[Congressional Record Volume 150, Number 85 (Friday, June 18, 2004)]
[Senate]
[Pages S7052-S7053]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       NATIONAL DAIRY EQUITY ACT

  Ms. SNOWE. Madam President, I support the legislation introduced by 
my colleagues Senator Specter and Senator Schumer, the National Dairy 
Equity Act. I am pleased to be an original cosponsor of this bill. This 
introduction is well timed as this month we are celebrating National 
Dairy Month and the positive aspects that eating dairy products have on 
our health. From calcium to potassium, dairy products contain essential 
nutrients that help to manage weight, reduce the risk for high blood 
pressure, osteoporosis and certain cancers, among other health 
benefits.
  In fact, each year 7 billion gallons of fluid milk are marketed in 
the United States, yielding about $22 billion in annual sales. However, 
the growing price spread between what the farmer receives and what the 
retail price is don't equal out. This is a concern to me.
  I applaud the sponsors of this legislation, Senators Specter and 
Schumer, for their hard work and commitment to the cause of bringing 
equity into the dairy industry. It should be noted that MILC replaced 
the very successful Northeast Dairy Compact during the reauthorization 
of the 2002 Farm bill. I fought very hard to reauthorize the Northeast 
Dairy Compact at that time because the Northeast Dairy Compact was not 
structured around payments from the government like the new MILC 
program. I ultimately voted for MILC because it was the best 
alternative to the Northeast Dairy Compact. I commend the resolve of 
Senators Specter and Schumer to craft a solution that is fair to 
farmers in all regions of the United States as their efforts have been 
nothing short of extraordinary.
  The National Dairy Equity Act is a win-win proposal that lends dairy 
farmers a hand, without tapping into the federal treasury. Price 
volatility in the milk market, coupled with growing production costs, 
has made it difficult for family dairy farmers to stay in business. The 
National Dairy Equity Act will work for both the people and the dairy 
farmers of New England as well as other parts of the United States by 
providing dairy farmers with a safety net and by helping to maintain a 
stable price for fluid milk. This legislation will also help to 
preserve a New England way of life. The legislation gives states the 
ability to work closely together to price milk in their own areas, 
giving states the power to determine fair prices. Of the milk sold in 
New England, a vast majority--more than 85 percent--is produced from 
herds in the New England area.
  The National Dairy Equity Act allows farmers in each of the five 
Regional Diary Marketing Areas, RDMAs, to establish minimum prices for 
Class I, fluid, milk based on the federal pricing structure. Under the 
bill, the Governor of each state, in consultation with producers and 
dairy industry representatives, nominates three members to the regional 
board. Participation by farmers and--importantly--participation by 
consumers is required. This regional approach effectively balances the 
needs of consumers and producers, while ensuring a healthier dairy 
industry in the future.
  The Regional Dairy Marketing Boards also have the authority to 
conduct effective supply management for their region, including the use 
of traditional and creative development and implementation of 
incentive-based supply management programs. To protect against 
overproduction, regions in which the growth in milk production is 
higher than the national average will be required to reimburse the 
Secretary of the Treasury for the cost of government dairy surplus 
purchases up to the amount that the region is receiving under the NDEA. 
This system of checks and balances protects against any overproduction.
  While the Northeast, Southern, and Upper Midwest regions are 
automatically considered as participating states, the National Dairy 
Equity Act has a mechanism for any State to opt into or out of the 
program. I consider this to be a strong provision in the bill precisely 
because it allows states to choose the option that is best for them. 
States that choose not to participate are eligible to participate in 
the current federal MILC program through September 2005. Individual 
farmers in states that opt for the MILC program can choose to continue 
receiving payments through the MILC contract until that legislation 
expires in September 2005. This legislation has been constructed to 
give flexibility and certainty to family dairy farmers.
  Further, the costs of operating the Regional Dairy Marketing Boards 
are borne entirely by those participating in the dairy industry in each 
of the respective regions, at no expense to the federal government. In 
addition, the Regional Dairy Marketing Boards provide environmental 
benefits through preservation of dwindling agricultural land and open 
spaces that help to combat the growing problem of urban sprawl, 
particularly near large cities, but which is starting to affect more 
rural areas as well.
  The National Dairy Equity Act provides farmers with the safety net 
they need to continue providing the resources for the myriad of dairy 
products we rely on to meet our health needs. I urge my colleagues to 
take this opportunity, during National Dairy Month to celebrate this 
creative policy solution presented by Senators Specter and Schumer that 
brings equity to dairy industry and could save the Federal treasury 
billions of dollars. This legislation is supported by the Maine Dairy 
Industry Association.
  I ask unanimous consent that the letter be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                             Maine Dairy Industry Association,

