For the past several years, we’ve kept a close eye in this newsletter on the significant gap between California’s Class 4b price (which applies to milk sold to California’s cheese manufacturers) and the Federal Order Class III price (the benchmark price used around the country for milk sold to cheese manufacturers). We’ve dubbed it the “California discount” and kept a running tally on the impact it has had on California’s producers.

Recently, the California Department of Food and Agriculture (CDFA) announced that for the months of February through May 2013, the minimum prices for the five classes of milk will be increased by varying amounts, resulting in an overall blend price increase of about $0.25 per hundredweight (cwt).

The California Department of Food and Agriculture (CDFA) has announced they will be holding a hearing on June 30/July 1 to consider changes to the minimum price formulas for Class 4a (butter/nfdm) and Class 4b (cheese/whey) milk. In this article, we’ll focus on the changes being proposed to the Class 4b formula, with specific attention paid to the way our Class 4b formula accounts for the value of the whey stream generated as part of the cheese-making process.