[Congressional Record Volume 143, Number 19 (Thursday, February 13, 1997)]
[Senate]
[Pages S1366-S1367]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 ADDRESSING THE DECLINE IN MILK PRICES

  Mr. SPECTER. Mr. President, I send a substitute or amended resolution 
to the desk and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will read the resolution by title.
  The bill clerk read as follows:

       A resolution (S. Res. 55) expressing the sense of the 
     Senate regarding the need to address immediately the decline 
     in milk prices.

  The Senate proceeded to consider the resolution.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, this resolution is being submitted on 
behalf of Senators Santorum, Feingold, Kohl, Jeffords, Leahy, 
Wellstone, Snowe, and Collins.
  It follows activity which Senator Santorum and I had undertaken in 
our State where the farmers have been very hard hit by low milk prices 
and rising costs of production, so that many, many farmers are near 
bankruptcy.
  It is my understanding that this is a national problem, not only a 
problem in Pennsylvania. On Monday of this week, Secretary of 
Agriculture Dan Glickman went to northeastern Pennsylvania and heard 
from a large assembly of farmers, estimated at some 500, and heard 
firsthand the plight of those farmers, again, as I say representative 
of the Nation.

  We all know that we rely upon the farmers for our supply of food. We 
know how important milk is in that supply. And we have a large group of 
farmers who laid it on the line in very emphatic and dramatic terms 
about their impending bankruptcy, the hard times they were facing 
because the price of milk had dropped so precipitously from $15.37 per 
hundredweight in September to $11.34 cents per hundredweight in 
December 1996, all the time costs going up.
  In our inquiry on this issue, we found that a key ingredient on the 
pricing of milk was the price of cheese, and that the price of cheese 
had been established by the Green Bay Cheese Exchange, and that the 
price on the Green Bay Cheese Exchange might not be realistic of the 
accurate market price. If the price of cheese is raised by 10 cents, it 
means there would be a rise in the price of milk $1 per hundredweight.
  I do believe that the Secretary of Agriculture is sympathetic to this 
issue and would like to ascertain the accurate price of cheese.
  It is my thought, Mr. President, from all that I know, and it has to 
be verified, that the price of cheese is priced unreasonably low at 
this time by the Green Bay Exchange; therefore, the Green Bay 
Exchange's price of cheese is really not the price of cheese.
  This resolution maintains that it is the sense of the Senate that the 
Secretary of Agriculture should consider acting immediately pursuant to 
his legal authority to modify the basic formula price for dairy by 
replacing the national cheese exchange as a factor to be considered in 
setting the basic formula price.

[[Page S1367]]

