[Congressional Record Volume 147, Number 90 (Tuesday, June 26, 2001)]
[House]
[Pages H3608-H3612]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              OPEC OF MILK

  The SPEAKER pro tempore (Mr. Shuster). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from Wisconsin (Mr. Green) is 
recognized for 60 minutes.
  Mr. GREEN of Wisconsin. Mr. Speaker, we will not take all that time 
this evening, but I wanted to talk about a subject that probably many 
people out there tonight have never heard of yet and, I would suggest, 
adversely affects millions of people.
  It is something that was recently described by the Wall Street as the 
OPEC of Milk. It is a price-fixing cartel for milk that hurts families 
all over the country, especially those who are least able to pay for 
it.
  The history of the OPEC of Milk, the Northeast Dairy Compact, is 
somewhat interesting. Back in 1996, a small group of New England 
Members of Congress formed something called the Northeast Dairy 
Compact. The way it was authorized was not to bring it to the floor of 
the House or to the floor of the Senate for a vote, but, instead, they 
were able to sneak it into a conference committee report under an 
appropriations bill.
  Now, their intentions were sound. They believed back in 1996 that 
this cartel that they created, the Northeast Dairy Compact, would, in 
their words, help stop the loss of family farms in six New England 
States by guaranteeing a minimum price for milk. That sounds harmless 
enough. I was not here at the time, but had I been, those sentiments 
are certainly ones that we all could have supported.
  I would suggest to you, Mr. Speaker, and to those who are listening 
tonight, that those good intentions went awry a long time ago, and that 
the OPEC of Milk has done tremendous damage not only to our dairy 
system and to dairy farmers in New England and all over the country, 
but also to so many families who are trying to afford the great 
nutrition that we have in our dairy products.
  The reason that this is so timely is that the Northeast Dairy Compact 
is due to expire in September of this year. This compact clearly could 
not stand on its own merits, and so we have had some of its strongest 
supporters, particularly Senator Jeffords over in the Senate, saying 
that he understands how unpopular it is. He implicitly understands how 
bad it is, but he has said that he is bound and determined to get this 
reauthorized, passed in September no matter what it takes.
  In fact, he told the Associated Press not 3 months ago that his goal 
would be to ``sneak it in through the stealth of the night. And to get 
it through when people are not looking.''
  Mr. Speaker, the Northeast Dairy Compact should die a peaceful death 
in

[[Page H3609]]

