[Congressional Record Volume 144, Number 134 (Wednesday, September 30, 1998)]
[Senate]
[Pages S11168-S11169]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   NORTHEAST DAIRY COMPACT EXTENSION

  Mr. GRAMS. Mr. President, I rise today to express my continued 
disappointment at the political maneuvering which has resulted in an 
extension of the Northeast Dairy Compact--an example of legislation 
driven by regional politics.
  I wish to register strong protest to the extension and ask that my 
colleagues join me and those in the Upper Midwest who must once again 
speak out against patently unfair, anti-American, anticompetitive 
policy.
  This is an archaic Federal dairy policy that penalizes farmers in the 
Upper Midwest, while giving benefits to farmers in other parts of the 
country in the dairy industry.
  The expected Agriculture appropriations conference report will 
include House language which underhandedly extends the Northeast 
Interstate Dairy Compact.
  Under the 1996 Food and Agriculture Improvement and Reform Act, 
commonly known as the FAIR Act, federal milk marketing order reform 
would go into effect in April, 1999. However, the conference committee 
has now adopted the House Agriculture Appropriations Committee bill 
language which delays the implementation date for Federal milk 
marketing order reform until October, 1999--6 months later. Not only 
does this delay long overdue marketing reforms, it also extends the 
Northeast Dairy Compact, which is not set to expire until the Federal 
milk marketing orders go into effect.
  Mr. President, USDA did not request a delay of the milk marketing 
order reforms. The real purpose of the House language is simply to 
extend the Northeast Dairy Compact.
  That this extension is even being considered leads me to believe 
there are some who remain unaware of the notorious history of the 
Northeast Dairy Compact's creation and its negative impact on consumers 
and all dairy farmers--with the notable exception of the largest dairy 
industries within the compact region.
  The 1996 FAIR Act included substantive reforms for dairy policy. It 
set the stage for greater market-orientation in dairy policy, including 
reform of the archaic Federal milk marketing orders. Yet, despite a 
strong vote by the Senate to strip the Northeast Interstate Dairy 
Compact from its version of the FAIR Act, and the deliberate exclusion 
of any Compact language from the House version of the bill, a Northeast 
Interstate Dairy Compact provision was slipped into the conference 
report.
  This language, however, does call for the compact to be terminated 
upon completion of the Federal milk marketing order reform process, 
again, set in April of 1999.
  It is imperative that the Northeast Interstate Dairy Compact sunset 
as was intended, and that no new compacts are created. Dairy farmers 
have not seen positive benefits as a result of the compact and 
consumers have been hurt by higher prices.
  It is estimated that consumers in the compact region of the Northeast 
have an increased annual cost of almost $50 million due to the compact. 
Not surprisingly, milk consumption in the compact area has dropped as a 
result. The only real winners have been the largest industrial dairies 
of the Upper Northeast.
  It is really no surprise. Just consider it: if the compact pays a 
premium per hundredweight of milk, and large industrial dairies are 
able to produce, let's say 15 to 20 times more than the ``typical'' 
traditional dairy farm that the compact was supposedly going to 
protect, who do you suppose wins? It certainly isn't the traditional 
dairy farm. They are still put at a competitive disadvantage, thanks to 
regional politics, and so are dairies outside the compact region.
  The artificial price increase stimulates overproduction and it floods 
the rest of the market in other parts of the country, and in other 
markets as well, including milk for cheese. Basically, all the 
principles of market forces, including pricing based on supply and 
demand and producers effectively determining profit and loss through 
efficiency, have now been replaced by artificial pricing.

  If any other industry tried to fix prices in this manner, I believe 
they would be hauled into court. Let me show this chart. The questions 
contained on the chart, which of these is actual Federal policy? 
Looking at the four questions:

       All computers should be price-adjusted according to their 
     distance from Seattle.
       All oranges should be price-adjusted according to their 
     distance from Florida.
       All country music should be price-adjusted according to its 
     distance from Nashville.
       All milk should be price-adjusted according to its distance 
     from Eau Claire.