  This resolution has been filed pursuant to the leadership initiated 
by my colleague, Senator Santorum, who traveled to northeastern 
Pennsylvania several weeks ago. I went this past Monday. And I think it 
will put us on a track to show that something can be done immediately. 
When I say immediately, within the course of the next several weeks.
  It had been my hope that we might have been able to make some 
modification in the price of cheese to have even faster action by the 
Secretary of Agriculture. But considering the fact that this resolution 
was drafted on Monday morning and has gone through considerable 
analysis by a number of Members of the Senate--and I thank my 
colleagues for their prompt attention to this issue--we are moving now 
very, very rapidly.
  In conclusion, Mr. President, let me point out that there was an 
extensive study of the Green Bay Cheese Exchange made at the request of 
the Secretary of Agriculture of the State of Wisconsin, and there were 
some indications there that because of the limited amount of cheese 
which was traded there, there was an opportunity to have a price 
established which was not genuinely a market price. The amount of 
cheese traded at Green Bay was less than one-half of 1 percent, and 
where you have such a limited exchange rate and with people at the 
scene who have a considerable interest in having a lower price of 
cheese, that result may not have represented the accurate market price 
of cheese.
  The Secretary of Agriculture has the authority unilaterally to make a 
modification on the price of cheese if he develops an evidentiary base 
from other transactions which lead him to conclude that is not the fair 
market price of cheese, and I believe that to be the case. The 
Secretary of Agriculture had previously initiated the process on 
informal rulemaking, which would take some considerable period of time. 
But he does have the authority.
  If we may vote at this time, Mr. President, I will conclude.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. KOHL. Mr. President, I want to thank the Senator from 
Pennsylvania for his efforts on this issue.
  The Cheese Exchange is of great concern to all dairy farmers 
nationwide, because it is a market that is very thinly traded, 
completely unregulated, and has a great deal of influence on the prices 
that farmers are paid for their milk.
  That's why my colleague from Wisconsin, Senator Feingold and I have 
been working to reduce the influence of the Cheese Exchange. Both 
Senator Feingold and I introduced legislation on this matter last week. 
Ultimately, what we need to do is find an alternative price discovery 
mechanism that is more reflective of market conditions, and less 
subject to manipulation.
  And we have two initiatives underway that could form the basis for 
new price discovery mechanisms.
  First, we've worked with Secretary Glickman to start a new cheese 
price survey, to survey cheese plants nationwide, to get a better view 
of prices paid for cheese. If done right, this could be very useful as 
a price discovery mechanism. But there's still some issues that need to 
be ironed out.
  And second, we've asked other exchanges such as the Coffee, Sugar, 
Cocoa Exchange to explore the possibility of creating a new cash market 
for cheese. Again, if this is done right, it could be very useful as a 
new price discovery mechanism.
  But in the short term, the Senator from Pennsylvania is right, we 
need to delink the National Cheese Exchange from the farmers' milk 
prices, and we need to do that as soon as possible. Two weeks ago, the 
Secretary of Agriculture announced a 60-day comment period on that 
exact proposal. The trick will be to find a new equivalent price 
mechanism, to take it's place. We need to find a new mechanism that is 
credible, or we'll merely make matters worse.
  So I thank the Senator from Pennsylvania, and I look forward to 
working with him on this issue, which has been a longstanding concern 
of mine. As far as I'm concerned, the more Senators become aware of 
this problem and join our efforts, the better.
  Mr. FEINGOLD. Mr. President, I am pleased to join the Senator from 
Pennsylvania, Senator Specter, in submitting the Sense of the Senate 
Resolution directing the Secretary of Agriculture to take action to 
delink the National Cheese Exchange from the basic formula price 
established by USDA under Federal Milk Marketing Orders.
  Dairy farmers have been concerned for many years about the role of 
the National Cheese Exchange, located in Green Bay, WI, in determining 
the price they receive for their milk. While the exchange has had an 
indirect influence on milk prices for many years, it also directly 
affects milk prices through USDA's basic formula price, established by 
regulation in 1995. For years, Wisconsin farmers have been concerned 
that the characteristics of the Exchange, outlined in this resolution, 
make it vulnerable to price manipulation. Those fears were confirmed by 
a March 1996 report by the University of Wisconsin Department of 
Agricultural Economics which found evidence supporting the allegations 
of manipulations. The concerns about manipulation and the influence of 
the exchange on milk prices nationally, were further heightened by the 
dramatic and unprecedented decline in cheese prices on the exchange 
last fall which led to a 26 percent decline in farm milk prices.
  The senior Senator from Wisconsin Senator Kohl and I have been 
working to address the concerns of the UW report for the last 10 months 
and have introduced legislation to address the short- and long-term 
problems associated with the Cheese Exchange. The directive of the 
resolution introduced by the Senator from Pennsylvania is also included 
in my bill S. 258, the Milk Price Discovery Improvement Act of 1997 
which I introduced last week. My legislation goes beyond the directive 
in the resolution by seeking additional long term solutions to the lack 
of price discovery in milk markets and by establishing improved USDA 
oversight of the National Cheese Exchange. S. 256, introduced by the 
senior Senator from Wisconsin Senator Kohl, which I have cosponsored, 
would enhance the role of the Commodity Futures Trading Commission in 
National Cheese Exchange oversight as well.
  The resolution we are introducing today, however, emphasizes the 
importance of quick action on this problem by the Secretary of 
Agriculture and I am pleased to welcome the Senator from Pennsylvania 
to our efforts to resolve this very difficult problem. Farmers have a 
right to expect that milk prices are determined fairly and without 
manipulation. The resolution introduced today is a step toward reducing 
the influence of the exchange on farm-level milk prices.
  I urge my colleagues to support this resolution and to work with us 
toward the enactment of S. 258 and S. 256 as well.
  I yield the floor.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER. Is the Senator from Pennsylvania propounding a 
unanimous consent request?
  Mr. SPECTER. Mr. President, I am advised that I do have the authority 
to yield back the time.
  The PRESIDING OFFICER. All time has been yielded back.
  Mr. SPECTER. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the resolution.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. FORD. I announce that the Senator from Louisiana [Mr. Breaux] is 
necessarily absent.
  I also announce that the Senator from Vermont [Mr. Leahy] is absent 
attending a family funeral.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
who desire to vote?
  The result was announced--yeas 83, nays 15, as follows:

                      [Rollcall Vote No. 11 Leg.]

                                YEAS--83

     Abraham
     Akaka
     Ashcroft
     Baucus
     Biden
     Bingaman
     Boxer
     Bryan
     Bumpers
     Burns
     Byrd
     Chafee
     Cleland
     Cochran
     Collins
     Conrad
     Coverdell
     D'Amato

[[Page S1367]]


     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Faircloth
     Feingold
     Feinstein
     Ford
     Frist
     Glenn
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Harkin
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Levin
     Lieberman
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Moseley-Braun
     Moynihan
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Sessions
     Shelby
     Smith, Bob
     Smith, Gordon H
     Snowe
     Specter
     Stevens
     Thompson
     Thurmond
     Torricelli
     Warner
     Wellstone
     Wyden

                                NAYS--15

     Allard
     Bennett
     Bond
     Brownback
     Campbell
     Coats
     Craig
     Enzi
     Hatch
     Kempthorne
     Kyl
     Lautenberg
     Mack
     Roberts
     Thomas

                             NOT VOTING--2

     Breaux
     Leahy
       
  The resolution (S. Res. 55) was agreed to.
  The preamble was agreed to.
  The resolution, with its preamble, reads as follows:

                               S. Res. 55

       Whereas, during the last few months farm milk prices have 
     experienced substantial volatility, dropping precipitously 
     from $15.37 per hundredweight in September, 1996 to $11.34 
     per hundredweight in December, 1996;
       Whereas, the price of cheese at the National Cheese 
     Exchange in Green Bay, Wisconsin influences milk prices paid 
     to farmers because of its use in the Department of 
     Agriculture's Basic Formula Price under Federal Milk 
     Marketing Orders;
       Whereas, less than one percent of the cheese produced in 
     the United States is sold on the National Cheese Exchange and 
     the Exchange acts as a reference price for as much as 95 
     percent of the commercial bulk cheese sales in the nation; 
     Now, therefore, be it
       Resolved, That it is the Sense of the Senate of the United 
     States that the Secretary of Agriculture should consider 
     acting immediately pursuant to his legal authority to modify 
     the Basic Formula Price for dairy by replacing the National 
     Cheese Exchange as a factor to be considered in setting the 
     Basic Formula Price.

  The PRESIDING OFFICER. The majority leader is recognized.

                          ____________________