[Congressional Record (Bound Edition), Volume 145 (1999), Part 7]
[Senate]
[Page 9888]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          DAIRY POLICY REFORM

  Mr. LUGAR. Mr. President, Secretary of Agriculture Glickman recently 
announced reforms for the Federal milk marketing order system. These 
reforms were authorized by the 1996 farm bill in an effort to modernize 
and streamline an out-dated and arcane structure for pricing the 
nation's milk. As was the case with other commodities, the farm bill 
intended that Federal dairy policy be more modern and market-oriented 
to reflect innovations in the milk industry and to position the United 
States to become a major trader in world markets. In announcing the 
reforms, Secretary Glickman said, ``These reforms will help make sure 
that America's dairy farmers receive a fair price and that American 
consumers continue to enjoy an abundant, affordable supply of milk. Our 
changes will also simplify the wholesale milk pricing system, making it 
more market-oriented and more equitable.'' The changes are positive 
steps toward accomplishing the goals stated by the secretary. The new 
structure is more market-oriented, more beneficial to consumers and 
more equitable to farmers across the Nation.
  During consideration of the 1996 farm bill, Congress could not agree 
on a policy to modernize milk marketing orders. The task of designing a 
consumer-friendly and market-oriented program was turned over to the 
Department of Agriculture. The Secretary was given until 1999 to design 
this new policy. In the interim between 1996 and 1999, Congress allowed 
the northeast region of the country to set up a dairy compact in which 
producers could receive a higher price for their milk. Authority for 
the compact was scheduled to end with the implementation of the new 
milk marketing order policy.
  On January 2, 1998, as Secretary Glickman prepared to consider 
changes to federal dairy policy, I wrote to him suggesting several ways 
to make dairy policy more consumer friendly and market oriented. 
Included in my recommendations was an overhaul of Class I differentials 
which set the prices that farmers receive for fluid milk. Shortly 
thereafter, USDA released its proposed rule for milk marketing order 
reform. The proposed rule contained seven different options for pricing 
structures and noted Secretary Glickman's preference for the more 
market-oriented ``Option 1B'' for pricing Class I milk. On February 25, 
1998, I again wrote to Secretary Glickman in support of his commitment 
to a more market-oriented approach and made recommendations for other 
changes that modernize federal dairy policy.
  The contents of the final rule were highly controversial. No one 
interested in dairy policy--producers, processors or consumers--was 
satisfied. Contradictory bills to amend portions of the final rule were 
introduced in both chambers of Congress. If I had written the final 
rule, I would have made some changes also.
  However, we should reflect on the entire rule and the process that 
led to its promulgation. Because of the complexity of, and 
controversies surrounding, dairy policy, Congress, in the 1996 farm 
bill, gave USDA the responsibility to draw upon its expertise, consult 
with the public and design a thoughtful milk marketing reform policy. 
USDA spent three years formulating the reforms contained in the final 
rule. During this process, the department received more than 8,000 
comments from interested parties. The final rule, though not perfect, 
is more equitable to all the nation's dairy farmers and pro-consumer. 
It is a good first step toward a policy that places the nation's dairy 
industry in a position to better meet the challenges of the global 
markets of the new century.
  When we begin deliberations on the next farm bill, we will have an 
opportunity to review and develop additional market-oriented reforms 
for dairy policy. But, I am convinced that the Congress cannot improve 
upon the department's good-faith, balanced effort either in committee 
or on the Senate floor. If dairy farmers approve the new policy in 
referenda in their order areas, we should allow the final rule to be 
implemented on October 1, as scheduled, without intervening legislation 
and I will work toward that end.

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