September. First, it has not met its goal. It has not stopped the loss 
of family farms, not even in the New England States that are part of 
this compact.
  Second, as we will talk about tonight, the Northeast Dairy Compact 
has raised the price of milk to consumers. It is what so many people 
have called a milk tax.
  Third, the Northeast Dairy Compact has accelerated the loss of dairy 
farms in other States, States like mine, Wisconsin, States like 
Minnesota, those whose States together have the largest number of dairy 
farms in the Nation.
  Finally, and perhaps, in my view, most damaging, the Northeast Dairy 
Compact has prevented us from dealing with our dairy problems on a 
national basis, and we do have tremendous problems in the dairy sector. 
We are losing dairy farms each and every day, and we must do something, 
but as long as we have a policy like the Northeast Dairy Compact, which 
pits State against State, region against region, farmer against farmer, 
we will not get that national policy.
  Mr. Speaker, I think it is important to understand clearly I have an 
interest in this. I come from America's Dairyland of Wisconsin, but it 
is not just me, not just those in Minnesota and Wisconsin who believe 
that the Northeast Dairy Compact is an abomination. It is others, 
analysts, journalists.
  Mr. Speaker, I will read from a few, the Wall Street Journal recently 
said not 2 weeks ago that compacts are ``basically a highly regressive 
tax on milk drinkers, starting with school-aged children, creating them 
is a tacit endorsement of the OPEC cartel.''
  There is the Consumer Federation of America, hardly a biased group, 
hardly a Republican group or hardly a Midwestern group, the Consumer 
Federation of America, which represents over 50 million consumers 
nationwide said not a month ago that regional dairy compacts give too 
much money to farmers who do not need the help, too little money to 
farmers who do need the help, and they asked consumers, especially the 
low-income consumers, struggling to feed their families and pay the 
rent to pick up the tab.
  There is Americans for Tax Reform, which refers to compacts as dairy 
cartels.
  There is the New Republic Magazine, which said that the Northeast 
Dairy Compact was ``a system that can best be described as socialism.''
  There are groups like the Council for Citizens Against Government's 
Waste, which says that this is a regressive milk tax on Americans; or 
the National Taxpayer Union, which said that the Northeast Dairy 
Compact is ``a cartel that only a robber baron could admire.''
  So it is not just folks from States like mine, Wisconsin. It is 
consumer groups, journalists, people really across the country, across 
the spectrum, who realize that the Northeast Dairy Compact was a bad 
idea. It has not gotten any better, and it should die a peaceful death.
  Mr. Speaker, the gentleman from Minnesota (Mr. Kennedy) is my good 
friend, and in his brief time here in the House has become a wonderful 
voice for dairy farmers in Minnesota. He is a true leader who I think 
is going to be a tremendous asset to all of us as we try to reform this 
outdated dairy system.
  Mr. Speaker, I yield to the gentleman from Minnesota (Mr. Kennedy).
  Mr. KENNEDY of Minnesota. Mr. Speaker, I thank the gentleman from 
Wisconsin (Mr. Green) for yielding to me and thank the gentleman for 
his leadership on this very important issue.
  People may ask, how did this ever come about? How did we get this 
dairy compact? The gentleman gave a little bit of the history, but the 
U.S. Constitution does allow States to enter into compacts upon passage 
of State laws and the consent of Congress. These consents have been 
granted in some cases to allow States to work together on parklands or 
transportation systems or waterways; however, there is no precedent for 
price-fixing compacts evidenced in this situation.
  This is the only case where we have allowed a region of the country 
to set a price-fixing compact against other regions of the country, and 
how this affects us is if you have excess production of milk that you 
do not drink with cereal or otherwise, you generally turn that into 
cheese. So if there is excess production in the Northeast, they convert 
that into cheese.
  For those major milk-producing States that include Minnesota and 
Wisconsin, but California, Idaho, Arizona, several others, that takes 
away from our cheese market. In fact, the Northeast Dairy Compact was 
fined $1.76 million in 1998 for the extra amount of money that the USDA 
had to consume in buying extra production coming out of the Northeast.
  They have since instituted just recently some type of supply 
management in the Northeast, but if you think of how un-American this 
is, let us just say we decided that we do not think that Michigan 
should be disproportionately producing so many cars, so we are going to 
have, the rest of the country, a non-Michigan auto compact where we are 
going to produce the autos we need outside of Michigan and let Michigan 
only produce the cars that they can use in Michigan.

