April 4, 1975
Representative Richard Barnes
House of Representatives
Capitol Building
Pierre, South Dakota 57501
OFFICIAL OPINION NO. 75-58
Cost of dairy items
Dear Representative Barnes:
You have asked whether dairy processors may include the cost of producing, packaging, promoting or delivering non-dairy products as a cost in establishing the "cost to the processor or distributor" under SDCL 37-3-9(9).
Terms used in §§ 37-3-8 to 37-3-72, inclusive, unless the context otherwise requires, mean:
. . . . "Cost to the processor or distributor," the actual cost of bulk milk and other ingredients plus the cost of doing business properly allocable to each item covered by the term dairy products which cost of doing business shall include but shall not be limited to: labor, salaries of officers, executives, clerks, office help of any nature; rent; upkeep and depreciation on real and personal property; shrinkage; interest; power; supplies; advertising; transportation and delivery costs; credit losses; all permits and license fees; all taxes; insurance and any and all other overhead expenses. The profit derived from the sale of one product whether the same be utilized in cost computations as a credit to or deduction from the cost of doing business properly allocable to any product embraced by the term dairy products so as to subsidize or lower the cost of doing business with respect to such dairy products. (Emphasis added.)
It is clear from the foregoing statute that only the cost of producing, packaging, promoting and delivering dairy products may be used in determining “cost to the processor or distributor." The “cost to the processor or distributor" must be figured separately for each individual item. Therefore, the answer to your specific question is NO, dairy processors may not include the cost of producing, packaging, promoting or delivering non-dairy products as a cost in establishing the "cost to the processor or distributor."
Respectfully submitted,
WILLIAM J. JANKLOW
ATTORNEY GENERAL
WJJ:MAG:rw
