02/21/2008 01:30 PM Senate LABOR & COMMERCE

                    HJR 16-OPPOSING MILK TAX                                                                                
                                                                                                                                
1:34:56 PM                                                                                                                    
CHAIR ELLIS announced HJR 16 to be up for consideration.                                                                        
                                                                                                                                
REPRESENTATIVE  BOB  LYNN,  sponsor  of HJR  16,  said  the  milk                                                               
industry  in Alaska  is struggling  to stay  in business  and the                                                               
dairy  business   is  a  vital   element  to   Alaska's  economic                                                               
diversification.                                                                                                                
                                                                                                                                
1:36:24 PM                                                                                                                    
SENATOR BUNDE  asked after the  Matanuska Maid debacle,  if there                                                               
is still a dairy industry in Alaska.                                                                                            
                                                                                                                                
REPRESENTATIVE LYNN  replied barely,  but they  need to  keep the                                                               
remnants of what  is left and a milk tax  would have the opposite                                                               
effect.                                                                                                                         
                                                                                                                                
DIRK  MOFFAT, staff  to Representative  Lynn, explained  that the                                                               
milk  tax  refers to  the  mandatory  dairy assessment  that  was                                                               
imposed  by Congress  in  1983. The  purpose of  the  tax was  to                                                               
decrease the  surplus of  milk by increasing  the demand.  In the                                                               
past milk over-production  was a big problem in the  Lower 48 and                                                               
answer  to it  was a  massive  generic campaign  that asked  "Got                                                               
milk?"  Alaska,  Hawaii,  and  Puerto Rico  have  milk,  but  not                                                               
enough.  "We're a  milk  deficit state."  So,  he explained  that                                                               
Alaska was excluded  from this promotion, but  stated that Alaska                                                               
is  still a  milk  deficit  state and  should  not  be forced  to                                                               
promote outside surplus milk from the Lower 48.                                                                                 
                                                                                                                                
1:38:58 PM                                                                                                                    
ILONA  RICHEY, Executive  Director, Alaska  Milk Coalition,  said                                                               
she is also president of the  Alaska Chapter of Women Involved in                                                               
Farm Economics  (WIFE), supported  HJR 16.  They oppose  the milk                                                               
tax   because  of   its  impact   on  consumers.   Isolated  Bush                                                               
communities  with the  highest milk  prices will  be particularly                                                               
affected.                                                                                                                       
                                                                                                                                
1:41:37 PM                                                                                                                    
MARIO  CASTILLO,  Executive   Director,  Dairy  Trade  Coalition,                                                               
supported HJR 16  said the Alaska Chapter of WIFE  and the Alaska                                                               
Milk Coalition are members of  the association. He related that a                                                               
new dairy  was opening up in  the Matanuska Valley and  that four                                                               
or  five  dairies in  Alaska  will  have congressional  funds  to                                                               
develop niche  products. The Valley  Dairy will start  to produce                                                               
some  ice cream  flavors very  soon that  will be  niche products                                                               
unique  to  Alaska. For  example,  their  products are  going  to                                                               
feature   local  ingredients   such  as   wild  salmon   berries,                                                               
huckleberries and  birch syrup.  He said  the Alaska  Gold Nugget                                                               
Cheddar  plant is  already receiving  orders.  This operation  is                                                               
committed to using all the milk Alaska can produce.                                                                             
                                                                                                                                
MR. CASTILLO said  he wrote the language that  exempted Alaska in                                                               
1983.                                                                                                                           
                                                                                                                                
1:46:09 PM                                                                                                                    
SENATOR  BUNDE asked  at  $.15 per  100-weight,  what would  that                                                               
actually translate to for the consumer per half gallon of milk.                                                                 
                                                                                                                                
MR. CASTILLO  answered any time  a middle man has  an opportunity                                                               
to mark up a product, it won't be  at the lowest level; he all of                                                               
a  sudden  take  a  brand  new  look  at  some  outside  elements                                                               
including transportation  costs, storage  or whatever  to revisit                                                               
his  current pricing.  "There is  no way  to gauge  the level  of                                                               
human greed that could be let loose."                                                                                           
                                                                                                                                
CHAIR ELLIS asked what the other milk-deficit states have done.                                                                 
                                                                                                                                
MR. MOFFAT answered  that Congressman Young had sent  a letter to                                                               
U.S.  Secretary of  Agriculture.  Others from  Hawaii and  Puerto                                                               
Rico signed the same letter.                                                                                                    
                                                                                                                                
1:48:42 PM                                                                                                                    
CHAIR ELLIS noted  a letter from Department  of Natural Resources                                                               
(DNR) talking about  the "Got Milk" campaign and  others. It said                                                               
it  might be  prudent to  wait for  the outcome  of the  Beef Act                                                               
case. He  asked if he had  any comments on the  natural resources                                                               
briefing paper about this bill.                                                                                                 
                                                                                                                                
MR. MOFFAT had no comments.                                                                                                     
                                                                                                                                
CHAIR ELLIS said he would hold the bill for another hearing.