What happens if 1A supercedes 1B

July 22,1999

Milk producers probably will decide they are better off approving milk marketing order reforms in their respective orders when they vote on the reforms soon. Although many producers don't like the milk pricing option in the final order, the only other choice is no order at all. They'll probably chance it that Congress will approve a better pricing option that then will have to be approved in a second referendum.

No one is issuing hard and fast predictions, but if producers were to vote down the final proposal in the Aug. 2-6 referendum, it would put them into a free market position in that order; there would be no milk or product price controls at all. If they approve the order and Congress approves the higher milk pricing option (known as Option 1A), USDA will have to go through the rulemaking process with another referendum on that option.

Many milk producers vote en bloc through their cooperatives. That means that cooperative executives are looking hard at the best way to proceed. Of course there also is the chance that the final order will be approved, and Congress will not approve Option 1A. But at least orders will be in place.

In the House, a bill to mandate the higher pricing mechanism (1A) has been voted out of the Agriculture Committee and is pending before the full House. However, House Majority Leader Dick Armey (R-TX) reportedly put that bill on hold until after Labor Day. (Congressional and dairy sources caution, though, that there's still a chance the bill could see floor action before then.) The bill includes other dairy pricing changes, a one-year extension of the milk price support program and forward contracting for the dairy industry.

An amendment by Sens. Patrick Leahy (D) and James Jeffords (R), both of Vermont, is ready to be offered as part of the agriculture appropriations bill. That amendment includes 1A and the extension of the Northeast Dairy Compact and authorization of a southern dairy compact. There is a separate bill to mandate 1A, introduced by Sen. Charles Schumer (D-NY). However, the Leahy-Jeffords proposal has been threatened with a filibuster by other Senators, and the dispute has stalled the Senate's appropriations bill, perhaps till after Labor Day.