Industria Lechera de Puerto Rico, known as Indulac for its initials in Spanish, filed a complaint at the San Juan Superior Court Wednesday, seeking to halt a price increase for Ultra High-Temperature milk ordered by the Agriculture Department, the dairy farmers confirmed.
In the complaint, the ranchers claim the Agriculture Department’s Milk Industry Regulatory Office (ORIL) issued an “illegal” administrative order on May 31 imposing a .3 cent increase on UHT milk, which took effect the following day.
Indulac Chair Juan Carlos Rivera said the group went to court to stop the implementation of this increase they considered illegal because it failed to follow the due process of law.
“For a price order to go into effect, there is a procedure established by Law 34 of 1957 which was completely obviated,” he said.
“This increase does not respond to the due process of evaluation and analysis of the industry and current conditions of the dairy market required by ORIL’s organic law,” he said.
“They’re supposed to hold public hearings and have issued a series of edicts, and had the input of the Consumer Affairs Secretary on the increase and its effect on consumers. None of this was done,” he said.
Indulac is asking the court not only to freeze the order, but invalidate the increase due to the damage it will cause to the dairy industry in general, to UHT milk consumers and Indulac.
“By increasing the price, the demand for this product will be affected, raw milk destined for these products will be affected due to lower yields, which in turn will have its effect on the farmer, who produces the milk. Many UHT milk drinkers are elderly people who have found in UHT milk an alternative to continue drinking milk given its long shelf life — they will also be affected,” said the agronomist.
The fixed to be paid by the consumer for the quart of milk will jump from $1.92 to $1.95. This increase will have an impact on the consumer of $1 million annually, Indulac executives estimated.
The farmers claim the increase will cover the debt the government has with dairy plants Suiza Dairy and Tres Monjitas, agreed to in the U.S. District Court for Puerto Rico under the previous administration.
“This was a self-inflicted debt that the [Agriculture] Secretary now intends Indulac to pay, hiding and protecting himself behind the Federal Court rather than fight and challenge the agreement that has been bad for farmers, the government and the people, who have had to pay for it. Now, they are willing to put their hand in consumer pockets,” Rivera said.
Through the agreement struck between the Agriculture Department in 2013 at the U.S. District Court, the agency agreed to pay the two dairy plants $95 million of which they have already paid $21 million. The agency’s current budget has set aside $15 million for the payment.
“We call on the Secretary of Agriculture to question this transaction that was conducted irregularly and challenge the agreement and the alleged debt that is not secured in the bankruptcy proceedings of the central government agencies, including the Department of Agriculture,” said Rivera.
UHT milk is one of Indulac’s highest-selling products, leading the category with nearly 60 percent market share, the company said.
Milk production is the island’s main agricultural sector, with more than 280 dairy farms in operation.