News from the capitol

News from the capitol

Te U.S. Supreme Court declined to hear a case concerning the constitutionality of the Northeast Interstate Dairy Compact, according to the National Milk Producers Federation (NMPF), Arlington, Va.

Without comment, the high court rejected the 1997 argument by NewYork State Dairy Foods Inc. that the Compact Commission’s pricing plan discriminates against processors located outside New England. The trade group says that as a result of the Compact, dairy producers get a higher payback from New England processors and prefer to do business with them, as opposed to NewYork handlers.

The court’s rejection of the NewYork State Dairy Foods challenge likely spells the end of efforts to have the Compact declared illegal. It is the final legal step following a federal judge’s ruling in Boston upholding the Compact’s pricing rules, which the 1st U.S. District Court of Appeals agreed with last November.

Meanwhile, the Massachusetts state Senate has begun the process of withdrawing from the Northeast Dairy Compact. The state’s annual budget plan, which passed the Senate Ways and Means Committee in late May, includes language which indicts the compact for costing the state’s consumers more than it’s providing for its farmers. The bill reports the compact has cost consumers $15 million while providing only $3 million to the state’s farmers.The bill says Massachusetts consumers are in effect subsidizing out-of-state farms.

The bill directs the state’s delegation to the Compact to provide the requisite one-year notification of planned departure to the Compact Commission. It also sets up the Dairy Farms Trust Fund, allotted with $3 million per year in the event of a formal Compact repeal, as well as an additional $1 million to expand a current agriculture preservation program.

The U.S. House of Representatives voted in late May to extend permanent normal trade relations to China and the Senate approved the bill in early June. The Arlington, Va.-based U.S. Dairy Export Council (USDEC) and NMPF issued a joint press release commending the vote.

“This deal offers nothing but positives for the U.S. dairy industry. Dairy consumption in China is poised to expand, thanks to rising incomes in the urban areas and a greater awareness of the nutritional benefits of dairy products. Approving this deal gives U.S. exporters the same preferential tariff treatment as our competitors from Oceania and the European Union,” said Tom Suber, USDEC president.

Jerry Kozak, NMPF chief executive officer, noted that the groups “applaud this action by the House and the efforts of the Administration in recognizing the benefits that opening foreign markets can bring to our nation and to the agricultural sector in particular.”

The dairy groups note that once China is admitted to the World Trade Organization, the country will cut tariffs on key dairy products by “as much as five-fold, making imported dairy products less expensive to Chinese consumers.”

Worldwide grain and soybean surpluses are likely to push down prices for many commodities again this year. Soybean prices, which averaged $4.65 per bushel in 1999, will decline for the fourth year in a row. U.S. soybean production is expected to rise 12 percent, according to the U.S. Department of Agriculture (USDA). Continued low prices could increase federal crop subsidies from a projected $7.3 billion to as much as $8 billion, USDA reports.

Commodity prices collapsed in 1998 because of financial problems in Asia and heavy worldwide crop production and are expected to recover slowly through the coming decade. Congress is considering a third multibillion-dollar bailout of the U.S. farm economy in as many years.

Copyright Stagnito Publishing Jun 2000

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