New Jersey Conducting Dairy Work Sessions To Discuss Dairy Stabilization Options
Trenton, NJ—The New Jersey Department of Agriculture is holding dairy work sessions in several cities around the state to discuss and debate elements of a recently proposed dairy stabilization pool and other future policy options.
Work sessions were held this week in Trenton and Newton. Two future dairy work sessions have been scheduled: Thursday, September 2, at the Rutgers Cooperative Extension of Salem county, Woodstown; and Tuesday, September 14, at the Rutgers EcoComplex, Bordentown.
Stabilizing the economics of New Jersey’s dairy industry has been the goal of ongoing work by the New Jersey Department of Agriculture (NJDA). This purpose was made clear from the outset of work sessions that began in October 2009.
The NJDA sees “no benefit” in a program that “unfairly penalizes” out-of-state dairy producers or dealers. New Jersey is home to more than 8.0 million people; the state’s remaining 87 dairy farms, by themselves, “cannot possibly provide enough milk to the rest of the marketing chain to satisfy a population that large,” the department notes in a new “Framework for Dairy Industry Stabilization,” which was released late last week.
While New Jersey is part of the Northeast federal order, states may establish their own, additional rules regarding pricing of milk and the conditions under which milk is to be sold.
With this in mind, NJDA staff put together options for consideration involving federal action, industry action, and state action taken singly or together to accomplish the potential of bringing stability to the state’s milk market without unfairly burdening producers, processors, dealers or out-of-state members of this marketing chain.
Producers may be asked to take specific steps to better manage milk production in the current economy. Two major factors to be considered for producer business models are:
• Supply management: NJDA recognizes that a historical pattern has emerged in which an increase in milk prices results in increased milk production as producers attempt to recoup some of the losses they experienced during times of lower prices. This has the effect of once again depressing prices as an over-supply of milk overwhelms demand.
This pattern suggests that a controlled rebuilding of the dairy sector is ultimately in the best interests of all segments of the milk marketing chain as it will provide better long-term stability for producers. Therefore, consideration of elements of supply management may offer one way to prevent production expansion from being counterproductive to any assistance to farmers.
• Constant quality improvement. For producers to receive the maximum payments, their milk must be at a higher quality standard.
Those urging the NJDA to take no action seem to share the common theme that only through change in federal orders can there be meaningful results. Those urging that action is needed at the federal level identified aspects of the federal order system, including the tying of prices for milk intended for drinking to the prices for milk intended to make products such as cheese and butter.
One option is that New Jersey take a strong position with surrounding states, combining efforts to push for a change in the federal orders. But “significant time would pass before any federal reform would be proposed, passed and enacted in order to bring relief to dairy farmers,” the Framework pointed out.
There is also federal debate about “what seems to be the growing consolidation of milk marketing into fewer hands.” In New Jersey, Class I milk can be sold to one of a limited number of entities; however, “most of these entities are affiliated, thus limiting farmer options to sell their milk,” the Framework said.
Another option directs the focus to the marketing of milk. Some milk dealers, for example, have urged that the NJDA put its energies into more aggressively enforcing the laws already in existence governing the selling of milk below variable cost.
If there is recognition of the critical supply zone for New Jersey, there can be a stabilization pool from which payments could be made to producers in this zone, the Framework said. A “Critical Supply Zone” could be determined based on: quality of milk; seasonal availability of milk; and location of raw milk supply.
The NJDA has determined such a zone to be “essential to maintain the critical supply of milk for consumers, especially during weather events or other emergencies that might arise.” A 50-mile zone could be established around each Class I plant located in New Jersey. r
