Joseph Gallo Farms seeks end to government-imposed milk tax; nation's largest dairy farmer vows...

SACRAMENTO, Calif.--(BUSINESS WIRE)--April 16, 1996--Joseph Gallo Farms of Atwater, Calif., which owns and operates a large dairy that supplies the milk for its popular Joseph Farms cheese, has petitioned the Department of Agriculture to discontinue its tax on milk producers.

The petition

Gallo has also filed a lawsuit in federal court in Sacramento seeking to enjoin the California Milk Advisory Board's promotion and advertising tax. Gallo contends that these programs violate constitutionally protected rights of free speech and free association.

On these same grounds, almond and fresh fruit producers recently prevailed before the Ninth Circuit Court of Appeals which ruled that similar mandatory generic promotion programs indeed violated these constitutional rights. The Ninth Circuit used established free speech criteria.

Joseph Gallo Farms claims that dairy programs do not satisfy the criteria. It is further claimed that this government-sponsored generic advertising and promotional program has not increased sales of dairy products. Sales in fluid milk have in fact declined, not increased, in spite of the tens of millions paid annually to advertising firms and consultants to carry out this program.

This program, Gallo contends, inherently works against its products, a private brand of cheese now marketed in 23 states. "The wide consumer acceptance we have experienced has been gained through product quality and private promotion," Michael Gallo, managing partner of Joseph Gallo Farms, states. "By taking these monies through mandatory taxation, the government is preventing us from using the funds in product research and specific promotional activities which we know will help sales of our own products grow. We know this because we have spent many years developing, promoting and marketing our cheese, and we believe we can do it best, certainly better than the government."

"Although cheese sales have increased," according to Gallo, "it has not been due to this government program, which is mostly focused on fluid milk. Fluid milk sales have in fact declined in spite of the more than $200 million spent each year."

Gallo, who for many years served as a director of the California Milk Advisory Board which administers the California generic promotion program, states that, "Any increase in the sale of cheese has been brought about by the skill, imagination and ingenuity of the private sector in the development of quality products that appeal to consumers' tastes coupled with specific product promotion and advertising aimed at product differentiation, not generic promotion. Although many examples could be cited, a recent example is Pizza Hut's idea to incorporate cheese in pizza crust."

"As a board member, I have seen no evidence that this government program has improved the sales of our product or any other." On the other hand, Gallo asserts, "the tragedy is that this program strips hundreds of millions of dollars each year from hard-working dairymen, many of whom desperately need these funds to make ends meet. The enormous cost of this program has caused an increase in the cost of dairy products to the consumer. Over 15,000 dairy producers have recently signed petitions calling for a referendum to cancel this program."

One aspect of the promotion program, that is especially disturbing to Gallo is the expenditure of these tax monies to overcome consumer opposition to the use of synthetic BST, a growth hormone that forces cows to increase their milk output. "We practice sound environmentalism and we do not believe in, nor do we inject, our cows with this artificial hormone. We are mindful of the fact that consumers do not want any hormones in the food they eat and feed their children and we strongly object to the government taking our money and using it in an attempt to change their minds to the benefit of the chemical company that manufactures this hormone."

CONTACT: The Londre Co. Inc.

213/851-8230

Frank Bantle, ext. 102

Patti Londre, ext. 105 (after April 17)