Appeals Court Says Milk Price Case to Continue

By CnAgri2012-08-16 19:46:23 Print

A federal appeals court has allowed some dairy farmers to pursue a lawsuit against a major dairy cooperative over alleged manipulation of milk prices. According to the Capital Press, the 9th U.S. Circuit Court of Appeals has found that the farmers are not barred from proceeding with the case by a law that governs agricultural marketing orders.

Plaintiffs in the case -- Gerald Carlin, John Rahm, Paul Rozwadowski and Bryan Wolfe -- accused the DairyAmerica cooperative of depressing milk prices by incorrectly reporting prices for non-fat dry milk.

Manufacturers like DairyAmerica are required to report to the USDA the prices they receive for their products, such as non-fat dry milk.

The agency uses that data in a formula to determine the prices paid to farmers under the Federal Milk Marketing Order program.

Federal law prohibits manufacturers from reporting prices established under certain long-term contracts. Those prices are generally lower than the spot market value of such products.

The plaintiffs alleged that DairyAmerica regularly included prices from such long-term contracts in its reports to USDA between 2002 and 2007.

According to a report from the USDA's Office of Inspector General, incorrect reporting caused the "total value of milk to be understated by $50 million" between April 2006 and April 2007.

The report did not mention the names of specific manufacturers.

The dairy farmers who filed the lawsuit asked for it to be certified as a class action, which would allow other growers to join the litigation.

However, a federal judge in California dismissed the case in 2010 because of the "filed rate doctrine," which prohibits lawsuits challenging price rates set by the USDA to maintain orderly markets.