Dairy farm advocates file lawsuit over low milk prices

Agency violated law on pay, they claim

jsmith@mercedsunstar.comSeptember 4, 2012 

Dairy farm advocacy groups recently filed a lawsuit against the California Department of Food and Agriculture, claiming the state's milk pricing formula improperly undercompensates milk producers.

The legal action is based on the premise that the CDFA violated its legal requirement to calculate milk prices in "reasonable and sound economic relationship" to comparable prices around the country, said Lynne McBride, California Dairy Campaign executive director.

"California dairy producers continue to be paid significantly less than those in surrounding states," she said. "We strongly feel the department needs to remedy this situation."

The legal action follows a government hearing this summer that considered changing the minimum pricing formula that determines what processors are required to pay farmers for milk.

CDFA officials made a minor change to the formula, but dairy farmers continued to demand pricing relief as they grappled with high feed costs and one of the country's lowest milk prices for producers.

While many processors recognize dairy farmers are facing significant challenges, industry groups maintain that processors are paying a fair price for milk, arguing that farmers have driven prices down with overproduction.

"The question becomes 'Should the secretary be sued to resolve this issue?' We believe not," said Rachel Kaldor, executive director with Dairy Institute of California, a group that represents dairy processors. "The core of this problem is making sure we can sustain a healthy balance between production and demand."

At the same time, farmers say they need emergency relief and processors can afford to give a little to help struggling dairies weather the tough times.

"It's a dire situation," said Scott Magneson, a dairy farmer from Ballico. "There's people going out of business practically every day. The banks won't loan anymore money. The feed companies are cutting people off. It's the worst I've ever seen ever."

But processors say they aren't as flush as farmers make them out to be, claiming that an increase in the minimum price could put some processors out of business, which in the long run would hurt the industry as a whole, Kaldor said.

"It would make processors uncompetitive so their product can't be sold, and you'd lose plant investment and you'd have an even bigger problem of milk trying to find a home," Kaldor said.

According to the most recently available CDFA data, California dairy farmers received $13.97 for a hundred pounds of milk, the lowest compensation in the country. In neighboring Oregon and Washington that price was $15.49.

The California Dairy Campaign, Dairy Farmers of America, the Milk Producers Council and Security Milk Producers Association filed their case against the CDFA in San Bernardino Superior Court.

Reporter Joshua Emerson Smith can be reached at (209) 385-2486 or jsmith@mercedsunstar.com.

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