Northeast Dairy Compact Authorization Expires

Authorization for the Northeast Interstate Dairy Compact reached its sunset date on Sunday, September 30, a major milestone in efforts to eliminate the compact and stop compact expansion efforts.

While a few compact proponents are attempting to breathe life back into the failed compact, the International Dairy Foods Association (IDFA) is hopeful that reaching this expiration date signals the end of the milk cartel.

"We've fought hard to push back the compact and keep it from being extended into additional states, where it could end up costing U.S. consumers up to $2 billion in higher milk prices," said IDFA Senior Group Vice President Connie Tipton. "Anyone who looks into this issue knows that compacts are extremely problematic and simply don't work. Continuing such a policy is short-sighted and not in the interest of consumers or the dairy industry."

Tipton noted that Congress is currently crafting a new farm bill that will focus on national programs, which is a more appropriate and constructive approach to dairy policy.

"We need dairy policies that don't pit one region against another, and which aren't market-intrusive. We've out-grown old-fashioned regional policies like the dairy compact, and need national solutions that work for our industry as a whole - producers, processors and consumers alike," said Tipton.

The Northeast Interstate Dairy Compact sets farm milk prices for beverage milk above the minimum federal prices, essentially ensuring a higher cost for fluid milk products in New England and shutting out competitive milk from neighboring regions.

The dairy compact has failed in achieving its primary goal of stopping the loss of New England dairy farms. Data from the American Farm Bureau Federation released earlier this year shows that more dairy farms left New England during the first three years of the compact than in the prior three years. Part of the reason may be that the compact directs more money to large dairy farms, giving them funding to expand even more. It also potentially hurts milk consumption by spurring retail prices upward.

Since it was first instituted in July 1997, the compact has cost New England consumers $146 million in higher milk prices.

This year, efforts were afoot to expand the compact to other states and regions. If expanded as was proposed in House and Senate bills, dairy compacts could raise milk prices for 60% of U.S. consumers.

For more information on dairy compacts, click here.