The California Department of Food and Agriculture (CDFA) held three public forums in the past 10 days to explain the upcoming producer referendum to change the quota payouts and assessments.
As I have explained in prior articles here and here, the Producer Review Board (PRB) after a lot of discussion voted to recommend changing the fixed quota payout from $1.70 per cwt. of standardized milk to $1.00 per cwt. The proposal also removes the Regional Quota Adjuster deductions which currently modify the quota payout depending on the county in which the dairy is located, thereby equalizing the quota payment everywhere in the state. Lowering the differential to $1.00 will reduce the amount of the quota assessment charged to all California producer milk from the current approximately 35 cents per cwt. to around 21 cents per cwt. The other issue that is part of this referendum is approval of language clarifying what a “hardship” is in the context of the Quota Implementation Plan.
At the forums, information about the proposal was explained, as well as the referendum process. After a formal presentation was made by CDFA staff, questions and public comment were received. I only attended the Tulare forum, but from reports, I understand that the other two meetings had modest attendance from producers. The comments ranged from objections to lowering the differential to wanting the quota system to be eliminated. Frank Konyn, the member of the Producer Review Board who spearheaded the effort to have this change considered, did attend all three forums, and was able to speak to his motivation and sincere desire to find a middle ground that “takes the edge off” the divisive nature of the quota issue among the California producer community. Frank also explained the justification for setting the new differential at $1.00, which is to approximate what the current contribution of Class I revenue to California producers is. Frank’s efforts to bring this potential solution forward were acknowledged and appreciated by several speakers.
CDFA did postpone the scheduled August 15 virtual “hearing” where the final documents and language that will be voted on will be considered. They mentioned two issues that came up in these forums that they wanted to consider before going final. One issue is the suggestion by some forum commenters to have separate votes on changing the differential and the hardship language change. CDFA said they would consider this; there was also objection to separating the two issues expressed by forum participants. The other issue that came up in the forums that CDFA wants a little time to consider is how to address advisory language that was in the PRB proposal that talked about analyzing California Class I revenue as compared to quota payouts in conjunction with the five-year review of the QIP. The department indicated that they thought this delay would only be a couple of weeks and still plan to hold the referendum around the first of October.
Once the ballots are mailed to producers to start the referendum, the voting will continue for 90 days. Each producer will receive a ballot that will state the name of the dairy and the authorized owners, as well as how much milk was produced by that entity in the recent month. At least 51% of the producers will need to vote to have a valid referendum. Then of those who vote, 65% of the producers who produce at least 51% of the voting milk must vote yes, or 51% of the producers who produce at least 65% of the voting milk must vote yes for the referendum to pass.
The ballot will have a postage paid return envelope that voters are encouraged to use. After a producer has mailed their ballot in, the department, if asked, will confirm receipt of the ballot for the producer, but the ballots will not be opened until the 90 day voting period is over. The department will not publicly announce during the voting period how many votes have been cast. They indicated that the counting of the votes will be subject to audit by other staff of CDFA that is not connected to the dairy program. They said that the results of the voting would be announced within 30 days of the close of the referendum voting period. If the referendum is successful, then implementation of the new rules would take place between 30-45 days later.
Geoff Vanden Heuvel
Director of Regulatory and Economic Affairs
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