Article 9. Establishment Of Minimum Prices And Provisions Of Stabilization And Marketing Plans of California Food And Agricultural Code >> Division 21. >> Part 3. >> Chapter 2. >> Article 9.

Each stabilization and marketing plan shall contain provisions for prohibiting producers and handlers from engaging in the unlawful trade practices applicable to them that are set forth in Article 10 (commencing with Section 62091) of this chapter.

Each stabilization and marketing plan shall contain provisions whereby the director establishes minimum prices to be paid by handlers to producers for market milk in the various classes. The director shall establish the prices by designating them in the plan, or by adopting methods or formulas in the plan whereby the prices can be determined, or any combination of the foregoing. If the director directly designates prices in the plan, the prices shall be in reasonable and sound economic relationship with the national value of manufactured milk products. If the director adopts methods or formulas in the plan for designation of prices, the methods or formulas shall be reasonably calculated to result in prices that are in a reasonable and sound economic relationship with the national value of manufactured milk products. In establishing the prices, the director shall take into consideration any relevant economic factors, including, but not limited to, the following:
  (a) The reasonableness and economic soundness of market milk prices for all classes, giving consideration to the combined income from those class prices, in relation to the cost of producing and marketing market milk for all purposes, including manufacturing purposes. In determining the costs, the director shall consider the cost of management and a reasonable return on necessary capital investment.
  (b) That prices established pursuant to this section shall insure an adequate and continuous supply, in relation to demand, of pure, fresh, wholesome market milk for all purposes, including manufacturing purposes, at prices to consumers which, when considered with relevant economic criteria, are fair and reasonable.
  (c) That prices, including the prices of components of milk, established by the director for the various classes of market milk bear a reasonable and sound economic relationship to each other. In establishing the prices, the director shall also take into consideration all the purposes, policies, and standards contained in Sections 61801, 61802, 61805, 61806, 61807, 62076, and 62077.

Any designation of a class 1 price by any method or formula that is used to develop class 1 prices paid to producers in the various marketing areas, shall provide, on a calendar year basis, a statewide weighted average minimum price level for a hundred weight of milk testing 3.5 fat and 8.7 solids not fat that is in reasonable relationship with minimum class 1 milk prices paid to producers in contiguous states. If the statewide weighted average class 1 prices paid to producers are not in a reasonable relationship with the class 1 prices paid to producers in contiguous states, the secretary shall immediately hold a hearing to consider adjustments to the class 1 prices.

The minimum prices otherwise established pursuant to this chapter shall be increased by any security charges that are imposed pursuant to Chapter 2.5 (commencing with Section 62500).

Subject to the provisions of Sections 62074 and 62075, each stabilization and marketing plan shall contain provisions whereby the director shall provide methods for the establishment of minimum prices for market milk received within a marketing area regardless of whether the milk is subsequently sold or distributed within or without the marketing area within the jurisdiction of this state, and may contain the provisions whether or not the market milk is subsequently sold or distributed outside the jurisdiction of this state.

Each stabilization and marketing plan shall provide all of the following:
  (a) For the establishment of prices for market milk, whether or not such market milk is subsequently sold or distributed in another marketing area within this state where a stabilization and marketing plan is in effect.
  (b) That, if area of usage pricing is in effect, producers shall be paid not less than the minimum prices established for the marketing area wherein such market milk is ultimately sold or distributed.
  (c) That, if area of usage pricing is in effect and such market milk is subsequently sold or distributed in any place within the jurisdiction of this state where no stabilization and marketing plan is in effect, such market milk shall be paid by the handler to the producer at not less than the average of prices which are paid by handlers, whose plants are located within such area, to producers for market milk. If, however, no plants are located within such area, the price which shall be paid by the handler to the producer shall not be less than the average of prices which are paid by handlers to producers for market milk, at the plants in the nearest marketing areas adjacent to the area where such market milk is sold or distributed, as established by the stabilization and marketing plans in effect in such adjacent marketing areas.

No amendment of this article terminates or invalidates any provision of any stabilization and marketing plan which has been established by the director prior to the effective date of such amendment. Each such plan shall, however, be brought into conformity with such amendment at the earliest practicable date after the effective date of such amendment.

Notwithstanding any other provision of this code to the contrary, the director, in establishing minimum prices to be paid by handlers to producers, for market milk in any marketing area, may establish, as the applicable minimum prices, those prices applicable within the marketing area of ultimate usage of such market milk, those prices applicable within the marketing area where the plant of first receipt of such market milk is located, those prices applicable in the marketing area where the producers place of production is located, or any of the above or any combination of the above.

Each stabilization and marketing plan may contain provisions which require handlers to report to each producer from whom market milk is secured all of the following:
  (a) The volume of market milk received from such producer in pounds of milk.
  (b) The milk fat, solids-not-fat, or other component tests of such milk.
  (c) The amount of market milk in pounds of milk fat, solids-not-fat or other components paid for in the several classes or pools.
  (d) The prices paid for the various classes for each month.

Each stabilization and marketing plan may contain provisions which authorize any handler that purchases market milk under contract from any producer to pool such market milk for producer payment purposes in accordance with such contracts, irrespective of whether such market milk is actually and physically received at the same milk products plant or diverted, in accordance with such plan. Such provisions may do any of the following:
  (a) Provide that market milk that is received from producers by milk products plants under the same ownership, may be pooled for purposes of payment to producers.
  (b) Provide that if a handler pools market milk, as provided in subdivision (a), the handler shall allocate, among all producers that participate in the class 1 usage, transportation savings which are applicable to market milk, not actually transported between the plant of first receipt and one or more other plants subject to the pool, and used for class 1, and may pay to producers shipping market milk directly to a plant subject to the pool a price for usage of such market milk for class 1, which price represents the average of minimum producer prices payable by that particular plant for such class 1 usage.

