A44-Uncaster Farming, Saturday, February 21, 1998
The Dairy Compact;
(Continued from Pag* A 32)
representatives have asked the
PMMB to address issues concern
ing a statewide differential, and
separately, to consider extending
its over-order premium to all Pen
nsylvania producers through
pooling.
The context for all of this is that
the United States is undergoing an
historic and dramatic change in
policy and conduct with regard to
its domestic agricultural
production.
As a nation, policy has been
steered away from having federal
government captain the agricultur
al production industry in order to
ensure low staple food prices
through the use of price controls
and incentives.
The new direction is to allow
commodity demand and customer
ability to pay to provide incentives
to produce. The new direction also
is to allow natural business com
petition to establish the nature of
the industry, such as regions of
production, processing and trans-
portation, etc.
The 1996 Farm Bill both outlines and in
some cases details the setup for the “weaning”
of United States agriculture from federal pro
duction programs (though it provides diffe
rent and expanded incentives for environmen
tal protections).
Also part of the context of all of this is the
expanded trading opportunities and timet
ables established through the General Agree
ment on Tariffs and Trade (GATT) and the
North American Free Trade Agreement
(NAFTA).
The 1996 Farm Bill directs a reduction in
the number of federal milk marketing orders
(FMMOs or F.O.s for federal orders) from 32
to between 10 to 14.
U.S. Secretary of Agriculture Glickman
has made a proposal on the restructuring of
the federal milk marketing orders, which is
available through the USDA Internet home
page. Issued two weeks ago, a 60-day public
comment period went into effect
immediately.
Under the Farm Bill, as a transitionary aid
for producers in the Northeastern United
States, authorization was granted for the crea
tion of a Northeast Dairy Compact, whereby
the New England states could price its milk
through a commission that includes a rep
resentatives from the consumer sector.
The Northeast Compact has been in exis
tence for six months, and its impact on dairy
production in the Northeast states is of
interest
Telephone calls made this week for infor
mation from the USDA Federal Order 1 milk
marketing administrator on production levels
(to compare before and after Compact) for the
region were not returned.
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While dairy producers supply
ing the market there have been
receiving higher prices, according
to numerous sources, the higher
prices could serve as an incentive
to increase production in the
region.
Since the higher-paying Class I
(drinking milk) market is assumed
to be fulfilled, any increased pro
duction would be directed to the
lower paying uses of butter and
milk powder.
Since farmers are paid on the
basis of an overall “blend” of the
uses for milk, increasing the
amount used far lower-paying uses
would reduce the overall compen
sation for milk production.
Eliminating artificial incentives
to dairy production growth is the
key reason for changing the
nation’s dairy policy.
The Northeast may actually be
helped in maintaining a higher
price because recent ice storms
caused milk losses in New Eng
land, New York and Canada. Milk
was dumped because of blocked
roads and loss of electricity.
If production and supplies were
hurt enough, prices should
improve, if not at least remain
stable.
However, if the higher farm
price for Compact producers docs
prove to serve as an incentive for
increased milk production it may
result in lowering prices in the
months following recovery from
the winter storms.
Complicating the whole picture
is the fact thatincluded in the Farm
Bill is the provision that New
York, Pennsylvania, Maryland and
a couple of other states could join
the Compact should three condi
tions be met; that the state be con
tinguous to a Compact state; that
the state legislature and governor
sign into law authorizing legisla
tion; and that the U.S. Congress
provide consent.
In addition, the authority and He said that while the Compact
existence of the Compact is to was initially opposed during con
cease in April 1999, when the new sideration of the Farm Bill, evcntu
fedcral order system is to be • al authority for the Compact was
established.
That April sunset date for the
Compact doesn't allow much time
for the political process to achieve
all three steps in order to expand
the borders of the Compact It
would seem difficult to achieve by
April, much less have farmers
receive any benefit.
Farmers in the upper Midwest
have gone on record as opposing
the Compact because incentives to
increase production that results in
ovcrsupplying the lower-paying
uses of milk will significantly low-
er their milk check.
Further, Sen. Rick Santorum,
the only member of Pennsylvani
a's current Congressional delega
tion to sit on an agricultural com
mittee (he’s a member of the
Senate Agriculture Committee and
chairman of its economic and rural
development subcommitee), said
Thursday that sentiment in
Washington is against expanding
or extending the Compact.
made primarily to benefit only the
small, low daily producing New
England states.
Sen. Santorum said it was his
understanding at the time that the
Compact was being authorized
because the New England states
represent a small segment of the
daily industry and because the reg
ion’s political leaders argued that
the small family farmers in the area
were necessary to maintaining the
rural attraction upon with the reg
ion’s more economically viable
tourism industry heavily depends.
Santorum said the Compact was
not designed to affect daily prices
nationally, and was not intended
for two of the top daily producing
states in the nation New York
and Pennsylvania.
He said opposition would be
strong from other states, not only
because it would most likely hurt
daily producers there, but because
it goes against the entire direction
of the Farm Bill eliminate gov
ernment supports and pricing.
Actually, until the recent lobby
ing effort by the new mega-
(Turn to Pago A 45)