Washington Week: Dairy Updates from Capitol Hill and the Campaign Trail
By IDFA Senior Vice President Chip Kunde

As Congress races toward recess and the presidential campaigns are heating up, there is news to report on several policy fronts this week that affect dairy. Legislation on food allergens and two free trade agreements is moving ahead, and a new bill has been introduced in the Senate to extend dairy producer subsidies. What's more, dairy compacts continue to be a hot topic of debate, with a prominent editorial published last week that urged Congress to reject the new national dairy compact proposal. Finally, presidential candidate John Kerry weighed in on dairy policies issues at a recent campaign stop.

Allergens Legislation
This coming week, the House of Representatives is expected to approve the Senate's bill (S. 741) that requires new labeling on food products containing any of the eight major allergens: milk, eggs, shellfish, fish, wheat, tree nuts, peanuts or soybeans. While the bill requires mandatory action, IDFA generally supports this compromise since it contains many provisions that we advocated for to ensure more flexibility than the original legislation, including the implementation date of January 1, 2006, to coincide with the trans fat labeling rule. President Bush is expected to sign the bill into law if it is approved by the House. For background information, click here.

U.S.-Morocco Free Trade Agreement
On July 8, a joint letter from IDFA, the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) was sent to all members of the Senate Finance Committee in support of the U.S.-Morocco Free Trade Agreement. While the United States currently exports little dairy to Morocco, the three dairy groups believe the pact is a "positive indicator" of the Bush Administration's continued efforts to expand market opportunities for U.S. dairy products. In addition, the letter notes the dairy industry's support for the administration's goal of creating a U.S.-Middle East Free Trade Area by 2013. To read the full letter, click here. For more details on this agreement, which was completed in March, click here.

U.S.-Australia Free Trade Agreement
On July 8, the House Ways and Means Committee approved a bill (H.R. 4759) to implement the U.S.-Australian Free Trade Agreement, which was hammered out by trade officials in February. Under the White House's trade promotion authority, Congress can approve or reject the deal, but not amend it. The Senate Finance Committee also considered the bill last week. However, due to procedural maneuvers by opponents of the bill, the Senate committee must re-examine the legislation, an action that is likely to happen this week. The legislation also faces big hurdles when the debate hits the floor of both the House and Senate. The full House vote could occur as early as this week. While disappointed that the pact doesn't include sugar, IDFA supports this free trade deal. More details can be found by clicking here.

MILC Extension Bill in Senate
Senators Herb Kohl (D-WI) and Norm Coleman (R-MN) introduced a bill (S. 2609) in the Senate on July 6 that would extend the Milk Income Loss Contract (MILC) direct subsidy program for dairy farmers for two more years. MILC was created as part of the 2002 farm bill and is set to expire on September 30, 2005. Co-sponsors include Senators Susan Collins (R-ME), Tom Daschle (D-SD), Patrick Leahy (D-VT), Tim Johnson (D-SD) and Tom Harkin (D-IA).

The bill is not identical to the House version (H.R. 3990) that was introduced in March. The Senate bill calculates payments by taking 45% of the difference between $16.94/cwt and the monthly Boston Class I price on the first 4.8 million pounds of milk production from each farm per year — which would double the current production cap. The House bill and current law calculate payments based on 2.4 million pounds of milk production from each farm per year. IDFA believes that the dairy industry would benefit from a more unified, market-oriented approach to dairy policy.

Editorial on Dairy Compact Bill
The leaders of three prominent consumer and taxpayer groups who rarely unite on an issue joined together to write an editorial against the new national dairy compact bill (H.R. 4597/S. 2525). The editorial was published in the July 6 issue of the Washington Times newspaper and authored by John Berthoud, president, National Taxpayers Union; Grover Norquist, president, Americans for Tax Reform; and Tom Schatz, president, Council for Citizens Against Government Waste.

Entitled "Moo-ve over Congress," the editorial begins, "Those who cannot remember the past are condemned to repeat it...that is a timely admonition for Congress, which is about to consider a new version of an old — and failed — concept in dairy policy: the compact."

The writers then outline the expensive history of the Northeast Dairy Compact, which cost consumers in New England more than $136 million in higher milk prices. They also chastise the co-sponsors of the new compact legislation for their proposal, which "takes a futile, and feudal, model of the expired Northeast Dairy Compact, mutates it and expands it...The results are predictable: enormous cost for consumers and taxpayers, and economic chaos for dairy farmers."

IDFA is strongly opposed to dairy compacts, including their latest incarnation in H.R. 4597/S. 2525. For more information, click here.

Candidate Kerry on Dairy
Senator John Kerry (D-MA), on track to become his party's nominee for president later this month, offered some positions on dairy policy issues during his campaign in Wisconsin last week. First, he stated that he wouldn't support dairy compacts if he is elected as president, despite his Senate voting history in support of the Northeast Dairy Compact.

"As a senator from the Northeast, I had to support it," Kerry said of the expired Northeast pact. "But, as president, I have to represent the entire nation."

The position switch evoked a strong reaction from Rep. Mark Green (R-WI), who stated that Kerry "showed his true colors by supporting the dairy compacts, and he has a lot of nerve coming to Wisconsin to talk to dairy farmers like nothing happened."

On the issue of dairy protein imports, Kerry stated that one of his first goals as president would be to review the country's trade agreements, in the hopes of finding ways to stop imports of milk protein concentrates (MPCs).

The senator became a co-sponsor this week of the pending legislation (S. 560) that would impose additional tariffs on imports of MPCs, caseins and caseinates. The U.S. Coalition for Nutritional Ingredients — an IDFA-led group of more than 50 associations, food companies, and taxpayer and consumer organizations — strongly opposes the legislation, citing a recent government report that showed that such imports did not affect farm milk prices in the studied period. Click here for more details.

The IDFA legislative group can be reached at 202/737-4332.

Posted July 12, 2004