[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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