For Immediate Release: May 23, 2000

Contact David Ferch at (802) 229-1941




MONTPELIER, VT – The farmers in the Northeast Dairy Compact region voted by a nine-to-one margin to adopt a supply management program that will provide support for farmers who increase milk production by no more than 1 percent.

            The program, which was approved by 91.8 percent of responding producers, will take a certain amount of money out of each monthly pool for a full year, creating an escrow fund of about $4.5 million. At the end of the year those farmers who increased production by 1 percent or less will share that escrow fund. Of 1,648 eligible ballots returned to the Commission, 1,513 were cast in favor of the proposal.

            This plan, which was crafted by the Northeast Dairy Compact Commission after two years of work, five public hearings, six public meetings and reams of testimony, is in response to a condition imposed by Congress. In the 1996 legislation creating the Compact, Congress said the Commission “shall take such action as necessary and feasible to ensure that the over-order price does not create an incentive for producers to generate additional supplies of milk.”

            This supply management program does not change the basic premise of the Compact: that farmers, consumers, processors and all residents of New England will benefit when farmers are guaranteed a reasonable minimum price for their milk. Qualified producers in the Northeast Dairy Compact will continue to receive Compact payments for every gallon of milk produced. The escrow fund created by the supply management program will bring an extra benefit to those farmers who do not increase production by more than 1 percent.

            Specifically, 7.5¢ for every hundred pounds of milk would be escrowed in each month that the Compact producer price exceeds 32.5¢ from July 1 through June 30. At the end of those 12 months, those farmers whose production increased by 1 percent or less would share in the escrow fund. The fund would be dispersed in two halves. The first half would be shared equally amongst qualified producers. The second half would be distributed to those same producers on the basis of total milk production in the previous year. There will be a cap of $12,000 on the per hundredweight portion of the refund.

            The final rule will be published in the federal register. After a 30-day waiting period, the supply management program will go into effect on July 1, 2000.

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