[Congressional Record Volume 143, Number 155 (Friday, November 7, 1997)]
[Senate]
[Pages S11941-S11942]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               DAIRY DECISION OF MINNESOTA FEDERAL COURT

  Mr. LEAHY. Mr. President, a court decision was issued recently which 
could throw the entire system of supplying milk to consumers into chaos 
and could lead to dramatically higher milk prices for consumers.
  This decision was a runaway ruling that jeopardizes the survival of 
thousands of dairy farmers outside the Midwest.
  The current milk marketing order system assures local milk production 
and reliable supplies of fresh and wholesome local milk.''
  The system is designed, according to the Congressional Research 
Service, to avoid ``shortages of milk,'' and ``to assure consumers of 
adequate and dependable supplies of pure and wholesome fluid milk.''
  In this respect, America is the envy of many nations in the world 
which have unreliable milk supplies shipped in from distant locations 
at high prices because there is no local competition.
  Price differentials, which were struck down in this decision, help 
keep local producers in business, help cover the costs of transporting 
fluid milk, and avoid shortages of milk in supermarkets, according to 
CRS.
  Common sense tells us that the cost of producing and transporting 
milk varies from region to region. A flat pricing system is flat-out 
wrong.
  I joined with 47 of my colleagues recently in sending a letter to the 
Secretary of Agriculture urging him to keep the current system which 
assures local supplies of fresh milk to millions of American families.
  The key to this system that has worked so well for decades is under 
attack--once again--in Minnesota.
  It is no secret that Northern Midwestern States want to provide milk 
to the Nation. New technology is available where they can ``drain'' the 
water out of their milk, ship the resulting concentrate, and then 
reconstitute the milk at distant locations.
  Over time, this new concentration of the dairy industry in Northern 
Midwestern States could put thousands of dairy farmers out of business 
around the Nation. I am very afraid that, ultimately, prices to 
consumers will rise as the supply of milk becomes more and more 
concentrated in one area of the country.
  My major fear is that when Midwestern winter storms blanket roads 
with snow, or when freezing conditions in the North stop traffic on the 
interstates, or when there is a trucker's strike, that consumers in the 
rest of the country are going to feel lucky if they can buy milk for 
just $5 a gallon. Parents who need milk for children might want to pay 
a lot more than $5 a gallon, if they could buy milk at any price.
  I do not think consumers are going to like this system of being 
dependent on reconstituted milk being shipped in from 1,000 miles away 
at who knows what price.
  Our current system of encouraging local production of milk works very 
well for consumers. USDA has been right to promote the local production 
of fresh milk instead of this system of concentrating the industry in 
one region and then shipping products to be reconstituted into milk 
later.
  The Court's ruling--unless stayed--will be effective almost 
immediately. the order will not have a great deal of effect in states 
fortunate enough to be in Northeast Dairy Compact, or in states that 
have their own milk order system such as California.
  In those states, local dairy farmers should be able to stay in 
business and provide towns and cities with local, fresh supplies of 
milk.
  When disasters, or winter storms hit, consumers in these areas will 
be able to buy milk.
  USDA must appeal the decision immediately--no ifs, ands, or buts. The 
existence of thousands of dairy farmers is at stake.
  It is unclear to me precisely which order regions will be affected by 
the Court order. The Order terminates Class I differentials in ``all 
surplus and balanced marketing orders and all deficit orders that do 
not rely on direct shipments of alternative milk supplies from the 
Upper Midwest or from other deficit orders which in turn rely on the 
Upper Midwest for replacement supplies.''
  A balanced market is one with sufficient milk to meet demand plus a 
40% reserve. A surplus market produces milk in excess of the demand and 
reserve percentage.
  Thus, a few Southeastern states may be exempt from the Order.
  For states like New York, Pennsylvania, New Jersey, and some 
Southeastern states, and southern Midwestern states, impact of the 
Order should come swiftly as banks decline to make loans to dairy 
farmers.
  The expectation is that producer income will drop significantly and 
that farmers would go out of business as lenders refuse to provide 
credit.
  Prices in the Northern Midwest could strengthen 20 to 30 cents per 
hundredweight (one-hundred pounds) sold--but it is too early to really 
know how much their prices would go up.
  This action was originally filed some years ago by Eric Olsen, 
Patricia Jensen, James Massey and Lynn Hayes representing the Farmers 
Legal Aid Action Group. It was filed before the Honorable Judge David 
S. Doty of the Fourth Division for the District of Minnesota.
  Mr. President, I know that my distinguished colleague from Vermont, 
Mr. Jeffords, will also be addressing the Senate on the same issue. 
Again, It is about a court decision that was issued recently which 
could throw the entire system of supplying milk to consumers into chaos 
and could also lead to dramatically higher milk prices for consumers.
  The decision was a runaway ruling that jeopardizes the survival of 
thousands of dairy farmers everywhere except the Midwest.
  Now, the current milk marketing order system, which is a very complex

