Cl6—Lancaster Fanning, Saturday, My 26, 1960
Issue No. 13
June 1980
USDA Mulls Options
by Pete Hardin
Agriculture Secretary Robert Berg
land called a hurry-up session with the
nation’s dairy leaders on June 24 to
review policy options in view of the
dairy surplus problem.
“A fiasco,” summed up Patrick
Healy of National Milk Producers
Federation.
“The meeting was a disaster,”
claimed Doug Caruso of the Farmer’s
Union Milk Marketing Co-op.
“Shoddy tactics . . . getting con
sumers set against farmers,” another
source (who wished to remain anony
mous) offered.
It doesn’t matter who’s offering an
opinion, the only real consensus in the
dairy industry is that the USDA is
badly foundering as it struggles to
fashion new dairy policy as surplus
mounts, editorials in newspapers call
for lowering milk prices . . . and most
of the nation’s agriculture is in a
severely depressed economic condition
right now. The uncertainty within the
USDA may also reflect divided opin
ions within the dairy industry.
At the meeting (called the week
before), Bergland made a few opening
remarks and then hustled off. . .
leaving most of the chores to the de
partment’s Howard Hjort Hjort re
viewed three possible dairy op
tions . the basic thrust being to tie
dairy support levels to Commodity
Credit Corporation (CCC) dairy sur
plus removals
White House & Leprino
by Pete Hardin
On the afternoon of June 4, 1980,
Mr. Charles Obermeyer, vice presi
dent of Leprino Foods, Inc., of Denver
Colorado, addressed the annual meet
ing of Eastern Milk Producers Co
operative in Syracuse, NY and in
formed those in attendance that Pres
ident Carter’s White House staff had
intervened on behalf of Eastern and
Leprino in seeking a loan guarantee
from the Farmer’s Home Administra
tion.
If what Mr Obermeyer said is
true . . . that is very interesting
Eastern Milk Producers is a fi
nancially troubled dairy farmers’ or
ganization that has turned to a 20-year
contract with Leprino to stabhhze
marketings. Eastern needs $2O million
to fund construction of two cheese
plants.
The Lepnno firm, founded in the
early 1950’s by James G Lepnno, Sr.,
has grown to become the world’s
largest manufacturer of mozzarella
(pizza) cheese. The Lepnno firm is a
private corporation, reportedly held by
the members of the Lepnno family.
And the President’s White House
staff is . presumably running
the country.
If as Obermeyer, the Lepnno
vice president stated .'President
Carter’s White House staff intervened
with the FmHA to get a loan guarantee
involving Lepnno —the world’s largest
manufacturer of mozzarella cheese,
privately owned by the Lepnno
family—then hold the anchovies
we may have “Pizzagate ”
The Milkweed jl
The farmer's milk marketing report
Consumer groups attend
Besides the dairy industry leaders,
major consumer group representatives
attended the meeting . . . the Com
munity Nutrition Institute (CNI), the
Consumers Union, and Common
Cause among them. Tom Smith, who’s
research director for CNI, came away
angry because he thought the depart
ment was trying to work a trade among
the producer and consumer
interests . . . involving parity levels,
casein imports, and resolution of the
reconstituted milk issue. Smith said he
didn’t think it appropriate that the
USDA look at these problem areas as
tradeable commodities.
The big policy split within industry
groups divides National Milk Pro
ducers and the American Farm Bureau
Federation with the Farmers’ Union.
NMPF and AFBF want to tie dairy
support levels to CCC purchases . . .
and to modify the scheduled October 1
parity adjustment. Such action, if that
were to occur, would require Con
gressional action. Little time remains
for Congress to act. Legislators
adjourn early this fall to head for the
campaign trail.
Meanwhile, Caruso from the Farm
ers’ Union Milk Marketing Co-op
contended that. “Price is too high only
because all the other agricultural
sectors are too low. They can bring
dairy down to the level of the other
Eleven days after Mr. Obermeyer’s
comments, reporter Bruce Ingersoll of
the Chicago Sun-Times broke the first
story in a whopper of an investigative
series detailing how the FmHA’s
Business and Industry Division has
become “the patsy on the Potomac.’’
Reporter Ingersoll’s investigation
showed how the FmHA had lost
hundreds of millions of taxpayer
dollars by making and guaranteeing
“highly questionable loans.”
Many of the loans, Ingersoll re
vealed, were to appease political
figures, and to bail out banks which
had political connections with the ad
ministration (like Bert Lance’s First
National Bank of Calhoun).
