[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[House]
[Pages 19177-19178]
[From the U.S. Government Publishing Office, www.gpo.gov]



                   A SOURING DEBATE OVER MILK PRICES

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 19, 1999, the gentleman from Minnesota (Mr. Gutknecht) is 
recognized during morning hour debates for 5 minutes.
  Mr. GUTKNECHT. Mr. Speaker, very soon the Congress will be engaged in 
a very vicious debate about milk. And that may surprise some people; 
but when we start talking about milk marketing order reforms, it is 
amazing how aggressive some Members can become.
  Mr. Speaker, in the last couple of days our colleague, the gentleman 
from Wisconsin (Mr. Green) and myself have sent to all of our other 
colleagues a copy of an editorial which appeared recently in the Kansas 
City Star.
  Mr. Speaker, I would like to read some excerpts of that editorial 
because as far as I am concerned they got the debate exactly right. I 
read and I quote, in 1996, Congress ordered the administration to 
simplify the pricing of milk. That is easy enough. Stop regulating it. 
But this is the farm sector and a free market in milk is somehow 
inconceivable. Instead, milk prices are calculated from rules and 
equations filling several volumes of the Code of Federal Regulations.
  The administration's proposed reform would reduce the number of 
regions for which the price of wholesale

[[Page 19178]]

milk is regulated from 33 to 11. Fine, but it would also perpetuate the 
loopy Depression-era notion that the price of milk should in some 
respects be based in part on its distance from Eau Claire, Wisconsin. 
Under current policy, producers farther away from this supposed heart 
of the dairy region generally receive higher premiums or differentials.
  The administration called for slightly lower differentials for 
beverage milk in many regions, but in Congress even this minuscule step 
towards rationality is being swept aside. The Committee on Agriculture 
has substituted a measure that essentially maintains a status quo. 
Similar moves are afoot in the Senate. Worse, some dairy supporters are 
working to reauthorize and expand the Northeast Interstate Dairy 
Compact, a regional milk cartel, and allow similar grouping for 
southern States. Missouri's legislature, by the way, has already voted 
to join the Southern Compact, even though it would result in higher 
prices for consumers. The Consumer Federation of America reports that 
the Northeast Dairy Compact raised retail milk prices by an average of 
15 cents a gallon over 2 years.
  Dairy producers concerned about the long view should be worried. 
Critics point out that the higher milk differentials endorsed by the 
House Committee on Agriculture may well lead to lower revenue for many 
producers. This is because the higher prices will encourage more 
production, driving down the base milk price and negating the higher 
differential.
  The worst idea in this developing stew is the prospect for dairy-
compact proliferation. A compact works like an internal tariff, because 
the cartel prohibits sales above an agreed-upon floor price. Producers 
within the region are protected from would-be outside competitors.
  Opponents point out that more regional compacts, and the higher 
prices they support, will breed excessive production, creating dairy 
surpluses that will be dumped into markets of other regions. This will 
prompt other States to demand similar protection, promoting the spread 
of dairy compacts.
  Ultimately, as in the 1980s, political pressure will build to 
liquidate the dairy surplus in a huge multibillion dollar buyout of 
cheese, milk powder, and even entire herds.
  Congress should permit the Northeast Compact to sunset or expire, 
which will occur if the lawmakers simply do nothing. In fact, doing 
nothing to the administration's proposal seems to be the best choice in 
this case, or more properly the least bad. Perhaps some day Washington 
will debate real price simplification as in ditching dairy socialism 
and letting prices fluctuate according to the law of supply and demand, 
closed quote.
  Mr. Speaker, the Kansas City Star is right. We should allow Secretary 
Glickman's modest reforms to go forward. We should sunset the Dairy 
Compact. Mr. Speaker, markets are more powerful than armies. They allow 
the market to set the price of milk in Moscow. Maybe we should try it 
right here in Washington, D.C.

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