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