daley article

Boston Globe article

Congress to weigh fate of disputed
dairy compact

By Beth Daley, Globe Staff, 5/2/2001

                 Tiny, family-owned dairy farms have defined the New
                  England landscape for generations: Black-and-white
              cows munching on green grass are the embodiment of
              country living for many urbanites.

              But a controversial effort to save the region's dwindling
              number of dairy farms faces an uncertain future today as
              Congress considers whether to continue a subsidy program
              for farmers. Supermarkets and dairy processors hope to kill
              the Northeast Dairy Compact, a four-year-old program that
              sets a price floor for milk sold by farmers and passes the
              charge, about 4.5 cents per gallon, on to consumers.

              ''Without the dairy compact, a lot of local dairy farmers will
              close up shop,'' said Representative James P. McGovern,
              Democrat of Massachusetts, a cosponsor of the bill, which
              would reauthorize the compact and include five other states
              from New York to Maryland.

              ''It also means fresher milk for New England consumers,''
              McGovern said. ''You shut down one of these dairy farmers,
              you could see a strip mall the next day. No one wants that.''

              However, support for the compact hinges on consumers'
              willingness to pay extra for milk, the price of which has risen
              much more than 4.5 cents a gallon since the compact's
              creation.

              In the past, some supermarkets have put signs in milk cases
              blaming prices of close to $3 a gallon on the subsidy
              program.

              But an independent University of Connecticut study being
              released today says prices went up, in large part, to increase
              leading supermarket and milk processors' profits, giving them
              an extra 11 cents a gallon. The study, by Ronald W. Cotterill
              and Andrew W. Franklin of the Food Marketing Policy
              Center, found that of the $130 million more that consumers
              across New England paid for milk, about $50 million has
              gone to supermarkets and dairy processors during the first
              three years since Congress passed the Northeast Dairy
              Compact. The price of milk went up about 29 cents a gallon
              from July 1997 to July 2000, according to the researchers.

              The study is sure to play heavily into the dairy compact
              debate, as milk processors and supermarkets argue that the
              program unfairly targets consumers who have to pay to
              support farmers.

              ''If people are concerned about consumer price levels of milk,
              the price-taking by these large retail [businesses] makes the
              price-taking by the dairy farmers pale in comparison,'' said
              Jay Healy, commissioner of the Massachusetts Department of
              Food and Agriculture. ''I find it to be the height of
              hypocrisy.''

              Officials at the Massachusetts Food Association and Stop &
              Shop Supermarket Co. declined comment late yesterday
              afternoon, saying they had not seen the report. A call to Suiza
              Foods, the largest New England milk processor, was not
              returned. In the past, supermarkets and processors have
              adamantly denied accusations of price gouging.

              Most people agree that dairy farms, occupying about 1.4
              million acres of open space in New England, need to be
              saved. There are now 262 dairy farms in Massachusetts,
              compared with 416 in 1993.

              While the aesthetic value of preserving the picture-perfect
              pastures are obvious to any tourist driving by them, compact
              supporters say the farms also keep milk production local,
              avoiding high transportation costs and ensuring freshness.
              Without the compact, they say, more dairy farms could close
              and most of New England's milk would be trucked in from
              the Midwest, raising prices even more than what it would be
              under the compact.

About $140 million has been paid out under the compact, and
dairy farmers get about $16,000 each per year on average.

              ''The compact is the nation's one good model to protect
              against globalization,'' said Stephen Burrington of the
              Conservation Law Foundation, a Boston-based
              environmental advocacy group. ''We know [the
              reauthorization] is going to be difficult. It has strong support
              in a lot of quarters, and it has a lot of opposition, and from
              serious monied interest.''

              Indeed, opposition to McGovern's bill - which would also
              smooth the way to create a compact of 14 southern states
              and allow others to join later - has been apparent since its
              inception. They say the compact unfairly burdens seniors and
              low-income families who cannot shoulder the price increase.
              The compact exempts some low-income government
              programs, such as school lunches, from paying the compact
              increase. Still, some say, the idea of using consumers to pay
              for farmers to stay in business is unfair.

              ''Artifical price supports are always a bad idea,'' said David
              Tuerck, executive director of the Beacon Hill Institute of
              Suffolk University. ''If the government wants to do something
              for dairy farmers, it should find a way not to raise the cost of
              milk.''

              But many dairy farmers say they would be out of business
              without the compact. Before it was adopted, they often
              operated at a loss; milk prices were so volatile and barely
              covered operating costs, they say.

              ''It gives us that little more breathing room,'' said David W.
              Shepard, co-owner of 330-acre Elm View Farm in Warren.
              His ancestors established the farm in 1715, and Shepard has
              90 cows.

''If the price of milk wasn't at or above the compact level, I
don't think we would continue to do this for very long.''