California Milk Control Legislation

Abstract

During the 1937 session of the California Legislature several acts were passed providing for the determination and enforcement of prices of market milk. These acts were incorporated in Chapter Io, Division IV, of the Agricultural Code of California. The two most important of these acts were the Young Act dealing with minimum prices to be paid to producers for market milk and the Desmond Act dealing with minimum wholesale and retail prices. The administration of all these acts was entrusted to the Director of the State Department of Agriculture. The original Young Act was passed in 1935 and its provisions were applied to seven marketing areas in the state. Late in 1936 an adverse decision in the Superior Court of San Francisco raised considerable doubts as to the constitutionality of the original law. As the Legislature was to meet early in 1937, it was decided by dairymen and others in favor of the legislation to try and get an amended act passed. This was done early in 1937, the amended act being passed with an urgency clause, which permitted its administration immediately after it was signed by the Governor. By the end of June 1937, twelve marketing areas including most of the larger cities of the state had been established. The amended Young Act is similar to acts in many other states providing for the determination and enforcement of producers' prices. These are to be based upon the economic relation between prices of market milk and prices of manufacturing milk in the various marketing areas. The Director of Agriculture may appoint local milk control boards of 7 members in the various marketing areas to advise and assist him in administration of the marketing plans. All distributors in the established areas have to be licensed. Producers pay a fee of 2 mills a pound of milk fat for administrative purposes. Marketing areas and plans are set up after appropriate hearing and only if 65 % of the producers in an area are in favor. After considerable debate and much opposition the Desmond Act was passed late in the 1937 session of the California Legislature and went into effect on August 27, 1937. This act extended the power of the Director of Agriculture to determine and establish minimum wholesale and retail prices as soon as possible in existing marketing areas and to put both producer and resale prices into effect in new areas. Five new marketing areas have since been established, although marketing plans have as yet not been provided for. The Desmond Act contains certain unique provisions governing the establishment of resale prices. These can only be established after hearings, audits, and surveys of costs of distribution have been made in the various areas. The law provides that the audits and surveys have to be made by an impartial authority. The law furthermore provides that the minimum wholesale and retail prices can be established in any marketing area only after the Director of Agriculture has determined in writing that such prices will (I) cover all reasonable costs, including a reasonable return upon necessary investments of reasonably efficient distributors of various types