[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Senate]
[Pages 30837-30840]
[From the U.S. Government Publishing Office, www.gpo.gov]



                A FAIR DEAL FOR MINNESOTA DAIRY FARMERS

  Mr. WELLSTONE. Mr. President, final point. Some of us have been 
fighting for several days. We are out of leverage now. It is toward the 
end. But to be real clear about it, there was a time, when the 
Northeast Dairy Compact was brought to the floor, it was going to be 
part of the 1996 ``Freedom to Farm.'' I think it is the ``Freedom to 
Fail'' bill. It was defeated.
  But this compact, which was not in the farm bill that passed in 
either House, was then put into the conference committee. There is a 
reform issue on which we ought to work. There is one in which I am 
really interested. I do not think the conference committee, which has 
become the ``third House'' of the Congress, should be able to put an 
amendment, a provision, into conference that was not passed in either 
House; or, for that matter, take out a provision that was passed in 
both Houses.
  So this got snuck in. It was part of a deal. It is how we got the 
``Freedom to Fail'' bill, which has visited unbelievable economic pain 
and misery.
  The argument that was made for the Freedom to Farm bill was it should 
all be in the market; there ought not be any safety net; so a family 
farmer should not have any real leverage for bargaining for a decent 
price. You name it. It was a great bill for grain companies, a great 
bill for the packers, but not a very good bill for family farmers. On 
the other hand, when it came to dairy, it was a different set of rules. 
And we were going to have these dairy compacts with administered 
prices.
  Our dairy producers were just asking for a fair shot--dairy producers 
in States such as Wisconsin and Minnesota.
  Let me explain. In my State, we have 8,700 dairy farms. We rank fifth 
in the Nation in milk production. These farms generate about $1.2 
billion for our farmers each year. The average size of the Minnesota 
dairy farm is about 60 cows--60 cows per farm. We are talking about 
family-size farm operations. We are going to lose many more because 
this compact, for all sorts of reasons so negative, impacts on our 
dairy farmers.
  Mr. President, I am disgraced by the recent action by the majority 
party to include such harmful dairy provisions to the State of 
Minnesota as part of the final spending bill this year. The tactics 
used to include dairy as part of this bill is yet another illustration 
of the flagrant abuse of power. I and my fellow colleagues have fought 
hard and have been successful in defeating previous attempts to extend 
the Northeast Dairy Compact. We fought openly and fairly on the Senate 
floor, and now our successful efforts may be unjustly curtailed by 
clandestine negotiations by those who overtly misuse their power. This 
type of backroom negotiating style is clearly not the first time that 
harmful dairy provisions have been attached to the bill. We have been 
fighting such tactics since the authorization of the compact. In fact, 
the authorization of the Northeast Dairy Compact was inserted into the 
1996 farm bill as part of a backroom deal. In 1996, I offered an 
amendment which successfully struck the compact out of the Senate bill 
and the compact was not in the farm bill initially passed by either 
House of Congress. Instead, it was later inserted during the bill's 
conference in the passage of the 1996 Freedom to Farm bill. Yet 
ironically, the 1996 Freedom to Farm bill was passed with the intent to 
remove government from the marketplace. Although, I adamantly opposed 
the bill, many viewed the 1996 farm bill as a way to decouple payments 
to family farmers. The thought at that time was that farmers should 
produce for the market and that Congress should eliminate a safety net 
for our farmers.
  For some reason, we seemed to play by a different set of rules when 
it comes to dairy. We told our corn and soybean farmers that to succeed 
in the 21st century they should pay close attention to market signals, 
but at the same time we considered implementing compacts that drown out 
those signals for dairy farmers. And yet even among dairy producers, we 
scrutinized and only allowed one region of the country to provide a 
safety net for their farmers, while hurting farmers in other parts of 
the country.
  Minnesota is not asking for special favors. All Minnesota dairy 
producers are asking for is a fair shot. I have spoken here before 
about the importance of family dairy farming to my State's economy. 
Minnesota's dairy industry is one of the cornerstones of the State's 
economy. We have 8,700 dairy farms in Minnesota, ranking fifth in the 
Nation's milk production. The milk production from Minnesota farms 
generates more than $1.2 billion for our farmers each year. Yet, the 
average herd size of a Minnesota dairy farm is about 60 cows. Sixty 
cows per farm. So we are really talking about family operations in my 
State. Family businesses with a total of $1.2 billion in sales a year, 
contributing to their small-town economies, trying to live a productive 
life on the land.
  Let me read from a few farmers in my State of Minnesota who are 
hurting:
  Eunice Biel, a Harmony, MN dairy farmer:

