Guest Comment on NRO

 Wicked Compact
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 Dairy Compact.

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 prices.

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 farm bills.

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.