Alabama Dairy Commission v. Delview Meadow Gold Division, Beatrice Foods Co.

345 So. 2d 278, 1977 Ala. LEXIS 1858
CourtSupreme Court of Alabama
DecidedApril 15, 1977
DocketSC 1814
StatusPublished
Cited by2 cases

This text of 345 So. 2d 278 (Alabama Dairy Commission v. Delview Meadow Gold Division, Beatrice Foods Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alabama Dairy Commission v. Delview Meadow Gold Division, Beatrice Foods Co., 345 So. 2d 278, 1977 Ala. LEXIS 1858 (Ala. 1977).

Opinions

PER CURIAM.

This appeal involves an order of the Alabama Dairy Commission which permits producers to share in the profits of sales of buttermilk made from milk powder.

Succinctly stated, Order 2-76 required that if a distributor receives surplus milk from the farmer, the distributor can use it in making buttermilk or not as he sees fit, but if he sells milk made from powder, he must pay for an equivalent portion of the farmer’s surplus milk as though such surplus milk had been used to make the buttermilk, that is, at the Class I price.

In order to compensate the distributor, in part, for this increased cost of manufacturing buttermilk from powder, the Commission increased the wholesale price of buttermilk, whether made from powder or fresh skim milk. In other words, the Commission continues to regulate the price of buttermilk whether made from powder or fresh skim milk. An example of how the Commission order would work is, as follows: Assume that during the month of June, a farmer ships 1,000 pounds of milk to a distributor. At the end of the month, the farmer’s pro rata share of the distributor’s sales are as follows: 600 pounds of the farmer’s milk was used to make homogen[279]*279ized milk (Class I) and 400 pounds was used to make yogurt, or was resold to a cheese manufacturer (Class II). The distributor’s records also show that it sold 300 pounds of buttermilk made from powdered milk. Under the old pricing structure, the farmers would have received the Class I price for 600 pounds of milk, and the Class II price for 400 pounds of milk. The distributor would have paid the farmer nothing from its buttermilk sales, and would have realized the entire profit, which the record before the Commission shows was considerable because the raw product cost of powder was unregulated but the sales price of buttermilk made from powder was regulated. Under the new regulation, the farmer gets to share in this profit. He would be paid for 900 pounds of milk at the Class I price, and 100 pounds of milk at the Class II price. The extra cost to the distributor is the difference between the Class I and Class II prices. In order to compensate the distributor for this increased cost, the Commission increased the wholesale price which he may charge the retailer.

Under the order, the farmer gets the Class I price for the distributor’s buttermilk sales only if the farmer at some point ships an equivalent amount of milk. The regulation does have a “carryover” provision, strenuously objected to by the distributors, which operates as follows: If a farmer has not shipped “surplus” milk equal to his share of the plant’s sales of buttermilk made from powder, he does not get paid for such share. However, he gets a “credit” which may be carried forward to succeeding months. If the farmer later ships “surplus” milk to the plant equal to his credited share of earlier sales of buttermilk made from powder, he gets the Class I price for this milk. The farmer never gets paid for milk he does not deliver, but under the “carryover” provisions, it is possible for a distributor’s buttermilk sales to give rise to a Class I price for “surplus” milk which was not delivered until after the month in which the buttermilk sales occurred.

Distributors, unhappy with Order 2-76, asked the Circuit Court of Montgomery County to review it. That court, citing this Court’s case of Dark’s Dairy v. Alabama State Milk Control Board, 278 Ala. 693, 180 So.2d 527 (1965), held it to be invalid, as being beyond the powers of the Commission. The Commission appealed. We reverse.

At first blush, it would seem that Dark’s Dairy would control this case because Dark’s Dairy, too, involved a classification and pricing order of the old Milk Board involving sales of buttermilk made from powder. However, it is apparent from a close reading of Dark’s Dairy that this Court did not hold in that case that a milk regulatory Commission was powerless, under all fact situations, to classify and regulate the price of buttermilk made from powder.

In Dark’s Dairy, the producers argued essentially what the Commission argues here, namely:

“Counsel for the producers argue in support of that portion of Order 1-63 now being considered, that unless the classification of non-fat buttermilk is on the 99% sales basis, a distributor could by reconstituting buttermilk from milk powder and other ingredients diminish his needs for fresh milk for buttermilk purposes, and thereby increase the amount of surplus milk with a resulting decrease in the blend price paid the'producer.”
This Court answered that argument, as follows:
“The record is devoid of evidence tending to show what percentage of non-fat or cultured buttermilk is manufactured from fresh milk or what percentage is reconstituted from milk powder and other elements. Without such evidence it must appear that the classification of non-fat buttermilk on the basis of the sales of 99% of all buttermilk, that is that made from fresh milk and that made from powder, etc., can only be deemed as arbitrary. It cannot be determined from the record why the figure was set at 99% of sales, rather than 95%, or 80%, etc.”

Here, unlike the situation in Dark’s Dairy, there was substantial evidence presented, [280]*280and based on this evidence, the Dairy Commission made the following findings of fact:

“3. Approximately three-fourths of the buttermilk processed and distributed by licenses of the Commission is made from non-fat milk powder. In the absence of adequate regulations the sales of fluid buttermilk processed from non-fat milk powder are lost to producers.
“4. The cost of producing buttermilk from non-fat milk powder is less than producing buttermilk from fresh Class I skim milk. This cost difference creates the incentive to produce buttermilk from non-fat milk powder.
“5. Some distributors are producing buttermilk from fresh Class I skim milk and some are producing buttermilk from nonfat milk powder, thus creating a disparity of costs among distributor licenses.
“6. Present wholesale and retail prices for buttermilk do not adequately reflect the cost of producing said buttermilk using fresh Class I skim milk.
“7. Wholesale and retail prices for buttermilk can be adjusted to adequately reflect the cost of producing buttermilk from fresh Class I skim milk and give the consuming public an adequate supply of high quality buttermilk at a fair price. “8. The use of fresh Class I skim milk in the production of buttermilk will tend to stimulate more production of milk in Alabama.”

These findings are supported by the record and justify the classification and pricing action taken by the Commission, acting pursuant to the authority granted it by Section 20 of Act No. 408, Acts of Alabama, 1971, p. 1097, [carried as Title 22, § 223(1), Code of Alabama, 1940, Recompiled, 1958, (1973 Cumulative Supplement)], which provides, in part:

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Related

Delview Meadow, Etc. v. Ala. Dairy Com'n
383 So. 2d 511 (Supreme Court of Alabama, 1979)

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Bluebook (online)
345 So. 2d 278, 1977 Ala. LEXIS 1858, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alabama-dairy-commission-v-delview-meadow-gold-division-beatrice-foods-ala-1977.