                              {time}  2145

  Orange juice. What if we decided that we are going to have an other 
than Florida oranges compact where we are going to produce our own 
orange juice and let Florida just produce the amount of orange juice 
that they can consume in Florida. Or movies in California. Or you can 
go on and on and on.
  I mean, this is ridiculous. It is un-American. It undermines where we 
have been strong in the past and what has made America strong in the 
past; that we are one country, that we do not have divisions among 
States. Our Founding Fathers were very nervous about that happening.
  Why we would let this happen and undermine our strong dairy industry 
in Minnesota, Wisconsin, the upper Midwest and other States around the 
country is something that is beyond me.
  It is something that, if American people understood this issue, they 
would be against it. If they understood, not just that they were being 
taken advantage of as consumers, but that one area of the country is 
going and pitting against another area of the country's strength, they 
would be uprising and saying we want to end this. Certainly we do want 
to end this.
  I appreciate the gentleman from Wisconsin (Mr. Green) reserving this 
hour to make sure that we can help educate the American people on this 
subject.
  Mr. GREEN of Wisconsin. Mr. Speaker, I thank the gentleman for his 
comments. I think that the gentleman has pointed out what may be really 
the greatest tragedy from the Northeast Dairy Compact. Nobody wants to 
help dairy farmers more than I or the gentleman from Minnesota (Mr. 
Kennedy). I mean, we come from dairy States which had the largest 
number of dairy farmers.
  It is interesting, when we were debating dairy policy last year in 
this House, some of my colleagues from the northeast States got up and 
talked about how many dairy farms that their home States, their home 
districts have lost. I remember a good friend of mine from the 
northeast exclaim that his State had lost some 200 dairy farms last 
year.
  I would like to put things into context for a moment. In my home 
State of Wisconsin, by this time tomorrow, by a quarter to 10:00 
tomorrow night, Wisconsin will have lost four more dairy farms. We are 
losing four dairy farms each and every day. Over the last 10 years, we 
have lost 13,000 dairy farms. In fact, we as a State have lost more 
dairy farms than any other State ever had save the State of the 
gentleman from Minnesota (Mr. Kennedy).
  So no one, no one wants to do more for dairy than those of us who 
represent States like Minnesota and Wisconsin. But we understand that 
to fix dairy problems, to meet the challenges, to be successful, to be 
compassionate, we have to have a national dairy policy, one that works 
all across America.
  The Northeast Dairy Compact rewards some dairy farmers. In fact, it 
encourages them to overproduce and harms others. It pits farmer against 
farmer, State against State, region and region. That cannot be good.
  As I talked to farmers in my home State and dairy farmers from all 
across America, they understand that one cannot have a policy that pits 
farmer against farmer. We cannot meet our challenges if we are divided 
and fighting amongst ourselves.

[[Page H3610]]

  The system that the gentleman from Minnesota (Mr. Kennedy) described 
is Stalinesque. I mean, I think the problem that we have had, so many 
of us who are so opposed to the Northeast Dairy Compact, is that, when 
we tell people how bad it is and we describe how it is set up, they do 
not believe us. They do not believe that, in America today, you could 
have such an absurd, illogical, irrational system. I am afraid, Mr. 
Speaker, it is true. Believe it or not, we do have such a system. It 
makes no sense. It does not work. It is, to put it kindly, a great 
distraction as we should be taking on so very many important issues.

