[Congressional Record Volume 144, Number 82 (Monday, June 22, 1998)]
[Senate]
[Pages S6760-S6761]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FEDERAL DAIRY POLICY
Mr. FEINGOLD. Madam President, I rise today to discuss our archaic
and unjust Federal Dairy Policy: it is hopelessly out-of-date,
completely out-of-touch with reality and an outrageous way to treat the
hard-working dairy farmers of the Upper Midwest, particularly
Wisconsin.
Federal dairy policy has been putting small dairy farms out of
business at an alarming rate, Madam President. The Northeast loses 200
dairy farms per year, which is bad enough. Meanwhile, Wisconsin is
losing 200 per month, which is disastrous. That's about 5 dairy farms
per day! The greatest force driving Wisconsin's dairy farmers out of
business and off the land is the current structure of the Federal Dairy
Program.
The Federal Dairy Program was developed back in the 1930's, when the
Upper Midwest was seen as the primary producer of fluid milk. The idea
was to encourage the development of local supplies of milk in other
areas of the country that had not produced enough to meet local needs.
It wasn't a bad idea for the 1930's, but those days are gone.
Six decades ago, the poor condition of America's transportation
infrastructure and the lack of portable refrigeration technology
prevented Upper Midwest producers from shipping fresh fluid milk to
other parts of the country. Providing an artificial boost to milk
prices in other regions to encourage local production made sense, in
the 1930's, that is.
So, in 1937, we passed legislation authorizing higher prices outside
the Upper Midwest. These artificial bumps in prices are referred to as
Class I differentials. Mr. President, this system is sometimes referred
to as the ``Eau Claire'' system. Do you know why? Believe it or not,
it's called the Eau Claire system because it allows dairy farmers to
receive a higher price for their milk in proportion to the distance of
their farms from Eau Claire, Wisconsin.
So the farther away you are from Eau Claire the better off you are. A
dairy farmer, as any dairy farmer from Wisconsin, would tell you that a
better name really for this system is the anti-Eau Claire system,
because it doesn't treat farmers very well who live close to Eau
Claire, Wisconsin.
The system's entire purpose was designed to put dairy farmers in
Wisconsin and its neighboring states at a disadvantage. And
unfortunately it worked well--too well. Now, we look on as trucks from
other regions of the country come into Wisconsin, historically
America's dairyland, with milk to be processed into cheese and yogurt.
The current Federal Dairy Program is now working only to shortchange
the Upper Midwest, and in particular, Wisconsin dairy farmers.
Madam President, it's time to change a system that is completely out
of date and is short-changing upper Midwest dairy farmers to the brink
of extinction.
But, instead, we have further aggravated the inequities of the
Federal milk marketing orders system. Despite the discrimination
against dairy farmers in Wisconsin under the Eau Claire rule, the 1996
Farm Bill provided the final nail in the coffin when it authorized the
formation of the Northeast Interstate Dairy Compact.
Madam President, the Northeast Interstate Dairy Compact sounds
benign, but its effect has been anything but, magnifying the existing
inequities of the system. It establishes a commission for six
Northeastern States--Vermont, Maine, New Hampshire, Massachusetts,
Rhode Island, and Connecticut.
The Northeast Interstate Dairy Compact Commission is empowered to set
minimum prices for fluid milk higher even than those established under
Federal Milk Marketing Orders. Never mind that the Federal milk
marketing order system, under the Eau Claire rule, already provided
farmers in the region with minimum prices higher than those received by
most other dairy farmers throughout the nation.
The compact not only allows the six States to set artificially high
prices for their producers, it allows them to block entry of lower
priced milk from producers in competing States. To give them an even
bigger advantage, processors in the region get a subsidy to export
their higher priced milk to noncompact States. It's a windfall for
Northeast dairy farmers. It's also plainly unfair and unjust to the
rest of the country.
Who can defend this system with a straight face? This compact amounts
to nothing short of government-sponsored price fixing. It's
outrageously unfair, and it's also bad policy: It blatantly interferes
with interstate commerce and wildly distorts the marketplace by
erecting artificial barriers around one specially protected region of
the Nation; it arbitrarily provides preferential price treatment for
farmers in the Northeast at the expense of farmers in other regions who
work just as hard, who love their homes just as much and whose products
are just as good or better; it irresponsibly encourages excess milk
production in one region without establishing effective supply control.
This practice flaunts basic economic principles and ignores the obvious
risk that it will drive down milk prices for producers everywhere else
in the country; you don't often hear about it but the compact imposes
higher retail milk prices on the millions of consumers in the Compact
region; it also imposes higher costs on every taxpayer because we all
pay for nutrition programs such as food stamps and the national school
lunch programs that provide milk and other dairy products.
As a price-fixing device, the Northeast Interstate Dairy Compact is
unprecedented in the history of this Nation. In its breadth and its
disregard for economic reality, it's in a class by itself.
Madam President, in addition to the current problems, language in the
reported Agriculture Appropriations bill in the other body extends
USDA's rulemaking period by six months, thereby extending the life of
the Northeast Interstate Dairy Compact by six months. Wisconsin's
producers cannot withstand another six months of these unfair pricing
policies.
