California agriculture officials on Tuesday extended a temporary price increase to the state's struggling dairy industry while acknowledging that the state's milk pricing system is outdated.
But the announcement did little to mollify dairy operators, who contend they are under paid.
Karen Ross, California Department of Food and Agriculture secretary, prolonged a monthly price increase of 12.5 cents per hundred pounds of milk that was put in place in June. The increase was due to expire at the end of the year, but Ross extended it through June 2014.
"While there are positive signs in the marketplace, the fragility of the country's economic recovery and the stability of the dairy sector compel me to make this extension," Ross said. "However, I am convinced that continued adjustments to the minimum price are inadequate to address the ongoing difficulties in the dairy industry. Our antiquated state pricing system demands structural reform."
Frustrated dairy industry leaders had petitioned the state for more significant changes to the California's milk-pricing formula.
"Any additional revenue will help," said Rob Vandenheuvel, general manager of the Milk Producers Council in Ontario. "But what we are working towards is a fair structure for our milk."
Dairy leaders have argued that the state's dairy operators are underpaid in comparison to dairies in the rest of the nation. They were seeking a change in the milk pricing system that would pay them more for the milk used to make cheese -- an increase of 46 cents per hundredweight -- and a higher value for whey from 75 cents to $1.
Lynne McBride, executive director of the Turlock-based California Dairy Campaign, said California's dairy industry has been hit hard by record-high feed prices and low milk prices. In 2012, 105 of the state's dairies went out of business and 2013 saw more dairies being sold.
"It has been a struggle for many producers and we were hoping for a better response," McBride said. "This was a minimal increase. And right now, we don't have a lot of confidence in the state's system."
Ross said dairy operators did not have the economic data to justify major changes to the pricing structure.
"There are a lot of things I would like to do, but I am bound by state statutes and I have a lot of interests that I have to balance," Ross said.
Despite the disappointment of the dairy industry, Ross said she is hopeful a solution can be found. A work group of industry technical experts is working on potential alternative pricing scenarios that could replace current formulas.
Staff, in cooperation with the dairy industry, are also working on potential legislation to create changes to the system.
The reporter can be reached at (559) 441-6327, firstname.lastname@example.org or @FresnoBeeBob on Twitter.