Spilled milk

Whether it’s direct taxpayer subsidies to sugar growers and mohair shearers or the payments milk processors make to the Northeast Dairy Compact, government-mandated price supports are always deserving of scrutiny and evaluation. Scrutiny and evaluation, yes; spiteful retaliation, no.

The Compact among the six New England states and New York was created by Congress in 1997 to help the region’s small (as compared to the giants of the Midwest) dairy farms stay in business. Although the program, which makes payments to farmers when the wholesale price of milk drops below the federal minimum, has not been in place long enough for a full assessment, there is evidence that it has at least halted the exodus from dairy farming, has helped the many support businesses, such as grain and equipment dealers, truckers and veterinary services, and has kept farmland in production and farming towns viable.

This has come at a remarkably low price. Although the average price of a gallon of milk in the region has risen by some 29 cents during the Compact’s first three years, a recent University of Connecticut study concluded that only 4.5 cents can be attributed to the surcharge; the rest to price increases imposed by supermarkets and processors, gouging the UConn researchers traced to the exercise of market power by those ever-consolidating links in the food chain. The recent settlement of an antitrust case brought by the New England attorneys general against Suiza Foods Corp., the nation’s largest milk processor, adds strong evidence that higher milk prices are due to anti-competitive practices and not to the Compact.

Scrutiny and evaluation shows that the Compact is doing precisely what it was designed to do – assisting small businesses, giving rural communities a shot at survival, keeping food production as local as possible and all at a barely noticeable penny and a half per gallon per year. Why then is the Compact in so much trouble that there are serious doubts Congress will re-authorize it before it expires on Sept. 30?

That’s where the spiteful retaliation comes in. The Midwest giants have opposed the Compact from the start, essentially saying the only subsidies the dairy industry needs are the ones they themselves get. Opposition has grown to alarm as four Mid-Atlantic states are considering joining the Northeast Compact and 14 Southern states, subject to chronic wild fluctuations in milk prices, are planning to form one of their own.

Such turf battles are commonplace. This one has taken an uncommonly ugly turn by combining regional interest with partisan politics. The Compact’s original sponsor and one of its most ardent supporters is Vermont Sen. James Jeffords. When, as a Republican, he voted against President Bush’s tax cut last spring, some of the president’s congressional allies – though not the president himself – strongly hinted that his failure to keep in step could mean tough going for Compact reauthorization. When Sen. Jeffords bolted the GOP to turn independent, cries of vengeance grew louder and Compact opponents boasted that 49 Republican senators now had reason to kill it.

Fortunately, the math is off. The Compact reauthorization has 39 Senate co-sponsors, including all five New England Republicans and its linkage to the entire Farm Bill provides leverage. Maine Sens. Olympia Snowe and Susan Collins have actively lobbied the president on this and there is reason to believe it’s having the desired effect – not necessarily of making him a Compact fan, but at least of basing his administration’s position upon the merits of the program and not upon the spilled milk of the Jeffords defection.