[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Senate]
[Pages 30564-30566]
[From the U.S. Government Publishing Office, www.gpo.gov]



                      THE NORTHEAST DAIRY COMPACT

  Mr. JEFFORDS. Mr. President, I will take a moment to react to an 
editorial which I read this morning in the Wall Street Journal which 
had so many errors and erroneous comments that it shocked me to find 
out that such a fine newspaper as the Wall Street Journal would carry 
this.
  I have been in Congress now 24 years, and as a result of unusual 
circumstances, for many years I had been sort of the leader of dairy 
for the Republicans in the House. That occurred because I was elected 
during the Watergate year. During the Watergate year, there were 92 
freshmen Representatives who were elected and only 16 were Republicans. 
So all of us who came in that year immediately got seniority because 
there were not any other Members around.
  I got to be the ranking member on the dairy subcommittee my first 
year. During that time, some 24 years, one thing I could be assured of 
was that any time something was going to come to the benefit of the 
dairy farmers, the Wall Street Journal, the New York Times, and the 
Washington Post would all write adverse editorials. Why is that? Well, 
do the dairy farmers buy any advertising in these newspapers? Of 
course, they don't. Who does buy the advertising? It is those who 
purchase milk. What is their motivation? To keep the dairy farmers 
getting the least money possible so they can maximize their profits. 
And they have done a masterful job.
  But they also have a propensity, either because they, without any 
checking, believe everything told to them by the processors who pay for 
their ads or they just ignore the truth. The Wall Street Journal 
article of this morning was a very typical example. I will run through 
some of the facts that were utilized in this great paper to point out 
the errors.
  First of all, they make statements which are just not true. They say 
we have to have a compact because our farmers are less efficient than 
the Midwestern farmers. Well, that is absolutely not true. Both are 
very efficient. The differences in the two areas are dramatic, but they 
are not relative to efficiency. Obviously, the Midwest farmers have an 
advantage because they are closer to the grain markets. They have more 
people producing cheese, and they have soils that are preferable to 
many of the other areas of the country, especially New England. So they 
have an advantage, not a disadvantage, by being not only efficient--and 
I don't think our farmers are any more efficient than theirs --but 
having lower costs to start with. So to make the statement that it is 
all based upon inefficiency is absolutely ridiculous.
  Then this statement: Never mind that this milk costs consumers to the 
tune of about 20 extra cents a gallon. This is absolutely false. In 
fact, one of the ironic aspects of this whole argument occurred back 
when the compact first went into effect and the Midwestern farm 
representatives said: We will show them. We will show that this is all 
due to efficiency and all those kinds of things. So they asked OMB, not 
GAO or whoever else. Why? Because OMB was sympathetic to the 
administration at that time and they wanted help from the White House 
to try to back up their arguments.
  Well, what happened? OMB did an analysis of the impact of the compact 
and found out just the opposite. Do we hear them quote that anymore? 
No. I

[[Page 30565]]

