By John Lyon
Arkansas News Bureau
LITTLE ROCK — Gov. Mike Beebe will not sign a bill on his desk that would add fees to wholesale milk sales, a spokesman said Monday.
House Bill 1451 by Rep. Johnny Hoyt, D-Morrilton, would charge milk wholesalers a fee of 30 cents for every 12 gallons of milk sold and direct the proceeds to a fund to provide subsidies to dairy farmers when milk prices fall below production costs. The measure has passed in the House and Senate, but Beebe is proposing an alternative method of funding subsidies that would require no new fees, Beebe spokesman Matt DeCample said.
The fee in Hoyt’s bill was expected to generate $4.1 million a year. It also was expected to raise milk prices by 2.4 cents per gallon, cheese prices by 2.5 cents a pound and prices of other dairy products by 1.5 cents a pound.
“Coming right off of signing (a 1-cent reduction in) the grocery tax, the governor did not like the idea of turning around and then putting a new tax onto milk and dairy products, which of course he has cited many times as one of the essential products that we’re going to be able to save you money on by reducing the grocery tax,” DeCample said.
Instead, Beebe favors tapping into a fund for biofuel development incentives that was created by the Legislature in 2007, DeCample said. There is enough carryover in the fund to match over the next two years the amount that would have been raised by the milk fee, which would have expired after two years, he said.
“We have used less than half of that (biofuels fund) for a number of reasons, but a significant reason being the change in the commodities markets and changes in fuel prices and things like that,” DeCample said.
The governor will not veto the bill, but instead will let Hoyt recall it, DeCample said.
Hoyt said Monday he supports the governor’s alternative funding plan and understands his concerns about the impact that increased dairy prices would have on consumers during tough economic times.
“He (Beebe) told me, he said, ‘You’ve got blinders on. You’re working on the dairy industry. … I see the big picture,’” Hoyt said.
In 2007, Hoyt sponsored legislation that created the Arkansas Milk Stabilization Board, which developed the fee proposal that Hoyt proposed. Hoyt said he, Beebe and the board have been working together to find ways to help the state’s dwindling number of dairy farmers stay in business.
“If we don’t find a way to shore up the dairy industry, in five or six years a University of Arkansas program shows that we will have no dairy farms left in Arkansas,” Hoyt said.
