Gil Gutknecht

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Chairman, I yield myself the balance of my time. Mr. Chairman, this amendment is just about basic fairness. If everyone has to play by the same rules and the rules are known upfront, business practices will change, and everyone will play by the rules. The problem with the system as it is today, we have one set of rules for the for-profits and another set of rules for co-ops. I do not know of any other game in America, baseball, football, pick the game, where some of the participants play by one set of rules and other participants play by a different set of rules. I think that is just unfair. I do not care who is right or who is wrong. What I am just simply saying is that this is wrong, and I have to say to my friend and colleague, the gentleman from Maine (Mr. Baldacci), I do not know how anyone can go back to their constituents and say last year the federal milk marketing order price that should have been received was $15.61 on average; but if milk was sold to a co-op, it was only $14.89. I do not know how that is explained. I cannot explain that. The same is true in Texas. I would say to the gentleman from Texas (Mr. Stenholm), last year the average Texas milk producer should have received $15.37; but because of a different set of rules, they received an average of only $14.72. That is a difference of 65 cents per hundred-weight. Now, that may not seem like much to those of us here in Washington, D.C.; but I will say if someone is out there milking 60 cows and getting up every day 365 days a year, 65 cents on average over an entire year is a lot of money, and that is the difference. It gets even worse. In some parts of the country, the difference is as much as $1.07 per hundred-weight of milk. Now, maybe people can go home and explain that. Maybe we can go home and say well, I know you are getting less for your milk than you should be under the milk marketing order system, but maybe one day you will get even, maybe one day you will get fair.

Mr. GUTKNECHT. Mr. Chairman, I yield an additional 2 minutes to the gentleman from Wisconsin (Mr. Green).

Mr. GUTKNECHT. Mr. Chairman, I yield 2 minutes to the gentleman from Wisconsin (Mr. Ryan).

Mr. GUTKNECHT. Mr. Chairman, I yield 2 minutes to the gentleman from Wisconsin (Mr. Green).

Mr. GUTKNECHT. Mr. Chairman, I yield 3 minutes to the gentleman from Minnesota (Mr. Minge).

Mr. GUTKNECHT. Mr. Chairman, I yield myself such time as I may consume. The amendment that I am offering, I think the short title we should use: The Truth in Milk Marketing Amendment, and I do not think most Members, and I know that speaking for myself, I was not aware until just a few months ago that in fact, even though we have a milk marketing order system, that many dairy farmers around the United States, and I have a chart here, and this is a chart provided by the USDA; this is not a chart that we made up, but it talks about the average 1998 Federal order in the mailbox prices by the Federal milk marketing order system, and what it shows is, for example, in places like the Southeast and the Southwest, even though the FMMO blended price was supposed to be one thing, the actual price, the average price, that dairy farmers in those regions was something less. Let me just share with my colleagues some of the numbers. For example, in the middle Atlantic States, the price was supposed to be an average of $15.17, but actually was only $14.90. In Carolina, it was supposed to be $16.14, but the price they got in the mailbox was $16.08. Go down into the Southeast, and we start to see the real differences. For example, in the Southeast the FMMO price was supposed to be $16.13, but actually the dairy farmers in that area got an average mailbox price of only $15.36. Now, Mr. Chairman, I think that that is evidence that there is something wrong with the system, and let me explain what is wrong with the system. In effect the co-ops are exempt from paying the minimum milk marketing order price. All I am saying with my amendment is that whether one is a for-profit or they are a co-op, they have to pay the minimum blend price, and I think this is a consummately fair amendment. In fact, I would say not only do most Members not know that this is happening, I suspect that most dairy farmers do not know. I think if those of my colleagues are from different regions, if they ask their dairy farmers are they getting what the milk market order price is, most of them would say, well, of course. But in truth in their mailbox they are not actually getting it. Reblending is not transparent. Producers do not know what happens to the money, how it is used, or what costs underlie the reblending amount. Mr. Chairman, this is an important amendment. If my colleagues really care about the dairy farmers in our areas, then they ought to at least vote for this amendment and say that we are going to have truth in milk marketing whether they sell their milk to a co-op or they sell their milk to a for-profit processor. Mr. Chairman, I reserve the balance of my time.

