[Congressional Record Volume 143, Number 118 (Tuesday, September 9, 1997)]
[Senate]
[Pages S9020-S9022]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           SENATE RESOLUTION 119--RELATIVE TO MILK PRODUCERS

  Mr. FEINGOLD (for himself, Mr. Specter, Mr. Moynihan, Mr. Kohl, Mr. 
Breaux, Ms. Landrieu, Mr. D'Amato, and Mr. Wellstone) submitted the 
following resolution; which was referred to the Committee on 
Agriculture, Nutrition, and Forestry:

                              S. Res. 119

       Whereas the basic formula price for milk established by the 
     Secretary of Agriculture under Federal milk marketing orders 
     fell to a 6-year low of $10.70 in May 1997 following months 
     of substantial price volatility and remained at similarly low 
     levels throughout the summer of 1997;
       Whereas the basic formula price for milk announced for each 
     month since April 1997 has been below the cost of producing 
     milk for milk producers in all regions of the United States, 
     as calculated by the Department of Agriculture;
       Whereas income losses to milk producers resulting from low 
     milk prices have imposed economic hardship on milk producers 
     in all regions of the United States;
       Whereas lost income to milk producers may create economic 
     losses to businesses and result in loss of jobs in rural 
     communities;
       Whereas milk producers, rural residents, and agribusinesses 
     in rural areas have petitioned the Secretary of Agriculture 
     to implement an emergency milk price floor to provide price 
     relief to milk producers;
       Whereas the Secretary of Agriculture has authority under 
     the Agricultural Adjustment Act (7 U.S.C. 601 et seq.), 
     reenacted with amendments by the Agricultural Marketing 
     Agreement Act of 1937, to establish minimum prices paid to 
     milk producers covered by Federal milk marketing orders; and
       Whereas the Secretary of Agriculture has authority under 
     section 143 of the Agricultural Market Transition Act (7 
     U.S.C. 7253) to use informal rulemaking to reform Federal 
     milk marketing orders: Now, therefore, be it
       Resolved, That it is the sense of the Senate that the 
     Secretary of Agriculture should immediately use the authority 
     of the Secretary under the Agricultural Adjustment Act (7 
     U.S.C. 601 et seq.), reenacted with amendments by the 
     Agricultural Marketing Agreement Act of 1937, to establish a 
     temporary emergency minimum milk price that--
       (1) is equitable to all producers nationwide; and
       (2) provides price relief to economically distressed milk 
     producers.

  Mr. FEINGOLD. Mr. President, I rise to submit a resolution which I 
hope all of my colleagues will support. Milk is

[[Page S9021]]

produced in every State of this country and in recent months the dairy 
farmers who produce that milk have suffered from unusually low milk 
prices. I am pleased to be joined in offering this resolution by the 
Senator from Pennsylvania [Mr. Specter], my senior Senator from 
Wisconsin [Mr. Kohl], the Senator from New York [Mr. Moynihan], and 
both Senators from Louisiana [Mr. Breaux and Ms. Landrieu] all of whom 
have worked hard over the past 10 months to find solutions to the 
problem of low milk prices.
  The resolution we are introducing today expresses the sense of the 
Senate that the Secretary of Agriculture should use his administrative 
authority under the Agricultural Marketing Agreement Act of 1937 to set 
a temporary emergency price floor under milk prices.
  Mr. President, as I am sure many Members are aware, milk prices have 
fallen in the past several months to levels far below the amount it 
costs many dairy farmers to produce that milk. In fact, the basic 
formula price for milk as calculated by USDA for every month since 
April has been below the cost of producing milk for all regions of the 
country--including the lowest cost milk producers in California. This 
situation might be bearable if dairy farmers had any assurance that 
prices might rebound--that the financial strain they are under would be 
alleviated--but many predictions about milk prices over the past 10 
months have simply proven inaccurate.
  Last fall, milk prices fell from $14.13 per hundred pounds in October 
to $11.61 in November. This dramatic decline in milk prices was nearly 
unprecedented. And while milk prices were strong prior to the milk 
price collapse last fall, the higher prices of mid-1996 reflected the 
extremely high cost of feed last year which left dairy farmers with 
little to show from those high milk prices. Feed is the single most 
important, and most expensive, input to milk production. It is 
frequently the case that the cost of the input--in this case, forage 
and feed grains such as corn--is reflected in the cost of the output--
milk. So while some dairy producers may have found 1996 to be a good 
year, many more were struggling under high feed bills that still had to 
be paid long after the strong milk prices had evaporated.
  Despite the milk price crash late last year, many dairy farmers had 
expressed optimism for 1997 as milk prices incrementally rose early 
this year, and were expected to continue to rise throughout the year. 
Many of my colleagues joined me and other dairy State Senators in 
asking the Secretary of Agriculture to take administrative steps to 
shore up milk prices, such as making advance purchases of cheese and 
other dairy products for the school lunch and breakfast programs and to 
export more dairy products under the Dairy Export Incentive Program. 
The Secretary took a number of steps in that regard that may have 
facilitated the slight increase in milk prices and we thank him for his 
efforts.
  Unfortunately, the milk price recovery was not sustained and in May, 
the basic formula price for milk hit a 6-year low of $10.70 per 
hundredweight and remained at roughly that level throughout the summer. 
Even the mailbox milk prices--that is, the milk prices that farmers are 
actually paid including all premiums--were below the cost of production 
for many milk producing regions of the country this summer. These tight 
margins have squeezed even the most efficient operators and have placed 
a great deal of financial stress on small- to mid-size family dairy 
farms who are less able to absorb the price shocks.