  Mr. Speaker, I yield to the gentleman from Minnesota (Mr. Kennedy).
  Mr. KENNEDY of Minnesota. Mr. Speaker, I would like to say that this 
dairy compact is kind of like salt in the wounds that are already being 
put in place by an underlying milk marketing system that, again, hurts 
the natural dairy producing States of this country.
  When in the 1930s we implemented milk marketing orders, that was 
designed to make sure that fresh milk was available all over the 
country. It may have made sense back then; but right now, it divides 
milk into four classes, all of which receive a different price.
  The class 1 milk which we drink out of our glass gets 33 percent or 
more higher price than what we make in the cheese. Since we are 
primarily exporters of dairy, we convert about two-thirds of our 
production in our region into cheese; and, therefore, our farmers 
receive more than a third less already, just setting the dairy compact 
aside, for our milk production than those like the northeast that are 
producing primarily for fluid, milk.
  So we are already being penalized by an archaic system that we have 
not been able to overcome because of the resistance of people in the 
northeast. We are already being penalized.
  Then when they have one down, the dairy compact is really piling on. 
It is piling on and saying, okay, you know, you are already only 
getting 60 percent of what we get, but that is not enough for us. We 
want more. We want to take more out of your income. We want to take 
more of your dairy farmers and put them out of business. We want to try 
to prop up what we have.
  It really has not had that beneficial impact. They are still losing 
family farms in the northeast area. They are still not really having 
the benefits that they speak of at the same time that they are clearly 
penalizing us.
  As the gentleman mentioned, Minnesota and Wisconsin. Many of the 
people I know, I live in a rural area of Minnesota called Watertown 
where there are many dairy farmers that go to our church. I could name 
off names of dairy farmers in the last year that I know that have gone 
out of business. The milk marketing orders and the Northeast Dairy 
Compact are to blame for that.
  The gentleman's father, I know, is in the medical profession; and the 
first rule they learn is to do no harm. It would be good for us as 
legislators to know, to do no harm.
  Well, this is clearly something that harms Americans, harms millions 
of Americans, favors a very small few, and it is something that we 
should stand up against. It is something that Americans should stand up 
against.
  Write your Congressman wherever they may be and say this is something 
I do not believe in. This is something that undermines everything that 
I believe about America.
  I ask my colleagues to oppose the dairy compact because this is just 
the northeast now, but I have a map here of those areas that want to go 
into dairy compacts. It includes just about every State in the country 
that is not a producer of dairy over and above their own needs. It 
includes everything other than just about Minnesota, Wisconsin, Idaho, 
California, other large dairy producing States.
  Again, I go back to my examples of cars outside of Michigan, citrus 
outside of Florida, movies outside of California.
  What if one decided that one cannot do financing, we put a wall 
around New York and say all of the financing outside of New York has to 
be self-sufficient, and, therefore, New York can only finance New York. 
Do my colleagues know what would happen to Manhattan Island that could 
only finance loans that were being used on Manhattan Island? That is 
what kind of an effect this is having on Minnesota and Wisconsin and 
our other natural dairy States.
  As the new republic says, this is a situation where we are penalizing 
those areas that are most suited to dairy farming. They received the 
lowest payments for their milk; and those from the least efficient 
regions received the highest. The system, by design, punishes the 
efficient farmers and rewards inefficient ones. This is not the way 
that America becomes strong and stays strong.
  I urge our Members to vote against the dairy compact. I urge voters 
to contact their legislators and express their views on this very 
important subject.
  Mr. GREEN of Wisconsin. Mr. Speaker, I thank the gentleman; and he 
has made some great points. In our States of Minnesota and Wisconsin, 
we have a lot of dairy farmers though the numbers are obviously 
dwindling. But our dairy farmers, they know they are in a tough 
profession. They are in a tough way of life. The hours are long. They 
do not have vacations. One has got to milk every day.
  All they are asking for is a chance to compete. The dairy farmers I 
talk to say, look, you know, we understand this is a tough business. 
Give us a level playing field. We will compete with any dairy farmers 
in the world.
  The problem is that, with the Northeast Dairy Compact, we do not give 
them that fair chance to compete. We set them up to fail right off the 
bat; and that is wrong.
  Can my colleagues think of any other commodity that we treat like 
that? The gentleman from Minnesota (Mr. Kennedy) has just run through 
some of the examples of how crazy it would be. But not just the compact 
and the milk marketing orders. Think about our pricing system that we 
take milk, and we offer a different price to farmers based upon the use 
down the line of that product. That does not make any sense. I mean, it 
is the same cows. It is the same fluid. Yet, we treat it differently. 
In States like Minnesota and Wisconsin, because so much of our milk 
goes into manufactured dairy products, again, our farmers are losing.
  As I began this evening, I said that, when this system was created, 
and it was, again, sort of slipped in in the dark of night in a 
conference committee report, it was done by some Members who really had 
the best of intentions. They wanted to reverse the decline of dairy 
farming in New England. But the sad news is it has not worked.
  So I would appeal to my friends from the northeast to reexamine their 
support for the Northeast Dairy Compact, because if they believe that 
we need to take action to help dairy farmers, this is not it.
  The Boston Globe last year did a really interesting study. They 
studied the States of Massachusetts and Vermont, and they looked at the 
effect of the Northeast Dairy Compact. Their study showed that, in the 
2 years before the Northeast Dairy Compact was concluded, the State of 
Massachusetts lost 34 dairy farms and the State of Vermont lost 117.
  Interestingly, though, in the 2 years after the compact went into 
effect, the State of Massachusetts lost 44 dairy farms, 10 more, and 
the State of Vermont lost 153. The compact is not working. In fact, the 
loss of dairy farms is accelerating.
  It is interesting. If one goes beyond those two States to the entire 
New England region, one will see that 25 more dairy farms went out of 
business after the compact than in a comparable period before the 
compact.
  What may be most painful of all and really distressing, since the 
most vulnerable dairy farms in America today are the smaller ones, 50 
cows or less, the compact has actually accelerated decline in those 
farms, the small farms, those that are most vulnerable.
  The Consumer Federation of America said recently that, because 
compacts pay farmers on a per-gallon basis, most of the benefits of 
this fixed price that they have go to the larger farmers who do not 
really need it.
  I heard earlier this evening the gentleman from Vermont (Mr. 
Sanders), who loves to talk about how we should be on the side of the 
little guy, he talks about how corporate interest dominate this 
Congress. Well, the gentleman

