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NJDA Sets Emergency Price for Class 1 Milk
For Immediate Release: December 31, 1997 Contact:

Hope Gruzlovic

New Jersey Agriculture Secretary Art Brown took action to protect the state's family dairy farms and the dairy industry by setting a new minimum price for raw milk produced over the next six months. The new minimum will be $16.891 per hundredweight and will apply only to Class 1 (fluid) milk produced on the state's dairy farms.

"Dairy farms have become an endangered species," said Brown. "Here in New Jersey more than 45% of our dairy farms have gone out of business in the last decade alone, leaving just over 200 dairy farms in the state. If we want to save our family dairy farms, immediate action must be taken." "During pre-dawn hours dairy farmers are already milking their cows, seven days a week, 365 days a year, long before most of us are up and about," Brown added. "It is not an easy or lavish life but one that makes us all better off. It would be a real tragedy if we didn't take action today that could mean the difference between saving our family dairy farms or losing them forever." The action is based on analysis of producer prices over the last several years and on testimony submitted by dairy farmers, milk producer cooperatives, and milk processors at last month's hearing concerning the need for emergency price relief for New Jersey dairy farms. "Prices for Class 1 milk at the federal level is simply insufficient to meet the basic costs of producing milk here in New Jersey," Brown said. "With minimum milk prices set monthly by the federal government, even minor fluctuations in price raise havoc in a business with the kind of fixed capital investments that characterize dairy farming." Brown noted that, even though some have claimed that an increased base price to farmers would significantly impact consumer prices on milk, the facts do not support the claim. In November 1996, when average farm prices for Class 1 milk reached a relatively high level of $18.29 per hundredweight, retail stores adjusted their prices to consumers accordingly. However, by August 1997, the average base price had declined by 25 percent to $13.66 per hundredweight, its lowest price in over six years, yet prices to consumers remained steady. Throughout this period, costs of production have continued to climb for New Jersey dairy farmers. Despite increasing on-farm efficiency and cost-cutting efforts and despite significant increases in the quality of milk produced, it now costs dairy farmers more per hundredweight to produce the milk than they receive for it from processors. New Jersey dairy farms are important in maintaining locally produced, high quality milk for consumption, supporting rural economies, providing tax-paying open spaces and maintaining the aesthetic value of rural New Jersey. Dairy farms account for more than 100,000 acres of New Jersey's rural open spaces. Brown noted that the crisis in the dairy industry is nationwide in scope and has driven tens of thousands of dairy farmers out of business all across the nation.

New Jersey's critical situation is further complicated by the major federal milk marketing order reforms mandated in the 1996 Farm Bill and by the potential for significant changes at the federal level in the way milk prices are set.

1New Jersey is covered by two federal milk marketing orders. Last month, the Class 1 base price to dairy farmers in northern New Jersey was $15.41 per hundredweight, while dairy farmers in the southern part of the state received $16.08 per hundredweight for Class 1 milk.