Prepared by the offices of Senator Patrick
Leahy, Senator Jim Jeffords and Rep. Bernie Sanders
Update, May 2, 2002
Senator Leahy and his colleagues on the House and Senate
Agriculture Committees, assisted by Senator Jeffords,
Congressman Sanders and others, late last week reached an
agreement on the key issues that differed in the separate
House- and Senate-passed versions of the farm bill and
completed work on the final bill on Tuesday night. The new
farm bill, which passed the House of Representatives Thursday
(May 2) in a vote of 280 to 141, will assist America’s family
farmers, expand economic opportunity in rural communities,
strengthen programs to protect the environment and improve the
nutritional safety net for low-income Americans.
The new farm bill, in its final form, still must be
approved by the Senate and signed into law by the President.
The Senate is expected to begin debate on the bill today
(Thursday) and to vote on the bill next Tuesday.
If enacted, the new farm bill will establish a new national
dairy program, sponsored by the Vermont Congressional
delegation, that will provide cash assistance to dairy farmers
comparable to what dairy farmers from Vermont and other New
England States received under the Northeast Dairy Compact.
Senator Leahy, Senator Jeffords and Congressman Sanders
originally pressed for an extension and expansion of the
Northeast Interstate Dairy Compact. After Members of Congress
from other regions and the opposition of President Bush and
Vice President Cheney blocked these efforts, the Vermont
Congressional Delegation -- against great odds, but joined by
allies from across the nation -- urged creation of a national
dairy program as a compromise. Senator Leahy, as a conferee,
advanced the national dairy program in the House-Senate
negotiations on the farm bill.
If the farm bill is enacted, dairy farmers across the
country will receive monthly payments – when fluid milk prices
fall – nearly identical to what New England producers received
under the Northeast Dairy Compact. All farmers in Vermont will
be eligible for these payments. Like the Compact, whenever the
federal minimum price for fluid milk in Boston falls below
$16.94 per hundred weight, participating dairy farmers will
receive a payment. The national dairy program will pay
producers 45 percent of the difference between $16.94 and the
Class I fluid milk price in Boston. Like the Compact, payments
will be made on a monthly basis and will fluctuate with milk
prices; no payments will be made when the fluid milk price in
Boston is $16.94, or higher. Under this program, the U.S.
Department of Agriculture's Commodity Credit Corporation, not
milk processors, will make the payments.
Producers should begin receiving payments under this new
national dairy program early this fall. USDA is required to
begin signing up farmers to participate in the program not
later than 60 days after the new farm bill is signed into law.
As under the Compact, all producers will receive payments on a
monthly basis: USDA is required to pay producers not later
than 60 days after the end of each month for which a payment
is made.
Another significant feature of the new national dairy
program is that it will be retroactive, covering market losses
due to low prices since Dec. 1, 2001. On that date, there was
a devastating drop in the price for Class I fluid milk. The
Vermont Congressional Delegation estimates that the
retroactive payments to Vermont dairy farmers covering losses
from December 2001 through April 2002 could total more than $9
million. Producers should receive these retroactive payments
at the same time they receive their first payments early this
fall.
Whereas the Compact made payments to producers based on the
amount of milk marketed in the six-state Compact region, the
national dairy program will make payments based on milk
marketed in any of the 50 states. However, each producer will
be able to receive payments on no more than 2.4 million pounds
of production per year. Only milk marketed during a month in
which a payment is made will count toward that total. The
Compact had no similar production limit. The 2.4 million-pound
cap is equal roughly to the annual production of 140 cows. In
a new provision added by the House of Representatives
negotiators at the final conference meeting, the 2.4
million-pound cap will apply to each dairy "operation" as that
term is defined under the Dairy Market Loss Assistance Program
guidelines. Each typical farm represents at least one
"operation" and could represent two or more operations. (Note
that USDA Notice LD-505 defines dairy "operation" as "any
person or group of persons who as a single unit produce and
market milk commercially produced from cows and whose
production and facilities are located in the United States.")
The national dairy program is authorized through Sept. 30,
2005. The bill also re-authorizes the milk price support
program under which the government purchases powdered milk,
cheese and butter offered to it at the equivalent of $9.90 per
hundredweight. It also re-authorizes the Dairy Export
Incentives Program (DEIP); requires importers to pay the dairy
research and promotion program assessment; and authorizes a
new Johnes disease research initiative.