  While the recently announced basic formula price for August increased 
milk prices by about $1.00 per hundredweight, few farmers believe this 
is enough for them to continue to pay their bills through the fall and 
many farmers are skeptical that prices will increase much beyond this 
level.
  Mr. President, it has been a long summer for dairy farmers who have 
come to Washington today to demand our action and our support. They 
have brought with them thousands of petitions from farmers, rural 
residents, and agribusinesses seeking emergency price relief for milk 
producers. It is in response to those petitions, the hard work that has 
gone into gathering the signatures, and the months of exasperatingly 
low milk prices that we introduce this resolution today.
  Mr. President, I urge my colleagues to support their dairy farmers by 
supporting this resolution.
  This resolution simply expresses the sense of the Senate that the 
Secretary of Agriculture should use the substantial administrative 
authority and discretion the Congress has provided him under the 
Agricultural Marketing Agreement Act of 1937 to provide temporary 
emergency price relief to dairy farmers throughout the Nation. The 
resolution stipulates that such price relief will be provided in a 
manner that is equitable to farmers throughout the country. As many of 
my colleagues know, dairy policy has frequently been embroiled in 
regional battles over pricing. This resolution stipulates that all 
producers will receive the same price relief regardless of where they 
milk their cows.
  Many Senators have already asked the Secretary to implement this type 
of emergency price floor. Earlier this year over 30 Senators from all 
regions of the country contacted the Secretary urging that he provide 
price relief for economically stressed dairy farmers. And those 
requests came even before prices hit bottom this summer. I urge those 
Senators to join me in sponsoring this resolution.
  Agriculture Secretary Dan Glickman, however, has indicated that he 
needs more than just letters from Senators to provide this type of 
emergency price relief. Rather, he indicated in a July 9 letter to the 
distinguished chairman and ranking member of the Senate Agriculture 
Committee [Mr. Lugar and Mr. Harkin] that he needs Congress to provide 
a more formal expression of support for temporary emergency price 
relief for dairy farmers. This resolution, when agreed to by the 
Senate, will provide the Secretary with the support he needs to provide 
milk price relief.
  The resolution, while directing the Secretary to take action, 
provides him with flexibility in providing price relief. If milk prices 
do indeed recover this fall, a price floor may be unnecessary and the 
Secretary will be able to take that into account. However, analysts are 
unsure as to what milk prices will ultimately be this fall when they 
normally reach their peak. High levels of nonfat dry milk stocks may 
continue to depress prices through the end of the year.