Mr. GUTKNECHT. Mr. Chairman, I thank the gentleman for yielding me this time. I want to see if I can put this into terms that more Members can understand. Last year, I was at the Houston County Fair, and I have done this at other fairs, but this was a specific example where I was meeting with some dairy farmers and we were talking about dairy prices and I asked some of them, well, how much was your milk check last month. If you ask the farmers themselves, many times they do not know. But if you ask the farm wives, they can tell you. They know how much that milk check is month to month. What this debate is about is are we going to allow some of those people to take some of the bumps out of the road. The reason I tell the story is last year and then again this year, we have seen prices go from $20 a hundred-weight down to about $12 a hundred-weight, and depending on the circumstances, either side of those two numbers. They are happy when the price is $20 a hundred- weight, but they are all hurting when the price is $12. We have seen this roller coaster ride. What we are talking about is a risk-management tool whereby the dairy farmers, and let us talk about those farm wives, the ones who get the checks, who pay the bills, they are the ones who really know what is happening with the business end of most dairy farms; let us let them have that option, whether they go to the co-ops or whether they go to a for-profit producer or processor. Let us let them have the option of contracting. So I rise in opposition to the Stenholm amendment; I rise in support of the Dooley language, because all we are saying is whether one sells their milk to a co-op or whether one sells their milk to a for-profit, they ought to have the option of taking some of those bumps out of the road. I say to my colleagues, the co-ops, in my opinion, have done a miserable job of advancing this basic notion. I think if people begin to understand it is available and if there is a competitive pressure out there, both the co-ops and the for-profits are going to move to help farmers utilize this risk-management tool.

Mr. GUTKNECHT. Mr. Chairman, I offer an amendment.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Chairman, I thank the chair of the Committee on Agriculture for yielding me the time. Mr. Chairman, earlier the gentleman from Pennsylvania (Mr. Sherwood) had a chart and he said, if this thing is defeated, these areas are going to be bleeding red. But if we think about it, what it really says is that for 62 years they have had an advantage and our farmers in the upper Midwest have been bleeding red. The gentleman from Alabama (Mr. Riley) said that in some areas it costs more to produce milk and so we have to have big differentials. But in some areas of the country it costs more to grow wheat. In some areas it costs more to grow corn. And if it costs too much, they do not produce corn in those areas. But in no other area does the Federal Government step in and artificially try to set the prices. Mr. Chairman, I want to thank the gentleman from Wisconsin (Mr. Ryan) because I think what he read just made my point. In fact, I rest my case. Can anyone in this room, can anyone in this body, can anyone in this country say that they honestly understand the way milk marketing orders are set? Can anyone honestly say that it makes any sense, either economic or policy or politically, can anyone honestly defend this price-fixing cartel? Shortly after the Soviet flag came down for the last time over the Kremlin, an editorial was written here in the United States and the headline was ``Markets are more powerful than armies.'' What a beautiful line. Let us take a small step away from this Soviet-style pricing scheme. Let us listen to common sense. Let us listen to our farmers, not to special interests. Let us defeat H.R. 1402.

