[Congressional Record Volume 144, Number 13 (Monday, February 23, 1998)]
[Senate]
[Pages S812-S814]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
OMB'S STUDY OF THE NORTHEAST DAIRY COMPACT
Mr. GRAMS. Mr. President, I rise today to express concern at the
continued efforts of some Members of Congress to use dairy farmers and
consumers as vehicles for political manipulation.
Late in the day on Friday, February 12, the Office of Management and
Budget released a study requested by Congress which is reported to be
an analysis of the economic effects of the Northeast Interstate Dairy
Compact. Unfortunately, it appears only to be a masterful work of
political manipulation that skillfully avoids answering the core
question of what actually is the impact of the Northeast Dairy Compact.
As a watered-down compromise, the report sheds little light on the
plight of dairy farmers both inside the Compact region and around the
nation. Meanwhile, the New England milk tax continues to take its toll
on the most vulnerable consumers.
Senator Feingold and I were the authors of the amendment which
directed OMB to undertake an unbiased, independent study of the direct
and indirect economic effects of the Northeast Interstate Dairy
Compact. Did we receive an unbiased study? Hardly. I was informed that
Compact supporters had plenty of input. Lacking the same political
clout, opponents did not. What the American people have received is a
sanitized product of regional politics. It's one more example of this
administration's failed dairy policy.
The OMB has made it painfully clear that they had neither the time,
data, nor resources to produce a meaningful analysis. This is not a
legitimate excuse for producing a report with exorbitant levels of
``statistical uncertainty.'' We attempted to work with OMB in
addressing the issue of the inadequate time frame for conducting a
meaningful study. At the beginning of the year, OMB asked for my
assistance in requesting a time-extension before the release of the
report. I worked with them to obtain the short extension they
requested, in the interest of not rushing through the project. This was
the only time an extension was requested even though I made it clear I
would work with them in obtaining further extensions as necessary.
So, why did OMB wait until the week before the initially scheduled
release of the study to inform us that not enough time had passed to
produce a significant, decisive report? If OMB could see there still
was a problem with insufficient data due to the limited time the
Compact has been in effect, they should have made a formal request for
an extension.
There was no attempt to seek an extension to allow a meaningful
study, only a veiled attempt to get this request off their plate--even
if it resulted in an inferior product compromising the integrity of
OMB. Aren't the best economists in the government at OMB? This study
questions that presumption.
The attitude in a staff briefing conducted by OMB three weeks ago was
that it did not want this task, and sought to get rid of it as soon as
possible. We expect OMB to conduct professional and unbiased studies.
Apparently, that is not possible.
Even without a decent report, we all know the Compact hurts
consumers. Milk prices have increased an average of 17 cents a gallon
throughout New England. Those most adversely impacted include low-
income families, children, and elderly residents on fixed incomes.
Over the past year, a number of newspaper articles have appeared in
the New England region that have questioned the legitimacy of the
Compact. I ask unanimous consent that a
[[Page S813]]
sampling of these be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Legislative Gazette, Nov. 3, 1997]
Group Concerned About Raising Milk Prices
(By Elysia Nest)
Cookies will just have to go without it. And morning coffee
just won't be the same.
If Gov. George E. Pataki's newly appointed dairy task force
agrees to artificially raise the price of milk to aid the
state's ailing dairy farmers this week, low-income families
will be hit the hardest, according to John Schnittker, senior
economist for Public Voice for Food and Health Policy.
Schnittker warned that boosting the price dairy farmers
receive for milk will cost the state's consumers $91 million
over the next 12 months. That's an increase of 21 cents a
gallon.
Also, the organization opposes the possibility of New York
joining in the Northeast Interstate Dairy Compact for fear
that it would raise prices for consumers without enhancing
the long-term viability of small dairy farmers.
The revenue would continue to flow to the largest
producers, who would in turn produce more milk, further
shutting out the smaller farms. The Compact allows New
England to receive a price for milk that is about the price
set by the federal dairy program. This price is currently
$16.94 per 100 pounds of milk.
Farmers are getting less for their milk. People are paying
more. Schnittker sees danger signs ahead.
``The governor's dairy task force should reject attempts to
get a quick fix to these problems,'' he said. ``A price
increase will harm the pocketbooks and the health of New
York. The low-income consumer will be hit the hardest. It
robs families of purchasing power. Dollars that are needed
for groceries will be spent on milk.''
But Rick Zimmerman of the New York Farms Bureau said Public
Voice is a front group for dairy farmers. ``They are farmer
advocates,'' he said, ``not consumer advocates.'' Zimmerman,
however, said there is a short-term answer to the problem.