       We currently milk 100 cows and just built a new milking 
     parlor. We will be milking 120 cows next year. Our 22-year-
     old son would like to farm with us. But for us to do so he 
     must buy out my husband's mother (his grandmother) because my 
     husband and I who are 47-years-old, still are unable to take 
     over the family farm. Our son must acquire a beginning farmer 
     loan. But should he shoulder that debt if there is no stable 
     milk price? We continuously are told by bankers, 
     veterinarians and ag suppliers that we need to get bigger or 
     we will not survive. At 120 cows, we can manage our herd and 
     farm effectively and efficiently. We should not be forced to 
     expand in order to survive.

  Lynn Jostock, a Waseca, MN dairy farmer:

       I have four children. My 11-year-old son Al helps my 
     husband and I by doing chores. But it often is too much to 
     expect of someone so young. For instance, one day our son 
     came home from school. His father asked Al for some help 
     driving the tractor to another farm about 3 miles away. Al 
     was going to come home right afterward. But he wound up 
     helping his father cut hay. Then he helped rake hay. Then he 
     helped bale hay. My son did not return home until 9:30 p.m. 
     He had not yet eaten supper. He had not yet done his 
     schoolwork. We don't have other help. The price we get at the 
     farm gate isn't enough to allow us to hire any farmhands or 
     to help our community by providing more jobs. And it isn't 
     fair to ask your 11-year-old son to work so hard to keep the 
     family going. When will he burn out? How will he ever want to 
     farm?

  Les Kyllo, a Goodhue dairy farmer:


[[Page 30838]]

       My grandfather milked 15 cows. My dad milked 26. I have 
     milked as many as 100 cows, and I'm going broke. They made a 
     living out here and I didn't. Since my son went away to 
     college, my farmhands are my 73-year-old father and my 77-
     year-old father-in-law who has an artificial hip.
       I have a barn that needs repairs and updates that I can't 
     afford. I have two children that don't want to farm. At one 
     point, in a 30-mile radius, there were 15 Kyllos farming. Now 
     there are three. And now I'm selling my cows. My family has 
     farmed since my ancestors emigrated to the United States.
       When I leave farming, my community will lose the $15,000 I 
     spend locally each year for cattle feed; the $3,000 I spend 
     at the veterinarian; the $3,600 I spend for electricity; or 
     the money I spend for fuel, cattle insemination and other 
     farm needs.

  The testimony I just read were from MN farmers who felt comfortable 
to share their names. I have additional testimony, but the farmers who 
shared their stories, had requested that I not use their name. This is 
testimony from a farmer in East Ottertail, MN:

       Despite the ongoing difficulties, it is amazing the 
     steadfast willingness of this family to try and hold things 
     together. The farm is farmed by two families, a father and 
     his son.
       Since dairy prices fell in the second quarter of 1999, 
     there was not enough income for this family to make the loan 
     payments and to provide for family living and cover farm 
     operating expenses. The Farm Credit Services would not 
     release a loan for farm operating assistance, and so the 
     family had to borrow money from the lender from which they 
     are already leasing their cows. They have not been able to 
     feed the cows properly because of the lack of funds. Because 
     they cannot adequately feed their dairy herd, their milk 
     production has fallen and is considerably lower than the 
     herd's average production. In addition, because there was no 
     money for family living, the parents had to cash out what 
     little retirement savings they had so that the two families 
     had something to live on day to day.
       The son and wife had to let their trailerhouse go since 
     they could not make the payments and moved into a home owned 
     by a relative for the winter. Most of their machinery is 
     being liquidated. However, there are a few pieces of 
     machinery that go toward paying off their existing debt. The 
     family will be selling off 120 acres of land in their 
     struggle to reduce the debt. Recently, the father has been 
     having serious back troubles and has been unable to help his 
     son with the work. This is tremendous stress both physically 
     and mentally on the son. The son has decided he is going to 
     have to sell part of the herd in order to reduce the herd to 
     a number that is more manageable for one person. In addition, 
     the money acquired from selling off part of the herd will be 
     applied toward their debt. The son hopes that these three 
     items combined: selling machinery, land and part of the herd 
     can pay off enough of their debt that he might be able to do 
     some restructuring on the remainder of the farm and to reduce 
     loan payments to a manageable amount where there is something 
     left to live on after payments are made.

