California Dairy:

Production, Sales, and Product Disposition

RCED-88-180FS: Published: Jun 15, 1988. Publicly Released: Jun 15, 1988.

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Pursuant to a congressional request, GAO provided information regarding California's: (1) milk production; (2) milk production costs and economic returns; (3) grade-A milk pricing system; and (4) manufacture and disposition of butter, nonfat dry milk, and cheese.

GAO found that California: (1) increased its milk production from 10.6 percent of all U.S.-produced milk in 1980 to 12.6 percent in 1987; (2) had higher average inventories of dairy cows per farm and average milk yield per cow than the country as a whole; (3) had higher production costs for concentrates, forage, hired labor, and interest than other regions; (4) had lower expenses for overhead, taxes, insurance, and capital replacement than most other regions and substantially greater residual returns; and (5) experienced increased cheese production and fluctuating cheese, butter, and nonfat dry milk sales to the Department of Agriculture (USDA) between 1982 and 1987. GAO also found that: (1) the federal milk marketing order system, which sets forth acceptable marketing practices, terms and conditions of sale, and prices, does not cover California; and (2) unlike USDA, California uses marketing quotas and weighted formulas to determine grade-A milk prices.

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