On Monday, October 3, the Producer Review Board (PRB) met in Modesto and tackled a significant agenda. Normally approving the minutes is non-controversial, but at this week’s meeting there was a challenge by one of the board members as to how the minutes of the June 6, 2022, meeting were written. The minutes were not approved and will come back to a future meeting.
There were a number of reports from California Department of Food and Agriculture (CDFA) staff explaining how the assessment money is physically collected and paid out. They also reported on the status of building up an auditing team and mentioned that there would be an internal CDFA audit of the fund in the near future. The reduction in the assessment on August 1 has begun the drawdown of excessive balance in the QAP fund. That balance peeked at $20,466,000 in July and dropped by $2.5 million with August assessment and payouts. The plan is to have a lower QAP assessment for 7 months and then readjust the assessment back to a rate that more closely approximates the payouts.
The requirement in the QIP for a 5-year review was discussed. CDFA intends to put out a Request for Proposals asking outside firms with expertise in surveys to make proposals to do this review. The PRB members expressed a strong desire to have another board meeting or meetings soon that would focus specifically on this issue. Indications are that those meetings would be public and virtual and would give the board members an opportunity to weigh in on what types of questions a review survey should ask.
There was discussion about the upcoming nominations for PRB board membership. CDFA sent a notice out to producers soliciting nominations for six board seats that are up for consideration. A report was also given on various department communications that had occurred over the past few months.
Another topic the PRB spent some time discussing was a hardship request from a producer who recently downsized his operation significantly. The producer was asking for financial relief from the effect of the over collection of assessments that led to the big balance in the QAP and the method being used to reduce that balance, which is a reduced per cwt. assessment for seven months. The argument of the producer in the hardship request was that he contributed to the accumulation of the surplus at an assessment rate on a much larger volume of milk than he will receive in benefit from the lower rate for the next 7 months. Under the state pooling plan, quota related hardship requests dealt primarily with producers potentially losing their quota or being prevented from selling their quota because of rules requiring Grade A production or the length of time you had to own quota before selling it. When the QIP was written in 2017, a hardship definition was included that states: “‘Hardship’ means a challenge to the management and operation of a dairy due to the operation of this plan.” The PRB wrestled with the request and in the end denied it and asked the department to do a legal review of hardship considerations prior to working on any potential changes to the hardship definition.
Geoff Vanden Heuvel
Director of Regulatory and Economic Affairs