[Congressional Record Volume 153, Number 105 (Wednesday, June 27, 2007)]
[Senate]
[Pages S8620-S8621]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER (for himself and Mr. Casey):
  S. 1722. A bill to amend the Agricultural Adjustment Act to require 
the Secretary of Agriculture to determine the price of all milk used 
for manufactured purposes, which shall be classified as Class II milk, 
by using the national average cost of production, and for other 
purposes; to the Committee on Agriculture, Nutrition, and Forestry.
  Mr. SPECTER. Mr. President, agriculture is Pennsylvania's No. 1 
industry. According to 2004 U.S. Department of Agriculture, USDA, 
statistics, the market value of all agriculture production in PA was 
approximately $7,026,739,000. Further, dairy is the number one sector 
of our agriculture industry. In 2005, Pennsylvania dairy farmers 
produced 10.5 billion pounds of milk from 558,000 cows on approximately 
9,000 dairy farms. In 2004, milk production in PA contributed about 
$1,770,912,000 to the economy.
  I have consistently fought for Pennsylvania's dairy producers since 
taking office in 1981. Last year, I fought to ensure the viability of 
the dairy industry by ensuring that the Senate Budget Committee opposed 
the administration's fiscal year 2007 proposals that would have been 
detrimental to our Nation's dairy farmers. I, along with 16 other 
Senators, wrote a letter on March 8, 2006, to the Senate Budget 
Committee urging rejection of the proposed budget cuts and tax 
increases on America's dairy farmers that included: 1. reducing the 
value of the price support program; 2. cutting Milk Income Loss 
Contract, MILC, payments by 5 percent; and 3. taxing every dairy farmer 
in America 3 cents per hundredweight, cwt., on all production. We were 
successful in this fight to protect Pennsylvania's, and the Nation's, 
dairy producers.
  Also, I, along with five other Senators, requested that the 
Government Accountability Office, GAO, review the Chicago Mercantile 
Exchange, CME, cash cheese market because the price of cheese is 
strongly correlated to the price of milk. The GAO is expected to have a 
final report in the near future. This report will help us set 
legislative priorities by giving us a better understanding of the CME 
cheese market and its relation to the price of milk.
  Even though milk production in Pennsylvania had a market value of 
$1,770,912,000 in 2004, dairy farmers across PA and the Nation 
experienced decreased prices of milk from November of 2005 until early 
this year. Our dairy producers should not be receiving decreased milk 
prices, especially with the increased costs of production, such as 
fuel, feed, and fertilizer.
  These unpredictable fluctuations in the price of milk paid to our 
dairy farmers place an undue financial burden on our producers, which 
in turn negatively impact our rural communities. As a result, I worked 
hard with Senators Santorum, Chambliss, Kohl, and Leahy to extend the 
Milk Income Loss Contract, MILC, program until September of 2007. The 
MILC program was created as part of the 2002 farm bill to provide 
supplemental payments to dairy farmers when the market price falls 
below a statutory trigger. This program has provided timely and crucial 
payments to producers, particularly when prices were low in 2002, 2003, 
and 2006. Although milk prices are expected to be above the statutory 
trigger price of $16.94 through 2007, we need to ensure a more stable 
milk pricing system.
  The 2007 farm bill creates an opportunity to address the current 
volatile milk pricing system. While many legislative measures have been 
proposed, it is essential that any program address costs of production, 
ensure market and price transparency, and provide a safety-net for our 
producers. Additionally, we need to provide dairy producers with tools 
to help them should milk prices fall below sustainable levels, such as 
a voluntary revenue insurance program.
  I, along with Senator Bob Casey, have worked with our constituents to 
propose two dairy legislative proposals to ensure that we continue to 
discuss America's milk pricing system and the need for change in the 
2007 farm bill. I have met with dairy producers from across the 
Commonwealth and there is a broad consensus that the unpredictable milk 
pricing system needs to be addressed. The hard part is coming to a 
consensus on how to reform the system. Although these two legislative 
proposals may not be perfect, they provide ideas on assuring an 
equitable milk price for our dairy producers.
  The first bill that we are introducing is the Federal Milk Marketing 
Improvement Act of 2007. This legislation would reduce the number of 
classes of milk from four to two with the intent of simplifying the 
pricing of milk. The bill would require the Secretary of Agriculture to 
determine the price of all milk used for manufacturing purposes, which 
will be classified as Class II milk, by using the national average cost 
of production. This price would then be the basis formula for 
calculating the price of Class I milk, which is fluid milk. Although 
costs of production can vary drastically farm by farm, this legislation 
would ensure that dairy farmers receive a fair price for their milk 
based on a national average cost of production figure.

