Commentary—

The Case For The Dairy Compact

By Shirley Ferris

The Northeast Interstate Dairy Compact is one of the best things to come down the pike in a long time. It has a record of being beneficial to consumers, processors, and farmers alike.

Connecticut consumers are the biggest winners. Why? First, in spite of all the rhetoric from the International Dairy Foods Association lobbyists to the contrary, the fact is that consumers in this area are enjoying some of the lowest milk prices in the nation.

And the littlest of the consumers, participants in the WIC and school lunch programs, are the biggest winners because these programs are exempt from any increase in milk prices caused by the Dairy Compact. Of the $160 million the Dairy Compact has brought farmers, three percent of that money was set aside for WIC programs and one percent for school lunch programs.

There is no evidence less milk is being purchased or consumed by these participants, or any other part of the population, because of the Dairy Compact. It’s important to realize that the Dairy Compact price only affects fluid (drinking) milk. It has no effect on butter, cheese, ice cream, or any other dairy product.

Second there is no cost to taxpayers. This is a program that is completely market driven. The Dairy Compact works on a very simple premise: In times when the price to farmers is low, processors set aside dollars in a pool that is distributed to farmers according to the amount of milk produced at their farms and utilized by the pool for fluid milk. That cost is passed on to retailers, who may or may not pass it on to consumers. Remember, milk is highly perishable and is therefore priced very competitively.

Third, the Dairy Compact has slowed the attrition of dairy farms in the state. Why is that important? Because 70 percent of the state’s working landscapes are utilized by dairy farmers. And of the 225 dairy farms in the state, 60 percent open their farms to the public for farm tours, hayrides, pumpkin hunts, and the like. Dairy farms have become popular with teachers who want to bring something tangible into the science and math curriculum.

This Dairy Compact is important not only to consumers, but also to processors. They could bring milk in from the Midwest, but what would happen to their bottom line with gasoline prices what they are today? Think about it. There are three million people in Connecticut. The closer to the market the raw product is, the less expensive it is to the processor to transport it and deliver it to the consumer in its highest quality.

There are several concentrated areas in the state where dairy farms provide an anchor for a sustainable agricultural industry. Those businesses that service the dairy industry with equipment, supplies, feeds, and other products form the basis of a thriving community that provides the underpinnings for other agricultural related businesses. A thriving community is attractive to everyone.

Finally, of course, there is benefit to the dairy farmer because the Dairy Compact allows for a more stable income providing a solid basis on which to make good business decisions.

The Dairy Compact was passed by the Connecticut Legislature in 1993 and approved by Congress in 1997 and extended for two years in 1999. The Northeast Dairy Compact Commission has won every court case brought against it. It has been shown not to form a trade barrier; any milk that enters the compact area gets the compact price, by law.

To date 25 states have either passed legislation or have legislation pending to form a dairy compact with neighboring states. Persons across the country who are interested in the sustainability of American agriculture and its working landscapes agree this legislation is important, correct, and justifiable.

The current Dairy Compact expires September 2001. Over the next few weeks Congress will be deciding whether to extend and perhaps expand this legislation. Governor Rowland and our Congressional delegation are in favor; consumers and farmers, even some processors, agree.

Now is the time for anyone who cares about the maintenance of our state’s working landscapes to contact Senate and Congressional leaders and President Bush to voice support for the Northeast Dairy Compact.

(Shirley Ferriss, whose family operates a dairy farm on Sugar Street, is Connecticut’s Commissioner of Agriculture.)