Fallacies of the Local Milk Production Argument

In "Getting It Done in 2001" there are numerous references to the alleged benefits dairy compacts will provide consumers by "ensuring a local supply of fresh milk." The evidence shows that dairy compacts: are unnecessary to ensure fresh milk supplies in New England and mid-Atlantic states; and would greatly increase the cost of milk to local consumers in the Northeast and the South. Here are the facts:

The Northeast Region

• There would be no shortage of fresh milk in New England or the mid-Atlantic region without an expanded Northeast Dairy Compact. The region's dairy farmers produce far more milk than its consumers drink. Only about 44% of the milk produced in the Northeast is consumed as a beverage. The excess supply is used to produce processed products, such as cheese, milk powder and butter.



• Between, 1990 and 1997, prior to the Compact, milk production in Vermont, New York and Pennsylvania, the major dairy states in the Northeast, increased 8%, 5% and 8%, respectively while New England milk production increased by 7%. All without a dairy compact.



• Under the current federal pricing system, the demand for fresh milk supplies of states in the Northeast is met by a combination of local production and imports from other states in the Northeast region. Milk is rarely trucked more than 200 miles. In fact, New York supplies nearly 30% of New England's milk supplies. Had there been no Compact in 2000, milk would have been able to be trucked into New England, from New York, at an average of about 19 cents a gallon less than it actually cost as a result of the Compact.

Southern States

• Even in the nine Southeastern states, where milk is imported from states as far away as 1,000 miles during the parts of the summer and fall, the total cost of a dairy compact would be about 15 times greater than the cost of periodically importing milk under the existing Federal milk pricing system.



• With a Southern Dairy Compact in place, a price premium is added to each and every gallon of beverage milk sold in the Compact region. If the Southern Compact premium equaled the premium imposed by the Northeast Compact in 2000, about 19 cents would have been added to the price of every gallon of beverage milk consumed in the Southeast. That's a total cost of about $220 million for those nine states.



• According to 1999 USDA statistics, most of the beverage milk shipped into the Southeast from other states was priced at the local price. As a result, only 6% of the total southeastern beverage milk supply was priced at a market premium, which averaged 22 cents a gallon. The cost of those market premiums was only about $15 million or about 7% of the total cost of the Southern Dairy Compact premiums.



• With today's modern, milk transport system, rapid delivery of fresh, high-quality milk, from even distant surplus milk producing states, is no longer in question. These shipments, combined with local production unencumbered by dairy compact price fixing, ensure local consumers everywhere a continuous high quality supply of milk at the most affordable price.