Ohio milk producers not convinced compacts work

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KENT, Ohio – The idea of including Ohio in any dairy compact – Midwestern, New England, or Southern – has never caught on with northeastern Ohio dairy farmers.

And dairy producers who turned up at an informational meeting Oct. 11 in Kent came with lots of questions, quite a few opinions, and a big dose of an “we ought to take a good look at this, but I’m not sure it will work” attitude.

The meeting was arranged by the Ohio Farm Bureau after several dairy farmers had expressed interest in the idea of compacts.

Producers from Ashtabula, Trumbull, Columbiana, Mahoning, Portage, and Stark counties attended.

Ohio issue. Constance Jackson, vice president of ag ecology for the Ohio Farm Bureau and an ag economist, came from Columbus to talk with producers. And she had a couple of major pieces of information to put on the table.

Jackson discussed results of a report released Sept. 14 by the federal General Accounting Office on the economic impacts of the Northeast Interstate Dairy Compact and on proposed expanded dairy compacts.

The second was a report on the fact-finding visit the Ohio Farm Bureau had made to the office of the Northeast Dairy Compact in Connecticut.

While the compact issue got little reaction and no debate when placed before the state delegate assembly last year, the policy has been forwarded to the state again this year by five county Farm Bureaus.

Milk supply data. The six-state area included in the Northeast compact, Jackson said, produces 3 percent of the nation’s milk supply. If that compact were expanded to include the five mid-Atlantic states of New York, Pennsylvania, New Jersey, Maryland, and Delaware, it would then produce 18 percent of the supply.

If a Southern compact is formed to add another 11 states, the percentage would increase to 27 percent.

And proposals are floating among compact supporters for compacts in the West and in the Pacific Northwest, she said.

The effect of that expansion on pressures for overproduction and on the level of premiums available to producers in compact states cannot be determined, she said.

But the GAO estimated that the compact’s effect on dairy farms in noncompact states would be a loss in revenue. For the average Upper Midwest dairy farm, the report estimated a decline of 4.7 percent in gross revenues.

Northeast findings. In the New England states during the six-year life of the compact, the rate of decline of farms and the increase in the size of herds was unchanged, the report said. There was an increase in the price of fluid milk in the New England market, but it was unclear whether that was due to the compact premium.

Milk production had increased only slightly. The compact did not result in any net increase in cost to the federal government nor to associated food programs.

In the trip to New England, the Farm Bureau group discovered from its conversation with compact executive director Dan Smith that the purpose of the compact was not to preserve small farms, but to meet consumer needs for locally processed milk. If faced with overproduction, the only solution compact leaders see is production quotas.

Overproduction, and how to control it, was their biggest concern, Jackson said.

“We got the idea,” she said, “that they were not really interested in having Ohio join them. They seemed to want our political support, but were not interested in having our production.”

Short-term remedy. Charles Lausin, a Geauga County producer who went to Connecticut, said anything that might improve the income of dairy farmers needs to be looked at, but that he thinks dairy compacts are a short-term remedy. If dairy compacts were put into practice, he said, the federal market order system would probably have to be repealed.

The effect of compacts and of overproduction in general on Class III milk remains a major concern, he said.

“It’s cheese that drives the price of milk,” Lausin said.

Probably not work. Portage County producer Ken Rufener went to the Kent meeting just to get information, but came away convinced that compacts will probably not work in Ohio, he said. The fact that a compact doesn’t pay anything back over $16, he said, means that it just wouldn’t work.

Rufener said there is more to be gained in reforming the federal order system to eliminate the superpool that Ohio producers are now contending with as a result of pool riding.

“We’re probably losing more from the superpool than we would gain from any compact,” Rufener said.

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