Guest Comment on NRO
The Northeast Interstate Dairy Compact on the verge of a comeback.
By Dave Juday, a commodity-market analyst & an adjunct fellow with the
Hudson Institute’s Center for Global Food Issues.
March 20, 2002 8:35 a.m.
I n The Wizard of Oz, after Dorothy's house falls on the Wicked Witch
of the East, the Munchkin Coroner declares to much celebration that the witch
is "not only merely dead, she's really most sincerely dead." Alas, the same
cannot be said from some other wickedness from the east, the Northeast Interstate
The NEIDC was a provision of the 1996 farm bill that allowed a panel of state
bureaucrats and farmers to unilaterally set the price that milk bottlers
in New England had to pay for milk off the farm. All in all, the compact
cost consumers in the northeast more than $130 million in higher retail milk
The NEIDC expired on September 30, with the fiscal year. But it seems, unlike
the Wicked Witch of the East, the compact is only merely dead. Indeed, one
Capitol Hill source gives the compact a "25 percent chance" of being reinstated
during the on-going conference committee to reconcile the House and Senate
While 25-percent odds may be a bad bet in Atlantic City, the fact that anyone
in Washington would consider seriously — on or off the record — that the
NEIDC has any chance whatsoever of making a comeback boggles the mind. Legislation
to reauthorize the NEIDC was not included in either the House or the Senate
farm bill. And, according to a Library of Congress primer on the legislative
process, "a subject not dealt with in either the House or the Senate version"
of a bill may not be added in conference deliberations.
Legislative odds makers who foresee a NEDIC comeback can't be faulted for
being realists, however. After all, the original NEIDC was not in either
the House or Senate farm bill back in 1996, the last time Congress undertook
a comprehensive rewrite of our nation's agriculture policies, but it emerged
from the House-Senate conference nonetheless.
The original NEDIC was intended to last 36 months; instead it lasted 65 months.
It was extended in large part because Vermont Senator Jim Jeffords had convinced
the Republican Senate leadership he needed to deliver an NEIDC extension
in order to be reelected and prevent the Senate from falling into Democratic
control. How ironic.
Now there is threat from supporters, and speculation from observers, that
the NEDIC might be brought back to life in the farm-bill conference committee.
Enough so that more than 15 industry groups are starting to lobby lawmakers
to "reject efforts that would bring back, and possibly expand the use of
interstate dairy compacts." According to a letter sent to Capitol Hill by
the groups — ranging from the Chocolate Manufacturers to the Independent
Bakers Association to the Consumer Federation of America — dairy compacts
"would enable a totally arbitrary and higher milk price to be set, region
by region, disrupting the free flow of milk and milk products at competitive
prices. The failure of the Northeast Compact experiment makes revisiting
the idea impossible to justify."
Impossible to justify, yes. But alas, not impossible to imagine.