  These are just a few of the stories. I read these stories, because it 
is important that when we consider national dairy policy here in the 
Senate, we need to keep in mind that we are determining the future of 
an industry and a way of life that are basic not only to the 
agricultural economy, but to the very soul of America's rural 
heartland. I am concerned that the dairy provisions attached to this 
omnibus bill will hurt Minnesota dairy farmers and frankly dairy 
farmers throughout the country. I have been on the floor before 
discussing how the dairy compacts and any reversal to the 
implementation of an equitable milk marketing system will harm 
Minnesota dairy farmers. However, the dairy language included in this 
bill goes even further and could potentially threaten all family dairy 
farmers throughout the nation.
  What I am talking about and concerned about as are many Americans is 
the trend towards factory-farm and concentration in dairy. It is 
unnecessary and unwise. There is no reason we cannot have a family-farm 
based dairy system. A dairy system which promotes economic vitality in 
rural communities and one which is more environmentally sustainable 
than a factory-farm system. Family dairy farms are efficient and 
innovative. Family dairy farms can provide a plentiful supply of 
wholesome milk at a fair price. However, there is a provision stuck in 
this bill which no one has really discussed, and would harm family 
dairy farmers everywhere. The provision would establish a pilot program 
allowing for the expansion of forward contracting of milk.
  Forward contracting reduces competition in the marketplace and 
results in lower prices to dairy producers. Forward contracting is not 
specific to the dairy industry. In fact, one can note the effect of 
forward contracting by the recent events occurring in the hog industry. 
Recently, the hog industry has witnessed a significant increase in the 
number of producers who decided to forward contract. Hog producers will 
contract with packers to guarantee them a minimum price for their pigs. 
Contracting is not inherently bad and there are some good contracts. 
However, what is occurring is that these deals are made often in 
private and do not reflect the spot market. There is a strong argument 
that contracting is partly responsible for the depressed hog prices and 
the rapid increase in the consolidation of the hog industry. What is 
happening in the hog industry is also happening in dairy.
  This provision would expand forward contracting of milk by allowing 
processors to pay producers less than the federal milk price for milk. 
Under current law, forward contracting is allowed, however, only if the 
buyer is willing to offer at least as much as the federal minimum 
price. In other words, this provision will remove an important safety 
net for our dairy producers. Expanded forward contracting can also 
reduce the price for producers who do not forward contract by reducing 
the competition for milk, thereby damaging the entire dairy market 
structure. This provision could also discriminate against our family 
farmers because the most likely scenario is that processors would offer 
forward contracts to the largest producers. Again, we would see the 
domino effect of losing family farmers. By giving a better deal to 
larger producers, our family farmers cannot compete and we would see 
more losses of family farmers.
  Those who support forward contracting contend that forward 
contracting is a risk management tool; however, this argument doesn't 
hold water. In fact, National Farmers' Union and other groups contend 
that the proposal for forward contracting will actually make it more 
difficult to manage risk by forcing producers to guess whether the 
volatile dairy market will go up or down. It is logically deduced that 
in the absence of an adequate support price, the market will continue 
to be highly volatile. What can happen is that anytime producers price 
guess wrong, they lose money under this proposal. The truth is that our 
family dairy farmers cannot compete in such a volatile market place. We 
must set policy that keeps family dairy farms in business while 
ensuring that consumer and taxpayer costs are kept at a reasonable 
level. What we need to achieve here is a fair, sustainable and stable 
price system for all dairy farmers.
  That has clearly not happened, and that's partly why Minnesota 
continues to lose dairy farmers at an appalling rate. Minnesota is 
losing dairy farms at the rate of three per day due to base price that 
are already low and unstable. Let me read to you the past couple of BFP 
prices for family dairy farmers. The BFP is the basic formula price. It 
is the monthly base price per hundredweight paid to dairy farmers for 
their milk.
  In August the BFP was $15.79 per hundredweight. That was quite high 
and it is a good price. Farmers could be pleased with that price. In 
September the BFP rose a little higher to $16.26 per hundredweight. I 
haven't seen the analysis of why the BFP price rose so high. Back in 
May of 1999, the BFP was only $11.26. Some would argue that it was due 
to the drought in the East that prices rose so high for August and 
September. The milk price was high because cows in the eastern region 
were strained and produces less milk. Therefore, milk was in demand and 
thus the price rose. If this is the case, our farmers are getting a 
decent price for their milk only at the expense of farmers in other 
parts of the country who are suffering.
  In October, the BFP took a stumbling tumble from the $16.26-September 
price to $11.49 per hundredweight. This is a dramatic drop price. The 
BFP for this month will not be released until

