[Congressional Record (Bound Edition), Volume 153 (2007), Part 12]
[Extensions of Remarks]
[Pages 16741-16742]
[From the U.S. Government Publishing Office, www.gpo.gov]




         INTRODUCTION OF THE NATIONAL DAIRY EQUITY ACT OF 2007

                                 ______
                                 

                          HON. JOHN M. McHUGH

                              of new york

                    in the house of representatives

                         Tuesday, June 19, 2007

  Mr. McHUGH. Madam Speaker, I rise today with my colleague from New 
York, Mr. Reynolds, to introduce the National Dairy Equity Act of 2007, 
NDEA, which is designed to establish a minimum price for fluid milk and 
create a market-based safety net for dairy farmers.
  I greatly appreciate the men and women who work the extremely hard 
and long hours needed to produce milk, butter, cheese, ice cream, non-
fat dry milk, and yogurt. Thus, I

[[Page 16742]]

would like to begin by noting that June is Dairy Month. It is hard to 
overstate how important dairy is to the United States economy, nor for 
that matter, how important dairy is to the economies of New York and 
its 23rd Congressional District, which I represent. In fact, in 2006, 
New York was the Nation's third largest dairy State; it accounted for 
about 7 percent (638,000 head) of the nation's milk cows, 6.7 percent 
(12.04 billion pounds) of total milk production, and 6.9 percent ($1.6 
billion) of total cash receipts from milk marketing. The importance of 
dairy to New York's 23rd District is readily apparent when one 
considers that the 2002 Census of Agriculture reported there were 1,989 
dairy farms with 188,305 milk cows in the 11 counties that comprise the 
district.
  I also appreciate the fact that the Milk Income Loss Contract, MILC, 
has provided about $230 million in much-needed support to New York 
dairy farmers over the past 5 fiscal years and I know my constituent 
farmers do as well. Moreover, it is critical that the 2007 Farm Bill 
continue to provide dairy farmers with some form of income support. 
While I appreciate the support provided through MILC, the NDEA is an 
alternative that could help to provide additional support to American 
farmers with greater stability and at less cost to the taxpayer.
  The NDEA would establish 5 Regional Dairy Marketing Areas, RDMA; the 
Intermountain, Midwest, Northeast, Pacific, and Southern. The Midwest, 
Northeast, and Southern regions would automatically be included as 
participating regions while the Intermountain and Pacific regions would 
have the ability to opt into the program.
  In each region, a Regional Dairy Board would establish the minimum or 
over-order price for Class I (fluid) milk; that price would then have 
to be approved by farmers through a referendum. In the first year, the 
maximum price that a board could establish is capped at $17.50 per 
hundredweight (cwt.), but thereafter the price could rise based on the 
Consumer Price Index, CPI.
  Under the NDEA, when the Class I milk price in the Boston market 
falls below the established minimum price, processors would pay an 
over-order premium--the difference between the minimum price set by the 
applicable Regional Dairy Board and the Boston Class I price--into a 
national fund. The U.S. Secretary of Agriculture would then distribute 
the monies in the fund back to the Boards according to a formula 
whereby each region would get back the greater of what they pay into 
the fund or the amount of the over-order payments a region would have 
generated if it had a Class I utilization rate of 50 percent. In the 
event of a shortfall, the Secretary would supplement the money in the 
fund from savings from the MILC program to ensure that the Regional 
Dairy Boards, and subsequently the dairy farmers themselves, would 
receive the full payments.
  The Regional Dairy Boards would be comprised of three members from 
each participating state in a particular region. The U.S. Secretary of 
Agriculture would make the nominations to the Boards after receiving 
nominees put forward by governors or elected state agricultural 
commissioner after consultation with the dairy industry. Each State 
delegation to the Regional Dairy Boards would consist of 3 
representatives, with at least 1 producer and 1 consumer.
  In addition to the responsibility to establish minimum prices and 
distribute payments to dairy farmers, the Regional Dairy Boards would 
have the authority to conduct supply management programs when 
necessary, including the development of incentive-based programs. 
Moreover, in order to prevent overproduction, regions in which the 
growth in milk production is higher than the national average would be 
required to reimburse the U.S. Secretary of Treasury for the cost of 
government dairy surplus purchases up to the amount that the region is 
receiving under the NDEA.
  It is important to note that the NDEA would not establish national 
pooling. Rather, it would create an equalization fund whereby processor 
paid funds would go to a central account at the U.S. Department of 
Agriculture; Government funds would be added to that fund and then 
payments would be made to the various regions according to a formula, 
which would permit regions with low Class I utilization to receive the 
same benefit as those regions with higher utilization.
  Also of significance, the NDEA would be entirely optional for the 
States and individual farmers. Thus, those states that do not wish to 
participate in the NDEA program could simply choose to continue to 
participate in the MILC program, which the NDEA would extend to 2012, 
and individual farmers in States participating in the new NDEA program 
could instead opt to merely continue receiving payments under their 
current MILC contract rather than under the NDEA. However, those 
individuals would not be eligible to extend their MILC contract beyond 
September 2008 and would lose all future eligibility to participate in 
the NDEA program.
  Madam Speaker, the NDEA would create a market-orientated, counter-
cyclical program to help all of our Nation's dairy farmers while 
simultaneously saving taxpayers money. Accordingly, I ask my colleagues 
to join with me to enact this important legislation.

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