The CDFA Secretary has recently overridden a decision by the Producer Review Board and granted an emergency exemption for a California dairy producer to not contribute to the QIP program.  Right now, California dairy producers’ milk prices are at ruinous levels — several dollars below even the best dairies’ costs of production.  After various deducts from our milk checks – including QIP — our net prices for the first quarter of 2026 may net around $12.00 per hundredweight.  For $12/cwt. milk, the QIP deduct of 39 cents equals 3.3% of total net revenue

California dairy producers are in a severe financial crisis.  

Proposal:  That the CDFA board direct the Secretary to use her powers to eliminate the QIP assessment from Grade A dairy producers’ who own zero QIP quota until the Statistical Uniform Price for California Grade A milk attains a level of $16.00/cwt. for three consecutive months.  At that time she can reinstate  the assessment on the Non-quota holders.  

Analysis: This proposal will not affect the stability of the the QIP  but rather it will shift the burden of the  quota payment to the quota holders who are receiving $1.40 to a $1.70 cwt.  from the QIP,  therefore they have the resources to handle the additional assessments (tax) needed to fund their program.   We estimate that  the payment would go to approximately $.72 cwt.  to all quota holders, leaving them an additional revenue  over and above the non- quota holding producers, between $.68 to $.98 a cwt. 

  If these dairy prices remain this low, there will be no need of temporary exemptions as the Non quota holders will disappear on their own and and they will not be around to generate  assessments for the QIP. in the future.  All this does is shift the burden of the quota payment to those who have the resources to pay the  payments and in the meantime, hopefully save some of the Non Quota dairy’s from extinction.   This can all be done under the authority  of the Hardship in the QIP, and it is only a temporary relief and then the QIP will return to its normal assessment on all Grade A producers. 

The Quota holders can ill afford to lose their source of revenue for their quota payments.  They have worked too hard to get out from under  the burden of financing  their  own     program with amendments like the 1994 fixed differential that essentially placed the  burden from the quota holders to the non-quota holders, albeit Chapter 3.5.  So, this emergency exemption from the QIP by way of the Hardship is very much needed by the quota holders if they are to keep their source of revenue in place.

This proposal will cease the taking of 3.3% of estimated Quarter 1 2026 milk revenue from dairy producers who are already under severe financial duress and who receive nothing back from QIP. 

Best regards,

Craig Gordon