[Congressional Record Volume 145, Number 60 (Thursday, April 29, 1999)]
[Senate]
[Pages S4445-S4446]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAMS (for himself, Mr. Feingold, Mr. Fitzgerald, Mr. 
        Abraham, Mr. Kohl, Mr. Hagel, Mr. Durbin, Mr. Allard, Mr. 
        Craig, Mr. Conrad, and Mr. Wellstone):
  S. 916. A bill to amend the Agricultural Market Transition Act to 
repeal the Northeast Interstate Dairy Compact provision; to the 
Committee on Agriculture, Nutrition, and Forestry.


                    dairy compact repeal legislation

  Mr. FEINGOLD. Mr. President, I rise to join the Senator from 
Minnesota, Senator Grams, in introducing a measure to repeal the 
Northeast Interstate Dairy Compact. The Northeast Dairy Compact was 
included in the 1996 farm bill during conference negotiations after it 
had been struck from the Senate version of the farm bill during floor 
consideration.
  Mr. President, support of this legislation is especially crucial as 
compact proponents have recently introduced a measure to make permanent 
and expand the Northeast Interstate Dairy Compact and establish a 
southern dairy compact. In other words, a measure devised to control 
three percent of the country's milk is now seeking 40% of the country's 
milk. The cost to consumers, taxpayers, and farmers outside the compact 
region are enormous.
  Mr. President, the Northeast Interstate Dairy Compact bill of 1996 
established a commission for six Northeastern States--Vermont, Maine, 
New Hampshire, Massachusetts, Rhode Island, and Connecticut--empowered 
to set minimum prices for fluid milk above those established under 
Federal Milk Marketing Orders. This sort or compact was unprecedented 
and unnecessary because the Federal milk marketing order system already 
provided farmers in the designated compact region with minimum milk 
prices higher than those received by most other dairy farmers 
throughout the nation. But they wanted more.
  This compact not only allows the six States to set artificially high 
fluid milk prices for their producers, it also allows those States to 
keep out lower priced milk from producers in competing States and 
provides processors within the region with a subsidy to export their 
higher priced milk to noncompact States.
  Mr. President, the arguments against this type of price-fixing scheme 
are numerous: It interferes with interstate commerce by erecting 
barriers around one region of the Nation; It provides preferential 
price treatment for farmers in the Northeast at the expense of farmers 
nationally and may now extend that privilege to the south; It 
encourages excess milk production in one region without establishing 
effective supply control that drives down milk prices for producers 
throughout the country; It imposes higher costs on the

[[Page S4446]]

millions of consumers in the Compact region; It imposes higher costs to 
taxpayers who pay for nutrition programs such as food stamps and the 
national school lunch programs which provide milk and other dairy 
products and as a price-fixing mechanism, the compact it is 
unprecedented in the history of this Nation.
  Most important to my home State of Wisconsin, Mr. President, is that 
the Northeast Dairy Compact exacerbates the inequities within the 
Federal milk marketing orders system that already discriminates against 
dairy farmers in Wisconsin and throughout the upper Midwest. Federal 
orders provide higher fluid milk prices to producers the further they 
are located from Eau Claire, WI, for markets east of the Rocky 
Mountains.
  Wisconsin farmers have complained for many years that this inherently 
discriminatory system provides other regions, such as the Northeast, 
the Southeast, and the Southwest with milk prices that encourage excess 
production in those regions. Of course, that excess production drives 
down prices throughout the Nation and results in excessive production 
of cheese, butter, and dry milk.
  Cheese and other manufactured dairy products constitute the pillar of 
our dairy industry in Wisconsin. Competition for the production and 
sale of these products by other regions spurred on by artificial 
incentives under milk marketing orders has eroded our markets for 
cheese and other products.
  Mr. President, my State of Wisconsin loses more dairy farms each year 
than any other state. A recent survey by the National Milk Producers 
Federation revealed that, between 1993 and 1998, Wisconsin lost over 
7000 dairy farms--that's three dairy farms a day! The number of 
manufacturing plants has declined from 400 in 1985 to less than 230 in 
1996. These losses are due in part, to the systematic discrimination 
and market distortions created by Federal dairy policies that provide 
artificial regional advantages that cannot be justified on any rational 
economic grounds.
  Lets look at their arguments: They claim this legislation is 
necessary to save their small dairy farmers, yet the bill does not 
target small operations. One year after the compact began, New England 
dairy farms went out of business at a 41% faster rate than in the prior 
two years.
  They also claim that consumers in their regions are willing to pay a 
higher price at the grocery store as a result of the compact. However, 
studies show that higher milk prices at the retail level result in a 
decline in milk consumption at home. According to economists, a 10% 
increase in price can lead to as much as an 8% decline in consumption. 
The spread of dairy compacts to include half of the U.S. population in 
the Northeast, the South and parts of the Midwest could drive up milk 
prices as much as 20%.
  Mr. President, my colleague from Minnesota, Senator Grams and I are 
on the floor today offering this legislation because the Northeast 
Dairy Compact reinforces the outrageous discrimination that has so 
wounded the dairy industry in our States. We have fought to change 
Federal milk marketing orders and we will fight to prevent the 
Northeast Dairy Compact from becoming permanent and expanding, and 
prevent the authorization of a southern compact. We will do all of 
these things in the name of basic fairness, simple justice and economic 
sanity in the marketplace. Upper Midwest dairy farmers have been bled 
long enough.

