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CAPITOL BUSINESS BEAT

State dairymen seek bigger share of whey windfall

Farmers want lawmakers to overhaul the complex milk-pricing formula to give them more for the dairy byproduct that has become a profit center for cheese makers.

May 19, 2013|By Marc Lifsher, Los Angeles Times
  • Dairy cows feed in a pen at the Van Ommering dairy farm in San Diego County.
Dairy cows feed in a pen at the Van Ommering dairy farm in San Diego County. (Sam Hodgson / Bloomberg )

SACRAMENTO — California dairy farmers and cheese processors are fighting again over milk prices.

It's not Grade A, homogenized, pasteurized milk that's at issue in the state Capitol. Rather, agriculture lobbyists are focused on the price of whey, a milk byproduct probably best known to consumers who've read the Mother Goose nursery rhyme about little Miss Muffet eating her "curds and whey."

Once thrown away as waste, whey has become a valuable commodity, left over from processing cheese and then used in hundreds of foods, including baby formula and protein powder. Whey has become a profit center for cheese makers that invest in processing equipment.

Financially distressed dairy owners want a bigger share of the whey windfall. They're asking lawmakers to overhaul the California Department of Food and Agriculture's complex milk-pricing formula. The pricing scheme is the subject of a department administrative hearing set for Monday. California is the only state with its own pricing plan.

Squeezed by falling prices and rising feed costs, almost 400 California dairy farms have closed in the last five years. And farmers say they deserve more money for the whey derived from their milk. "Farmers are getting a very small share," said Michael Marsh, chief executive of the Western United Dairymen in Modesto.

So, the dairy industry is backing AB 31 by Assemblyman Richard Pan (D-Sacramento) to change the current pricing system.

But many legislators aren't eager to step into the milk regulation quagmire. "It's a terrible idea," said Assembly Agriculture Committee Chairwoman Susan Eggman (D-Stockton).

Cheese makers oppose the bill, preferring that prices be set by the market.

They hope negotiations will lead to a compromise. "We need dairy farmers," said Rachel Kaldor, executive director of the Dairy Institute in Sacramento, which lobbies for cheese makers, "and they need us."

The Equalizers

The so-called underground economy of businesses evading taxes costs $8 billion a year, and California needs that money, says Jerome Horton, the state's top elected tax collector.

The chairman of the Board of Equalization is pushing a bill to create a task force to gather intelligence, track suspects and strategize to curb black-market operations. The team would go after employers who underreport payroll, sell counterfeit goods, don't collect sales taxes and illegally sidestep income taxes.

The force would be "almost like the Eliot Ness of old times," Horton said, referring to the G-man whose "Untouchables" helped bring down mobster Al Capone in prohibition-era Chicago. "We're going to be the Equalizers."

Money shuffle

Environmentalists had their eyes on $500 million being collected from businesses buying carbon emission credits. The money is earmarked to fight pollution.

But Gov. Jerry Brown wants to borrow it to balance his budget, and activists are fuming. The governor's proposed diversion "is bad news for California's air and our economy," complained Bill Magavern of the Coalition on Clean Air.

marc.lifsher@latimes.com

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