By Rob Moritz
Arkansas News Bureau
LITTLE ROCK – A Senate committee Tuesday endorsed two bills designed to help struggling dairy farmers stay in business by paying them subsidies through an increased fee on milk and other dairy products.
“If we lose the dairy industry … we’re going to lose a significant number of jobs,” Sen. Jimmy Jeffress, D-Crossett, said in support of the two bills before the Senate Committee on Agriculture, Forestry and Economic Development. “I think it’s incumbent on us that we take steps to protect an industry that we still have a chance to save.”
Officials noted in 10 years the number of Arkansas dairy farms has dropped from 800 to less than 140, and that more milk is being trucked in from New Mexico, Texas and Arizona to keep Arkansans supplied. A recent University of Arkansas study found that at the current rate, there will be no dairy farms left in the state in 2015.
Without any dairy farms in the state, consumers would see the price of milk at the grocery store rise considerably to pay the transportation costs of getting the milk here, Agriculture Secretary Richard Bell said.
“We’re going to end up paying more later if we don’t pay now,” Bell said.
Both measures, House Bill 1451 by Rep. Johnny Hoyt, D-Morrilton, and Senate Bill 934 by Sen. David Wyatt, D-Batesville, were recommended on a voice vote. They both go to the Senate.
Under HB 1451, milk wholesalers across the state would be assessed a fee of 30 cents per 12 gallons of milk. For consumers, that would amount to about 2.4 cents per gallon of milk, 2.5 cents for a pound of cheese and 1.5 cents for a pound of other dairy products.
SB 934 would create the Arkansas Department Dairy Stabilization Fund and an incentive program to fund the farmers. The fee would generate about $4.1 million a year. Dairy farmers would be eligible for funds if the cost of producing milk drops below 70 percent of the monthly average cost of production in Missouri and Tennessee.
Bell said that would amount to about $28,000 a year for each farmer.
If funds are available, milk production and quality grants up to $50,000 also would be available.
Polly Martin, president of the Arkansas Grocers and Retail Merchants Association, said the increase would make it difficult for grocers to make sure the various dairy products are taxed correctly.
Montine McNulty, executive director of the Arkansas Hospitality Association, said restaurants would be forced to raise their prices.
Hoyt told the panel that officials with Bentonville-based Wal-Mart Stores Inc. were consulted to make sure that the process of keeping tabs on the products and the tax money would not be too difficult.
Wal-Mart representative Laurie Smalling spoke for the proposal during a House committee meeting last month but did not attend Tuesday’s meeting.
Hoyt said the proposal also addresses legal concerns raised by Attorney General Dustin McDaniel, who suggested the measure might violate the commerce clause of the U.S. Constitution.
Hoyt, who originally had the entire proposal in his House bill, said after meeting with the attorney general’s office the decision was made to rewrite the questionable sections in the bill and file them in a separate Senate bill.