  Some might ask why dairy farmers should be given this assistance. The 
answer, Mr. President, is that a temporary emergency price floor is 
necessary because unlike other commodity producers, dairy farmers were 
singled out in the Federal Agricultural Improvement and Reform Act by 
having their only support mechanism--price supports--phased out. No 
other commodity program was terminated by the 1996 FAIR Act. Dairy 
farmers were not provided with the ``Freedom to Farm'' payments that 
have been provided to wheat and feed grain producers each year 
regardless of crop prices. These payments, also known as transition 
payments, were provided to crop producers in order to help them 
transition to a market without Government intervention. However, no 
transitional income assistance has been provided for milk producers 
even though their commodity program has been, in effect, eliminated.
  Similarly, while wheat and feed grain producers, as well as producers 
of many other commodities, have federally subsidized crop insurance 
available to help them manage their production risk, and in some cases, 
their price risk as well, there is no USDA insurance program for milk 
production.
  While producers of other commodities may be able to hedge their price 
and production risk using high volume futures and options markets that 
have operated in those commodities for decades, dairy farmers have no 
such markets to rely on. While futures and options markets exist for 
dairy products, the trading volumes for most of these markets are so 
low that few farmers are able to use them.
  For whatever reason, Mr. President, dairy farmers were not provided 
the tools to weather a transition to a more market oriented 
agricultural sector.
  Mr. President, I am not a strong advocate of Government intervention 
in dairy markets. I have seen the types of division and inequity that 
Federal involvement in dairy policy and milk

[[Page S9022]]

prices can create in the dairy industry. So, I do not introduce this 
resolution lightly. But if there was ever a time for the Federal 
Government to step in to help dairy farmers, it is now. During the 
month of August, I traveled throughout Wisconsin conducting the 
listening sessions which I hold in each county, each year. And in the 
15 years I have represented Wisconsin farmers, I have never seen a 
greater sense of despair among farmers and other rural residents.
  Mr. President, there is a sense in the countryside that Washington, 
DC, has turned a blind eye to the low milk prices of 1997. While that 
might be a misperception, as I know many of my colleagues have worked 
with me to find solutions to low milk prices, it is understandable that 
farmers feel this way. Farmers began asking for this type of price 
relief at the end of 1996 and 9 months later, nothing has come of that 
request. That must change.
  Mr. President, we must act now to provide some very short-term relief 
that will help economically distressed dairy farmers through this milk 
price crisis. We can do that by passing the resolution we are 
introducing today. The long-term solutions to volatile milk prices and 
farm income are more nebulous and we must work to address them. But 
first, we must take some steps to lessen the immediate financial strain 
on farm families throughout the Nation.
  I urge my colleagues to support this important resolution.
  Mr. SPECTER. Mr. President, I rise today to join with my colleague 
from Wisconsin, Senator Feingold, in submitting a sense of the Senate 
resolution calling for the Secretary of Agriculture to immediately 
establish a temporary emergency minimum milk price that is equitable to 
all producers nationwide, and that provides price relief to 
economically distressed milk producers. We are joined by Senators Kohl, 
Moynihan, Breaux, and Landrieu.
  I have been working with my colleagues in the Senate over the past 
year in order to provide a more equitable price for our Nation's milk 
producers. Last year, dairy prices set an all-time high, with an 
average price of $13.38 per hundredweight. The price reached its peak 
in September at $15.37 per hundredweight, but the market experienced 
its largest drop in history during November, falling to $11.61 per 
hundredweight, which represents a 26 percent decline. During this same 
period, the cost of the dairy production reached a record high due to a 
30-50 percent increase in grain costs.
  This record drop in prices has placed a tremendous strain on our 
Nation's dairy farmers, who have been forced to sell their milk for a 
price below the cost of production for much of the past year. In an 
attempt to provide some relief, and to ensure that thousands of small 
dairy producers were not forced out of business entirely, I joined with 
19 of my Senate and House colleagues on November 22, 1996, in writing 
to Agriculture Secretary Glickman, urging him to take action to help 
raise dairy prices. Secretary Glickman responded on January 7, 1997, by 
announcing several short-term actions to stabilize milk prices. While 
these actions did have a small positive effect in increasing dairy 
prices, they did not provide adequate relief to our nation's dairy 
farmers.
  In order to hear the problems that dairy farmers are facing first 
hand, I ask Secretary Glickman to accompany me to northeastern 
Pennsylvania, which he did on February 10. We met a crowd of 
approximately 750 angry farmers who complained about the precipitous 
drop in the price of milk.
  During the course of my analysis of the pricing problem, I found that 
the price of milk depends on a number of factors, one of which is the 
price of cheese. For every 10 cents the price of cheese is raised, the 
price of milk would be raised by $1 per hundredweight. I further 
learned that the price of cheese was determined by the National Cheese 
Exchange in Green Bay, WI. According to a report created by the 
University of Wisconsin, there was an issue as to whether the price of 
cheese established by the Green Bay exchange was accurate or not. The 
authors of the report used a term as tough as manipulation. Whether 
that is so or not, there was a real question as to whether that price 
was accurate. Therefore, 3 days after the hearing in northeastern 
Pennsylvania, I introduced a sense-of-the-Senate resolution with 
Senators Santorum, Feingold, Kohl, Jeffords, Leahy, Wellstone, Snowe, 
Collins, and Grams. The resolution, which passed by a vote of 83-15, 
stated that the Secretary of Agriculture should consider acting 
immediately to replace the National Cheese Exchange as a factor to be 
considered in setting the basic formula price for dairy.
  In my discussions with Secretary Glickman, I found he had the power 
to raise the price of milk unilaterally by establishing a different 
price of cheese. Therefore, on March 10, I wrote to Secretary Glickman 
and urged him to take immediate action to establish a price floor at 
$13.50/cwt on a temporary, emergency, interim basis until he completed 
his action on delinking the National Cheese Exchange from the basic 
formula price.

