Farmers plead for price aid 8-cent handling fee proposed on milk

AUGUSTA – With no money for spring planting, no available credit, and milk prices the same as during the Depression, Maine’s farmers brought the only asset they have left to Augusta on Wednesday – the cows.

Five Brown Swiss, Ayrshire and Jersey cows from three western Maine dairy farms silently munched hay on the south lawn of the state capital, one wearing a sign announcing that Maine dairy cows are an endangered species.

A hundred dairy farmers and suppliers gathered on the lawn to express support for LD 345, a bill that would place an 8-cent-per-quart handling fee on milk produced and sold in Maine. The money would be used to pad the general fund, and farmers could support passage of a $5.5 million emergency appropriation to subsidize crashing prices paid to milk producers.

Once the cows were loaded back into a livestock trailer, the farmers took their plea inside to the Legislature’s Taxation Committee.

The dairy crisis “is a serious problem on the federal level that has backed itself all the way to Maine,” a dairy expert told members of the committee. With a national surplus of milk fueled by four Western states, the price of milk is set on the federal level based on supply and demand nationally, despite no surplus in the East.

The current price is well below what it costs Maine farmers to produce it, said Robert Wellington, a dairy economist and expert on federal dairy policy.

It costs Maine dairy farmers $1.45 per gallon to produce milk, but they are getting $1.05 in the marketplace. These prices have continued to drain farmers’ wallets for 16 months.

Wellington said that the passage of the handling fee would be a temporary solution while Congress is pressured to pass reauthorization of the Northeast Dairy Compact. The compact stabilized milk prices in a fashion similar to that of the proposed bill, explained Wellington. “We know it works,” he said.

However, the compact was not reauthorized a year and a half ago due to pressure from Midwestern dairy states that claimed the subsidy gave Eastern farmers an unfair advantage.

Wellington said the new compact was introduced in the U.S. Senate two weeks ago and will be put forward in the House of Representatives soon.

“We do believe we can get it passed on a federal level,” said Wellington. “The compact has one benefit that Congress will find attractive. The money comes from the marketplace [through a fee charged to milk processors] and not taxpayers. Twenty-eight states have expressed interest.”

Several members of the Taxation Committee appeared interested in confirmation that any fee levied in Maine would be a temporary measure.

The fee is being called a tax by Gov. John Baldacci, who, it is expected, will lobby heavily against the measure.

Several dairy officials said that since the retail price of milk has not gone down during the dairy crisis, they doubted that the entire 32 cents per gallon would be absorbed by consumers.

Rep. Peter Mills introduced the bill, which he said is the last chance for many of Maine’s 411 dairy farmers. “This is an industry that has been here for 200 years,” Mills said. “The Legislature hasn’t hesitated to help the paper industry, the tourism industry. The budget that will likely be completed Friday night has more than $61 million in it for paper company relief.”

“When have you ever had an industry come forward and say ‘Please tax the product we produce?'” he said.

Mills said that until Congress acts on a compact, “we, as a state, have to act or suffer extraordinary consequences.”

Maine lost 10 percent of its dairy farms last year and more than $20 million in revenue. Without assistance, it is estimated that one-third to one-half may close this year.

“We will wake up some morning and it will be gone,” said Mills.

Rebecca Meyers, a livestock veterinarian from Turner, said it is already nearly gone on her road. “When I moved there in 1989, there were five farms on my six-mile road,” she said. “Today there is one farm and 20 new houses.”

Members of Maine’s dairy industry, insurance agents, land trust representatives, feed and seed suppliers, and others testified throughout the afternoon.

A work session on the proposed bill has been set for 1 p.m. Wednesday, March 26.