[[Page S11942]]

one, assures local milk production, and it assures reliable supplies of 
fresh and wholesome local milk. In this respect, we are the envy here 
in the United States of most nations of the world. Most nations have 
unreliable milk supplies that are shipped in from distant locations at 
high prices, because there is no local competition. Common sense tells 
us that the cost of producing and transporting milk varies from region 
to region. You can't have a flatout pricing system that is the same 
everywhere.
  Now, again, I joined with 47 other Senators recently in sending a 
letter to the Secretary of Agriculture urging him to keep the current 
system, which assures local supplies of fresh milk to millions of 
Americans. It's no secret that northern Midwestern States want to 
provide all the milk to the Nation. They have a technology where they 
take all the water out of their milk and you get this kind of ``glop'' 
that is left, and you ship it to distant places and somebody pumps some 
water back into it, and you end up with this reconstituted milk, which 
they can then sell. If you do that, what is going to happen is that the 
``glop" producers of this reconstituted milk will all be in one part of 
the country and the rest of us will be everywhere else in the country. 
The rest of the country will be at their mercy, depending upon when, 
how often, and at what price they want to send this concentrate to us.
  Now, my major fear is--especially coming from a part of the country 
that has severe winters--what happens when the Midwestern winter storms 
blanket roads with snow, or you get the freezing conditions in the 
North and that stops traffic on the Interstates? It happens fairly 
often. Or what happens when there is a truckers' strike? When that 
happens, I think you are going to find consumers in the country feeling 
lucky they can buy milk for $5 a gallon. Parents who need milk for 
their children might have to pay a lot more than $5 a gallon if they 
have to buy milk at whatever price. Whatever price they get it for, it 
is going to be the reconstituted ``glop'' coming to that area--and 
water is going to have to be added--from producers from a thousand 
miles away. I don't think this makes much sense. I like the system we 
have today, which encourages producers in a number of different areas 
of the country where they can produce fresh milk for the consumers at 
prices they can afford.
  Now, the court's ruling will be effective immediately. It is not 
going to have a great deal of effect on the States in the Northeast 
dairy compact or States who have their own milk order system, such as 
California. In those States, local dairy farmers should be able to stay 
in business and provide local, fresh supplies of milk. When disasters 
and winter storms hit, consumers in those areas will be able to get 
milk. What I worry about is all the other areas.
  The Department of Agriculture has to appeal this decision 
immediately--no ifs, ands, or buts. The existence of thousands of dairy 
farmers is at stake. USDA has to act for these farmers and for the 
consumers.
  Mr. President, I see my distinguished colleague from Vermont on the 
floor. I now yield the floor.
  Mr. JEFFORDS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Vermont, Mr. Jeffords, is 
recognized.
  Mr. JEFFORDS. Mr. President, I commend my colleague from Vermont for 
raising what could be a very important issue to all of the people of 
this country who like milk. I don't understand how a court could do 
that, other than the fact that, when I read he was from Minnesota, I 
new why it was done. The judiciary sometimes gets a little prone to its 
own constituency. But I want to tell you, I want to raise the danger 
that this precedent sets. I urge Secretary Glickman to appeal the 
judge's decision and to make sure that this does not maintain an 
existence.
  If this ruling survives, it could be the final financial blow to many 
farmers throughout the country. It could also lead to higher prices 
consumers pay for their milk. Senator Leahy and I have stood on the 
floor many times defending Vermont's dairy farmers and dairy farmers 
across the country. We have fought to give both the dairy farmers and 
the consumers a fair and stable milk price. At times, debates on dairy 
policy have pitted one region against the other. In this case, a group 
of Midwestern milk producers hope to eliminate the pricing structure 
for fluid milk that dairy farmers and consumers rely upon for stable 
prices.
  This methodology of creating a system to provide differentials was 
created way back in our history, at a time when the original milk acts 
were considered, recognizing that it's incredibly important that we 
have fluid milk available to the families all across the Nation. One 
only has to remember back a few years ago when there was a tremendous 
drought in Minnesota and Wisconsin, in the area where these farmers say 
they can produce it for all the country. As a result of that, we had 
the huge price increases. We had to supply milk to other regions 
because they could not produce it sufficiently in Minnesota and 
Wisconsin. That is a demonstration as to why the original dairy 
legislation in the acts of the thirties made sure that this fluid milk 
would be available across the Nation at all times, understanding the 
need for fresh milk.
  If this ruling of the judge from Minnesota prevails, the entire 
country may ultimately rely on Minnesota and her bordering States for 
their milk supply. This would be extremely dangerous to consumers for 
prices and not being able to get it because of the lack of milk.
  I know that in Vermont, every morning--and I am sure it's the same at 
breakfast tables across the country--people enjoy fresh milk that was 
produced and packaged within a reasonable distance of their home and at 
reasonable prices. There are many other reasons for maintaining a 
healthy dairy industry in each region. The economic and social benefits 
ripple through each farming community.
  Mr. President, the present system for pricing fluid milk is currently 
under consideration from the U.S. Department of Agriculture. There is 
tremendous support for maintaining the current pricing structure for 
fluid milk. Recently, as Senator Leahy mentioned, 48 Senators and 113 
House Members sent a letter to Secretary Glickman urging him to keep 
the current system.
  It is critical that the Secretary act quickly to request a stay and 
appeal this decision. I urge my colleagues to join Senator Leahy and 
myself in that request.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Illinois.

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