[[Page 30839]]

December 3rd, but it is predicted to be even lower. Again, as I have 
stated before with such volatility in the market, it is no question why 
our farmers are having a difficult time to survive. And if dairy 
farmers are not struggling enough with the volatility of the market, 
Congress is now assisting and in some cases is making the price of my 
dairy farmers worse--and that is what has happened with the Northeast 
Dairy Compact. The Northeast Dairy Compact gives six states the right 
to join together to raise prices to help producers in the region. While 
it may help the Northeast, it is cutting into our markets. It is true 
that the compact provided a safety net this spring to certain farmers 
when dairy prices plunged. When the price of raw milk dropped by 37 
percent, one Massachusetts farmer got a $2,100 check from the compact. 
Overall, that farmer said, aid from the compact totaled seven percent 
of his gross income during the first 12 months of its operation. 
Conversely, Midwest dairy farmers--who also confronted the sharp price 
decline--got no such price.
  The Northeast Dairy Compact fixes fluid milk prices at artificially 
high prices for the benefit of dairy producers in just that region. 
This artificial price boost of a compact may benefit the producers 
covered by the compact, but it hurts all other dairy farmers. It is 
also no secret that the extension of the Northeast Compact encourages 
other regions such as the Southeast to form their own compact. This 
would be detrimental to the Upper Midwest. A recent report by 
University of Missouri dairy economist Ken Baily found that Minnesota's 
farm-level milk price would drop at least 21 cents per hundredweight if 
a Southeast dairy compact were allowed to be implemented alongside 
expanded Northeast dairy compact. This would translate into a $27.2 
million annual reduction of Minnesota farm milk sales. The compacts in 
Baily's study would cover only 27 percent of U.S. milk production, yet 
would have a sizable negative impact. If more regions adopted compacts 
Minnesota prices would drop even further.
  Many, such as I heard Senator Leahy inquire, why doesn't the Upper 
Midwest form their own compact. Minnesota and Wisconsin farmers would 
not benefit from organizing their own compact. A compact's price boost 
applies for only fluid milk. The percentage of Upper Midwest milk going 
into fluid products is so low that any compact would do little for 
Minnesota's farmers' income. The negative impact of compacts would far 
outweigh any minimal boost to fluid prices here in Minnesota. Congress 
should not accept a policy that so clearly provides benefits to the 
producers of one region at the expense of consumers and producers 
elsewhere. Instead, there should be an effort to create a more uniform 
and rational national dairy policy--a policy without the regional 
fragmentation caused by compacts.
  To put it simply, compacts erect trade barriers in our country. By 
fixing milk prices at artificially high levels, Compact proponents 
understand that their markets become vulnerable to market forces at 
work elsewhere in the nation. So in order to prevent milk from other 
regions entering those Compact markets at lower prices, a tariff-like 
mechanism is established to ensure that all milk entering the Compact 
area is priced at the level fixed by the price-fixing commission in the 
region. It is bad enough that the extension of the Northeast Dairy 
Compact is attached to this bill, but it is unacceptable for Congress 
to attempt to meddle with USDA's final plan by resurrecting an 
alternative similar to Option 1-A.
  As you know, the referendum voted on by producers nationwide 
overwhelming passed this past summer. Given the prominence of 
Minnesota's dairy industry, it should be no surprise that I have pushed 
for reform of the existing milk pricing system. The Secretary's reforms 
are a step forward in a long overhaul of dairy policy toward a more 
unified and simplified pricing system that benefits all producers. We 
need to reduce and eliminate the regional inequities that exist within 
the federal order system. The current pricing system regulates the 
