By Steve Bailey, Globe Columnist, 3/20/2002
[N] early five years ago when the Northeast Interstate Dairy Compact went
into effect, retailers immediately jacked up the price of milk 20 cents a
gallon to cover the new ''tax'' increase on consumers. Now that the compact
is dead, I have a question: Where's my tax cut?
My free-market bones have never been comfortable with price-setting schemes
like the dairy compact, which established a minimum price for milk sold by
New England and some New York farmers. But watching what has happened since
the compact died on Oct. 1 makes a very bad joke of all that whining that
came from dairy processors and retailers about the raw deal the poor consumer
was getting from farmers.
The punchline: We're still paying compact prices, but the money is going
to fatter profits for retailers and processors, not to New England farmers.
If your family drinks a lot of milk, like mine does, you might want to know
what has been happening to your dairy dollars. According to the Massachusetts
Department of Agriculture, the average price of a gallon of whole milk in
the Boston area was $2.99 in January and February last year, when the compact
was still in effect, and in the same two months of this year, when the compact
had expired. But the milk processors were paying farmers about 15 cents less
a gallon for milk in the first two months of this year than they were a year
Where did that 15 cents go? Not back to you and me once the milk ''tax''
disappeared, that's for sure.
John Bunting takes more interest than most in such things. At age 60, Bunting
and his two sons have about 500 acres in the western foothills of the Catskills
(nearest town: Delhi, N.Y., pop. 5,000) where they struggle to stay afloat
with their 40 Jersey cows. Bunting's night job: writing for a muckraking
little dairy tabloid, ''The Milkweed,'' published monthly by editor Pete
Hardin out of tiny Brooklyn, Wis. ''Consumers are not benefit ing from the
end of the compact,'' says Bunting, who developed the data on the Boston
milk market using monthly state and federal pricing reports.
Massachusetts agriculture officials say Bunting is right on the numbers and
right on his analysis of who has been profiting on the end of the compact.
''The issue is profits,'' says James Hines, director of the state's division
of animal health and dairy services. ''There is no logical explanation other
than the fact that the money that was going to the farmers is now going to
the supermarkets or the processors. They used the compact to raise prices;
they didn't use the end of the compact for dropping prices.''
Who is to blame: the supermarkets or the processors? ''They both take a chunk
of it, though the retailers make a higher percentage,'' says Jay Healy, who
just stepped down as the state's agriculture commissioner.
A spokeswoman for the International Association of Dairy Foods, which represents
the processors (in New England that means Dean Foods, which controls more
than 70 percent of the market), said she had not seen the Boston milk numbers
and could not comment. ''Our cost are relatively the same from last year
and our retail prices are relatively the same from last year,'' said a spokeswoman
for Stop & Shop, New England's largest supermarket chain.
One year ago dairy processors were paying $1.46 a gallon for their milk;
last month they were paying $1.31. Why am I still paying the same $2.99 for
Addendum: On the day that Acting Governor Jane Swift said that she would
not be running for election, Jay Healy is a reminder of the hidden cost of
bad leadership. Healy, appointed by Governor William Weld, retired last week
as agriculture commissioner after a nine-year run during which he helped
make his tiny little agency a model of how to protect family farms and the
environment. Yesterday he said he quit, in part, because he could no longer
tolerate Swift: ''She was a pretty nice lady who was a pretty poor governor,''
Steve Bailey can be reached at 617-929-2902 or by email at email@example.com.
This story ran on page D1 of the Boston Globe on 3/20/2002.
© Copyright 2002 Globe Newspaper Company.