Farmers say a ruling by Nova Scotia's Supreme Court will cost some of them hundreds of thousands of dollars.

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The Supreme Court of Nova Scotia says a group representing dairy farmers in the province has the right to reduce the cost of milk quota. ((CBC))

The court ruled Wednesday that the Dairy Farmers of Nova Scotia, the board that regulates dairy production, has the right to force down the value of milk quota without paying farmers who held the old quota for their loss.

Quota used to cost as much as $30,000 to cover the right to produce and sell milk from one average cow.

The board has cut the price by $5,000, so dairy farmers Paul Taylor and Doug Bacon, who say they represent the majority of the industry, went to court to challenge the board's right to do so.

Taylor said losing the quota's former value is "devastating." He compared it to a housing authority with the right to put a limit on the value of a house despite what bankers have lent the owner or what buyers are willing to pay. 

Farmers says the devaluation has implications for farm businesses and rural communities, and it will suck $80-million worth of equity out of the dairy industry over the next  three years.

Brian Cameron, general manager of the Dairy Farmers of Nova Scotia, said the reduction is meant to protect people who want to buy quota in the future from overwhelming debt.