price of fluid milk based on the distance from Eau Claire, Wisconsin. 
This policy causes market distortions that disadvantage producers in 
the Upper Midwest. These reforms must move forward quickly, and be 
implemented as soon as possible by the Secretary.
  These dairy provisions are putting at great risk dairy farmers not 
just in my State, but across the country. It is imperative that we 
establish a national and equitable dairy system for all. For this 
reason, and among numerous other inequities included as part of this 
mammoth omnibus package, I cannot vote for the bill.
  Mr. President, milk prices per 100 weight were about $16. Now they 
are down to $11. They are going down further. We do not have any kind 
of national dairy policy that makes any sense.
  What has happened, which affects Eunice Biel and Lynn Jostock, and 
Les Kyllo, and all sorts of other farmers who will remain anonymous but 
whose statements are included in the Record --they do not want their 
names used--it is hard when you are going through pain, and you are 
working 19 hours a day, and you are going to lose your farm.
  What has happened, to add salt to the wound, insult to injury, is 
that in the dark of night in a conference committee a few people--it 
did not pass the Senate; they did not get it through--they put through 
a provision that extended this Northeast Dairy Compact, which would 
have run out, and they blocked the Secretary of Agriculture from being 
able to move forward with milk marketing order reform.
  They have another provision which would allow for a pilot project for 
the expansion of the forward contracting of milk. That is what we have 
had in the hog industry. Contracting is not inherently bad, but what 
happens is these arrangements are made in private; they do not reflect 
the spot market. Basically, what happens is, you are going to have this 
consolidated industry, as in the hog industry. And what will happen is 
that the processors will be able to pay the producers less than the 
Federal milk price for milk. In other words, under current law, forward 
contracting is allowed; however, only if the buyer is willing to offer 
at least as much as the Federal minimum price. But this little-known 
provision--never debated on the floor of the Senate--would now remove 
that important safety net for our dairy producers. Processors are going 
to offer better forward contracts to the larger producers, to the 
largest producers, and our dairy farms are going to go under.
  In Minnesota, we continue to lose dairy farms at an appalling rate. 
Minnesota is losing dairy farms at the rate of three per day due to a 
base price that is already so low and so unstable.
  I say to each and every one of my colleagues that it is a triple blow 
to agriculture, to dairy farmers, in Minnesota. First of all, again, 
this horrendous piece of legislation, which was passed in 1996, that I 
think the Senate should be ashamed of, took the bargaining power away 
from farmers. They cannot even get a price to survive.
  We have a depression in agriculture. We are going to lose a whole 
generation of producers. The way this happened, with the Northeast 
Dairy Compact, was to put that into the conference report. It never 
passed on the floor. It was part of the whole deal that made this bill 
possible.
  Then this dairy compact was going to expire in 2 years. We had a vote 
on it. It did not get through the Senate. It came back into the 
conference committee, in this horrendous process--which will be my last 
point about this process--no vote, no public discussion, all sorts of 
provisions, one of which I just mentioned, put into this amendment, and 
now this omnibus conference report is brought to us, and we cannot 
amend it. We can't amend it. I can't come to the floor of the Senate 
and deal with this forward contracting of milk without the safety net. 
I can't come to the floor of the Senate with an amendment to knock out 
this amendment. You get a few people who decide in a closed room, 
outside of any scrutiny, and they put this back in.
  I am outraged. But we fought this every way we know how. Today is the

