[Congressional Record Volume 146, Number 26 (Thursday, March 9, 2000)]
[Senate]
[Pages S1378-S1379]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FEDERAL DAIRY POLICY
Mr. GRAMS. Recently, I came to the floor to address Federal dairy
policy, specifically focusing on an erroneous but often repeated claim
that dairy compacts are necessary today to guarantee a supply of fresh,
locally produced milk to consumers. During that time, I dealt with how
this is a myth similar to urban legends that are assumed to be true
because they are repeated so often. Another dairy myth that you may
hear a great deal is that dairy compacts preserve small dairy farms.
Mr. President, this is simply not true, and this afternoon I want to
point out the reasons why it is untrue.
The Northeast Dairy Compact sets a floor price that processors must
pay for fluid milk in the region. Ostensibly, this is supposed to
provide small farmers with the additional income necessary to help them
survive during hard times. In its practical effect, it doesn't work
that way at all. In fact, It has provided financial incentives for big
dairy farms to get even bigger.
Consider the cases of Vermont and Pennsylvania. Vermont is in the
Northeast Dairy Compact and Pennsylvania is not. Before the formation
of the compact in 1997, Vermont had 2,100 dairy farms with an average
herd size of 74 cows per farm. By 1998, the number of farms had fallen
nearly 10 percent to 1900 dairy farms, but the average herd size had
increased to 85 cows per farm. That is a 15-percent increase.
Meanwhile, during the same period of time in Pennsylvania--again,
without the compact--the number of dairy farms fell 3 percent, from
11,300 to 10,900, but the average herd size increased only from 56 cows
to 57 cows. Thus, in a compact State such as Vermont, the number of
dairy farms fell significantly while the average herd size per farm
increased significantly. And then compare that to the noncompact State
of Pennsylvania during the same period. Their number of dairy farms
dropped by a smaller number, and farm herd sizes increased by an even
smaller percentage. So this does not appear in any way to be a compact
to protect small dairy farms.
The extra income that the compact provides to large farms accelerates
their domination of the industry by helping them get larger and
stronger. Since the amount of compact premium a producer receives is
based entirely on the volume of production, the small amount of
additional income a small farmer receives is often inconsequential and
does nothing to keep small farms from exiting the industry. In fact,
during the first year of the compact, dairy farms in New England
declined at a 25 percent faster rate than the average rate of decline
during the previous 2-year period.
The assertion that dairy compacts do not protect small farmers is not
just something that this Minnesota Senator claims but compact
supporters themselves have acknowledged as much. In the latter part of
1998, the Massachusetts commissioner of agriculture declared that the
compact, after 16 months, had not protected small dairy farms. The
commissioner consequently proposed a new method for distributing the
compact premium to class I milk, capping the amount of premium any one
dairy farm could receive and redistributing the surplus. Farms of
average size or smaller would have seen their incomes increase by as
much as 80 percent. However, large farm dairy interests were
predictably able to kill this proposal because the assistance to small
dairy farmers would have come, of course, out of their pockets. So
while compact supporters perpetuate a sentimental picture of compacts
enabling small family farmers to continue to work the land, the bottom
line is that compacts hasten the demise of the small farmer while
enriching the bigger producers.
This claim that compacts save small dairy operations is often made in
conjunction with the claim that compacts are being unfairly opposed by
large-scale Midwest dairy farms that want to dominate the market. Well,
this, too, is untrue because the average herd size for a Vermont dairy
farm is 85 cows per herd, while the average herd size for a Minnesota
dairy farm is only 57 head. Thus, Vermont dairy farms average in size
almost 50 percent larger than Minnesota dairy farms.
Similarly, the South, which has also sought to have its own compact,
also has larger farms than the Midwest. The average herd size of a
Florida dairy farm is 246 head. That is almost four times larger than
the upper-Midwest average. Incidentally, Minnesota producers would love
to be getting the mailbox price that farmers in Florida and the
Northeast are getting.
In November of last year, the mailbox price--which is the actual
price farmers receive for their milk--in the upper-Midwest was $12.09
per hundredweight. In the Northeast, it was $15.02. And in Florida, due
to the milk marketing order system, it was $18.72 per hundredweight. So
in the Midwest it was $12; in the Northeast it was $15--that is $3 per
hundredweight more--and again, in Florida, it was $18.72, or nearly $7
a hundredweight more, or 50 percent more for milk produced in Florida
than in Minnesota. How are you going to compete against this type of
unfairness in the compact system and in the milk marketing orders?
So the Northeast price is 24 percent higher than Minnesota's, and
Florida's price is almost 55 percent higher. Again, Minnesota farmers
would love to get those kinds of mailbox prices, but our Government
program--and again, the larger farmers in these areas unfairly benefit
from this program--ensures that they don't and that these other regions
do.
While dairy compacts are again not saving small dairy farms in
compact States, they are impacting the bottom line of small-scale
producers in non-compact States; in other words, those dairy farmers
outside the compact. Compacts are a zero-sum game that shifts producer
markets and income from one region of the country to competing regions.
They don't have small family farms, and they certainly don't deserve
the continuing sanction and the support of the Congress.
Again, there are other dairy myths that must be exposed, and the
truth must be told. I will be back on the floor soon to take another
look at a misleading claim, try to dissect it a little bit, and put
some fairness into what we often hear in the dairy debates.
If we look at this system and why it is unfair, again to look at the
prices farmers receive for the milk they produce, why is it fair that
if you are in the Midwest, you get $12.60 or $12.70
[[Page S1379]]
per hundredweight, but if you are in New England in the compact States,
you get $15.20, and if you are a farmer in Florida, that somehow you
can receive $18.72 per hundredweight? I don't know. We don't sell
computers that way. We don't sell oranges that way. We don't sell
automobiles that way. Why is it milk is different? Why is the
Government picking winners and losers among those who are in the dairy
industry?
If you are in the Midwest, the Government says, well, you are going
to be a loser, and if you are in Florida or in the compact States, our
Government programs say you are going to get more so you can be a
winner. I don't think we should have this type of competition and
unfair playing field with the Government picking dairy winners and
losers.
I hope we bring some sanity into our dairy program. I will be back on
the floor to take on another misleading claim we often hear in these
dairy debates.
Thank you, Mr. President. I yield the floor.
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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