``This is an opportunity for the governor to institute an
emergency price increase for fluid milk that could prove of
some assistance.'' While the length of time that an
artificial price increase may be implemented is dictated by
state law at 90 days, Zimmerman said it may be just what the
state needs to get the dairy farms back on track.
Peter Gregg, spokesman for the Department of Agriculture
and Markets, said he has complete faith that the dairy task
force will do what needs to be done.
Still, Michele Mitola, director for New York Citizens for a
Sound Economy, said an artificial price increase would barely
help farmers at all. It would just be another consumer tax
increase.
``It is bad enough that the federal government has set
prices for milk; to allow the state to artificially raise the
price higher amounts to nothing but a tax increase for the
state's consumers,'' she said. ``As with any consumption tax,
the burden will be greatest on those at the lowest end of the
income scale. The governor is trying to sustain an industry
on the backs of the state's consumers. This is the equivalent
of corporate welfare, and consumers should not be forced by
the government to pay above-market process to sustain any
industry.''
In addition to the financial strain higher prices would
cause, Public Voice estimates the loss in purchasing power to
New York food stamp recipients under the plan to exceed $11
million over 12 months, Also, New York taxpayers will pay $5
million more for school meal programs.
The assistance plans would also hit the New York
metropolitan area hard, since it has a large urban
population. Over the next 12 months, the analysis found,
downstate residents can expect to pay $49 million in higher
milk costs under the plans.
The New York State Public Research Group (NYPIRG) is also
concerned. It opposes ``over-order'' pricing, regardless of
whether it is accomplished through administrative action by
the Department of Agriculture and Markets or through
participation in the Northeast Interstate Dairy Compact.
``There is little reason to believe that an increase in
dairy support will provide help to the small family farms
that truly in need,'' said Russ Haven, legislative director
for NYPIRG. ``If anything, non-targeted assistance in the
form of dairy price support will widen the disparity between
large and small milk producers.
So while ``milk may do a body good,'' unless the dairy task
force can come up with a fair compromise between farmers and
consumers, many consumers will just have to go without it.
``If the governor truly wanted to help family farmers
without hurting consumers, he would focus more on further
lowering their tax burden and removing unnecessary
constraints that increase the cost of doing business in the
state,'' said Mitola.
The 14-member dairy task force is expected to meet this
week.
____
[From the Record, Nov. 31, 1992]
Consumer Groups: Let Market Set Milk Prices
(By Kenneth Lovett)
Albany.--If the government sets higher milk prices for
farmers, consumers are likely to pay more at the grocery
store but New York's small dairies aren't likely to be any
better off, two consumer advocacy groups charged yesterday.
``It would be nothing more than a milk tax on consumers,''
said John M. Schnittker, a senior economist with Public Voice
for Food and Health Policy, a Washington, D.C.-based think
tank.
Public Voice and New York Citizens for a Sound Economy, a
Westchester-based advocacy group, said the industry and
consumers would be better off letting the free market set the
price of milk.
If really interested in helping small dairies survive, the
state should continue to lower the cost of doing business in
New York, offer property tax relief for farmers and other
direct incentives, they said.
``Sixty years of federal intervention into milk pricing has
done nothing but accelerate the trend of fewer farms and
smaller farms that have been replaced by larger ones,''
Schnittker said.
Though declining, agriculture is still New York's and the
Mid-Hudson's No. 1 industry.
Dairy farmers have long complained that the federally-set
milk prices are too low to offset the steadily increasing
cost of running their operations. The wholesale price of milk
is about $12 per 100 pounds for New York farmers or $4.50
less than a year ago.
Gov. George Pataki last week formed a task force to develop
recommendations to help farmers without hurting consumers.
Among the options being explored is whether the state
should temporarily raise milk prices paid to farmers above
the federally set rate. By law, New York's agriculture and
markets commissioner can increase the rate if petitioned by
35 percent of the state's milk producers.
Another option supported by many farmers is to have New
York join the six New England states in the Northeast
Interstate Dairy Compact, which would allow them to charge
more for their milk. The states now in the compact are
receiving $1.31 more per hundred pounds for their milk than
New York farmers.
Consumer groups are urging both options be rejected. The
study that Public Voice released yesterday predicted raising
the price paid to farmers would translate to about 21 cents a
gallon more for milk. The average upstate milk price per
gallon is now $2.24.
But it's not just consumers who would suffer, he said. The
higher prices would encourage larger farms to up production,
thus allowing them to benefit significantly more than smaller
farmers. According to the study, 53 percent of the revenue
taken in from the increase in prices would go to only 18
percent of the producers. For the largest 400 dairies that
would mean annual subsidies averaging $45,000 per farm.
But farming interests say the consumer groups are only
working to scare people. They say increased milk prices will
be one way to make it easier for small farmers to compete.
