N.J. Keeps Dairy Fuel Adjustment; Waits on rBST Premium

Ag Department sites high input costs for continuing fuel add-on.

Published on: Apr 16, 2008

New Jersey Department of Agriculture announced on Monday that dairy farmers would continue receiving fuel adjustment add-on payments. The decision came after a series of hearings that confirmed in-state dairy farmers needed the additional payments to help them remain viable amid rising costs of fuel, feed and fertilizer.

Purchasers of raw milk from New Jersey dairy farmers are mandated to pay the additional charge for fuel to help offset high diesel prices. The payment, averaging $325 per month, is calculated monthly by the Ag Department. It moves up or down based on whether the price of the fuel has risen or fallen. It accounts for one-half cent to one cent of the retail price of a gallon of milk.

No decision on rBST

During the hearings, the Ag Department panel is still examining whether an extra 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.

"Farmers' input costs for fuel, feed and fertilizer have risen sharply," noted Murray. "And the Federal Milk Marketing Order minimum price does not directly take those costs into account."

New Jersey currently has just over 100 dairy farms. The state's four remaining dairy processors get approximately 8% of their milk from in-state farmers. "We do not want to lose the remaining dairy farms and processors," added Murray.

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 filed April 11 with the Secretary of State is on the Web at www.nj.gov/agriculture/pdf/Dairydecision08.pdf.