End Northeast Dairy Cartel
Now that Vermont’s James Jeffords has fled
the Senate’s GOP caucus, Republicans should boot the cow he rode in on.
Specifically, they should scrap the Northeast Interstate Dairy Compact, Jeffords’ costly and distortive pet project. With Jeffords gone, Republicans no longer can defend the compact as a necessary but evil truss in the GOP’s big tent.
The 1997 compact covers Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. It dictates the minimum that dairy farmers may charge processors for their milk. This price floor exceeds the federally fixed milk cost that increases, amazingly enough, the further away a dairy is from Eau Claire, Wis.
Federal milk price controls began in the Depression to encourage Americans to develop local dairies rather than rely on perishable Midwestern milk. Although refrigeration and interstate highways have outpaced these regulations, they remain on the books.
The Northeast compact is a folly that picks New Englander’s pockets. The compact adds up to 14 cents to each gallon of milk. The Consumer Federation of America estimates that this cartel has cost milk drinkers an extra $165 million in its first 3 ½ years. Between 1997 and 1999, the compact cost local child nutrition programs an extra $9 million.
This is essentially a regressive milk tax. As the CFA’s assistant director, Arthur Jaeger, wrote compact foe Rep. Henry Bonilla, R-Texas, on Monday, the compact’s subsidies “reduce the purchasing power of food stamps and are especially burdensome on those whose income is too high to qualify for food assistance.”
This program most generously benefits high-volume producers rather than small family farms. Former Agriculture Secretary Dan Glickman predicted as much in his March 1997 statement authorizing the compact. As he wrote, “These higher prices may not alter the long-term trend toward larger and probably fewer dairy operations, because all producers would benefit in direct proportion to their size …”
In fact, the American Farm Bureau found that 444 New England dairy farms went kaput in the three years before the compact began while 465 failed in the three years thereafter.
Further curdling things, the compact’s artificially high prices increase Northeastern farmers’ milk production. Some of this surplus spills into the upper Midwest and splashes into the faces of farmers who may not sell into New England at competitive prices. This decreases milk prices and depresses farm income in Wisconsin and Minnesota.
How did Jeffords plan to keep this monstrosity alive beyond its September expiration date?
“Hopefully … everybody will be concentrating on something else other than the compact,” Jeffords confessed to “The Associated Press last April, “and thus, we can sneak it in through the stealth of the night, get it through when people aren’t looking.”
Alas for Jeffords, many people – including Democrats – are looking at the compact. Illinois’ Jesse Jackson Jr., Michigan’s John Conyers and Texas’ Sheila Jackson Lee, all Congressional Black Caucus members, were among the 42 House Democrats and 61 Republicans who opposed the compact in a May 1 letter to Speaker Dennis Haster, R-III. They denounced it as a “subversion of the basics of interstate commerce.”
“We should not wall off a group of states or one single commodity at the expense of competition and free trade within our national economy.” Sen. Herb Kohl, D-Wis., commented Wednesday. Indeed, why shouldn’t there be a Northeast Potato Compact to block those pesky Idaho spuds? Just think what an anti-Hollywood Northeast Movie Compact would do for Vermont’s film industry.
The dairy cartel began as a two-year temporary measure, then was renewed in 1999. Now supporters want to make it permanent. They envision lassoing 26 states and 40 percent of U.S. milk production into similar exercises in lactose Leninism. The International Dairy Food Association forecasts that such new compacts would cost Americans $2 billion in higher milk bills annually.
Pouring this mess down the drain makes political sense. Potential Republican apostates would learn that abandoning the GOP will get their oxen gored. Also, Republicans would profit from promoting a reform that clearly benefits low-income parents and their kids. Let Jeffords and Sen. Hillary Rodham Clinton, D-N.Y., a compact enthusiast, explain the wisdom of robbing single moms and young families essentially to enrich large, high-output dairy producers.
Enough is enough. Republicans and Democrats alike would do America’s growing boys and girls a huge favor by turning James Jeffords’ sacred cow into hamburger.