Mr. GUTKNECHT. Mr. Chairman, I thank the Speaker for allowing us to have time to debate this on an equal footing. Mr. Chairman, today we are engaged in a great debate on a Federal policy that defies rational economic policy and just plain common sense just as Anton Scalia a couple of years ago described the Federal milk marketing order system as ``byzantine.'' I doubt if there are more than a handful of Members on the floor of this House, in fact, I think if we had a quiz, I suspect all would fail if we were asked to describe in detail exactly how the milk marketing order system works. But we do know that it defies any logical or economic sense. Currently, the gentleman from Wisconsin (Mr. Kind) and myself, as well as some other Members, have Russians who are visiting in our districts, and we are going to be hearing today about the milk marketing order system being almost a Soviet-style price scheme. But it is interesting that even in Russia today they are allowing markets to set the price of milk, and yet we are engaged in this debate today as to whether or not we will allow some modest reforms that Secretary Glickman came up with to go into effect. Mr. Chairman, we are going to hear some interesting things today. Among them, some people are claiming this is going to cost the milk industry $200 million. That is not what the USDA said. That is not what the consensus of economists who have looked at that have said. They say at maximum it is going to cost dairy farmers $3 million. That is the worst it is going to be. Let me read a quote from the USDA. If the modest reforms the Secretary wants to put in place October 1 were in effect this year, let me read this quote, ``Over all Federal orders, the average blend price would have averaged 15 to 20 cents per hundred weight higher if Federal Order reform had been in place over the last 12 months and nearly all farmers would have been better off.'' Mr. Chairman, we are not talking about making bold changes that are going to drive dairy farmers in some parts of the country out of business, we are talking about modest reforms we are going to allow to go into place. The current policy is indefensible. We should defeat H.R. 1402. We should allow the reforms to go into effect.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, for 62 years dairy farmers in the upper Midwest have been placed at a competitive disadvantage. For 62 years we have received less for our milk simply because we are closer to Eau Claire, Wisconsin. No other product in America is priced based on where it comes from and what it goes into, only milk. In response to this, a couple of years ago Congress authorized the Secretary of Agriculture to come up with modest reforms. Dairy farmers have spoken. They voted in a plebescite to endorse Secretary Glickman's modest proposal. Mr. Speaker, out in the Midwest we have an expression: A deal is a deal; and a bargain is a bargain. The farmers have spoken, but unfortunately we are going to have a great debate today to undo those modest reforms. Mr. Speaker and colleagues, please as we listen to this debate today, we should vote our consciences, not the special interests, defeat H.R. 1402.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, very soon the Congress will be engaged in a very vicious debate about milk. And that may surprise some people; but when we start talking about milk marketing order reforms, it is amazing how aggressive some Members can become. Mr. Speaker, in the last couple of days our colleague, the gentleman from Wisconsin (Mr. Green) and myself have sent to all of our other colleagues a copy of an editorial which appeared recently in the Kansas City Star. Mr. Speaker, I would like to read some excerpts of that editorial because as far as I am concerned they got the debate exactly right. I read and I quote, in 1996, Congress ordered the administration to simplify the pricing of milk. That is easy enough. Stop regulating it. But this is the farm sector and a free market in milk is somehow inconceivable. Instead, milk prices are calculated from rules and equations filling several volumes of the Code of Federal Regulations. The administration's proposed reform would reduce the number of regions for which the price of wholesale milk is regulated from 33 to 11. Fine, but it would also perpetuate the loopy Depression-era notion that the price of milk should in some respects be based in part on its distance from Eau Claire, Wisconsin. Under current policy, producers farther away from this supposed heart of the dairy region generally receive higher premiums or differentials. The administration called for slightly lower differentials for beverage milk in many regions, but in Congress even this minuscule step towards rationality is being swept aside. The Committee on Agriculture has substituted a measure that essentially maintains a status quo. Similar moves are afoot in the Senate. Worse, some dairy supporters are working to reauthorize and expand the Northeast Interstate Dairy Compact, a regional milk cartel, and allow similar grouping for southern States. Missouri's legislature, by the way, has already voted to join the Southern Compact, even though it would result in higher prices for consumers. The Consumer Federation of America reports that the Northeast Dairy Compact raised retail milk prices by an average of 15 cents a gallon over 2 years. Dairy producers concerned about the long view should be worried. Critics point out that the higher milk differentials endorsed by the House Committee on Agriculture may well lead to lower revenue for many producers. This is because the higher prices will encourage more production, driving down the base milk price and negating the higher differential. The worst idea in this developing stew is the prospect for dairy- compact proliferation. A compact works like an internal tariff, because the cartel prohibits sales above an agreed-upon floor price. Producers within the region are protected from would-be outside competitors. Opponents point out that more regional compacts, and the higher prices they support, will breed excessive production, creating dairy surpluses that will be dumped into markets of other regions. This will prompt other States to demand similar protection, promoting the spread of dairy compacts. Ultimately, as in the 1980s, political pressure will build to liquidate the dairy surplus in a huge multibillion dollar buyout of cheese, milk powder, and even entire herds. Congress should permit the Northeast Compact to sunset or expire, which will occur if the lawmakers simply do nothing. In fact, doing nothing to the administration's proposal seems to be the best choice in this case, or more properly the least bad. Perhaps some day Washington will debate real price simplification as in ditching dairy socialism and letting prices fluctuate according to the law of supply and demand, closed quote. Mr. Speaker, the Kansas City Star is right. We should allow Secretary Glickman's modest reforms to go forward. We should sunset the Dairy Compact. Mr. Speaker, markets are more powerful than armies. They allow the market to set the price of milk in Moscow. Maybe we should try it right here in Washington, D.C.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, back in January when this Congress convened, I told my constituents that I thought we ought to pursue what I called the B.E.S.T. agenda. B-E-S-T. B for balancing the budget; E for educational reforms that focus on giving local school districts and parents more flexibility in dealing with education issues; S for saving Social Security, something that is important to all of us but particularly to those of us who are baby boomers who were born after World War II; and T for tax relief and reform. Mr. Speaker, I am delighted that we are pursuing this agenda and we are making tremendous progress. Our budget resolution calls for not only a balanced budget this year, but for the first time actually securing every penny of Social Security taxes only for Social Security. Our educational reform, Ed-Flex, has already passed and is on its way to the States. Now we focus on tax relief. Mr. Speaker, let me suggest that the gentleman from Texas (Mr. Archer) has put down his marker. Mr. Roth has put down his marker. The President is coming up with his own tax plan. But I hope at the end of the day there will be real tax relief for working families, and I hope we would focus first and foremost on eliminating the marriage penalty tax.

