Western New York Milk Producers Cooperative Bargaining Agency v. Butcher

Kane, J. (dissenting).

The entire regulatory scheme encompassing the dairy industry is designed "to protect the dairy industry and insure an adequate supply of milk for the inhabitants of this state” (Agriculture and Markets Law § 258-k; see, Matter of Friendship Dairies v Du Mond, 284 App Div 147, 155). The diversion granted in this case by respondent provides Sorrento direct access to eight million pounds of milk per month (originally 16 million pounds) for manufacturing purposes (i.e., cheese, ice cream, yogurt, etc.) without Beres assuming the same obligation to the fluid market imposed upon other dealers, who may apply for and obtain designation as a "diversion plant” and who, otherwise, would be limited to a diversion of 70% (1 NYCRR 21.17 [b]). Under this order, individual producers still receive the "blend” price for their product, making membership in the cooperative organizations of little benefit since they may negotiate directly with the manufacturer. This huge addition of Class II milk to the pool can only reduce the price of fluid milk, depress the blend price and impair the supply of fluid milk available to the general public, in direct contravention of the provisions of the statute. Moreover, other producers will be encouraged to leave their cooperative, thus reducing its profitability and impacting unfavorably upon the orderly marketing of fluid milk, again in violation of the policy set forth in Agriculture and Markets Law § 258-k. It is no answer to say that the milk diverted to Sorrento would ultimately be shipped to them in any event. As indicated, other dealers have a commitment to the fluid market. The special privilege granted to Beres reduces the availability of Class I milk, requiring other sources of supply to meet the needs of the fluid market provided by producers who are not cooperative members.

Finally, the thrust of respondent’s grant of the diversion was to assist Sorrento, rather than the fluid market, as required by statute. It was granted after the hearing and without evidence presented for or against the proposition, and in contravention of established practices. Accordingly, the grant of the diversion was not only arbitrary and capricious, but without substantial evidence in the record to support it.

I would therefore grant the petition and annul respondent’s determination.

Mahoney, P. J., Casey and Weiss, JJ., concur with Harvey, J.; Kane, J., dissents and votes to annul in an opinion.

Determination confirmed, and petition dismissed, without costs.