Opposition Mounts to Vermont's Proposed New "Milk Tax"

N. SYRACUSE, NY (09/05/2008)(readMedia)-- The Vermont Milk Commission is holding a hearing next Tuesday, September 9, 2008, to consider a new regulation that would require dairy companies that bottle milk to pay a minimum price on all milk sold at retail in the state. If adopted, the proposed regulation is estimated by the Commission to increase the cost of milk about $0.38 per gallon but yet return only $0.02 per gallon to Vermont dairy farmers.

Several dairy organizations and companies, including the Vermont Grocers' Association, HP Hood, Dean Foods the International Dairy Foods Association and New York State Dairy Foods, Inc., plan to testify.

According to dairy economists, dairy processors cannot absorb the price increase, which represents about 10 percent of the cost of raw materials, and remain in business. In fact, Carl Herbein, a dairy cost accounting expert with 25 years of industry experience, is expected to testify that the proposed regulation could have several serious yet unintended consequences for Vermont dairy consumers.

"This is not the time to increase costs to retailers and consumers for a basic food staple like milk." said Jim Harrison of the Vermont Grocers' Association. "We are all struggling with the high cost of energy and food today. The last thing we need is this Commission adding new premiums, taxes or fees onto Vermonters right now."

Opponents will testify that the Vermont Milk Commission ignored the impact on consumers and dairy businesses when they proposed this new tax

"Our members cannot afford this tax. Costs to process, manufacture and distribute dairy products have increased to a breaking point in the past 18 months," said Bruce W. Krupke, executive vice president of New York State Dairy Foods, Inc., a trade association for dairy product processors, manufacturers and distributors in the Northeast states. "Do Vermonters know that much of this milk tax money could be transferred to dairy farmers outside Vermont? On Tuesday, we will make it clear that the proposed rule does not make any sense and will only hurt the dairy industry in Vermont."

Opponents also say that the Commission has adopted procedural rules that discourage public participation in the review of this draft order. For example, written comments must include a notarized statement of beliefs, and anyone testifying at the hearing must be sworn in.

"Although the proposal's goal is to stabilize pricing for dairy farmers, imposing a flat, unchanging price for milk purchased from Vermont farmers is unrealistic and will do more harm than good," said Jerry Slominski, IDFA senior vice president of legislative affairs. Slominski said there are other, more viable options, including policies such as a Vermont dairy farmer tax credit system, as well as funding from Vermont businesses which benefit from the landscape of dairy and tourism in the state.

The Vermont Milk Commission will hold the public hearing on the proposed Order on Tuesday, September 9, 2008 at 9:00am in the Vermont State House in Montpelier, Vermont.

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