Wisconsin's dairy farmers are being economically crippled by these
policies. It's time to bring justice to federal dairy policy, and give
Wisconsin dairy farmers a fair shot in the market place.
In an effort to repair some of the damage that sixty years of this
awful system has caused, I have worked with colleagues to bring the
true nature of this system to light and offer some alternatives.
To strike at the heart of the problem, I have introduced legislation
in the Senate to kill the notorious Eau Claire system. The measure
simply would forbid USDA from using Eau Claire, Wisconsin as the sole
basing point when pricing milk.
And I am cosponsoring legislation to repeal the Northeast Interstate
Dairy Compact. I'm working hard to prevent the compact's extension and
expansion, and to prevent the formation of other regional dairy
compacts. Compacts of this kind are unfair and they need to be
abolished along with this entire system which has been plaguing
Wisconsin farmers for more than sixty years.
Also, I have cosponsored the Dairy Reform Act of 1998, introduced by
Senator Grams, which establishes that the minimum Class I price
differential will be the same for each marketing order at $1.80/
hundredweight. What could be more fair than that? Given a level playing
field, I know Wisconsin farmers can compete against any farmers in the
nation.
The Dairy Reform Act ensures that the Class I differentials will no
longer vary according to an arbitrary geographic measure--like the
distance from Eau Claire, Wisconsin. This legislation identifies one of
the most bizarre and unjustly punitive provisions in the current
system, and corrects it. There is no justification to support non-
uniform Class I differentials in present day policy.
I first learned of the profound inequity of the Federal dairy program
[[Page S6761]]
when I served in the Wisconsin State Legislature. There, I spearheaded
the effort to provide state funds for a lawsuit against the United
States Department of Agriculture. Challenging the system, we argued
that USDA had no sound and justifiable economic basis for their milk
pricing system. The states of Wisconsin and Minnesota, working
together, repeated that argument relentlessly in the courts for over
ten years in an effort to beat back the system.
In November of last year, the people of Wisconsin and Minnesota won
that case. Federal District Judge David Doty ruled in favor of a more
equitable dairy pricing system and enjoined the Secretary of
Agriculture from enforcing USDA's ``arbitrary and capricious'' Class I
differentials. Madam President, in other words, a federal judge could
find no rational justification for this archaic system and ruled the
whole scheme illegal.
Although the case is now in the appellate court, I am optimistic that
Doty's ruling will be upheld. As I said, Judge Doty found the current
pricing system ``arbitrary and capricious.''
Most recently, the USDA came up with a proposed rule that included
two different options to replace the old system: Option 1A is virtually
identical to the status quo and is totally unacceptable to the majority
of Wisconsin dairy farmers. Option 1B is a modest step in the right
direction and a good place to begin reform efforts. I was optimistic
when Secretary Glickman announced USDA's proposed rule for milk
marketing order reform and his stated preference for Option 1B.
If there was any question of the intense, personal effect this
discriminatory policy has on Wisconsin's dairy farmers, I would hope,
after visiting with over 500 producers, consumer advocates, and local
officials at an informal hearing in Green Bay, that USDA's doubts could
be put to rest.
At the USDA listening session in Green Bay, more than 500 people
showed up, demanding a fair shake. At the sessions in New York, Georgia
and Texas, a total of 240 people showed up. Wisconsin had more than
double the attendance than the other locations combined. That
difference in attendance didn't happen just because of Wisconsin's
tradition of good citizenship. They showed up in Green Bay by the
hundreds because they know they are getting a raw deal. Those
Wisconsinites showed up to demand reform. They showed up to demand a
better system, a chance to preserve economic viability and the
opportunity to continue their way of life.
Day after day, season after season, we are losing small farms at an
alarming rate. While these operations disappear, we are seeing the
emergence of larger dairy farms. The trend toward fewer but larger
dairy operations is mirrored in most States throughout the Nation. The
economic losses associated with the reduction in the number of small
farms go well beyond the impact on the individual farm families who
must wrest themselves from the land.
The loss of these farms has hurt their rural communities, where small
family-owned dairy farms are the key to economic stability. They
deserve better: we need a system in which their farms are viable and
their work can be fairly rewarded.
In conclusion, I will continue to work with Wisconsin family farmers
and other concerned Wisconsinites in the fight to preserve and protect
our family dairy farms by restoring some semblance of fairness and
economic integrity to our outdated, out-of-touch, milk pricing system.
In the process, we will save an important piece of American
agricultural history and a priceless part of Wisconsin's culture.
As USDA considers Federal Milk Marketing Order reform, I urge the
Department to set aside 60 years of inequality and senseless
regionalism to do what is best for this nation's dairy industry. These
policies are out-of-date, out-of-touch and, frankly, an outrageous way
to treat Wisconsin dairy farmers. For those farmers, who are watching
as their neighbors sell their livestock to cover their bills and
abandon the land of their parents and grandparents, USDA's decision
could mean the demise or the survival of their way of life. It is time
to do the right thing on dairy pricing policy. Wisconsin farmers demand
it, Wisconsin's consumers demand it, and, above all, Justice demands
it.
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