The director may establish minimum prices to be paid by handlers to producer-handlers for milk not used by the purchasing handler as class 1 milk. These provisions may provide that the milk, if used in classes other than class 1 by the purchasing handler, may be paid for at the minimum prices established by the director for this other usage but which shall not be less than the prices as found by the director to be paid by manufacturing milk plants in, or adjacent to, the area that use milk for similar purposes. The prices shall remain in effect only for the period during which, as determined by the director, there is a surplus of producer-handler milk.

Each stabilization and marketing plan may further provide for maximum charges for plant processing and transportation service on the market milk or market milk components which are transported to the area where sold. The stabilization and marketing plan may enumerate the applicable maximum charges, and may establish individual charges for each function enumerated. In establishing any such maximum charges for such transportation services, the director shall base such maximum charges upon the rates which are charged for actual or reasonably similar services by highway carriers, as the term "highway carriers" is defined in Secton 3511 of the Public Utilities Code.

Each stabilization and marketing plan may provide for minimum charges for the various services performed or rendered by a nonprofit cooperative association in respect to class 1 market milk sold or delivered to another handler. Handler services include component testing for payment purposes, quality control, producer payroll, weighing and sampling of bulk market milk. Each stablization and marketing plan may also include, but not be limited to, minimum charges for the handling of intermittent or irregular deliveries of market milk and plant standby services. The stabilization and marketing plan may enumerate applicable minimum charges and establish individual charges for each service enumerated or, in the alternative, the director may establish one or more minimum charges covering one or more of the separate handler services.

In establishing minimum handler service charges under Section 62071, the director shall take into consideration all relevant factors, including, but not limited to, the following:
  (a) The reasonably necessary costs of providing such services, including overhead, as determined by impartial cost surveys, examination of books and records, or both, of such portions of those handlers within the marketing area as are reasonably determined by the director to be sufficiently representative to indicate such costs of all reasonably efficient handlers within such marketing area.
  (b) The relationship of the establishment of such minimum charges to the achievement and maintenance of the orderly marketing of market milk and to the effectuation of the purposes of this chapter.

If any contract between a handler and a producer for the purchase of any market milk provides that the charges for the hauling of it shall be paid, in whole or in part, by the producer, and such hauling is done by the handler either directly or through an agent or by any person that contracts with, or is designated by, such handler for such hauling, the director may, and upon the written request of the producer or the written request of any association representing the producer shall, investigate the rates, terms, and conditions which are involved in such hauling in order to determine whether such rates, terms and conditions are in compliance with Section 62070. If the director determines that such rates, terms, and conditions are not in compliance with Section 62070, he shall determine, within the standards which are prescribed in Section 62070, the maximum charges on account of such hauling that will comply with Section 62070 with respect to such purchase of market milk.

If the director establishes a stabilization and marketing plan for market milk, the director shall establish minimum prices to be paid by handlers for market cream, market skim milk, or milk fat, or market skim milk components of such market milk.

A stabilization and marketing plan may contain provisions necessary to encourage the availability of market milk for those usages for which class 1 and class 2 milk is mandatory.

The director shall establish the minimum prices to be paid by handlers to producers for class I usage of market milk upon a milk fat, solids-not-fat or the subcomponents thereof, and fluid carrier basis. In establishing the minimum prices for classes of market milk other than class I, separate prices may be established for any one or more of the following:
  (a) The milk fat contained in such milk.
  (b) The solids-not-fat or subcomponents thereof contained in such milk.
  (c) The fluid contained in such milk.
  (d) Any combination of the milk fat, the solids-not-fat or subcomponents thereof, or the fluid contained in such milk.

In establishing prices to be paid by handlers to producers for class 2, class 3, class 4a, or class 4b market milk, the director shall take into consideration any relevant economic factors, including, but not limited to, the following:
  (a) The relative market value of the various products yielded from such market milk.
  (b) The market price of other milk which may be used for the same purposes that are set forth in such respective classes.
  (c) The value of milk used for manufacturing purposes giving consideration to any relevant factors including, but not limited to, product prices, product yields, and manufacturing costs of class 4a or class 4b.

A handler shall not pay any producer less than the applicable price established for the usage to which the market milk, purchased from him is applied pursuant to accounting procedures established by the director. If the market milk is not applied to any purpose set forth in Article 5 (commencing with Section 61931), then a handler shall not pay any producer less than the lower of the prices established under the applicable stabilization and marketing plan for class 4a and class 4b usage.

All handlers who receive market milk within this state shall be obligated to pay minimum producer prices established under this chapter regardless of the area of origin of such milk, whether inside or outside the jurisdiction of the State of California.

Whenever a pooling plan is in effect as provided in Chapter 3 (commencing with Section 62700) and Chapter 3.5 (commencing with Section 62750) of this part, all market milk received by pool handlers shall be obligated to the pool at the applicable minimum price established in the Stabilization and Marketing Plans based on the classified usage of that milk. Handlers may pay producers for restricted use market milk at prices that are less than the amount credited to those handlers for restricted use market milk by the pooling plan.