Sour, Curdled, and Gross - agricultural policies

National Review, July 12, 1999 by Dave Juday

How Congress got milk wrong.

Mr. Juday is an adjunct fellow of the Hudson Institute's Center for Global Food Issues.

Of all the issues that Congress deals with, perhaps none is less glamorous to members than agriculture policy. As Republican senator Pat Roberts of Kansas noted last year, some members "don't even know we passed a farm bill in 1996." But that bill-commonly referred to as the "freedom-to-farm law"-is one of the boldest reforms effected by Congress since the Republicans took control in 1995.

The Wall Street Journal editorialized that the bill represented "the kind of change the 1994 election was supposed to be about." The National Center for Policy Analysis, a conservative think tank, called it "a success comparable to welfare reform." Even CNN noticed that it was "the most far-reaching agricultural-policy reform since the 1930s."

Despite all it accomplished, however, there's one thing the legislation failed to do: make much progress in federal dairy policy. Instead, Congress deferred such decisions to this year. Even among the ag-policy wonkery, dairy policy remains a conundrum. A top aide to a congressional ag committee recently confided that "there are maybe five" congressmen who understand the issue. It shows: Last year, Congress cheerfully appropriated $200 million in "emergency disaster relief" for dairy farmers-in a year that saw record high income for dairymen.

Part of the 1996 bill's temporizing on dairy was a provision known as the Northeast Interstate Dairy Compact. The compact allows a local commission of farmers and state bureaucrats to set the price that processors must pay farmers for raw milk. The commission even has the authority to raise the price of milk entering the region from outside the compact-which essentially keeps milk from places like Wisconsin and Minnesota out of New England. This is the rough equivalent of allowing Amish buggy-makers in Pennsylvania to set the price of Detroit-made cars east of Pittsburgh.

The Northeast Compact was set to expire in April 1999, but Congress extended it until October. Congress is now considering not only whether to make the compact permanent, but whether to extend it to other states-establishing, for example, a Southern Dairy Compact. If that happens, Wisconsin farmers could lose about $64 million in annual milk sales, according to a study by the University of Missouri.

After watching what the six New England states got away with, twelve other state legislatures passed bills either to join the Northeast Compact or cast their fates with a southern one. Ten more states are now considering such a move. Compacts require both federal authorization and state legislative action, and must be set up among contiguous states. So what started in New England may reach to Oklahoma, as Republican principles have held up no better in state capitals than on Capitol Hill: Six of the nine governors to sign versions of the compact statute are Republicans: in New York, New Jersey, Virginia, Mississippi, Alabama, and Oklahoma. The only governor to veto a bill was Democrat Zell Miller, then the governor of Georgia. He called it "counterproductive" and akin to a "price-fixing scheme."

In Congress, one of the most ardent proponents of compacts is Rep. Roy Blunt, a Republican from Missouri. He's the GOP's chief deputy whip and George W. Bush's point man on the Hill. Bush is one governor who hasn't yet made his position on compacts known. In mid June, a compact bill passed both houses of the Texas legislature, but died a peculiar procedural death before reaching Bush's desk. The governor may have dodged a bullet: Compacts may be popular among dairymen in New Hampshire, the first primary state, but they'd really put the screws to farmers in Iowa, the first caucus state. That, in a nutshell, is the politics of dairy compacts: They are a matter of raw regional power, philosophical principles be damned.

For example, Republican representative Asa Hutchinson of Arkansas (a prospective Southern Compact state) defends compacts as a "states' rights" issue. But Hutchison, a House manager in the Clinton trial, a former prosecutor, and something of a political intellectual, surely knows better. These regional "OPECs for milk," as they have been dubbed, are clearly a barrier to interstate commerce, thus unconstitutional under the commerce clause. William Van Alstyne, a constitutional-law expert at Duke Law School, has cited a 1994 Supreme Court comment that "a surprisingly large number of Commerce Clause cases arose out of attempts to protect local dairy farmers."

While the Constitution does allow states to enter into compacts if authorized to do so by Congress, these arrangements traditionally have been for infrastructure projects such as airports and bridges. Some in the early part of the 20th century were to settle boundary disputes. The GOP Congress is now the first in history to approve an interstate compact for the purpose of price-setting.

Moreover, for a congressional majority elected on a platform of accountability and responsibility, the compact legislation was passed in a most unaccountable and irresponsible way. In the only vote either body of Congress ever took expressly on the Northeast Compact, the Senate defeated the measure. Nonetheless, it was revived in the House- Senate "conference committee" and added to the final statute largely by the maneuvering of two powerful Republicans: New York's Gerald Solomon (now retired) and Louisiana's Bob Livingston (then the chairman of the Appropriations Committee, later Speaker-for-a-second).