Meeting In Rhode Island

            The May meeting was held in Newport, Rhode Island. The speakers scheduled for the event were intended by the state delegation to provide a comprehensive report on the success of the Compact measured against Rhode Island’s legislative purposes for participating in the Compact.  Issues covered focused on the consumer impact and the Compact’s effectiveness in promoting farm viability, for the dual purposes of the maintenance of milk supply and the preservation of the state’s working open space.

Congressman Patrick Kennedy made a surprise appearance and spoke in strong terms of his belief that the Compact had proven successful in helping to maintain open
space in Rhode Island (Attachment 11-3d).  Jan H. Reitsma, Rhode Island’s director of the Department of Environmental Management (Attachment 15) provided the keynote statement on this issue, describing in detail Rhode Island’s integrated programs to maintain open space.  He explained and stressed the importance of regulatory pricing under the Compact as a critical linkage in this overall program.

“Loss of open space and in particular farmland is a major concern for us,” said Director Reitsma in his presentation “between 1964 and 1997, Rhode Island lost almost half of its farmland… the Dairy Compact is a critical element of our agricultural policy as well as our environmental protection strategy. It is imperative that we secure reauthorization.” (Attachment 15-3l)

 Compact Commissioner Jametta Alston from the Office of Consumer Protection in the Rhode Island Attorney General’s office (Attachment 14), and Commission Vice Chair Peter Petrone of the Rhode Island WIC program (Attachment 16) reported as the representatives of those monitoring state government agencies designated by Rhode Island’s Compact enabling legislation.  Ms. Alston reported that her office was well  satisfied with the consumer safeguards that had been built into the Compact.

In a most critical report, Mr. Petrone reported that the price regulation had satisfied its intended purpose of "holding harmless” the WIC program. He indicated that the exemption provision “has resulted in the ability of the program to serve the maximum number of participants with limited funding resources.” (Attachment 16-3o)  While the Commission had been informally monitoring the impact on the WIC program given the presence of two state WIC program directors on the Commission, this was the first formal assessment that had been conducted.

Rhode Island dairy farmer Louis Escobar (Attachment 17) presented a succinct summation of the price regulation’s impact on his farm operation.  Indicating that he believed he was representing the views of the farmers in Rhode Island, many of whom were in attendance, Mr. Escobar said

“Probably if it wasn’t for the Compact, I’d stand before you an ex-dairy farmer,” he said as one of the states 23 remaining dairy farmers. “If we are going to be able to continue, the few of us that are left, we need the Compact.” (Attachment 17-3c)

Finally, Dr. Ronald Cotterill, director of the Food Marketing Policy Center for the University of Connecticut gave an extended presentation on the Compact’s impact on retail consumer milk prices. (Attachment 20).   Dr. Cotterill described his conclusion that processors and retailers were exercising market power in the determination of retail prices, and that the Compact had only a marginal direct impact on the ultimate retail price.

Retail prices for leading brands of milk sold at supermarkets in New England increased from an average $2.49 per gallon just prior to the Compact to an average $2.78 per gallon in the three years after the Compact, according to the study. It demonstrates that increased profits by dairy processors and supermarkets account for 11 cents of the 29-cent retail increase during the three-year period. In comparison the Compact increase was 4.5 cents, which amounts to only a 1.8 percent increase over pre-Compact levels. (Attachment 20-3t)