Mr. GUTKNECHT

Mr. GUTKNECHT. If the gentleman will yield, I think the difference here is that we are not going to be coming back every year for additional maintenance costs.

Mr. GUTKNECHT. The point here is that we have recognized this is the national eagles center. The city has contributed already almost $1 million, the State of Minnesota has contributed almost $1 million. They intend to raise in addition to that perhaps as much as $2 million in private resources. We are asking for a very modest investment, because it is important, it is our national symbol, it is the national eagles center. So we are asking for a very modest amount to be transferred out of a department budget that was increased by over $2.5 million. Frankly, Mr. Chairman, I really do not want to have to come back for maintenance expenses every year. This would be just one way that the Federal Government could pick up a small portion of the overall cost.

Mr. GUTKNECHT. With all due respect, I would hope that we can have a vote on this. We would like to have the gentleman's support. If in the end assuming that we may not prevail in this vote, it is something that is important, it is not just important to the people in Wabasha, Minnesota, it is really important to all Americans. As I say, it is one of the few places in the lower 48 United States where you can actually see eagles in the wild and I think it is going to be a tremendous resource not only for the upper Midwest but for all Americans.

Mr. GUTKNECHT. Yes, I have talked to Fish and Wildlife. They very much would like to be a part of this. They did not make it a priority item on their budget list this year, but they asked me if perhaps I could get it included individually in this particular manner.

Mr. GUTKNECHT. Mr. Chairman, I offer an amendment.

Mr. GUTKNECHT. Mr. Chairman, recently the President announced from the White House that the American bald eagle, a symbol of our Nation and the freedom we cherish, is no longer on our country's endangered species list. We can be proud of this accomplishment and acknowledge the efforts and the vision of the individuals who have helped save this majestic raptor from extinction. Today, I come to the floor to ask this body's support for what I believe to be an exceptional opportunity to help one community's dream become a reality. But more importantly I believe this Congress can make a modest investment in providing an exceptional site where millions of Americans will be able to enjoy viewing the American bald eagle in its natural habitat. I am proud to report that the city of Wabasha, Minnesota, has made a real commitment to building a first-class facility where visitors can do just this. But first I want to say that I am fully aware of the very difficult task before the gentleman from Ohio (Mr. Regula), his subcommittee and staff in developing this bill that addresses the stewardship of our Nation's natural and national resources in a responsible and balanced way. I appreciate their hard work and many worthy funding projects they have been asked to consider. Despite the subcommittee's support for the eagle center last year, I regret that the budget constraints within the U.S. Fish and Wildlife precluded the agency from extending financial support for the construction of the center. Rather than asking the agency to draw on its limited operations budget, my amendment transfers $250,000 from the Energy Information Administration to the construction account within the U.S. Fish and Wildlife Service. With the EIA receiving an increase of $2.1 million over last year's budget for a total of $72.644 million, I would suggest that my proposed reduction would have a minimal impact on its operations. Indeed, the CBO has scored it to have a neutral budget impact. Again, this amendment requests a very modest contribution from the Federal Government for a project that will generate benefits that far exceed the costs. For the past 9 years, 70 volunteers, people who live in Wabasha, Minnesota, have shared their riverfront with thousands of visitors who come to see a bald eagle in the wild. These visitors leave with a tangible connection to the eagles and a newfound interest in preserving our wildlife heritage and vanishing wild places. But, Mr. Chairman, winters in Minnesota are very cold. An average visitor spends only about 10 minutes on the riverfront. An indoor eagle viewing and education facility would enhance the visitor experience. To get this incredible project moving forward, the city of Wabasha and the Minnesota legislature have already contributed over $1.9 million, about half of what the cost will be to build the national eagle center in Wabasha, Minnesota. Now the community is looking for a little support from Congress. I cannot think of a better way to celebrate the recovery of the once threatened American eagle. Two years ago, CBS News reporter Harry Smith joined the ranks of America's wildlife watchers. He became a birdwatcher when he visited rural southeastern Minnesota to shoot a story about Wabasha's bald eagle center. He said, ``It makes the heart quicken to see the splendid symbol of our Nation, hundreds of them, in their natural environment sitting in the cottonwoods and fishing, along the banks of the upper Mississippi River.'' CBS News officials said the network received more phone calls requesting copies of Smith's eloquent story about the bald eagle's success in Wabasha than any story he has ever done. Nowhere else in the lower 48 States can you and your family get a better view of our natural symbol. And there is nowhere else you can go to see so many bald eagles on any Sunday from November through March knowing that trained staff will be there to help you spot the birds and share information about them. And, Mr. Chairman, there is no admission charge. Recently, the Minnesota Audubon Council and the Upper Mississippi River Campaign agreed to team up with the city to support the development of the project. They, too, recognize the eagles center as a unique visitor and teaching facility. In fact, Audubon is planning to use the center to be a key stopping point for the Great Rivers Birding Train which will run from the headwaters of the Mississippi River to the city of St. Louis. Nationally and locally, investments in wildlife and wild places are an investment in this country's natural resource legacy and its economic future. Mr. Chairman, I ask the chairman and my colleagues for their support of this very important amendment.