Bail out? Darned if the First
Pennsylvania Corporation (First
PA) . . . the bank which in late April
received a $5OO million bail out from
the Federal Deposit Insurance Cor
poration and a couple dozen banks . . .
isn’t the lead lender for the mozzarella
cheese plant deal involving Eastern
and Lepnno. And First PA extends
Eastern the co-op its line of credit.
If Mr Obermeyer’s comments are
true . then the already highly ques
tionable mozzarella connection be
tween Eastern Milk Producers and
Lepnno has taken a giant step towards
deeper, murkier waters
Through the Freedom of Informa
tion Act, The Milkweed has initiated a
search for available documents to sub
stantiate Mr Obermeyer's claims of
White House involvement in the
Lepnno deal The White House, the
“I'm not gonna sit here much
longer.” Healy promised. He will
aparently come out smoking on Berg
land’s case if the Secretary doesn’t act
soon “They’re shaking the wrong end
of the stick . . the severe problems
are in red meats and grains. The
USD A should spend more time on
corn, hogs and beef,” Healy com
mented
© Copyright 1980, PeC> Hardin
The federal agencies have 20
working days in which to respond to
the FOIA requests. Next month in The
Milkweed, this publication will hope
fully begin revealing what documents
available through the FOIA tell about
activities of the White House staff and
the loan for $2O million to Eastern Milk
Producers to build cheese plants for
the Leprino contract.
Paid Advertisement
commodities or they can bring the
others up.”
Hollis Hatfield, the AFBF’s milk
marketing specialist, noted that in
May the CCC removed more surplus
dairy products than any other May in
history ‘‘We’ve got to make adjust
ments or we’ll lose the whole damn
program,” Hatfield said. He noted
that with the exception of Farmers’
Union, there was relative consensus
amongst the industry.
Miik disaster?
Healy, from National Milk Pro
ducers, urged modification of the
coming October I price increase. “We
are willing to propose it,” Healy said.
He seemed unrestive and bemoaned
the lack of action and leadership from
Bergland. “We see nothing com
ing . . . we don’t want milk to become
a disaster area like the other com
modities,” he stated.
The plans rc\ icv cd by Hjort basical
ly call for tying milk support levels to
how much milk the CCC must buy. The
FmHA in Washington, and the FmHA
state offices in Syracuse (NY) and
Harrisburg (PA) have been served
with registered letters requesting
documents pertaining to the proposed
loan guarantee to Eastern Milk Pro
ducers by the Business and Industry
Division of the FmHA.
The Milkweed
$l5 per year (second class mail) j
$24 per year (first class mail) |
(name)
(street orrfd)
(town, state & zip)
parity ranges run between 75% and
80%. Whatever the Department might
come up with, it would require
Congressional action during an elec
tion year with only a short period of
time left for the legislators to vote
Without unity within the dairy in
dustry, it is unlikely that Congress
would tackle this issue in a short time
during an election year.
Complex
The whole dairy issue is complex
and defies simple answers or so
lutions. Producers are geared up to
make more milk. Feed grain prices are
low due in part to the embargo of grain
sales to the Soviet Union. Dairy cattle
numbers have been increasing in pre
vious months over year-ago fig
ures . and the semi-annual price
increases through the CCC seem to
send a green light to producers to
make more and more milk.
Dairy’s dildmma is interrelated to
beef and hog prices and grain prices
Many major sectors in the agricultural
economy are severely distressed. With
low prices for red meats, dairy pro
ducts do not offer as attractive a
bargain price-wise in the supermar
kets. Demand fpr dairy products has
become soft as production shifted into
overdrive.
As the tab for buying and storing the
nation’s surplus dairy products gets
very near the one billion dollar
mark . . . the dairy industry can only
expect continued heat from the news
media and public. Producing for no
market is a marketing strategy remi
niscent of Chrysler. Right now the
government is buying about seven
percent of all milk production as
surplus products. Without a different
signal from the milk check, dairy
farmers will likely continue producing
milk and the CCC will come to own
more buner, cheese and non-fat milk
powder
“1 want to think that some more
reasonable people realize there’s a
need to increase flexibility in the
program,” Smith from CNI said.
“Consumer groups were very of
fended . . . they felt used. They per
ceived that the strategy was to get
them to give up on reconstituted milk
to get lower price supports. The whole
scenario was faulty,” Caruso claimed.
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