have to bring it up every time. They still--either their friends in the 
newspapers that make the money off advertising or sometimes they do it 
themselves--ignore the fact that the study they asked for came back 
saying that, contrary to what they were telling people, actually the 
consumers in New England, where the compact was in effect, paid 5 cents 
less a gallon--not 20 cents more a gallon, 5 cents less a gallon--than 
the average in the rest of the country. But they still print something 
which they know is absolutely incorrect.
  Also, for a conservative newspaper such as the Wall Street Journal--I 
wouldn't give that same label to the New York Times and the Washington 
Post--the Wall Street Journal should recognize that all of these 
States, all six States, are taking advantage of the Constitution which 
says that States can, if they want to, ask Congress for permission to 
create a commission to allow them to join together to sort of control 
or impact interstate commerce.
  Well, the States have the right to do that and the States did do it. 
The New England States got together and said: Well, let us take a look 
and see what we can do to have a more organized pricing system. One has 
to understand a little bit about how the farming goes. If you are a 
dairy farmer, you have milk and you have to get rid of it. It is going 
to last about 3 days before you will have to throw it out. So you are 
at the mercy of the market. You can form cooperatives and things such 
as that, but no matter what you do, the milk has to go somewhere or it 
is going to spoil.
  The thought was, instead of leaving ourselves at the mercy --and this 
is the basic part of the situation--of the processors, the people who 
buy the milk, who can sit there 2\1/2\ days and say: Well, it is going 
to be worthless tomorrow; I will give you 5 cents a gallon--well, it 
never gets quite that bad, but that is the kind of power they have. 
They don't want to lose that power. They want to be able to dictate to 
the dairy farmers the price they are going to get. The New England 
farmers got together and worked with their various legislators and 
decided, why don't we set up a commission that would have consumers 
represented, processors represented, farmers represented, and the 
general interest of the public represented. We will set what the price 
will be, keeping in mind that we don't want to end up with a huge 
surplus. We want to make it fair but make sure the consumers don't lose 
on this--in fact, maybe even gain--and the dairy farmers will gain 
because they will have a stable market situation.
  It worked so well that, as I said, the price to consumers actually 
went down. I could speak at length on that, but it went down. The 
farmers got a significantly better price overall. They were happy. The 
processors got a fair price, and they haven't screamed, those that are 
participating in it. It is a good system. That is the problem with it. 
It is a good system.
  Why does that scare the processors? They would rather get the lowest 
price possible to pay to the farmers and so they have lost that 
control. But to the Midwest, it shakes them up because what was their 
dream? Their dream was that all of the dairy farmers in the United 
States would go out of business except in the Midwest. And they are so 
sure they could provide all the milk the country needs, so why do we 
not put them out?
  Well, the commission worked. The price to consumers has gone down, 
the farmers are getting a fair price, and the processors are not being 
injured in any way. That is why 25 States, now a total of 25, including 
New England, have said that is a great idea. Everybody is happy. What a 
wonderful situation.
  The processor is happy, consumers are paying less in price, and 
everybody is happy. So why don't we join? Well, that, of course, has 
now made it a big threat to the Midwest. Because if the whole country 
goes to compacts, the farmers will stay in business, and the market 
expansion that the Midwest was hoping for won't occur.
  That is why we are here today. The States have recognized that it is 
essential to make sure their farmers survive. Why is that? The basic 
concept of the law right now, from the 1930s and rewritten in the Farm 
Act of 1947, said it is critical that we ensure that every area of this 
Nation has an adequate supply of fresh milk. That is basic law; that 
is, to make sure that when you go to your store, there is always some 
fresh milk for you there. That is the basic law. All these States that 
are going into compacts are saying: We want to make sure that our area 
of the country has an adequate supply of fresh milk, and we ought to be 
able to do that. So that is what the real fight is about.
  We have already had the editorial I anticipated in the Post. The Wall 
Street Journal came through right on time with one I anticipated. 
Theirs is so incredibly inaccurate in what they cite, it was a little 
embarrassing, on behalf of the paper, to read that. I expect the New 
York Times will follow suit probably in the next couple of days.
  I want to make sure these facts are out there. What this Nation needs 
is stable farming. We all love our farmers. I can't think of Vermont or 
New England without the cows on the hillside. I can't think of what the 
Southeast would be without the ability of their farmers to produce 
milk. And they have, because of the weather situation and all, special 
problems in the Southeast, being able to produce milk at reasonable 
prices. But they are doing very well. They want to form a compact. The 
same is true in other parts of the country. What is wrong with people 
in the region getting together and deciding how to do it?
  Another argument raised, which will be one for other editorials, is 
that it causes higher prices for WIC--Women, Infants and Children--and 
food. That is all taken care of by the commission. Farmers in the 
Midwest, right now, on an average, receive significantly more in the 
checks they get on a weekly or monthly basis--what they call the 
``mailbox price.'' They do better than the rest of the country. So they 
are not the ones suffering. They have advantages, as I pointed out, in 
cost of production and those things. They are doing well. They just 
want to be sure they can perhaps have a better future by shipping more 
milk.
  Incidentally--and I will leave you with this because the statements 
are that this is somehow infringing on commerce and the ability of 
people to sell--they can bring their milk down now and sell it in the 
New England area. Why don't they? It costs too much to ship it down 
there. But the market is open; it is not closed out. There are no 
barriers built up to where the farmers can ship milk. In fact, the New 
England compact is in place right now, but a great deal of the milk 
comes from New York, Pennsylvania, New Jersey, and wherever else anyone 
wants to ship it.
  The New England area itself is a negative producer. So we depend upon 
milk coming from other areas. When you come in, you know you are going 
to be bound by the price that is established by the commission. That, 
again, represents consumers, producers, the dairy farmers, the 
processors, the people who buy it, and it protects programs such as 
WIC. It is working so well. That is the problem.
  Just remember, the reason for all the controversy right now is that 
this program is working so well for consumers, processors, and the 
producers, and it is a danger to those who want to do away with our 
local farming businesses.
  Mr. President, I see no other Member present, so I suggest the 
absence of a quorum.
  The PRESIDING OFFICER (Mr. Voinovich). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Ms. COLLINS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. COLLINS. Mr. President, I ask unanimous consent that I be 
permitted to proceed as in morning business for not to exceed 10 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page 30566]]


