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Dairy Industry

 New Jersey’s dairy industry is an important part of the state’s agriculture, not only contributing wholesome, locally produced milk and milk products, but also creating demand for field crops used as feed and for farm equipment and other industry support sales; and
 recent years have seen severe and protracted depressed market prices for milk, combined with periodic spikes in input costs, which have resulted in severe economic hardship for New Jersey dairy farmers; and
WHEREAS, although prices received for milk by dairy farmers have recently trended upward, the history of dairy pricing suggests a downward cycle should shortly follow, bringing new economic hardship on the dairy industry in the state; and
WHEREAS, the Department has frequently visited the issue of New Jersey dairy prices, and has found implementing solutions to the problems difficult for the following reasons:
  • New Jersey is a “milk-deficit” state, whose dairy farmers produce less than 10 percent of the milk processed at its four major Class 1 processing plants;
  • Surrounding states and even states as far away as the Southwestern United States sell milk into New Jersey, either as raw milk being sold into processing plants or as packaged fluid milk and milk products;
  • New Jersey is the only state that regulates milk pricing that is operating under a “variable cost” system, in which processors and dealers selling milk are able to reduce their prices to their customers further into the marketing chain so that they can gain market share or market entry without violating New Jersey’s milk-pricing rules;
  • That “variable cost” model is the result of a decades-old court order;
  • Moving to a “total cost” system, which would include all the costs of administration, processing, packaging, selling, transporting, advertising and other fixed costs of selling milk into New Jersey, would force out-of-state milk dealers to increase prices to match that minimum cost;
  • The existing Federal Milk Marketing Order, a relic of the Depression era, dictates prices to be paid to farmers in various “zones” of the country, resulting in the ability of New Jersey’s Class 1 processors to reach into nearby areas outside New Jersey’s higher-priced “zones” to procure milk if they deem the cost of New Jersey farmers’ raw milk too high;
  • Attempts in the past to create more-favorable treatment of New Jersey dairy farmers than for those in nearby areas outside our higher-priced zones have met with resistance, including legal action, by organizations representing milk dealers in other states; and

WHEREAS, the New Jersey Congressional Delegation, along with Congressional Delegations throughout the Northeast, can be a major force for change to the federal milk marketing order if they work together as a bloc of major milk-producing and milk-consuming states; and
WHEREAS, opportunities to process New Jersey-produced milk in New Jersey urban areas that have prime access to port facilities and other transportation advantages, thereby reducing transportation costs to the processor, can provide the state’s dairy farmers with a chance to earn significant premiums over the Federal Milk Marketing Order prices; and
WHEREAS, as with all agricultural products, the return to the farmer for milk and milk products is greater the further into the marketing chain the farmer controls the ultimate packaging and sale of the milk his farm produces.
NOW, THEREFORE, BE IT RESOLVED, that we, the delegates to the 97th State Agricultural Convention, assembled in Atlantic City, New Jersey, on January 18-19, 2012, do hereby strongly urge the New Jersey Department of Agriculture to do the following:

  • Pursue a change in New Jersey’s milk-pricing regulations to abandon the “variable cost” model in favor of a “total cost” model to determine a fair price to be paid by processors to dairy farmers for their milk
  • Work with the New Jersey Congressional Delegation and interested federal lawmakers from other states to restructure the Farm Bill and Federal Milk Marketing Order system in order to create a program that better fits the modern milk market.
  • Enthusiastically support projects that can offer New Jersey dairy farmers significant premiums for their milk, helping to reverse the cycles of low prices affecting dairy farm viability in this state.
  • Investigate the feasibility of establishing projects in which one or more dairy farmers can work toward marketing products that can be processed, packaged and sold by the farmer, as opposed to the farmer selling his raw milk to another entity, thereby giving the farmer value further into the market chain.
  • Investigate the feasibility to establish anaerobic digestion units which will utilize high moisture dairy farm, dairy industry, agricultural and human food waste streams for the production of bio-gas for a locally produced energy source and digestates which could be used as managed soil nutrients for agricultural production.