BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 629


                                                                    Page  1





          Date of Hearing:  May 13, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          629 (Perea) - As Amended May 6, 2015


           ----------------------------------------------------------------- 
          |Policy       |Agriculture                    |Vote:|9 - 0        |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
           ----------------------------------------------------------------- 


          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires the Secretary of the Department of Food and  
          Agriculture (DFA) to inform milk producers and handlers, on a  
          monthly basis, the minimum prices for the various components of  
          market milk, and permits the Secretary to do so via written  
          notice or publication online.


          FISCAL EFFECT:


          Negligible fiscal impact to DFA, potential minor administrative  
          cost savings if DFA were to cease providing written updates on  








                                                                     AB 629


                                                                    Page  2





          market milk component pricing and only publish online.


          COMMENTS:


          1)Purpose.  According to the author, dairymen frequently use  
            forward pricing and other hedging strategies to manage their  
            businesses, and this bill provides producers and processors  
            with important information on the component pricing of market  
            milk.


          2)End of a Milk Era?  California's milk industry may be  
            embarking on historic structural changes.  Processors in  
            California currently pay on five different classes of milk,  
            compared with four for federal milk pools.  For several years,  
            prices for the cheese class of milk in California have  
            consistently underperformed the federal cheese class, as  
            cheese falls into different classes at the state and federal  
            level, and is aggregated with higher value milk products in  
            the federal classification.


            As a result, California's three milk cooperative petitioned  
            the US Department of Agriculture (USDA) to form a federal milk  
            pool, and the USDA accepted the petition and will begin  
            informational hearings next month.  If the cooperatives are  
            successful in creating a federal pool, DFA's role in  
            establishing milk prices would be diminished or eliminated.





          Analysis Prepared by:Joel Tashjian / APPR. / (916)  
          319-2081










                                                                     AB 629


                                                                    Page  3