  All of these are foolish. But this is Federal policy. The last one, 
``All milk should be price-adjusted according to its distance from Eau 
Claire,'' WI, might have made sense back in the 1930s when it was 
instituted, because of transportation and refrigeration, in order to 
encourage dairy production in other parts of the country. The Midwest, 
really, is the heart of the dairy industry in this country. So they set 
up these laws, but these laws are now archaic, outdated. They no longer 
need to be on the books. All they do is penalize the farmers in the 
Midwest who get the lowest prices for their milk and reward farmers 
further away from Madison or Eau Claire, WI, who receive more money for 
dairy products, despite the new and improved transportation and 
refrigeration in this country. This may have served a purpose in the 
1930s, but it is outdated when we come into this century.
  What it does is have the government picking winners and losers when 
it comes to dairy. They have their foot on the neck of dairy farmers in 
the Midwest while granting dairy farmers in other parts of the country 
more money.
  All we are asking for is fairness in this policy. Should computers be 
priced according to their distance from Seattle? No. Should oranges be 
priced according to their distance from Florida? They are not. Is all 
country music priced according to its distance from Nashville? No, that 
is ridiculous. And the same should be true for dairy--Should all milk 
be priced according to its distance from Eau Claire? No.
  USDA's own data show that milk production has increased substantially 
in the Compact region of the Northeast. In fact, the increase in 
production has been so great that the Compact Commission has started to 
withhold money from farmers, in anticipation of being required to 
reimburse the Commodity Credit Corporation for increased purchases of 
surplus dairy products.
  But the creation of the Northeast Interstate Dairy Compact, we have 
done a disservice to traditional dairy farmers in the Compact region, 
consumers within the Compact region, and all dairy producers nation-
wide who have been forced to pay the price of this anti-competitive 
measure.
  The higher milk prices in the Compact region are cause for alarm, but 
these consequences were easily foreseeable. What is outrageous is the 
idea of another extension of this anti-competitive effort.
  As far as I'm concerned, this is it--the last straw. There will be no 
more extensions. The Northeast Dairy Compact has had its day. It has 
failed. It is being kept alive for another six months by a life-support 
system of favors and big business.
  I believe it's time to put fairness first and put the Senate on 
notice. The Upper Midwest has waited long enough for substantive 
reform--basic fairness. I will continue to make this point during the 
next Congress, no matter how long it takes to get the message across.
  Special protection benefits and anti-competitive measures make 
competitors worried, and rightly so. The Northeast Interstate Dairy 
Compact has spurred a movement in the Southeast to create a similar 
Compact.
  In fact, earlier this year the groundwork was laid for a national 
patchwork of regional compacts. Roughly half the country had either 
passed enabling compact legislation, was debating such legislation, or 
was a part of the Northeast Interstate Dairy Compact.

[[Page S11169]]

  Can you imagine in the time when we are trying to knock down trade 
barriers with other countries around the world to have greater access 
to markets, to help export our products, especially in agriculture, 
that we, here in our own country, would put up trade barriers between 
portions of the country?
  Clearly, the writing is on the wall. As far as dairy policy is 
concerned, we're at a pivotal juncture. We must either decide to 
support a national system or regionalize. A national patchwork of 
compacts would render the Federal Milk Marketing Order reforms 
meaningless. It would essentially kill any hope for real federal 
reform. Interstate commerce in the milk industry would be a confusing 
maze.
  To extend the Compact ignores the mandate of the 1996 FAIR Act 
itself. Further, attempts to accomplish this regional protectionism 
through an annual appropriations bill is also particularly offensive.
  Certainly, it is difficult to have the courage to bypass a quick-fix 
in favor of a long-range view. But that's where real leadership comes 
into play. Let's be advocates for the traditional dairy farmers, not 
just the mega-dairies, and maintain the integrity of the legislative 
process by standing up to policy making behind closed doors.
  An extension of the Northeast Dairy Compact does not belong in 
important Agriculture Appropriations legislation.
  What is required next is a complete overhaul of this antiquated and 
just plain unfair dairy policy.
  Again, established back in the 1930s, it has long outlived its 
usefulness. It is counterproductive, anti-American and unfair. Let's 
give all dairy farmers in all areas of the country the ability to 
compete on a level playing field.
  I close with a quote from the Chicago Tribune. The quote says:

       More compacts [like the Northeast Interstate Dairy Compact] 
     will only mean higher milk prices for even more consumers and 
     more lost market opportunities for the Midwest. . . . How 
     could Washington approve this throw back to Depression-era 
     economics when other farm subsidies . . . are being phased 
     out? Back-room deals and pork barrel politics, that's how [it 
     is done.]

  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GRAMS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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