  Costs of production for dairy farmers all across America have 
increased, not

[[Page S8621]]

just in one region. Fuel, feed, and fertilizer costs have more than 
doubled. Only recently has the price of milk paid to farmers reached 
higher than the MILC program trigger price of $16.94 per cwt. With the 
price of milk above this target price, no payments to farmers will be 
made, even though input costs have more than doubled. Addressing costs 
of production is necessary to ensure that our family dairy farmers 
survive.
  The second bill that we have introduced aims to promote growth and 
opportunity for the dairy industry. This bill would change the current 
MILC program to a Milk Target Price Program and would link payments to 
dairy farmers on Class III milk. The program would pay farmers when the 
price of Class III falls below $12.00 per hundredweight. This trigger 
price would be adjusted by a feed adjustment factor to reflect the feed 
cost of producing 100 pounds of milk. The USDA would determine this 
factor based on a feed price index using a baseline period of calendar 
years 2001 through 2005.
  Further, the second bill would require the mandatory reporting of 
dairy commodities by requiring that dairy prices be reported on a daily 
and weekly basis. The current system is not mandatory and it is 
estimated that dairy farmers lost $6.4 million due to a Federal 
reporting error by the USDA over the past nine months. Along with 10 
other Senators, I sent a letter to USDA Secretary Mike Johanns on May 
9, 2007, requesting an explanation on how this misreporting occurred. 
This bill aims to close any loops in current law and assure proper 
auditing, data verification, and enforcement of reporting in order to 
ensure a transparent dairy market.
  Finally, the second bill would provide authorization for a Federal 
dairy education loan forgiveness program. This would allow students at 
higher education institutions across America who focus on agriculture 
for a 2- or 4-year degree and become a full-time owner of a farm to 
become eligible to have their Federal student loans forgiven. This is 
aimed to ensure that there is a younger generation of farmers to work 
the lands across the fields in America.
  Both of these bills aim to help our family dairy farms who deserve a 
fair price for their milk. I am committed to Pennsylvania's dairy 
farmers and will continue to work with my Pennsylvania colleague, 
Senator Casey, and all my colleagues in the U.S. Senate to ensure our 
dairy farmers are not left behind. As more ideas and solutions are 
proposed, I will consider each and every one. Debate is important to 
finding a solution to any problem.
  Farmers and rural America are the backbone of our great country. 
Every day, they work the fields, milk the cows, herd the cattle, and 
pick the produce. I myself grew up in rural Kansas and at the age of 
14, I worked for Clyde Mills, father of my close friend and high school 
classmate Steve, driving a tractor in the wheat fields, providing 
lessons on the difficulties of working on a farm.
  Agriculture is crucial to Pennsylvania and to the entire nation. We 
need to ensure that the next farm bill provides all our fanners with 
the assistance they need to overcome hardships, as well as providing 
our rural communities the financial and technical assistance they need 
to assure a vibrant and stable rural economy. Even though I voted 
against final passage of the 2002 farm bill because it 
disproportionately provided more Federal funds to other states and 
regions in the U.S., I look forward to working with the Senate 
Committee on Agriculture and my colleagues in the full Senate to ensure 
farmers across America are equitably treated when it comes to Federal 
agricultural programs and assistance.

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