with milk prices projected to fall below $13/cwt, yielding potential losses of $5/cwt.
Though USDA has completed the hearing process for a Federal Milk Marketing Order in California, it has not yet issued a final rule or scheduled a producer referendum. That process could take months. “California dairy families clearly need additional revenues and we believe the CDFA should provide pricing assistance while we await USDA’s final decision,” notes AcMoody.
Just this week, California Dairies, Inc., announced the closure of one of its six dairy plants due to falling milk production.