June 18, 1999

Two major supermarket executives say dairy compact legislation would fix prices that harm consumers. The evidence is in the track record of the Northeast Dairy Compact, they add.

Scott Charlton, vice president for manufacturing for Publix Super Markets, and Geoff Covert, senior vice president and president of manufacturing for The Kroger Co., testified before the subcommittee on commercial and administrative law of the House Judiciary Committee.

Northeast consumers pay a 20-cents per gallon "milk tax" as a result of the compact, they say. The hearing was held to consider extending the life of the Northeast Dairy Compact and allow a southern compact to be established and another to rescind congressional authority for the Northeast Compact.

Sen. Russell Feingold (D-WI) called the Northeast Compact "the final nail in the coffin for many Wisconsin dairy farmers." The compact "sounded benign" when created in 1996, but the effect has magnified "the existing inequities of the system."

However, Sen. Charles Schumer (D-NY) said the compact "will preserve the economy and a distinct rural way of life" in New York and throughout the country. "I now believe the dairy compact will actually help consumers by halting the trend of consolidation within the dairy industry into a few large farms that control most of the market and can charge higher prices."

Wisconsin Gov. Tommy G. Thompson countered that argument by claiming the compact and federal milk marketing orders have had a detrimental effect on the Midwest if not on the Northeast. He said the exit of Wisconsin dairy farmers from business had accelerated since the compact was implemented.

Charlton and Covert maintained that since the Northeast Compact began operating, price increases have taken more than $4.7 million from the purchasing power of New England food stamp recipients. New England states' Child and Adult Care Food Program and the Nutrition Program for the Elderly have had to absorb $342,000 and $410,000 respectively in higher milk prices, they said.

In a related development, the Senate Appropriations Committee approved the 2000 budget for USDA. Senators deferred controversial amendments until the full Senate considers the bill, probably next week. Earlier, observers had expected Sen. Patrick Leahy (D-VT) might offer dairy compact legislation at yesterday's session.