Pennsylvania’s Governor Ed Rendell has asked a court to overturn a state board decision that ruled out an extra charge on packaged milk produced in Pennsylvania and sold in New Jersey.
Rendell and Pa. Agriculture Secretary Dennis Wolff filed a lawsuit last week in Commonwealth Court that challenges the Milk Marketing Board’s April 1 decision. The two said in the lawsuit the board’s 2-to-1 vote showed the panel was biased in favor of milk dealers, and argued that the panel ignored evidence and abused its discretion.
At issue is whether to add the so-called “over-order premium fuel adjuster” on the New Jersey-bound milk. The extra fee increases how much processors , the middlemen who sell to groceries and other outlets , have to pay to farmers.
Earl Fink with the Pennsylvania Association of Milk Dealers trade association, which voted Thursday to intervene in the case, said the additional cost works out to about 2.5 cents a gallon.
The market is sensitive to tiny changes in price, and Fink said the extra fee would put Pennsylvania dealers at a competitive disadvantage to other states that feed the massive New Jersey market.
“It would substantially harm some of our members who sell there,” Fink said. “We have a very large dairy in Reading that does over half their business in New Jersey.”
The Milk Marketing Board’s chief counsel, Doug Eberly, declined comment Thursday on the lawsuit.
In making its decision, the board said it was unconvinced the additional charge would put more money in the pockets of Pennsylvania dairy farmers, and worried that dealers would either reduce voluntary payments to farmers or buy milk from other states.
“It’s unlikely any of that money would ever get to dairy farmers,” Fink said. “If we had to pay it we’d just lose our business in New Jersey , that’s the bottom line.”
Agriculture Department lawyer Brook Duer said an additional charge would mean an increase in actual payments to farmers. Duer said Pennsylvania consumers would not be affected because the higher-priced milk would only be sold to New Jersey outlets.
A Pennsylvania Farm Bureau dairy expert told the milk board the state lost 800 dairy herds between 2002 and 2006 and total cow numbers also were on the decline.
But dealers said that if the board adopted the higher payments they might seek raw milk from other states or simply reduce the amounts above the minimum they are currently paying to dairy farmers.
In its April 1 ruling, the milk board said a higher premium would not necessarily address dairy farmers’ problems with volatile prices and rising production costs.