California’s Federal Order: Here's What it Means for Your Milk Price

Because California produces almost a fifth of the nation’s milk, the impact of the order will cause ripples in the surface of milk prices from Los Angeles to Minneapolis and from Boston to Miami. Whether those ripples grow into waves remains to be seen. California’s new Federal Order will be implemented at the same time world markets continue to churn and trade wars potentially disrupt U.S. exports.  For starters, California processors will have to learn how to move milk around the state without the millions of dollars in transportation credits California’s state order provided. The Federal Order provides no such incentives.Two of the major players in the state, Land O’Lakes and Dairy Farmers of America, have very little milk production in the Los Angeles basis where the bulk of California fluid milk is consumed, and they have little or no fluid processing. The trick, Vanden Heuvel says, is to get fluid milk buyers to contribute dollars to aid that movement.“ Longer term, quite a lot of cheese milk will never be pooled,” Vanden Heuvel says. But non-pooling plants will still have to pay competitive prices to attract milk, he says. And therein lies the hope of better prices for farmers.