Farmers lobbying for new milk pricing system

This article submitted by Linda Stelling on 1/6/98.

A federal court suit that is threatening to topple the governmentâs milk pricing system has drawn attention to an outdated system of setting prices based on a farmâs distance from Eau Claire, Wis.

Minnesota dairy farmers, who appear to be winning the eight-year-old court battle, charge it was a back room deal on Capitol Hill 12 years ago that was mainly responsible for distorting prices and triggering the process that has seen the ranks shrink from 22,168 farms in 1985 to 9,821 farms in October 1997.

Experts say, regardless of the outcome of the case, other economic factors will make it difficult to reverse the decline of the Minnesota dairy industry. But the court rulings could level the playing field a bit for upper midwest farmers.

The deal in the 1985 farm law substantially raised minimum prices for fluid milk from California across the south to Florida. It didnât touch the upper midwest.

ăThatâs what really put things into a tailspin,ä Bill Dropik, former president of the Minnesota Milk Producers Association, said. The revised price structure accelerated the demise of Minnesota and Wisconsinâs dominance and created a dairy farming boom in states such as Texas, New Mexico, Arizona, and Idaho.

The suit seejs to force the agriculture department to throw out the 1985 changes and an antiquated system of ămilk marketing ordersä that set regional price differentials.

In November, U.S. District Judge David Doty in Minneapolis agreed the USDA had set prices in an ăarbitrary and capriciousä fashion and ordered the government to scrap its system.

Agriculture officials, fearing the ruling would bring chaos to a system that assures reliable delivery of milk to consumers at stable prices, have sought twice to delay the effective date of Dotyâs order while they decide whether to appeal. He has given the government until Feb. 15 to act.

Melvin Kunstleben, Paynesville, will be joining other farmers from the midwest to lobby in favor of changes to the milk pricing system.

ăIâll be meeting other members of the Upper Midwest Coalition in mid-January prior to leaving for Washington,ä Kunstleben said.

Nearly 300 rural residents have urged Doty to stand firm in his decision to end discriminatory milk pricing practices that have put many dairy farmers out of business.

ăThe court has made its decision,ä David Frederickson, Minnesota Farmers Union president, said. ăThe U.S. Department of Agriculture lost. Minnesota dairy farmers won. Itâs time for the government and the dairy industry to enact a milk pricing system that is fair and equitable to dairy farmers across the country.ä

In the current system, processors are required to pay premiums for Class I milk (fluid milk used for bottling) based upon a dairy farmâs distance from Eau Claire, Wis., the farther the distance from Eau Claire, the higher the price. The court barred payment of those price differentials because they placed an unjustifiable economic bias on dairy farmers in the upper midwest.

For every hundred miles a processor was located from Eau Claire, the marketing order, setting the regional floor price, generally added 15 cents per hundredweight (about 11.5 gallons) to the minimum price of fluid milk.

At a meeting with industry officials, House Agriculture Subcommittee members agreed to increase fluid milk prices by as much as $1.50 per hundredweight for southern and eastern states.

Gary Reeck, Paynesville, said the system which has evolved over many years and many rule changes, doesnât make sense anymore.

ăI donât feel if changes are made, they will affect farmers in Minnesota too much. Florida will feel the effects more,ä Reeck added. ăI donât totally understand the milk pricing system, but if the judge threw it out, isnât that message saying it is outdated and cumbersome. It doesnât belong in there anymore and changes need to be made.ä

Reeck added he is unsure what the effects of a change will be for Minnesota farmers, but if prices are changed, it will help a little.

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