California minimum prices paid for milk to producers are determined through a complex system of reference prices and formulas. The intricacies of the system are often not fully understood which leads to confusion even among those whose livelihood relies on this system. The complexities of the pricing system stem from processors paying different prices for milk according to how the milk is used and payments to producers according to a schedule of quota, base and overbase prices. This paper explains how the various class prices are determined and how they are converted to the pool prices from which producer payments are made.