Milk debate a hot issue

MAT-SU -- Local dairy producers and activists continue to battle against a potential increase in the cost of milk production, while others insist there's no cause for such concern.

The fee, which amounts to 15 cents per hundredweight -- a unit of measurement equal to a hundred pounds -- of produced milk, has been in place in the lower 48 states since 1983, when the Dairy and Tobacco Adjustment Act instituted a national advertising and promotional campaign using funds garnered from its collection.

Alaska, Hawaii and Puerto Rico were originally exempted from the fee due to the fact that they don't have a surplus of milk, but the possibility of extending the increase to these three areas in the near future has raised a considerable amount of ire. The new fees would charge Alaskan dairy farmers the extra 15 cents per hundredweight, which would then go to fund Alaskan dairy advertising and promotional programs.

Christopher Galen, vice-president of communications for the National Milk Producers Federation, said the price hike wasn't as onerous as many make it out to be.

"The assessment amounts to about a penny a gallon," he said. "The amount of money we're talking about, proportionally, is very small."

The milk tax, as it's commonly called, might more properly be called a milk assessment, Galen said, since its collection isn't administered by the Internal Revenue Service and doesn't follow any of the typical routes taken by conventional tax dollars. The U.S. Department of Agriculture handles the collection of the funds.

Cash from the assessment goes to help fund Dairy Management Inc., a group that administers both local dairy-related events and promotions around the nation. David Pelzer, vice-president of industry relations for DMI, said the corporation runs a variety of programs, but they're all centered around increasing demand for dairy products.

"We think it's a very good thing for dairy producers," Pelzer said of the nationwide campaign funded by the 15-cent assessment.

DMI's programs include, among other things, a campaign to put milk on the menu at fast-food restaurants, an initiative to get schoolchildren to drink more milk, and the 3-a-Day-of-Dairy advertising campaign.

Galen said the increased price would be handled by the farmers who produce the milk, not the consumers who buy it, and that he therefore didn't anticipate any appreciable increase in milk prices.

"It's not a price that the farmer can pass along," he said. "Even if it were, this rhetoric about a 20- or 30-cents-per-gallon increase is just poppycock."

Pelzer agreed with this sentiment.

"I don't see any evidence of [the assessment] driving up milk prices. It's a wise investment for dairy farmers who really need to grow their markets," he said.

However, not all Alaskan dairy farmers are sold on the idea. Rachel Hecker, a Point MacKenzie dairy farmer and director of the Alaska Dairy Coalition, adamantly opposes the increase.

"I hear a lot of people saying 'Oh, it's only 15 cents per hundredweight, that's not so much,'" she said. "My response to that is: Welcome to reality." Hecker said she believes administrative and bureaucratic costs surrounding the tax could make it far more damaging than the 15-cent figure might lead some to believe.

Hecker said she views the new assessment as another proverbial straw heaped on the collective backs of Alaskan dairy farmers.

"We're being nickeled and dimed to death," she said. "We're treated horribly up here."

Galen said the milk Alaska imports from Outside has already been assessed the 15-cents-per-hundredweight increase, and that the new legislation would therefore apply only to milk the state produces itself.

The 2002 Farm Security and Rural Investment Act, Galen said, contains a stipulation that dairy products shipped into the United States from other countries be assessed the increase.

The inclusion of Alaska, Hawaii, and Puerto Rico in the plan, Galen said, is a gesture of equality, to ensure that the country doesn't come under fire from those exporters for granting assessment amnesty to some of its territories but not incoming dairy products.

"What they're going to say is: 'You're exempting some of your states, but not us?'" he said.

The bill didn't include a stipulation involving Alaska, Hawaii and Puerto Rico, but it might go back to Congress for amendment to include these areas. If this amendment passes muster, the three territories will be subject to the same assessment already common to the other 48 states. However, since the U.S. Department of Agriculture hasn't started collecting an assessment on imported dairy products yet, the timeline for this amendment is not yet static.

"The real issue here isn't Alaska or Hawaii, but imports," Galen said. "The issue with Alaska and Hawaii is really peripheral."

Galen said most agricultural commodities already have assessments applied to them. Beef, for example, takes a $1-per-head assessment to handle the "Beef -- It's What's For Dinner" ads and other promotional programs. In most of those cases, he said, imports are also assessed the fee.

Galen also said that many states in the lower 48 don't have a dairy surplus, but they're required to handle the assessment anyway.

Alaska might be a special case, however.

Hecker said that all things considered, she felt that she and other Alaska dairy farmers weren't getting a fair shake from governing entities outside the state.

"Alaska doesn't need to be the United States' redheaded stepchild," she said. "I'm not paying for someone else's Ferrari."

Hecker's organization, the ADC, has adopted as its mission the immediate halting of the dairy price increase.

ADC Director of Government Relations Jlona Richey said the coalition was prepared to pursue the assessment's defeat to its conclusion.

"Our outstanding AK State Representatives and Senators helped take our fight to the highest levels. The ADC [and others] is watching closely to make sure that the milk tax is on its deathbed and isn't given life support by the Outside. No one is going to tax our children's milk and get away with it," Richey said in a press release.

The Blue Moon Dairy, Hecker's farm business, recently hosted a press meeting to protest the assessment, inviting a large group of children and state Rep. Bob Lynn, R-Anchorage. In addition, more than 1,000 signatures were gathered by the ADC in its anti-milk-tax petition drive and delivered to the Alaska congressional delegation.

However, farmers and concerned citizens aren't the only ones who have come out against the assessment.

U.S. Sen. Lisa Murkowski, among other Alaska legislators, has voiced strong opposition to the proposed increase.

"Imposition of the milk tax on Alaskan, Hawaiian, and Puerto Rico milk producers would harm their ability to produce milk at competitive prices and would result in price hikes for consumers of milk products including children, low-income families, Alaska Natives, bakeries, and other small businesses," said Murkowski in a June 22 letter to U.S. Trade Representative Robert Zoellick and U.S. Secretary of Agriculture Ann Veneman. "It could also potentially end dairy production in Alaska, Hawaii and Puerto Rico."

Murkowski's letter was signed by U.S. Sen. Ted Stevens, U.S. Rep. Don Young and representatives from Hawaii and Puerto Rico. Some other Alaska politicians who have spoken out against the increase include Reps. Ethan Berkowitz, D-Anchorage; Carl Gatto, R-Palmer; Bill Stoltze, R-Chugiak/Butte, and Vic Kohring, R-Wasilla, as well as state Sen. Lyda Green, R-Mat-Su.

Hecker said Sens. Murkowski and Stevens deserved special praise for their efforts against the tax.

"It makes absolutely no sense to burden Alaska with a new tax to promote outside milk when our struggling dairy farmers can't produce enough milk to keep up with our state's demand. Lisa and Ted made sure that this terrible tax idea is on its death bed," she said in a press release.

Galen said that despite accusations that the increase would be used to fuel Outside enterprises, the money garnered from the assessment would probably be used to promote dairy in Alaska.

"It would certainly make sense for us to send that money we'll get from Alaska back locally," he said.

Alaska produced roughly 17.6 million pounds of milk in 2002, making it one of the smallest dairy states in the union. California produced approximately 2.9 billion pounds in 2002, while Wisconsin produced approximately 1.8 billion, New Mexico produced approximately 534 million, and Florida, another state that has to import milk, produced 163 million.

The value of Alaska milk per hundredweight in 2002 was $20.40.

Contact Daniel Spoth at daniel.spoth@frontiersman.com.