Mr. GUTKNECHT

Mr. GUTKNECHT. Thirty-one. The goal was to reduce it to no more than 13.

Mr. GUTKNECHT. I would say it is more than just essentially. It is a trade barrier. In my opinion it violates both the letter and the spirit of the commerce clause of the Constitution. The gentleman is correct. One of the fundamental reasons that the 13 colonies came together and formed a Federal union was to keep the colonies from setting up artificial trade barriers and to allow free trade between the 13 colonies. But we do have a constitutional expert among us. As I said, the gentleman from Illinois has been one of the really true fighters in terms of opening up markets and free trade here in the United States.

Mr. GUTKNECHT. That is exactly correct, and at least I am delighted that the dairy farmers in the upper Midwest have Members like yourselves who are joining me and others to try and at least get the facts out on the table because John Adams, who served in this body, former President, a great patriot; one of my favorite quotations from John Adams is that facts are stubborn things. And I think in this case the facts are so overwhelming that so many things have changed since 1937 that a system that may have made some sense in 1937; just look at this map, and you can see how incredibly bizarre. In fact, a Supreme Court justice was asked to review this, and he referred to this system as, and I quote, Byzantine, and if ever there was a time to say it is time to scrap this system, come up with a new system that levels the playing field that is based on real market principles, if ever there was a time, that time is now and that place is here because here is an interesting fact about milk. They are now allowing markets to set the price of milk in Moscow. Would it not be wonderful if we tried at least a modified version of that here in the United States? And who knows? We might actually begin to increase per capita consumption of milk. And if I can just finally say this: If there is one really great tragedy about this system where we have regional conflicts, where the southeast dairy farmers compete and argue against the dairy farmers in Iowa, and the dairy farmers in Carolina are against the dairy farmers in the upper Midwest; any time you have farmers spending so much energy arguing with each other, then it means that they are not spending that energy trying to figure out how in the world can we sell more milk, how can we sell more cheese, how can we sell more ice cream not only here in the United States, but around the world. And the real tragedy is we are pitted against each other, we are arguing against each other, when at the end of the day the simple fact about agriculture in America today is this: We cannot eat all that we can grow. The only way that we can increase real farm income is become aggressive in world markets. But while we are spending all of our energy arguing with each other, we are losing tremendous market opportunities whether it be in Asia, China, Japan, Central America, South America, Europe, other parts of the world who really, if we can just show them what we can produce, I think we can get a bigger and bigger market share and increase the size of the pie rather than arguing about who gets the largest slice.

Mr. GUTKNECHT. Yes.

Mr. GUTKNECHT. Well, that is an argument that the consumer groups and now even some of the people against government waste and some of the other taxpayer groups have weighed in and begun to say particularly in the larger cities, that they are paying artificially higher prices for dairy products, that if we had a more market based reform along the lines of what Secretary Glickman has proposed that they would see lower prices, and this would benefit poorer people, and frankly, we believe, in the long run, would increase consumption.

Mr. GUTKNECHT. Well, I thank the gentleman, and I just, in summing up, one of the expressions that I think every farm State legislator, whoever represents a farm area, this expression they all understand, we all understand, and that is that a deal is a deal and a bargain is a bargain, and you know, out in farm country they sell a $100,000 combine on a handshake, they trade their grain on a phone call. We have very few written contracts because everybody understands the principle that a deal is a deal and a bargain is a bargain, and 2 years ago and then again last year we made a deal, we made a bargain, to allow the Secretary to go forward with market-oriented ag reforms, dairy reforms, that would move us to a fairer, simpler system. That was the deal, that was the bargain, that is what we shook hands on, that is what we expect, and as far as I am concerned, I do not care how many cosponsors they may have in the House, I am going to continue fighting, arguing, making the case, sharing the facts with the Members, with the American public because at the end of the day a deal is a deal, a bargain is a bargain. We ought to have market-based reform as far as dairy products, and as far as I am concerned, we will not stop until we get them. I thank my colleagues for joining me.