State attorney general’s office to attempt collection of creamery’s non-payment to “pool” fund

By Marilyn Davin

Originally published in the "4-9-09" issue.

Humboldt Creamery’s non-payment of $695,556 to the California Department of Food and Agriculture’s Pool Equalization Fund – the “pool” – had two recent consequences.

Both the creamery and Humboldt Creamery, LLC, were put on the state’s ineligible list for pool benefits; and the matter was referred to the state attorney general’s office for collection. The latter was decided at the March 26 meeting of the Milk Producers Security Trust Fund Board of Directors meeting in Sacramento.

This information was supplied by email to The Enterprise by Department of Food and Agriculture public affairs director Steve Lyle who, while cooperative, responded only to specific written questions and would not provide a less structured phone interview. And just what does this incredibly complicated- sounding turn of events mean to the state of affairs at the creamery?

Initially, at least, not a whole lot. Members of the Humboldt Creamery are exempt members. That means that they would not have been eligible for pool payments – a kind of unemployment insurance for producers - when the creamery made only partial payments to them.

Non-creamery members who ship their milk to the creamery could actually collect this benefit – which is paid after a hefty deduction, but they have been notified of ineligibility for the insurance because of the creamery’s non payment.

Lyle added, however, that pool funds are used for purposes other than reimbursing unpaid producers, though he did not elaborate on what those purposes might be.

According to other information from the Department of Food and Agriculture, the pool system was set up in the late 1950s and early 1960s at a time when handlers often paid disparate prices in the same region for “Class 1 products” (fluid milk). These inequities led to “disorderly marketing practices,” according to the department. In a nutshell, the pool ultimately became one aspect of the state’s efforts to equalize regional fluid milk prices.

Lyle stated in one email that “the greatest impact from Humboldt Creamery’s recent failure to pay into the pool will be felt among the co-op dairies,” adding that the next payment is due on April 15.