(2) Price Instability
    Abundant testimony in the record indicates that price instability,
and wide fluctuations in the price of milk, were significant sources of
financial stress for the dairy industry. These wide

[[Page 23035]]

variations in price made it difficult for farmers to make good business
decisions and to plan financially. Robert Wellington, Vice President of
Agri-Mark, testified that:

* * * data from the New England Market Administrator's office show*-
*-*the price volatility exhibited in the past 12 months is triple
that experienced in 1981 and much larger than most of the 1980's and
nearly all of the 1990's. This combination of lower prices with
unpredictable volatility has made business planning nearly
impossible and has put severe financial strain on most farms. \23\

    \23\ Wellington, 3/31/97 AC.
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    Robert Smith of the Farm Credit System testified with respect to
price instability that:

    The volatility in milk prices makes it very difficult for
farmers to effectively plan and make the type of investment
necessary to position themselves for the future. The Commission can
play a major role in helping to reduce this volatility through
establishing a higher minimum Class I price. This will help keep
farmers and land in business and maintain a stronger agriculture
industry in New England for future generations. It will enable dairy
farmers to make necessary investments to enhance efficiencies and
will benefit communities with enhanced economic activity. \24\

    \24\ Smith, 12/17/96 at 39.
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    Comments from farmers expressing frustration over the wide swings
in milk prices were abundant and adamant. Tom Magnant, a dairy farmer
from Franklin Vermont testified: ``We find it very difficult to make
ends meet with the milk prices that fluctuate between $11.00 and $15.00
a hundredweight.'' \25\
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    \25\ Magnant, 12/17/96 at 227.
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    Jeffrey Holmes, a farmer from Langdon, New Hampshire testified
that:

    I think one of the key things that's going to be gained from
this potential floor price and Mr. Smith alluded to that is the
stability of the price to the producer. We have no say in what we
get and that's been true for years and years, but in this day and
age of tight margins we really need to plan on a certain price.
We're making borrowing decisions on variations of ten, twenty and
thirty cents a hundred and the last two months we dropped 2 dollars
and I don't know what the figure is--$2.50 with a little over a
month warning that was coming and it's really a farce that we have
to make long range plans based on that type of marketplace. \26\

    \26\ Holmes 12/17/96 at 92-93.
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    Jim Jenks, a farmer from Danville, Vermont, testified:

    I regret that I'm not a more prudent businessman but one thing I
know is if we're going to make a good decision with respect to
putting my family's equity on the line, we need to know something
about the stability of our markets and our future. So with regard to
the Compact Commission and the price that they could set, one thing
that we're really looking for is stability. We need price. And
there's a lot of other factors. But stability and a price that goes
with it is really critical.\27\

    \27\ Jenks, 12/17/96 HT at 153.
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    Ralph McNall, a dairy farmer and a Director of the Vermont St.
Albans Cooperative Creamery testified that:

    Price stability is the greatest potential benefit of the
Compact. Within our own business costs have increased dramatically
in the last five years. The improvements or expansions have been
difficult to justify or prepare for with the fluctuations of the
price paid for milk. I fully support the Compact and its potential
to stabilize the milk price to allow my business to plan its
future.\28\

    \28\ McNall, 12/17/96 HT at 221.
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    Charles Telly, a dairy farmer from Dunstable Mass testifying on
behalf of the National Grange: ``I am increasingly concerned about the
fluctuating prices * * * It is difficult for me to plan out--to
financially plan out my future three, five or ten years in advance
because of the uncertainty I face each month with the ever changing
milk price''.\29\

    \29\ Telly, 12/19/96 HT at 123.
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    These comments are persuasive, and they demonstrate the need for
price stability in the region in order to avoid the harmful effects of
price volatility.