Leahy And Jeffords Ask GAO To Investigate
Milk Markets In Northeast

...They Cite Widening Disparity Between Farm And Retail Milk Prices

WASHINGTON (Tues., March 11) – Vermont’s U.S. Sens. Patrick Leahy (D) and Jim Jeffords (I) Tuesday were joined by over a dozen senators in asking the watchdog agency of Congress – the General Accounting Office (GAO) – to investigate the widening disparity between farm and retail milk prices that has caused financial hardship for Northeast dairy farmers.  The request comes after members of the St. Albans Cooperative Creamery talked with Leahy and Jeffords about the issue at last month’s Cooperative annual meeting.

“Although farmers continue to endure the lowest prices in decades, we have seen almost no change in retail prices," Jeffords said. "Who is reaping the benefits? I am hopeful that this report will provide some much needed answers.”

“Vermont’s dairy farmers are hurting, and so are their communities and our region’s economy,” said Leahy.  “Farmers are getting less for their milk but consumers are not paying less, and it adds up to a raw deal for both.  We are out to document the reasons for this gap and the beneficiaries of it.  Getting these answers will help our efforts at the federal level and in Vermont to solve this crisis.”   

Statistics from the U.S. Department of Agricultural Marketing Service (AMS) show that upon the expiration of the Northeast Interstate Dairy Compact on October 1, 2001, dairy farmers were receiving a minimum price of $18.81 per hundredweight (cwt) for their Class I fluid milk and the corresponding retail price for milk was $3.08 per gallon.  Over the past 18 months, the federal order minimum price for Class I fluid milk has fallen to $13.06 cwt – a drop of $.50 a gallon.  Despite the fall in farm prices, retail milk prices have fluctuated only a few cents and remain priced around $3 per gallon.

The study, requested by letter, builds on an earlier GAO investigation that Leahy had initiated several years ago.  Sen. Olympia Snow (R-Maine), who chairs the Senate Small Business Committee, is making the official request to GAO for the investigation on behalf of the committee, and Leahy, Jeffords and other senators have seconded the request in their letter Tuesday to GAO.  The senators are asking GAO to investigate: the impact of the expiration of the Northeast Interstate Dairy Compact on Oct. 1, 2001, on retail prices; the change in the retail price of milk since the expiration of the compact; the decline in the price of Class I fluid milk received by farmers over the past 18 months; and the proportionate breakdown of the retail price of a gallon of milk received by farmers, cooperatives, wholesale milk processors, and retailers at the expiration of the compact and the following 18 months.

Leahy and Jeffords have worked diligently to help Vermont’s dairy farmers.  They championed the Northeast Interstate Dairy Compact and the current “MILC” program that has brought Vermont farmers about $25 million since its inception. 

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