Dairy association discusses milk tax to assist industry Group to ask for hike in farmers’ prices

AUGUSTA – With Maine’s dairy industry at a crisis stage, members of the Maine Dairy Industry Association, which consists of the state’s 412 dairy farmers, met Wednesday night and discussed several solutions, including a four-cents-per-gallon milk tax.

“Our options are so limited,” said MDIA President Dale Cole on Thursday. “No one wants to lose our dairy industry.”

When Congress failed a year ago to reauthorize the Northeast Dairy Compact, which provided payments to farmers to balance the fluctuating milk market, the price of milk paid to farmers dropped through the floor.

“Between November and December of 2000, milk prices dropped $4 [per hundredweight] in one month,” said MDIA Executive Director Julie-Marie Bickford. “They continued to drop for the next 12 months.” Farmers today are getting less for their milk than it is costing them to produce it and, as a result, the state lost more than 10 percent of its dairy farms in the past year.

Three possible actions were discussed by MDIA members this week, said Bickford.

“We explored every conceivable option to finding a way to shore up this industry,” she said, “including exploring or tweaking some things that have worked in the past.”

MDIA will first ask the Maine Milk Commission to make an adjustment in the price of milk paid to farmers. “We are asking them to make it as high as possible while still realizing Maine must be competitive.” Maine farmers are currently receiving $13.85 per hundredweight. “We are asking for help,” said Bickford. The MMC will meet on Friday, Nov. 22.

A second option would be introduction of state legislation that would act as the Northeast Compact did, setting a ceiling price and providing farmers with the difference between the ceiling and what they are actually getting paid.

Bickford said this system is similar to the Maine Dairy Stabilization Fund, which was superseded by the Northeast Compact.

She said MDIA recognized the serious economic problems legislators are dealing with, but added “We’re more concerned with farmers getting their payments.” She said those payments would come from the state’s general fund.

Another proposal that MDIA officials said could help replenish the general fund would be a tax of about four cents per gallon on fresh milk. “This would be absorbed by the consumer without any problem,” said Bickford.

Although the two proposals cannot be linked as supporting each other because that would violate interstate commerce laws, such a tax could deflect general fund payments to farmers.

About 10 years ago, before the Northeast Compact, an eight-cents-per-gallon tax was being paid directly to farmers. “But in 1994 the law had to be changed after it was challenged and ruled unconstitutional by the Interstate Commerce Commission,” Bickford said.

“However, for us to reasonably look at any options, we have to assist in finding a revenue source,” Bickford said. Bickford said MDIA is still compiling accurate figures to determine how many gallons of milk are sold in Maine each year so it is unknown at this point how much revenue a milk tax would bring in.

Since farmers get only $1.11 of each gallon sold, Bickford said, “There is no doubt that consumers will be with us in spirit on this.”