[Congressional Record Volume 145, Number 128 (Tuesday, September 28, 1999)]
[Extensions of Remarks]
[Page E1982]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                 CONSOLIDATION OF MILK MARKETING ORDERS

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                               speech of

                         HON. JAMES L. OBERSTAR

                              of minnesota

                    in the house of representatives

                     Wednesday, September 22, 1999

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 1402) to 
     require the Secretary of Agriculture to implement the Class I 
     milk price structure known as Option 1A as part of the 
     implementation of the final rule to consolidate Federal milk 
     marketing orders.

  Mr. OBERSTAR. Mr. Chairman, in 1996 Congress agreed the U.S. dairy 
pricing system was seriously flawed and the U.S. Department of 
Agriculture (USDA) should develop a more evenhanded pricing system. 
After three years of research and an exhaustive public comment period, 
USDA proposed a modest reform plan, and now the proponents of H.R. 1402 
seek to violate the agreement made in the 1996 Farm bill by leaving in 
place a blatantly unfair Depression-era pricing structure that 
penalizes dairy producers based on their distance from Eau Claire, 
Wisconsin.
  Few government programs are more complex and misunderstood than the 
USDA's milk marketing system. President Franklin Roosevelt established 
federal orders in the 1930s during the Great Depression to ensure an 
adequate supply of fresh milk nationwide. The primary goal of the 
system was to facilitate the flow of milk from surplus production 
regions to deficit regions. During the Depression, the Upper Midwest 
was the nation's center of dairy production. So to encourage the flow 
of milk from the region, the federal government required dairy 
processors to pay higher prices for fluid milk based on their distance 
from the Upper Midwest. This allowed our dairy farmers to recover the 
extra costs of transporting their product to consumer regions. Clearly, 
federal orders made sense sixty years ago.
  The situation has changed. Dairy farms have sprung up in every corner 
of the country, especially in those regions farthest from the Upper 
Midwest where the government requires higher minimum prices. Federal 
orders no longer encourage the flow of milk from one place to another. 
Today, federal orders artificially encourage the production of milk by 
high-cost producers in certain regions at the expense of more efficient 
producers in the Upper Midwest. Geographically, the system favors milk 
production in high-cost regions such as the Southeast, Texas, and the 
Northeast at the expense of traditional dairy states such as Minnesota 
and Wisconsin.
  The impact of this pricing system on the Upper Midwestern dairy 
farmer has been disastrous. Since 1955, Minnesota has lost nearly 
60,000 dairy farms. Over one-quarter of Minnesota dairy farmers 
disappeared in the six-year period following 1993.
  Mr. Chairman, I strongly oppose this misguided legislation that would 
continue an outdated dairy policy, and I believe that the USDA's reform 
plan should be implemented.




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