Milk-pricing arguments waged Bill that would put state in regional group debated at hearing

March 04, 1998|By Ted Shelsby | Ted Shelsby,SUN STAFF

The price that Baltimore's poor will pay for milk was at the heart of a lively state Senate hearing yesterday on a bill that would allow Maryland to become a member of the Northeast Interstate Dairy Compact.

Opponents of the legislation, which would allow the compact to set the farm price of Class 1 (drinking) milk in Maryland, argued that it would boost the price to those least able to afford it.

Supporters pointed out that Baltimore residents already pay considerably more for milk than consumers in other parts of the ** state.

Testifying in favor of the bill, Maryland's agriculture secretary, Henry Virts, told the Economic and Environmental Affairs committee that membership in the compact is needed to halt the sharp decline of the state's dairy farms.

He noted that 25 percent of the farms have disappeared since 1991.

This trend does not bode well for state consumers, Jonathan L. Healy, Massachusetts commissioner of agriculture, told the committee. If the state loses its dairy industry and milk has to be trucked in from 300 miles away, the cost will jump 30 cents to 40 cents a gallon, he said.

Healy admitted that New England retail prices jumped 20 cents a gallon last July when the compact first set the farm price, but he said that since then, prices have dropped 3 cents below the national average.

He said it was the retailers, not the farmers, who are making money off of milk, noting that the profit margin at the retail level is 40 cents a gallon, four times what farmers make.

"Low income families will be the hardest hit by this bill," said Dennis Zegar, president of the Mid-Atlantic Food Dealers Association, adding that they would be forced to pay more of their food dollars for milk.

Alan M. Rifkin, a lobbyist for retailers and milk processors, said the loss of dairy farms in Maryland has been caused by development pressures on land and by production. He said farmers are producing as much milk today as the industry was supplying in 1974.

Under the proposed legislation, Maryland's farm price of milk would be in the hands of a panel composed of two consumers, two farmers and a representative of a milk processor.

The panel would only set the price of Class 1 milk and not milk used in other products such as ice cream or cheese.

The price farmers are paid for their milk varies greatly throughout the year.

It is usually lower in the summer, a period of peak production, rising in winter months.

Dan Smith, executive director of the Northeast Dairy Compact Commission, which administers the compact, testified that it is designed to take out the price fluctuation and stabilize prices at the farm and retail level.

The compact set the price at $16.94 a hundredweight ($1.46 a gallon) last July.

The price has stayed at that rate while farm prices for milk in Maryland and other states have moved above the compact price.

Phyllis Kilby, a dairy farmer from Cecil County, told the committee that farmers "are not looking for a handout," but want some say in the future of their industry.

In its fiscal note on the proposed legislation, the Department of Legislative Services said it is unclear how the compact might affect milk prices. It said it would depend upon the extent to which retailers absorb the higher farm costs by reducing their profit margins.

Pub Date: 3/04/98

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