Lawmakers Push Plan To Set Floor Price For Milk

In the aftermath of a dramatic collapse in raw milk prices, 30 U.S. senators Wednesday asked President Clinton to stabilize the market by temporarily setting a floor price paid to dairy farmers.

But some economists said the plan would artificially raise supermarket milk prices by paying farmers more money on average than they’ve received in more than six years.

“This is a bad policy,” said dairy policy specialist Robert Cropp at the University of Wisconsin-Madison. Cropp estimated the plan would hike milk prices at the grocery by 8 cents per gallon.

Supporters of the floor price, including Sen. Patty Murray, D-Wash., and Republican leaders Trent Lott of Mississippi and Jesse Helms of North Carolina, said it would rescue some dairies without hurting consumers. Sens. Slade Gorton, R-Wash., and Idaho Republicans Larry Craig and Dirk Kempthorne did not sign the letter.

“The loss of family farms is being threatened,” the lawmakers wrote in a plea to Clinton dated Feb. 28.

In a separate statement, Murray said that Washington’s 850 dairy farmers have seen prices for raw milk drop from a high of $17.27 per 100 pounds (about 12 gallons) in November to $13.24 in February.

Murray and the others asked the Clinton administration to use emergency measures to set a temporary floor price of $13.50 per 100 pounds.

According to records kept by the U.S. Department of Agriculture’s milk market administrator in Seattle, $17.27 was the most Washington farmers had ever received; the $13.24 was higher than what farmers had received on average since July 1990.

“That is pretty high,” administrator Jim Daugherty said in response to the floor price proposal. “You’d probably see more production and an increase in herds.”

Yet that’s exactly what the industry does not need at this time, said Cropp. Fluid milk consumption has been flat and farmers hoping to get a higher price should hope that production slows, not increases.

“Why would we want to raise the price of milk consumers drink at a time when the market is not really growing?” he said.

Murray’s press secretary, Rex Carney, said the senator signed the letter at the request of the Washington State Dairy Federation.

“That’s the extent of it,” Carney said. “We don’t have a lot of economic justification for this.”

Doug Marshall, spokesman for Seattle-based dairy giant, Darigold Inc., said the floor price is a temporary measure to protect farmers while the USDA studies a change in how cheese and milk prices are set.

“The milk prices have been profitable for everybody but farmers,” he said.

In 1996, some 616 million gallons of milk were produced in Washington and 547 million gallons in Idaho.

, DataTimes