Wisconsin Makes Its Case Out West
Volume 140, No. 21, Friday, November 13, 2015
It’s tempting to dwell on the process itself. A federal milk marketing order hearing is part of a genteel, inefficient past that the current hearing in Clovis, California hasn’t improved.
When two Wisconsin cheese makers took the stand in Clovis last week, the hearing to create a new federal milk marketing order in California had reached Day 28 – a new record for order hearings according to one veteran lawyer present. As of this writing, the hearing has reached Day 34 and could exceed 40 days.
The hearing process includes daily introductions of every person present. All testimony is read aloud – whether two pages to 200 – and lawyers may cross examine a witness for an unlimited amount of time. During breaks in the action, the corps of consultants and lawyers, government staff and dairy industry economists who have spent their autumn away from home spoke of little else than when it all would end.
Replacing California’s state milk marketing order with a federal order is a complex proposition. California’s existing system of farm-level quota for milk production is unique in the US and according to the Golden State farmers that sought a new federal order, sun-setting or devaluing that quota would destroy the prospect of a new federal order.
Hearing participants are also discussing requirements for milk pooling and formulas for classified milk prices and transportation credits and rules for producer handlers and credits for California’s unique fortification of fluid milk and will this hearing ever end?
California’s existing system of farm-level quota for milk production is unique in the US and according to the Golden State farmers that sought a new federal order, sun-setting or devaluing that quota would destroy the prospect of a new federal order.
Two Wisconsin cheese makers addressed the hearing November 3 to describe the impact of the federal order’s Class III milk price formula on small to mid-sized cheese manufacturers. Why travel to a California hearing? Because California is America’s No. 1 milk producer, making 20 percent of all fresh milk in the country. Any change USDA may recommend for milk price formulas in the California order would require matching changes in federal orders across the US.
And the Class III formula is broken. “My cooperative is in favor of changing the way whey is priced in [Class III] milk pricing,” Steve Stettler from Decatur Dairy in Brodhead, Wisconsin testified. When the Other Solids value in the Class III price rises, he stated, the cooperative pays more for milk than the value they earn for their whey in the marketplace.
Like most cheese manufacturers across the nation, Decatur is too small to add sophisticated whey processing technology, yet the Class III price uses the value of dried whey in the Other Solids calculation in the Class III milk price. He noted that expanding the cooperative’s wastewater system to clean whey equipment would cost $2 million alone. Adding a new building and new whey equipment and piping, “The cooperative could easily be at $3 million plus in investments if whey investment was looked at,” Stettler said.
Next on the stand was Steve Buholzer, a co-owner of Klondike Cheese in Monroe, Wisconsin. Buholzer noted “there are months that Klondike Cheese cannot earn revenues on concentrated whey and permeate that meet the whey value in the Class III milk price.” Unlike Decatur Dairy, which sells warm, unprocessed whey, Klondike Cheese processes whey via ultrafiltration and reverse osmosis. In 11 of 12 months in 2014, Klondike earned less for its concentrated whey and whey permeate than the value demanded in the Class III milk price.
Making a specialty cheese can also deter whey processing, Buholzer noted. Feta cheese produced at Klondike generates a higher acid whey that must be blended with other whey in order to be dried, Buholzer testified. Because Klondike’s whey must be buffered with whey from other cheese plants, drying whey at the Klondike plant is not an option.
If this hearing ever ends, USDA will need months, if not years, to digest the mountain of data and testimony produced. But the spreadsheets submitted by these Wisconsin cheese makers verify a simple fact: smaller cheese manufacturers in Wisconsin, California and across the nation cannot afford to build multi-million dollar whey drying plants. Yet the Class III milk price demands that these cheese makers pay dairy farmers the value of dried whey.
It’s a mistake. The formula is broken. And USDA has this chance to fix it.
John Umhoefer has served as executive director of the Wisconsin Cheese Makers Association since 1992. You can phone John at (608) 828-4550; Fax him at (608) 828-4551; or e-mail John Umhoefer at