For Immediate Release Contact: David Ferch

Aug. 20, 1999 (802) 229-1941

The Northeast Dairy Compact Commission released $5.7 million this week for payment to more than 4,000 farmers in the six New England states and New York. The average farmer in New England will receive approximately $1,425 from the funds.

While grocery stores and supermarkets decide what to charge consumers for a gallon of milk, the amount of money the dairy farmer gets is largely determined by the federal government. To determine the farm price of milk, the government uses a complex formula including the price of cheese, distance of major markets and how much milk is destined to be drunk. The Northeast Dairy Compact piggy backs on the federal pricing system by making sure farmers are not paid less than $16.94 per hundred pounds of milk, or $1.46 per gallon of drinking milk.

In July, the federal price was $1.01 below this figure of $16.94. And 44 percent of all raw milk was bottled for drinking purposes. So, as a result of the Northeast Dairy Compact each dairy farmer received an additional 9 cents per gallon for 44 percent of the milk he or she sold to processors in the Compact region.

The drought and heat wave of 1999 has had a dramatic and negative impact on dairy farmers throughout the Northeast. Cows do not produce as much milk in hot, dry weather and farmers are struggling to store fodder for the coming winter. Because the pricing mechanism for the Northeast Dairy Compact is based on statistics created in prior months, the impact of the drought on the Compact is indirect. But, it is evident from these statistics that the Compact does moderate the dramatic price swings that make it difficult for farmers to plan for the future.

The Dairy Compact between the six New England states is scheduled to expire October 1, 1999. Legislation to extend federal authorization for the Compact and to expand its area was introduced in Congress on April 27, 1999. The states of New York, New Jersey, Pennsylvania, Maryland and Delaware this year passed legislation allowing them to join the six New England states in the Compact if it is reauthorized by Congress. To date, 25 states have passed legislation that could result in at least two dairy compacts based on the New England model, if Congress grants approval.

Since implementation of the Compact Over-order Price Regulation in July 1997, more than $68 million has been returned to the region’s farmers, including: $28.6 million to Vermont farms, $340,000 to Rhode Island farms, $19.3 million to New York farms, $3.5 million to New Hampshire farms, $4.3 million to Massachusetts farms, $6.1 million to Maine farms and, $5.7 million to farms in Connecticut.