Farmers Blame DairyAmerica for Low Prices

FRESNO, Calif. (CN) - Dairy farmers across the country have filed a class action against DairyAmerica and California Dairies in Federal Court, claiming they improperly reported forward-priced sales in their weekly reports to the government, causing raw milk prices to be set lower than they should have been. As a result, farmers say they were deprived of "millions of dollars of income."

Raw milk prices are typically set by Federal Milk Marketing Order formulas that factor in dairy product prices collected by the National Agricultural Statistics Service (NASS), a division of the U.S. Department of Agriculture.

NASS get the dairy product prices by surveying the nation's largest dairies, including DairyAmerica.

In its weekly reports to NASS, DairyAmerica included prices from sales contracts in which the selling price had been set 30 days or more before the transaction was finished.

Farmers say this inclusion was clearly prohibited.

"The NASS reporting instructions are not difficult to understand," they claim. As evidence, they cite the USDA's Office of the Inspector General's opinion that "the wording on the data collection instrument is clear" and an NASS press release stating that the "guidelines explicitly exclude the reporting of forward pricing sales in which the selling price was set 30 days or more before the transaction was completed."

From January 2006 through April 2007, about 90 percent of DairyAmerica's contracts for non-fat dry milk set selling prices 30 days or more in advance, the lawsuit claims.

Benjamin Brown with Cohen Milstein Sellers & Toll PLLC in Washington, D.C., is lead counsel for the plaintiffs.

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