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Dairy Compact Expansion Debated

posted on May 2, 2001

Congress is being lobbied to lift the cap on the amount of subsidies farmers can receive from the government. Currently, that cap is 460-thousand dollars.

Proponents say even modest-sized farms can bump into the limit. Opponents of lifting the cap note that under it, 7 percent of U.S. farms received 43 percent of the billions of dollars the government paid to farmers last year. They argue that higher caps are likely to create an inhospitable economic environment for small farms.

Alternatives to government outlays probably aren't any easier on taxpayers. Take for example the Northeast Dairy compact. It has been a boon for New England dairy producers, less so for consumers. And milk producers in the rest of the country aren't too happy with it either. This week, regional battle lines once again were drawn over legislation to extend and expand the Northeast Dairy Compact to the South.


The dairy compacts guarantee farmers wholesale prices for their milk that are set above federal minimums. Supporters say those higher prices protect farmers from volatile swings in the market, and have kept a number of producers in business.

Rep. Bobby Etheridge, D-N.C.: "It's important that we have it because unless our farmers get a decent return, we are turning dairy farms into housing projects." 09

Under the bill, the original members of the Northeast Dairy Compact, the six New England states, would be joined by five more – New York, New Jersey, Pennsylvania, Delaware and Maryland. The newly proposed Southern Dairy Compact would comprise 14 states stretching from Kansas to the Carolinas, a much larger geographic region than previous plans.

Legislatures in all 25 states have approved the compacts but the regional alliances also must get congressional approval.

SLUG: Speakers in front of Capitol

Though congressional support for the compacts has broadened considerably, proponents must act fast. The Northeast Dairy Compact is set to expire on September 30th.

In addition to price stability, supporters say the compacts ensure fresh supplies for consumers ... and help combat consolidation in the dairy industry.

Maurice Henchey, D-N.Y.: "If we fail to enact dairy compacts we are going to have a situation in America where you have essentially three or four producers of dairy products who will control the entire market." :14

Opponents, primarily Midwestern lawmakers, say the compacts are unfair to dairy farmers in their region and raise prices at the retail level.

In fact, a report issued by the University of Connecticut indicates retail prices in the Northeast have risen since the inception of the compact there in 1997. But the study says a sizeable portion of that increase was being pocketed by processors and supermarkets. As a result, attorneys general in New England have promised investigations into price gouging.

The nation's top veterinarian says the risk of a U.S. outbreak of foot and mouth disease has been sharply reduced because of containment measures and stepped up airport inspections taken by the British government.

The USDA is now considering easing its ban on imports of raw meat and livestock from Europe. The restrictions would be lifted first for countries that have shown no signs of the disease.

Tags: agriculture dairy news