Dairy Industry California

More than 1,000 California dairy farmers will split a $20-million legal settlement, ending three years of legal battling in a convoluted fraud case against a consortium of banks, attorneys announced Tuesday. The case, which was settled in Los Angeles Superior Court on Monday, alleged that a group of banks used $25 million worth of raw milk as a kind of secret collateral when they financed Knudsen Foods' leveraged buyout of Foremost Dairies.

State investigators say a dairy here has been linked to the nation's largest poisoning by drug-resistant salmonella bacteria. Their conclusion, based on DNA evidence, appears to solve the mystery of the 1997 outbreak that left 110 area residents with fevers, stomach cramps, diarrhea, nausea and vomiting. The victims, many of them children, got sick after eating unpasteurized cheese. Fourteen people were hospitalized, but all recovered.

State agriculture officials have denied a request by California milk producers to factor rising energy costs into the formula it uses to set the minimum price paid for their milk. Farmers say they need these increases to offset rising utility costs and survive. But the Department of Food and Agriculture said it fears that increases would make such California dairy products as cheese, butter and powdered milk too expensive.

Consumers Union, the nonprofit publisher of Consumer Reports magazine, asked state regulators on Monday to reverse a decision of last November that resulted in retail milk price increases of up to 30 cents a gallon. Consumers Union, in a petition filed with the California Department of Food and Agriculture, said there was no justification for the department-ordered increase in what dairy farmers are paid for milk.

A demand by the McDonald's Corp. restaurant chain for more comfortable working conditions for the millions of chickens that produce 2 billion eggs a year for its Egg McMuffins and other items is being met with squawks of disapproval from much of the egg industry. Some of the loudest complaints are coming from California, the nation's third-largest egg producer.

Having a Cow: Why does Gallo Cattle Co. keep losing its 1st Amendment lawsuit? . . . It's probably the cheese! The U.S. 9th Circuit Court of Appeals on Thursday upheld a judge's order dismissing Gallo's suit against the California Milk Advisory Board. The cattle company, a partnership owned by Joseph Gallo and his son Michael, had claimed its free-speech rights were violated because the firm was forced under state law to contribute to the Real California Cheese advertising campaign.

A state appeals court ruling Monday opened the way for cheaper but less nutritious milk to be sold in California, offering consumers the prospect of more choices and a price break in what has been the most expensive milk in the nation. The ruling struck down California's decades-old regulations that require low-fat milk sold in the state to be fortified with more calcium and protein, in effect barring most out-of-state milk.

Consumers in California can expect to pay a little more for milk beginning next week when the state raises the wholesale price of milk by 4 cents a gallon. Although the state does not regulate retail prices, a jump in the price paid to farmers typically translates to a similar or slightly larger increase in supermarket dairy prices, state officials say. Californians got a break in April, when wholesale prices plunged 50 cents a gallon to an average of $1.

For such a wholesome liquid, milk might as well be nitroglycerin when it hits the state Capitol. State Sen. Debra Bowen (D-Marina del Rey) brought last year's unsuccessful crusade for lower milk prices back to the Legislature on Wednesday with a bill to set minimum calcium standards for milk. It was approved by the Senate Health Committee on a 5-1 vote. But the bill faces an uphill fight against lobbying from California's $3.7-billion-a-year dairy industry.

The House on Saturday approved $79 billion for the war in Iraq, foreign aid, homeland security and an airline industry bailout, sending President Bush a bill stripped of many unrelated projects critics had attacked as pork-barrel spending. Gone from the final measure were Senate-written provisions to boost the dairy industry in California, fund a dam in Connecticut, compensate Rhode Island authorities for a deadly nightclub fire and even set rules for ginseng labeling.