On Aug. 31, legal action was filed in the Superior Court of California – San Bernardino County, stating that the California Department of Food and Agriculture (CDFA) failed to follow the law in refusing to bring California’s Class 4b price into better alignment with the prices being paid by cheese manufacturers around the country. The writ was filed on behalf of the Milk Producers Council, Dairy Farmers of America, Security Milk Producers Association and California Dairy Campaign.

The legal action stems from CDFA's administrative hearing held May 31 – June 1, 2012, to consider changes to the formula used to calculate California’s Class 4b monthly minimum price.

The Class 4b price announced each month is the minimum price that must be paid for milk being sold to cheese manufacturers. 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.

“This issue is simple and straightforward. The law is very clear that the prices announced by CDFA must be in reasonable alignment with prices paid for comparable milk produced and sold around the country,” said Rob Vandenheuvel, general manager of the Milk Producers Council.

“CDFA is violating that law and rewarding our cheese manufacturers – including several huge national and international corporations – with a state-sponsored discount on the milk they buy, all at the expense of roughly 1,600 California dairy families that deserve a fair price for their milk.”

Much of the U.S. dairy industry outside of California operates in Federal Milk Marketing Orders (FMMO), which calculate a national Class III price that must be paid by cheese manufacturers regulated under the FMMO.

According to the Milk Producers Council, CDFA has a history of discounting the Class 4b price below the FMMO Class III price and that discount has increased since 2010. The gap in 2010 was about $1.24 per hundredweight. Since the beginning of 2011, the California Class 4b price has averaged $2.00 per hundredweight below the FMMO Class III price.

Taking that price gap into account, the Milk Producers Council estimates that an average-sized California dairy, milking 1,000 cows, lost about $380,000 in revenue since January 2010.

The documents filed with the court this morning will be available online in the coming days. PD

—From Milk Producers Council news release