  This subject was aired during the course of a special hearing before 
the appropriations subcommittee on March 13. At that time, Secretary 
Glickman said that the Department of Agriculture had ascertained the 
identity of 118 people or entities who had cheese transactions that 
could establish a different price of cheese. He told me that the 
Department had written to the 118 and were having problems getting 
responses. I suggested it might be faster to telephone those people. 
Secretary Glickman provided my staff with the list of people, and we 
telephoned them and found, after reaching approximately half of them, 
that the price of cheese was, in fact, $.164 higher than was being 
reported on the Cheese Exchange. On March 19, I again wrote Secretary 
Glickman and informed him of the results of my staff's survey. This 
price difference translates to a $1.64 per hundredweight addition to 
the price of milk.
  On April 17, I introduced two pieces of legislation to revise our 
laws so that they better reflect current conditions and provide a fair 
market for our Nation's dedicated and hard-working farmers. The 
legislation goes to two points. One is to amend the Agriculture Market 
Transition Act to require the Secretary to use the price of feed grains 
and other cash expenses in the dairy industry as factors that are used 
to determine the basic formula for the price of milk and other milk 
prices regulated by the Secretary. Simply stated, the Government should 
use what it costs for production to establish the price of milk, so 
that if farmers are caught with rising prices of feed and other rising 
costs of production, they can have those rising costs reflected in the 
cost of milk.
  The second piece of legislation would require the Secretary of 
Agriculture to collect and disseminate statistically reliable 
information from milk manufacturing plants on prices received for bulk 
cheese and require the Secretary to report back to Congress within 150 
days on the rate of voluntary compliance with the survey. This bill was 
successfully attached to the 1997 supplemental appropriations bill 
which was signed into law on June 12, 1997.
  On Tuesday, May 6, 1997, the Department of Agriculture announced that 
they were replacing the National Cheese Exchange in Green Bay, WI, with 
a survey of cheddar cheese manufacturers in the United States in order 
to determine the price of cheese for use in setting the basic formula 
price. I am pleased to report that last Friday, the basic formula price 
jumped to $12.07, an increase of $1.21 over last month, as a result of 
increased cheese prices measured by this new cheese survey.
  While we have made some progress in providing relief to farmers, 
there is much more that needs to be done. This sense-of-the-Senate 
resolution will ensure that farmers receive the necessary support they 
need to continue to produce milk. This resolution makes it clear that 
in emergency situations, the Secretary of Agriculture should set a 
temporary minimum price for dairy that is equitable to all producers 
nationwide and that provides price relief to economically distressed 
milk producers, I urge my colleagues to join with Senator Feingold and 
me as we work together to revise the current dairy laws so that they 
better reflect current conditions and provide a fair market for our 
Nation's dedicated and hard-working farmers.

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