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Agriculture Department Panel Cites Continuing High Input Prices as Reason to Keep Payments
For Immediate Release: April 14, 2008
Contact: Jeff Beach
(609) 292-5531

(TRENTON) – Dairy farmers may be receiving higher prices from processors for their raw milk compared to 2006, but their costs for fuel, feed and fertilizer have also risen significantly, so they should continue receiving additional payments to help them remain viable, according to a decision issued by the New Jersey Department of Agriculture.

The Department reviewed the so-called ”fuel adjustment add-on,” which was first instituted in February 2007. That regulation mandates that purchasers of raw milk from New Jersey dairy farmers must pay the farmers an additional charge for fuel to help offset high diesel prices. The payment is calculated monthly by the Department and moves up or down based on whether the price of the fuel has risen or fallen. Farmers have received an average of $325 per month from the fuel adjustment add-on.

Testimony received throughout the hearing process showed that the fuel payment has accounted for an increase of just one-half cent to one cent on the retail price of a gallon of milk to the consumer. 

The decision was issued after a series of hearings starting in November 2007 and ending this February. The panel also examined whether an additional payment should be mandated for farmers who forgo the use of rBST, an artificial hormone that stimulates additional milk production in cows. The decision, issued by Assistant Agriculture Secretary Al Murray in his role as Director of Milk Control, said any “rBST premium” should wait until it is clearer how the market will treat rBST-free milk in regards to being a value-added product.

“The good news is that the prices our dairy farmers have received for their milk have gone up since the round of hearings we held in 2006, when we found raw milk prices to be at historic lows,” Murray said. “However, the farmers’ input costs for fuel, feed and fertilizer have risen sharply as well, and the Federal Milk Marketing Order minimum price does not directly take those costs into account. The fuel adjustment add-on addresses the clear impact of escalating fuel prices on the producer, which are threatening the ability of our remaining dairy farmers to stay in business.”

New Jersey currently has just over 100 dairy farms, and the state’s four remaining dairy processors get approximately 8 percent of their raw milk from in-state farmers, with out-of-state dairy farms accounting for the rest.

“Having a safe, wholesome and locally produced supply of fresh milk is extremely important for New Jersey’s processors and the customers who buy their milk,” Murray said. “We do not want to lose the remaining dairy farms and processors we have and rely entirely on packaged milk being shipped in from other states.”

The decision also acknowledged the value of possible increased reporting requirements on the costs incurred and prices charged throughout the milk marketing chain – from producer to processor to wholesale dealer to retailer. That information would be used throughout the marketing chain to help avoid price undercutting from milk producers in other states and to ensure that no price gouging was occurring anywhere in the market chain.

A copy of the full decision document which was filed April 11 with the Secretary of State, is available by contacting the New Jersey Department of Agriculture at 609-292-8896 or on the web at