Bill that would create state commission to set milk prices is withdrawn

March 17, 1994|By Amy L. Miller | Amy L. Miller,Sun Staff Writer

A bill before the House of Delegates Environmental Matters Committee to create a Maryland milk commission was withdrawn by its sponsors yesterday and recommended for summer study.

The withdrawal grew from a hallway compromise between milk cooperatives, who supported the bill, and processors, primarily large supermarket chains such as Giant Food and Safeway, who felt they hadn't had enough input on the bill while dairy farmers waited in the committee room to testify.

State officials who were planning to support the bill suddenly announced yesterday that they would be neutral on the legislation.

Carroll Del. Donald B. Elliott, R-4B, a co-sponsor of the bill, said he felt the state officials' quick reversal on supporting it must have been caused by pressure from processors on Gov. William Donald Schaefer. The administration had expressed support for the commission until about 11 a.m. yesterday, two hours before the committee hearing.

Frederick County Del. James E. McClellan, who sponsored the bill, was unavailable for comment.

Welford McLellan of the governor's press office confirmed that Mr. Schaefer did not support a milk price-setting commission.

"I'm obviously disappointed, but I'd rather pull [the bill] than lose it," said Myron Wilhide, a Detour dairy farmer who chaired a task force that was organized in the spring of 1991 to study Maryland FTC milk production.

The bill, drafted by task force members, proposed a commission composed of two milk producers, one distributor who processes milk and three consumers to set minimum prices that would be paid to farmers for raw milk.

The commission would have set a minimum price that processors -- dairies that handle and package milk for retail sale -- would have paid dairy cooperatives for the milk.

The bill would not have regulated consumer prices, and supporters stressed that a milk commission would not increase consumer prices.

"Maybe we'll come out [of summer study] with a stronger unified position," said Mr. Wilhide, who also is the chairman of the Maryland Farm Bureau's dairy committee.

Maryland dairy farmers said a commission is necessary because raw milk from Pennsylvania and Virginia is entering the state at prices lower than the costs encountered by local farmers to produce it.

Both those states have milk commissions that regulate prices for a specific quantity of milk. When producers exceed that quantity, they sell it cheaply in Maryland and undercut dairy farm prices here. That causes Maryland farmers to leave the dairy industry, which increases the state's milk deficit.

Maryland farmers currently produce only 52 percent of the milk consumed in the state.

Under the bill, Pennsylvania and Virginia's milk commissions would have worked with Maryland to provide equity in pricing.

"Farmers are losing money," Mr. Wilhide said. "They're giving up premiums [money for raw milk] and they [premiums] will be hard to get back."

Processors, who turned out in force yesterday to oppose the bill, told dairy cooperative managers that they were against paying a minimum price to the co-ops.

"We would have taken that [minimum price] out," said Boyd Cook, manager of Dairymen Inc., a cooperative based in Sykesville. "The reason that it went in was that state officials who met with Pennsylvania and Virginia's milk commissions were sold on the idea to protect processors and guarantee them a small margin" of profit.

None of the processors was available for comment after the bill was withdrawn.

Mr. Cook said he knows some processors, whom he declined to name, who are undercutting their own price margins to obtain contracts.

"I just want to keep them financially sound so that I can pay premiums to my farmers," he said. "I just don't want them to go bankrupt like two [Maryland] dairies have in the past 15 years."

Mr. Cook said processors also told him they had not had any input into the proposed bill, but he maintained that the processors had indirect input.

"The cooperatives each met individually with their distributors about the bill and its intent," Mr. Cook said. He noted that most processors would not attend a group meeting on the bill for fear of being suspected of violating antitrust laws on milk pricing.

Despite the opposition to the bill, Mr. Elliott said he feels the proposal will survive summer study, which usually is a death knell for most bills. "This is not a bill about an industry," he said. "This is about economic development for the state. We talk about all the incentives we have to give industries so they will come into the state. This is an industry that we want to keep here."

Dairy farming is the third largest agricultural industry in Maryland, behind poultry and horticulture, Mr. Elliott said. Farming and related agricultural businesses are the largest, he said.

Mr. Elliott said the numbers of dairy farms and cows milked in Maryland have decreased faster than the decreases nationwide. Maryland lost 30 percent of its farms and 15 percent of its cows from 1980 to 1990. The national decrease was 25 percent for dairy farms and 6 percent for cows, he said.

"If this trend continues, in the next 20 years 60 percent of our dairy farms will be gone," Mr. Elliott said.

Both Mr. Elliott and Mr. Cook said that, contrary to popular belief, having a milk commission would not result in increased consumer prices.

Surveys of milk prices this month by Maryland Agricultural Statistical Services in the Department of Agriculture and by the Pennsylvania Milk Marketing Board showed that a commission would not adversely affect consumers, Mr. Cook said.

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