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California Lowers Class I, II and III Prices

Dec 22, 2008

The California Department of Food & Agriculture last week announced pricing formula amendments that will lower the Class I, II and III milk prices paid to producers in the state. The decision answered a joint petition from producer groups asking for a temporary surcharge of $1.00 per hundredweight for the milk.

The department held a hearing last August to consider the petition and take comments from industry participants. The Dairy Institute of California responded by demonstrating that a price increase would actually hurt the long-term economic prospects for producers in the state who are dealing with flat fluid milk sales and a surplus supply. A better solution, the Institute said, would be to reduce the Class I prices by $1.35 per hundredweight and the Class II and III prices by 26 cents.

The hearing panel agreed with the proposed price reduction for Class II and III prices and recommended reducing the Class I prices by $1.00 per hundredweight. Citing his concern for the producers' increased operating costs, the state secretary of agriculture decided to follow the panel's recommendation but limit the reductions to 35 cents per hundredweight for Class I milk and 26 cents for Class II and III milk.

The producer groups filing the petition were the Alliance of Western Milk Producers, the California Dairy Women Association and Western United Dairymen.

The new pricing formulas will become effective on January 1, 2009. A detailed explanation of the department's decision can be found at under Hearing Matrix.


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