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N.J. Appellate Court Sides with Dairy Farmers

Decision okays fuel adjuster payment, but not rBST-free payments.

Yesterday's New Jersey Appellate Court decision on actions to aid New Jersey dairy farmers was "a step in the right direction", according to New Jersey Ag Department officials. The decision upheld most of an earlier order by the Ag Department to address the way milk producers are paid by those who buy their product.

Fuel adjuster payment OK'd

A "fuel adjuster" payment per hundredweight of milk was upheld by the three-judge panel. But they said the department needed more specific local information to justify a 76-cent per hundredweight payment by processors who require milk be free of the synthetic hormone rBST, used to increase milk production per cow.

The panel rejected New York State Dairy Foods Inc.'s contention that numerous "deficiencies" in the way the ag department decision was reached during and after a series of hearings should have rendered all of it null and void. The company had claimed the notice announcing the hearing wasn't specific about the types of additional payments to farmers would be considered. And, some potential witnesses decided not to testify without advance guarantee of keeping certain financial information confidential.

The panel ruled that the Ag Department's hearing notice contained enough specifics. And, the hearing officer's decision not to provide a blanket ruling giving witnesses the ability to refuse to answer certain financial questions didn't keep people from testifying, as the appellants had claimed.

"This was a good first step toward helping New Jersey's dairy producers remain viable," says Al Murray, the department's director of marketing and development. With recent increases in diesel fuel and milk price declines, the department ordered the fuel adjuster payment.

Producers typically pay the cost of hauling their milk to processors. The adjustor will increase or decrease by 3 cents per hundredweight for each 10-cent change in the cost of diesel fuel, based on a starting point of the 2002 price for diesel.

"We're obviously disappointed that the rBST-free premium wasn't upheld. Clearly, we would disagree that the documentation we used to arrive at the rBST-free premium was insufficient."

rBST payments not a dead issue

"We'll immediately begin the process of collecting additional information, specific to local processors and others in the market chain," reports Murray. "We will remedy that situation."

The department's order on dairy pricing was issued on September 28. It included long- and short-term approaches to stabilizing prices received by dairy farmers.

In the long-term, the department is requiring more detailed reporting of financial information throughout the market chain from any entity required to obtain a dairy license from the State. Those long-term requirements were not part of the Appellate challenge.

"All in all, this decision will ultimately benefit our dairy producers," Murray says. "We have the Appellate Division's blessing on the fuel adjuster. They have given us a firm understanding of what we need to correct for the rBST-free premium to pass muster."

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