  Ms. COLLINS. Thank you Mr. President.
  Mr. President, I rise today in strong support of the reauthorization 
of the Northeast Dairy Compact. I am pleased that it appears Congress 
will accomplish this vital task before we adjourn for the year.
  The reauthorization of the Compact is more critical now than ever 
before. The U.S. Department of Agriculture recently predicted that milk 
prices for dairy farmers will be reduced 40 cents per gallon in 
December as a result of the announced drop in the basic formula price 
this past week. This translates into a 30 percent reduction in blend 
prices in December and will continue on into next year with additional 
declines in prices expected throughout the winter. The Dairy Compact 
will blunt the 40 cent per gallon drop in farm milk prices by one-half 
and will, by itself, make the difference between continuing in business 
and closing down for many small dairy farmers.
  The Northeast Dairy Compact is a proven success and is critical to 
the survival of dairy farmers in Maine and throughout New England. The 
Compact has a proven track record of quantifiable benefits to both 
consumers and farmers. The Compact works by simply evening out the 
peaks and valleys in fluid milk prices, providing stability to the cost 
of milk and ensuring a supply of fresh, wholesome, local milk. The 
Compact works with market forces to help both the farmer and the 
consumer. As prices climb and farmers receive a sustainable price for 
milk, the Compact turns off. When prices drop to unsustainable levels, 
the Compact is triggered. The Compact simply softens the blow to 
farmers of an abrupt and dramatic drop in the volatile fluid milk 
market.
  It is important to reiterate that consumers also benefit from the 
Compact. Not only does the Compact stabilize prices, thus avoiding 
dramatic fluctuation in retail cost of milk, it also guarantees that 
the consumer is assured of the availability of a supply of fresh, local 
milk. Let's remember that under the Compact, New England has lower 
retail fluid milk prices than many regions operating without a Compact.
  Moreover, the Compact, while providing clear benefits to dairy 
producers and consumers in the Northeast, has proven it does not harm 
farmers or taxpayers from outside the region. A 1998 report by the 
Office of Management and Budget showed that, during its first 6 months 
of operation, the Compact did not adversely affect farmers from outside 
the Compact region and added no federal costs to nutrition programs. In 
fact, the Compact specifically excepts the Women, Infants, and Children 
(WIC) program from any costs related to the Compact.
  The reauthorization of the Northeast Dairy Compact is also important 
as a matter of states rights. We often hear of criticism of the inside-
the-beltway mentality that tells states, we here in Washington know 
better than you, even on issues traditionally under state and local 
control. Mr. President, that is wrong. In the Northeast Dairy Compact, 
we have a solution that was approved by all the legislatures and 
governors of the New England States. It is supported by every state 
commissioner in the region and overwhelmingly--if not unanimously--by 
Northeastern dairy farmers. We in Congress should not be an obstacle to 
this practical, workable, local solution.
  I urge my colleagues to refrain from holding up this critical measure 
for Maine and for our Nation's dairy farmers. To small farms in my 
State and in states throughout New England, this is not just a matter 
of profit margins; it is a matter of their survival.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call.
  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that I be able 
to speak in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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