F. James Sensenbrenner, Jr., June 18, 2004

Many of you may remember the Northeast Interstate Dairy Compact that plagued Wisconsin dairy farmers from 1997 to 2001 by driving down prices paid for our milk. The Compact created regions in the country in which the cost of milk was fixed at a price higher than the federal minimum price. This effectively prohibited milk suppliers outside the compact regions, such as those in Wisconsin, from being able to sell their milk for a price below what was established in the regions. Consequently, Wisconsin dairy farmers lost money in this scheme.

As Chairman of the House Judiciary Committee, I promised to end the Compact, and I succeeded. But earlier this month, legislators from the Northeast part of the country, including surprisingly, Wisconsin’s own Congressman Dave Obey, introduced a bill that they hope will replace the now-defunct Northeast Interstate Dairy Compact (the Compact). This legislation, entitled the National Dairy Equity Act (NDEA), will subsidize dairy farmers based on what region of the country they live in through an assessment placed on milk processors. Under this proposal, the current Milk Income Loss Contract (MILC) program would expire in September 2005.

The NDEA will establish regional boards with the authority to require processors to pay a higher price for Class I milk, which is sold for fluid use. Money collected from this "milk-tax" would be used to subsidize some farmers. The NDEA would rely on price triggers -- when the price of milk falls below the trigger price (which would be different in each region), farmers would receive payments under the program. This program would raise the cost of milk for consumers who are already burdened with high milk prices.

Sound familiar? Although the NDEA doesn’t include the word compact in its title, the bill’s effect mimics regional dairy compacts. This legislation creates regional boards that establish regional prices to pay farmers money when the price of milk falls below a regionally established trigger price. Moreover, the money to farmers comes from assessments -- which is another word for taxes -- to milk processors.

To protect open trade within the United States, the US Constitution includes language that prevents states from colluding to create cartels with other states. Our Founders recognized that the best way for our economy to flourish was to tear down borders between states. The NDEA would resurrect those borders. This legislation breaks up our nation into regions that benefit their member states to the potential detriment of states in another region.

In Wisconsin, we produce a lot of milk and we do it efficiently, which is why our farmers do well when we have a level playing field across the country. The NDEA will hurt Wisconsin processors and consumers because they will both end up paying higher prices for milk. Just like the Northeast Interstate Dairy Compact, the National Dairy Equity Act needs to be stopped before the people of Wisconsin get milked out of their hard earned money.

Congressman James Sensenbrenner, a Republican, represents the Fifth Congressional District of Wisconsin. He serves as chairman of the House Committee on the Judiciary. The Fifth District of Wisconsin forms an arc surrounding Milwaukee to the North and West, and includes parts of Jefferson, Milwaukee and Waukesha counties, and all of Ozaukee and Washington counties.