[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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