  When prices fall, as they have recently, all farmers feel the stress. 
Why should one farmer in a region arbitrarily suffer or benefit more 
than another farmer on a similar operation in another region because of 
this artificial finger on the scale called the compact. Regional 
inequities are the inherent assumption of compact proponents and a 
basic economic premise of the compact idea. Shouldn't we be working 
together to make conditions better for all dairy producers? Why should 
one region, and now multiple regions be treated differently?
  And yet the Northeast Compact provides price protection for dairy 
farmers in six States, insulating them from market conditions which 
ordinary noncompact farmers have to live with. Compact proponents have 
never been able to explain how conditions in the Northeast merit 
greater protection from market price fluctuations than other regions of 
the country. The fact that there are no compelling arguments made in 
favor of the compact that justified special treatment for the Northeast 
was emphasized by a vote in the full Senate to strike the compact from 
the 1996 farm bill. It was the only recorded vote on approval or 
disapproval of the Northeast Dairy Compact--and it killed the compact 
in the Senate. The way in which the compact was ultimately included in 
the 1996 farm bill also illustrates the weak justification for its 
approval. Let me remind my colleagues that the compact was never 
included in the House version of the farm bill and yet emerged as part 
of the bill after a closed door Conference negotiation. Legislation 
which is patently unfair and difficult to defend must frequently be 
negotiated behind closed doors rather than in the light of day.
  Even the Secretary of Agriculture, after approving the compact, was 
unable to come up with an economic justification for the compact. The 
Secretary's finding of `compelling public interest' as a basis for 
justifying his approval of the compact was so weak and unsupported by 
the public record that a suit was filed by compact opponents in Federal 
court charging that the Secretary violated the Administrative 
Procedures Act.
  Mr. President, authorizing dairy compacts is bad public policy 
because it increases costs to taxpayers and consumers and currently 
only benefits a few in privileged regions. It is bad dairy policy 
because it exacerbates regional discrimination of existing Federal milk 
marketing orders by providing artificial advantages to a small group of 
producers at the expense of all others. And it is bad economic policy 
because it establishes barriers to interstate trade--barriers of the 
type the United States has been working hard to eliminate in 
international markets.
  Mr. President, Congress should never have provided Secretary Glickman 
with authority to approve the compact. That in my view, was an improper 
and potentially unconstitutional delegation of our authority and it was 
irresponsible. It is the role of Congress to approve interstate 
compacts and we irresponsibly abrogated our responsibility in this 
matter. It is time to make it right.
  It is incumbent upon Congress to undo the mistake it made in the 1996 
farm bill. It's time to repeal the Northeast Interstate Dairy compact.
  I urge my colleagues to support this legislation.
                                 ______