September 16, 1995 in Nation/World

Panel To Overhaul U.S. Dairy Policy

Associated Press

Citing a lack of agreement on reform, Republicans on the House Agriculture Committee said Friday they will propose ending the maze of regional orders and price formulas that make up government dairy policy.

“We are deregulating the industry and letting the markets take over,” said Rep. Steve Gunderson, R-Wis., chairman of the dairy subcommittee. He had promised such a course in June if regional dairy interests could not agree on reform.

The committee will include the proposal, estimated to save $500 million over seven years, in its plan to save $13.4 billion in farm programs over seven years. The committee plans to finish work on the savings package next week.

The impact of such a move on store prices and farmer prices would be hard to gauge, because the industry has been built around 60 years of government regulation. Bottlers, along with makers of ice cream, cheese and yogurt support deregulation because they believe the cost of their chief raw ingredient would fall.

The proposal would end the dairy support program, except for export subsidies that cost around $100 million a year but are scheduled to decline. The 14-cent-per-hundredweight fee on milk used to help pay for the dairy program would end Jan. 1, 1996, along with government purchases of surplus butter, powdered milk and cheese.

Loans would be available to hold products off the market until prices improve.

Dairy farmers would get a number of “transition payments” over seven years based on historic production.

The overhaul would cause government dairy spending to average $240 million a year through 2000, compared with $318 million currently projected.

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