N.E.
(Continued from Page A 1)
com prices, which had since
plummeted.
The additional milk production
resulted in the Compact Commis
sion paying the USDA Commodi
ty Credit Corporation $1.76 mil
lion in the fall of 1998 because the
Compact is required to compen
sate the federal government for
surplus purchases if milk produc
tion increases faster than the
national average. The government
had purchased excess dry milk and
the Commission was charge for its
pro rata share.
Then after making that pay
ment, the Commission held a
broad issue rule making hearing to
take additional testimony on milk
supplies and whether there was a
need for supply management.
At that time, according to Beck
er, there were several proposals
some coming out of Massa
chusetts, some from Compact
staff, and some from other places.
The staff reviewed the proposals
and consolidated the testimony,
and at the January 1999 meeting,
the Commission decided it was
time to consider the issue.
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Compact Commission Sets Supply Management
According to Becker, the Com
mission had collected testimony
over about a nine-month period
and sent all the information to its
regulatory subcommittee, direct
ing it to review it, do further study
of milk production stastitics, con
solidate the testimony from its
spring 1998 meeting, and formal
testimony collected in December
1998 and to crane back to the com
msision with recommendations.
At the Compact Commission's
April meeting, it determined to
enter into the proposed
rulemaking.
“They are now wanting to hear
from the public at large,” he said.
As it is now, the results of all the
information gathering and fact
finding ate to be deliberated at the
Commission's June meeting.
Prior to a permanent amend
mentbeing made to Compact over
order pricing regulations, there
must first be a public comment
period, commission deliberation,
and then a producer referendum
requiring a two-thirds majority
vote of Compact producers.
As it is, the current supply man
agement proposal is negative-
CiHll 1
■«S
• Tilting bed
allows easy
unloading.
• Low profile
incentive based, in that an assess
ment would be collected from all
dairy producers, but given back
rally to those who have either
maintained production or
decreased it from one year to the
next.
Those who increased their annu
al production above 1-percent for
the year would forfeit any assess
ment refund.
A refund would be made on a
flat rate for those who kept produc
tion increases under 1 percent, or
decreased production.
Those who decreased produc
tion would receive the flat-rate
refund and an additional refund
based on the hundredweight of
milk decreased from the prior
year’s production.
More specifically under the
proposal, the Commission would
collect an assessment from farmers
at a rate of $250,000 per Compact
monthly marketing pool, up to a
total maximum of $3 million per
year for the entire Compact.
The actual hearing announce
ment on the proposal was pub
lished in the April 19 Federal
Register.
Though not a member state, the
actions of the Compact Commis
sion are of interest to those
involved in the Pennsylvania dairy
industry, because the state Legisla
ture has been considering prop
osed legislation enabling the state
to join the Compact should it be
expanded and should it be reau
thorized beyond Sept. 30.
State farm policy organizations,
and several regional and national
dairy producer and milk marketing
cooperatives have been lobbying
the state’s elected officials for
legislation to authorize the inclu
sion of Pennsylvania into the
Compact.
(A version passed the Pa. Senate
and is currently set to be reviewed
by the House Agriculture and Rur
al Affairs Committee. The state
Legislature has until the end of
June to act; a deadline tied into the
state’s fiscal year and the need for
a state budget).
If the Compact is not reauthor
ized, several things would certain
ly happen: Becker and the other
four full-time Compact staff mem
bers would be out of work; dairy
pricing would revert to being
Lancaster Farming, Saturday, May 1, 1999-A3l
Hearing
influenced by regulation and admi
nistration by federal milk market
ing orders based on supply and
demand of milk and domestic
market trade of manufactured
commodities; commission mem
bers could stay in their respective
states instead of meeting monthly
in Concord, New Hampshire; and
Pennsylvania and New York dairy
producers who now ship milk to
the New England states wouldn’t
receive a Compact price for their
milk.
Also, the supply management
proposal would be moot
The Compact’ is controversial
because the 1996 Farm Bill (Free
dom to Farm Act) was designed to
end federal government support
programs of agriculture in an
attempt to remove obstacles to free
global trade.
The Compact was approved as a
temporary measure to help the
New England states, a region that
produces less than 3 percent of the
nation’s milk supply, with a transi
tion buffer.
From July 1997
through August of 1998
(July 1998 was the last
over-order premium
until this coming
month), the Compact
was able to pay dairy
producers an additional
$45 million, or an aver
age of $ 11,000 per farm
in the Compact region,
according to Becker. He
said the average price
increase per hundred
pounds of milk was 41
cents, representing a
2.5- to 3-percent
increase over what
would have been
received.
The Compact Class I
use has fluctuated from
a high of 52.3 percent in
October 1997 to a low of
43.5 percent in May
1998.
The Class I utilization
rate month-over month
did decline between the
last half of July 97 to the
last half of July 98,
Becker said, and while
the Class I volume went
up about a million
pounds from Octobert
1997 to October 1998,
the total milk pool vol
ume increased as well.
Becker said that, his
torically, since the
19505, New York dairy
farmers have contri
buted about 25 percent
of the milk to the New
England states (it has
fluctuated some, espe
cially when the Federal
Order 2 price was high
er), and now with the
Compact New York’s
contribution is about 26
to 27 percent, Becker
said.
“We have noticed
more being diverted out
since,” Becker said. “As
a result the Commission
amended the regulations
(as to how much) could
be diverted and trans
ferred out of the region
that could still have
Compact pricing,”
He said those limits
are seasonally adjusted
for receiving
plants 8 percent of
plant volume can be
diverted in the fall
months, 13 percent in
the spring.