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Dairy groups consider appeal to force Calif. milk price hike

Published on December 7, 2012 3:01AM

Last changed on January 4, 2013 7:33AM


Capital Press

California dairy interests are still considering an appeal following their loss in a legal battle to force the California Department of Food and Agriculture to increase the state's 4b milk price.

San Bernardino County Superior Court Judge Joseph Brisco denied a petition for a writ of mandate Nov. 26 against the California Department of Food and Agriculture over the pricing of milk used to manufacture cheese.

The petition was filed on behalf of Milk Producers Council, Dairy Farmers of America, Security Milk Producers Alliance, and California Dairy Campaign on Aug. 31.

The groups alleged CDFA failed to follow the law in refusing to bring California's 4b milk price into alignment with prices being paid by cheese manufacturers around the country.

The legal action stemmed from an administrative hearing on the 4b pricing formula by CDFA on May 31 and June 1, which resulted in no modifications to the formula.

Brisco ruled the petitioners had not demonstrated that Ag Secretary Karen Ross's "quasi-legislative act of determining the Class 4b milk price formula, after a full economic and technical analysis ... and a public hearing, was arbitrary, capricious or entirely lacking in evidentiary support."

"We are very disappointed," said Rob Vandenheuvel, general manager of Milk Producers Council.

He said the ruling demonstrates that California's secretary of ag is largely unchecked and the department can establish any price it wants as long as the pricing formula is reviewed.

Petitioners argued that California law requires CDFA to calculate prices that are in a "reasonable and sound economic relationship" with what comparable milk is sold for around the country.

That is not the case when it comes to 4b pricing, due to the lower value of dry whey in the formula compared with Class III in federal orders, but the judge was unwilling to uphold that, he said.

California law states the secretary must "take into consideration" several factors, but it also states the prices "shall be" in alignment with national prices. The petitioners were asking the judge to interpret that section of law and whether the term "shall be" represents a direct mandate on the secretary, he said.

CDFA believes the judge made the correct ruling, said Steve Lyle, CDFA public affairs officer.

California's 4b price has long been below the federal orders' Class III, but the difference was only about an average of 50 cents per hundredweight of milk between 2003 and 2009, Vandenheuvel said.

The disparity began growing in 2010, with a difference of $1.24 per hundredweight, and rose to $2 per hundredweight in 2011 and $1.87 per hundredweight from January through November 2012, he said.

For a 1,000-cow dairy, that represents more than $400,000 less revenue since January 2010, he said.

Milk Producers Council's board of directors has not yet decided whether to appeal the ruling, he said.


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