They also argue that costs to consumers won't necessarily
increase just because farmers are paid more.
Rick Zimmerman, New York Farm Bureau director of
governmental relations, noted that the price of milk over the
past year has not dipped as much as the price paid to
farmers.
``It is unfortunate that the general public is being scared
by a group that pretends to exist for the best interest of
New York consumers,'' Zimmerman said. ``The facts are clear.
Public Voice is--merely a front for milk processors who find
it in their best interest to keep the farmers milk price as
low as possible.''
____
[From the Boston Globe, Dec. 2, 1997]
N.E. Milk Tax Hits Needy Hard
(By Kevin G. Honan)
In the last several months consumers throughout New England
have seen their milk prices increase an average of 17 cents a
gallon. The reason for the increase is the Northeast
Interstate Dairy Compact, which sets a minimum price that
dairies must pay farmers. The minimum is currently $1.46 a
gallon, or 13 percent above the federally set national
minimum.
Because of this surcharge on milk prices. New England
consumers have paid an extra $16 million for milk since July.
Massachusetts consumers were hit hardest, paying $7.4 million
of the increase. According to a study by a Washington
agricultural policy group, the compact's milk tax will add
$32 million to Massachusetts consumers' grocery bills by
September 1998.
The compact is designed to protect New England dairy
farmers, yet the benefits to the state are minimal, because
Massachusetts has only about 350 dairy farmers, less than
one-tenth of the New England total. Additionally,
Massachusetts consumers will pay almost half of the entire
New England milk tax, yet 88 percent of the state's $27
million in milk tax revenues will benefit out-of-state
farmers. By next September, membership in the compact will
cost Massachusetts consumers more than $90,000 in milk taxes
per Massachusetts dairy farmer.
There must be a better way to help farmers in need than a
milk tax that places financial stress and unfair burden on
hundreds of thousands of working people, especially lower-
income families, children, and elderly
[[Page S814]]
residents on fixed incomes, who need milk at affordable
prices.
At a time when many low-income families are being hurt by
severe cuts in food stamp benefits, the compact's milk price
increases are especially distressing. The purchase power for
food stamp recipients decreased by more than a half-million
dollars in the first three months after the compact's
decision. Over the coming year, the compact will cost the
state's poorest residents more than $1 million in lost
purchasing power.
Government programs that provide food benefits for children
are also particularly vulnerable. National statistics show
that children are the biggest milk consumers. In fact, while
children constitute only 29 percent of the U.S. population,
they drink 49 percent of all milk sold. In Massachusetts,
over the first three months alone, the increased expense for
school lunch programs, which provide many children with the
one nutritious meal they have each day, was $400,000. By
September 1998, the compact will cost school lunch programs
statewide almost $2 million.
Massachusetts Commissioner of Agriculture Jay Healy, a
member of the Compact Commission, recently proposed an
amendment to exempt school lunch programs from the milk tax,
but that attempt was rejected by other commission members.
I recognize that the compact's goal is to help subsidize
New England dairy farmers, but penalizing the low-income,
elderly, and children is not the best method. Increased
training and tax relief programs are among the options we
should consider. Alternatives to the compact are necessary
and could involve initiating lending programs with banks for
preferential interest rates to small farmers, or creating
tax-relief initiatives on land transfers, so families are not
penalized when farms are transferred from one generation to
the next.
It is now in the hands of the five Massachusetts members of
the Northeast Dairy Compact Commission. At the December
compact meeting, the Massachusetts delegation should offer a
motion to rescind their previous vote in favor of the milk
tax. Low-income families, children, and senior citizens
cannot afford to bear this burden.
Mr. GRAMS. Opposition to the Compact is growing among state
legislators from the New England area. One state may even be attempting
to pull out of the Compact. Those regions with the most to lose are
densely populated and have fewer dairy farmers relative to other
regions. The result is an effective subsidization by urban consumers.
A milk tax that burdens financially stressed working families--
especially those of lower-income, who rely on reasonable and affordable
milk--is wrong. It is high time we put an end to partisan, regional
politics which block real, long-term, assistance for dairy farmers.
I intend to continue my efforts to oppose the Northeast Dairy
Compact. This will include fighting to obtain a comprehensive,
informative study on its effects and consequences.
Mr. CLELAND addressed the Chair.
The PRESIDING OFFICER. The Senator from Georgia [Mr. Cleland] is
recognized.
Mr. CLELAND. Mr. President, I ask unanimous consent to speak for 12
minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The remarks of Mr. Cleland pertaining to the introduction of S. 1664
are located in today's Record under ``Statements on Introduced Bills
and Joint Resolutions.'')
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