                                       Augusta, ME, June 15, 2004.
     Senator Olympia J. Snowe,
     U.S. Senate, Washington, DC.
       Dear Senator Snowe: On behalf of the 392 dairy farmers 
     operating small businesses in Maine, I thank you for your 
     support of the effort to create regionally flexibility in 
     dairy pricing through your sponsorship of the National Dairy 
     Equity Act. You have consistently been a strong advocate for 
     Maine dairy and all of Maine agriculture and we are proud of 
     your steady leadership in Congress.
       Dairy farming is a difficult profession. The cows work 365 
     days a year regardless holidays, weekends or illness. The 
     weather cannot be made to order. And farmers have very little 
     to say about what they will get paid for their milk, 
     regardless of the quality, quantity or freshness. In spite of 
     these challenges, Maine has a strong dairy farming tradition 
     and our farmers are proud to produce over 50 million gallons 
     of milk (605 million pounds) every year to Maine consumers. 
     Milk is a bulky, perishable product. When it is processed it 
     can be made into products that have a longer shelf life. But 
     fresh fluid milk has many more limitations.
       The USDA Federal Order system was put in place in the 1930s 
     to stabilize the price of milk and help the farmers get a 
     fair price for their product. Over the years, this program 
     has been tweaked and twisted in directions that no longer 
     achieve its original aim. Over the years the national 
     demographic profile of dairy farms has changed from small 
     family farms with local creameries serving small geographic 
     areas to larger farming operations concentrated by region and 
     shipping milk to a few large corporate processors with 
     multiple plant locations. Milk is priced on the commodity 
     market, responding to shifting trends of supply and demand 
     that are measured on a nationwide scale. The farmers are 
     again the Davids in an industry of Goliaths.
       Milk pricing is an incredible complex series of market 
     calculations. Simply, when the ration between supply and 
     demand shifts 1-2 percent one way or the other, the price the 
     Federal order sets for the farmer to get paid can shift 20-30 
     percent. If you mapped out the prices for a year on a chart, 
     it would look more like a blueprint for a roller coaster ride 
     than government-controlled pricing structure. And dairy 
     farmers are only told what price they will be paid for 
     their milk AFTER they have sent it to market. Can you 
     imagine any other business working under these conditions?
       In Maine, we are fortunate that our style of dairy farming 
     has vestiges of the old days. Most of our farms are family 
     owned, many supporting multiple generations. The farmers live 
     on the farm in the ``homestead.'' Most farmers can track 
     their milk to the

[[Page S7053]]

     dairy case in their local store. Visitors from states to our 
     south frequently come to Maine to see our green pastures with 
     grazing cows against the backdrop of a white farmhouse and a 
     red barn not only as tourists, but as prospective homeowners 
     and future Maine residents looking to find a simpler, more 
     traditional way of life. In fact, some of the most valuable 
     land for housing developments is adjacent to working farms.
       But the size of our farms and the beauty of the landscape 
     are coupled with innovative production techniques and 
     creative marketing efforts. Many farmers have discovered the 
     value of organic production operations and marketing to the 
     organic food niche market. Most dairy farmers have 
     diversified farm operations to include other agricultural 
     products to supplement the dairy operation, such as selling 
     hay or other silage crops, raising replacement dairy animals 
     or a variety of animals for meat and byproducts. And studies 
     have found that 89 percent of Maine dairy farms are operating 
     at 85 percent of higher rates of efficiency, utilizing new 
     techniques and technology.
       However, no amount of diversification can make up for low 
     milk prices. Farmers are just coming back from over 25 
     straight months of record low prices that resulted in a loss 
     of 68 Maine dairy farms (15 percent of the total). The irony 
     is that Maine has fared better than many other states, 
     including most of those in New England, thanks in part to 
     innovative state and regional solutions to help bolster the 
     price to farmers when the Federal Order Price drops.
       Maine has long been a leader in finding new and creative 
     solutions to the challenges in agriculture. In dairy, our 
     legacy is in finding ways to allow regional flexibility in a 
     pricing system that clumps farmers from all 50 States into 
     one big commodity category. In the early 1990s, Maine dairy 
     farmers worked with state leaders to create a Vendor Fee 
     system that supported the milk price paid to farmers when the 
     price fell below the cost of production. This became the 
     model for the Northeast Dairy Compact, which successfully 
     operated in the 6 New England states from 1997 until 
     September 2001.
       The Vendor Fee, its successor the Maine Dairy Stabilization 
     Act, and the Northeast Dairy Compact all recognized that not 
     all parts of the country can produce milk for the same amount 
     of money. Farmers in the western U.S. can take advantage of 
     federal water subsidies to turn desert into prime grazing 
     land. Some areas have longer growing seasons than others and 
     some are not suited to growing the types of grain and feeds 
     needed for dairy cattle. These three programs utilized their 
     regional marketplace to support the dairy operations that 
     supplied the consumers in that area. Consumers were willing 
     to pay more to ensure a fresh, quality supply of local milk 
     and dairy products. It was a symbiotic relationship.
       The National Dairy Equity Act is an attempt to recognize 
     and build on the simple concept begun in the state of Maine--
     that regional flexibility is necessary when it comes to milk 
     pricing in order to sustain a consistent supply of fresh milk 
     to all our citizens. Our dairy farms are too valuable to our 
     economy and our way of life to risk losing due to rigid, one-
     size-fits-all policies that have been mutated to protect the 
     consumer and the processor, but do little for the farmer.
       Without the dairy farmer, we would not have fresh milk. A 
     robotic cow operating in a mass production plant is not a 
     solution. We need a vibrant, diversified dairy industry 
     peppered throughout this country. Today, we have one in 
     Maine. Passage of the National Dairy Equity Act could mean 
     that we will continue to enjoy quality Maine milk for 
     generations to come.
       Thank you again for your support.
           Sincerely,
                                                        Dale Cole,
     Maine Dairy Industry Association.

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