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Supreme Court Hears California Dairy Case

posted on April 25, 2003

Currently there are a number of lawsuits that seek to end various commodity checkoffs, the assessments levied on producers to finance promotion and research.

The legal cases range from apples to mushrooms, nuts to livestock. At issue is whether the checkoffs constitute "forced" or "coerced" speech on the part of members who may disagree with the message they say they're being required to finance.

But checkoffs aren't the only assessments under fire, so too are some of the curious programs erected by states to protect their own producers. One such case was argued before the Supreme Court this week.


Supreme Court Hears California Dairy Case

At issue is whether California's dairy policy places out-of-state milk producers at an economic disadvantage … and violates interstate commerce laws.

The high court is being asked whether the 1996 farm law created "an unmistakably clear blanket" that exempts California from the constitutional ban on regulation of the dairy industry.

California has operated under its own milk pricing system since the 1960s. By setting higher nutritional standards for fluid milk sold in the state, critics charge the system forces out-of-state farmers to sell to processors at artificially low prices. The in-state subsidy, drawn from fees paid by the processors, helps maintain higher prices for fluid milk produced in California …and lower prices for out-of-state milk used in cheese, butter and nonfat dry milk.

The original 1997 lawsuit was brought against California by dairy producers in Nevada and Arizona, but since then several Midwestern dairy-producing states have joined the battle.

Charles M. English, attorney for plaintiffs: "We are discriminated against. Northern Nevada dairy farmers are treated as second class citizens, as you would expect, by a state that is protecting its own jurisdiction. It is simply incorrect."

California says the system is needed to ensure minimum prices for its farmers … and to maintain the higher nutritional standard. Its backers claim the 1996 farm law provided the state with a blanket exemption for the higher milk standard, as well as the subsequent pooling and pricing plan.

Kelly Krug, California Dept. of Agriculture: "We, in fact, think that exemption does include the pooling and pricing regulations and, therefore, we hope the court will find in our favor and we'll be able to continue to provide that nutritious milk."

The court's decision may have wide impact, since virtually every state in the country has some form of dairy industry. Plaintiffs believe California, the nation's leading dairy producing state, will face tougher competition if the regulatory barriers are brought down.


Tags: agriculture California courts dairy news Supreme Court