Milk pricing under review

FREEPORT – At a roundtable discussion last week on the health of Maine’s dairy industry, one hot topic was the proposed National Dairy Equity Act, a regional proposal intended to stabilize milk prices.

NDEA would mimic the Northeast Dairy Compact, a regional program that stabilized milk prices in the region but was not reauthorized by Congress two years ago. The Northeast Dairy Compact, which expired in 2001, set minimum milk prices in the Northeast that were higher than federal prices, with processors paying farmers 45 percent of the difference.

“We worked diligently to reauthorize the compact,” Maine Agriculture Commissioner Robert Spear said at the roundtable March 22, “and the Southeast was with us. But the Midwest and West fought against it, claiming it gave us an unfair pricing advantage.”

Since the Northeast Dairy Compact was dropped, milk prices plummeted to an all-time low and prices did not start to rise until this fall. In November 2001, the price for Boston Class I milk was $19.21 per hundredweight, while in August 2003 the price was $13.22 per hundredweight. Farmers typically receive several dollars below the Class I price.

In October 2003, the price was $17.72 a hundredweight, though officials are uncertain how long it will be before prices decline again, emphasizing the need for safety-net legislation.

Responding to the dairy crisis, Congress passed the Milk Income Loss Contract in 2001. It made payments to dairy farmers based on the same formula as the NDC, but payments were capped at 2.4 million pounds of milk, and funds for the program came from the government. This program has come under heavy criticism because it has cost taxpayers approximately $4 billion more than estimated, or three times what was predicted, due to low milk prices.

Spear said the NDEA would “level the playing field” with all producers nationwide getting the same price for milk.

The NDEA is calling for regional milk pricing, setting up five regions across the country. Maine would be part of the Northeast region along with Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. It would be similar to the Northeast Dairy Compact and would also return the payment responsibility to the marketplace, not the taxpayer. The bill has been introduced in the U.S. House of Representatives but not yet in the Senate. There is not a firm timeline yet for the bill to be considered.

Some Maine dairy farmers, however, are concerned that since it costs more to produce milk in Maine than any other state, a national program still would not level the playing field.

U.S. Sen. Susan Collins said last week that she is working closely with Senate leaders on this issue.

“This proposal would provide a more level playing field in the market for small, family-owned farms in New England, which are important to agriculture and the economy in Maine,” she said. “The bill would allow the Northeast to have a dairy board, represented by New England dairy farmers, to make decisions affecting the price of milk in our region.” She said she believes that the authority to make these decisions regionally is the only way to ensure that New England dairy farmers’ interests and concerns are met in this sometimes volatile and unpredictable industry.