Five-Year Sunset Proposed for California Quota Program
January 31, 2020
After a survey of California dairy producers, a 5-year sunset of the California quota program (QIP) is being proposed by Marin Bozic, a University of Minnesota dairy economist and Matt Gould, a private economist. The two economists have been facilitating Quota Implementation Plan discussions and providing analysis on various options.
Under the proposal, QIP would sunset on March 1, 2025. The sunset would provide a cumulative payment of $300 per pound of quota, distributed over 60 months. The plan would ensure that quota holders would recoup 80 to 90% of the value of their quota investment, depending on when they originally purchased quota, says Bozic and Gould. (Note: In January, quota was averaging just $230/lb. It had been trading for $270/lb in December.)
A 5-year sunset provides time for producers to prepare their businesses for a new milk pricing regime without quota and is therefore a socially sensitive way to terminate the program, say Bozic and Gould.
The survey was conducted at in-person meetings in Ontario, Tulare, Turlock and Petaluma, with 173 producers participating. They represented nearly 500,000 cows, or approximately 29% of the state’s cow population.
Earlier this week, StopQIP, a producer-led organization opposed to the California quota program, submitted a petition to the California Department of Agriculture (CDFA). It requested a producer referendum to eliminate language in California law that authorizes the quota program. “Because this petition is unchartered territory and CDFA has not confirmed its validity, next steps are bit nebulous,” says Annie AcMoody, an economist with Western United Dairies.