[[Page 30840]]

last day. There will be a vote, and we can't stop that vote--whether it 
be at 1 a.m. or in midafternoon. To me, that is no longer an issue. We 
have done everything we can.
  But I say to my colleagues that I think what has been done to the 
dairy farmers in the Midwest is an injustice. I think it is an 
injustice in a piece of legislation that, in and of itself, doesn't 
represent all that much for America, even though I know everybody will 
be talking about how great this is. I am certainly going to vote 
against it.
  I also say to my colleagues that I hope we will, next year, think 
about how we can reform the way we operate. On this, I hold the 
majority leader accountable--to the extent that I can hold him 
accountable. And I will figure out every way I can next year, when we 
come back, to keep raising this issue.
  We didn't get a lot of these appropriations bills done. We had a lot 
of legislation that came to the floor. We weren't allowed to do 
amendments. Frankly, I don't know how anybody in here thinks we can be 
good legislators when we don't have the bills coming to the floor. We 
need to get them out here in the open and have debates that are 
introduced, have up-or-down votes, and then we move forward. And if we 
have to work from 9 in the morning until 9 at night, so be it. But 
instead, we don't do our work.
  Those of us who believe the Senate floor is the place to fight for 
what we believe in and have the debates are not able to do so. Instead, 
we have this process where six, seven, eight people decide what is in 
and what is out, and we have this huge monstrosity called the 
``omnibus'' bill that is presented to us, which none of us has read--or 
maybe two people have. But none of us has read this from cover to 
cover. I doubt whether there are more than two Senators who know 
everything that is in here.
  I would like to raise the question, How can we be good legislators 
with this kind of process? We are not being good legislators. I am 
speaking for myself. I am not able to be an effective legislator 
representing Minnesota if we are going to continue making decisions in 
conference committees and rolling in six, seven, eight major pieces of 
legislation with no opportunity for me as a Senator from Minnesota to 
bring amendments to the floor. That was done on the dairy compact, and 
that is what has been done on a whole lot of other decisions. It is no 
way to legislate.
  I contend that that is no way to legislate. I contend that this 
omnibus bill makes a mockery of the legislative process. I contend on 
the floor of the Senate today, not only because of what happened to 
dairy farmers in Minnesota but because of the whole way in which this 
decisionmaking process has worked, that this is unconscionable. I 
contend that this kind of decisionmaking process is going to lead to 
more and more disillusionment on the part of people in the country.
  People hate the mix of money and politics. They don't like poison 
politics. They don't like all the hack-attack politics my colleagues, 
Senator Reid and Senator Durbin, were talking about earlier because 
they believe that is what is wrong. They don't like what, apparently, 
some of us relish. They don't like backroom deals, decisionmaking that 
is not open, accountable, and that people can understand and 
comprehend.
  Now, my final point. I am not so sure that some of the major 
decisionmakers, given the sort of deck of cards they had to work with--
I don't know that I want to point the finger at any one person. I don't 
think that is probably fair. I am making an argument about process, not 
about a particular Senator. Some of them who were involved in this 
probably did everything they could do from their point of view. They 
are very skillful. But I will tell you one thing. Minnesota dairy 
farmers came out on the short end of the stick.
  I regret the fact that this has been done and stuck into a conference 
report and was not done in an honest way, with open debate on the floor 
of the Senate, where we could have amendments. I also regret a 
legislative process where we didn't get to the bills on time, didn't 
have the debate on the floor, didn't have amendments we could 
introduce, didn't have the up-or-down votes, and it all got done by a 
few people, really, basically, with very little opportunity for public 
scrutiny, for democratic accountability.
  I am going to vote ``no'' on this bill. I think I would vote ``no'' 
just on the issue of the way in which these decisions have been made 
because, again, I think we have made a mockery of what should be the 
legislative process.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Maine is recognized.

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