[[Page H3611]]

from Vermont (Mr. Sanders), my good friend, if he wants to help the 
little guy in dairy farming, abolish the Northeast Dairy Compact. It 
punishes the family farm. It makes it worse. It makes it harder for 
them to get by, and it rewards the largest farmers.
  So even if this started with noble intentions, the reality, the stark 
reality is it has not worked. It is time to end it. It is time to go to 
a nationwide policy that does not pit farmer against farmer. It is time 
for a national policy that works.
  Mr. Speaker, I yield to the gentleman from Minnesota (Mr. Kennedy).
  Mr. KENNEDY of Minnesota. Mr. Speaker, I would just say that we are 
going to be debating foreign trade and giving our President trade 
promotion authority coming up here very soon. We know, many of us know 
the benefits that we receive from trade.
  Classic economics would teach us that, if we can do something better 
than someone else, and we each do what we do best, we all benefit. We 
all benefit from having lower cost of goods. We all benefit from higher 
employment, higher income levels. The increased prosperity around the 
world has really sprung from countries opening up their markets and 
each focusing on what they do best.

                              {time}  2200

  If foreign trade is so beneficial to the world, if opening up markets 
with other countries is so beneficial to us, why should we have open 
markets with Europe, with Asia, if we cannot even have open markets 
with Vermont? Again, I have to go back to what you have said. When you 
tell people about this, they cannot believe it. We are used to being 
pitted against each other when the Packers play the Vikings, and we are 
used to having our rivalries; but we all come together when it comes to 
singing that national anthem at the beginning of our games. This does 
in a nonsportsman-like fashion pit one region of the country against 
the other in a very unfair way that undermines one region's strength 
and subsidizes another region that does not have those natural 
strengths when in fact they have natural strengths that are still 
benefiting them, but they are not letting us benefit from our natural 
strengths.
  Again, this is something that I implore our colleagues to do 
everything they can to oppose and certainly we will continue to try to 
spread the message across the land, that this is something that is un-
American and should not be supported.
  Mr. GREEN of Wisconsin. The gentleman from Minnesota is right that 
our two States have football teams that are great rivals. I guess the 
Northeast Dairy Compact would be like giving the Packers an extra 
player. Maybe we deserve it, but that is another debate. I think, 
though, that my good friend and colleague brought up a very important 
point when he talks about free and fair trade and the great emphasis 
that we are placing as a Nation and a people on opening up markets and 
on trying to promote free and fair trade. I think we understand the 
importance of commerce and growing this economy. But does it not seem 
just a tad hypocritical as we send our trade representative, even our 
President, all around the world and we ask, we demand, that he works to 
lower trade barriers, at the very time when we are trying to demand 
that these countries drop their trade barriers, have no tariffs, allow 
for the free flow of our goods, we have barriers between our own 
States? We have tariffs between our States. How can we in all 
seriousness look our trading partners in the eye and tell them that 
they have to do more to open up their markets to our goods when it 
would be so easy for them to say, Mr. President, why is it that in 
dairy, you have barriers between your own States? It makes no sense. 
And at a time when we are trying to open up markets, how can we be 
restricting markets in our own country?
  One other area I would like to touch upon briefly tonight, and I 
appreciate the indulgence of the listeners tonight, I come from a dairy 
State, the gentleman from Minnesota comes from a dairy State, this is a 
matter of great interest to him, of great interest to so many families 
who live and work in the dairy sector; but even if you are not part of 
the dairy sector, even if you are not from a dairy State or even an 
agricultural State, this will affect you.
  A recent study suggested that consumers in the Northeast Dairy 
Compact States are overcharged for the price of milk by about $100 
million each and every year. The price of milk is artificially high as 
a result. It is interesting. Many of our colleagues want to expand the 
New England compact, they want to expand it and create a southern 
compact. One study suggests that if a southern compact is created, it 
would raise the price of milk by at least 15 cents a gallon. It would 
cost consumers $500 million a year at the very least. That is a 
conservative, modest estimate.
  The Northeast Dairy Compact is a tax on milk. It raises the price of 
milk. It takes one of our most nutritious products, one of the best 
things that you can possibly give to children to ensure that they have 
the nutrition to grow strong and fast, and it raises the price. It not 
only raises the price of milk, but it damages the very nutrition 
programs that we are struggling so hard to find money for. Families 
with low incomes who utilize food stamps, Meals on Wheels, the dollars 
that we spend for those terribly valuable programs do not go as far 
because of what we have done to the price of milk. We are discouraging 
people from consuming milk, and we are making milk more expensive for 
those low-income families. That is outrageous. Even if you are not from 
a dairy State, even if you are not from an ag State, you cannot support 
a tax on milk. You cannot support taking one of our most nutritious 
products and making it less affordable. It is just wrong. We cannot do 
it. We must not do it. It is the wrong thing to do, and it is something 
that must end.
  I implore our colleagues from all around the country, we represent 
diverse districts, but whether you come from an ag district or not, end 
this outdated, foolish experiment. It has not worked. It has done so 
much damage. It has cost so many farmers their livelihoods. It has made 
milk so much more expensive. It is time to end it. It is time for it to 
expire. It is time for us to develop a national dairy policy. We can 
develop a policy that rewards farmers for what they produce, that 
creates competition, that raises the amount that they receive but keeps 
the price to consumers low and affordable. We can do it if we come 
together.

  I appreciate the gentleman from Minnesota so much for joining me this 
evening. I offer him the opportunity if he has any final thoughts that 
he would like to share.
  Mr. KENNEDY of Minnesota. I will just close by saying the gentleman 
has talked about the broader sense of consumers, how this is hurting 
consumers. But this is an example, an unprecedented example of the 
tyranny of a minority by the majority. Those who believe in our 
government, those who believe in civil liberties should not idly look 
aside and watch where one region of the country, just because we have 
fewer congressional votes here in the upper Midwest, can be penalized 
by another area of the country without really repute. Again I must 
emphasize as I began and leave as I began, when I talked about no other 
case is there where a State compact has been a allowed to create the 
cartel, the OPEC that you opened with and have price-fixing and get 
away with it. This sets a very bad precedent for any number of other 
things that can come to a State near you and hurt your local economy, 
hurt your consumers and undermine the very freedoms and civil liberties 
upon which this country was based and is based.
  Again, I thank my colleague from Wisconsin for the leadership that he 
has taken on this issue. I pledge to work with him and our other 
colleagues around the country that believe very strongly that this is 
wrong, that this ought to be opposed. We implore our listeners and our 
fellow colleagues to really dig in and understand this and really 
understand how this is undermining America.
  Mr. GREEN of Wisconsin. I appreciate the great work of the gentleman 
from Minnesota in this area. Again, he may be a new Member; but he is 
already showing great leadership, particularly in agricultural issues, 
and I know the issues that are important to rural Wisconsin.
  I guess to summarize, what we have started tonight, Mr. Speaker, we 
hope

[[Page H3612]]

is an important stride in an educational effort to help our colleagues 
here in this institution and the people around America to understand 
what this bizarre thing called the Northeast Dairy Compact really is, 
what has been called the OPEC of milk. It is bad because it raises the 
price of milk, it is bad because it does not work, it does not prop up 
the dairy farms of America. In fact, it accelerates their decline. Do 
not take our word for it. You can listen to groups like the Wall Street 
Journal or the Consumer Federation of America or Americans for Tax 
Reform, the New Republic Magazine, the National Review. How many times 
do you get the New Republic and the National Review to agree on 
something? Citizens Against Government Waste, the National Taxpayers 
Union. Group after group after group has said to us and we are saying 
to you, this is wrong, it is bad public policy, it is time for it to 
end so we can move forward.

                          ____________________