47 



STATEMENT OF ROBERT L. FOSTER, VICE CHAIRMAN, BOARD 

 OF DIRECTORS, AGRI-MARK, INC., MIDDLEBURY, VT 



Mr. Foster. It is my pleasure to be here. Mr. Chairman, mem- 

 bers of the Committee on Agriculture, Nutrition, and Forestry, I 

 appreciate the opportunity to be here. I am Bob Foster, vice chair- 

 man of Agri-Mark, a value-added milk marketing cooperative. I live 

 on a farm in Middlebury, Vermont, where I farm with my family. 



My task today is to share with you my perspective on the North 

 American Free Trade Agreement. I will be expressing the position 

 of the Council for Northeast Farmer Cooperatives. CNFC rep- 

 resents 5,500 dairymen in 4 cooperatives: Agri-Mark, Eastern, St. 

 Albans, and Upstate. These cooperatives service the Northeast 

 fluid milk markets, package and market the full range of manufac- 

 tured products, as well as provide ingredients to service the dairy 

 industry. Products range from whole and skim milk powder to 

 Cabot sharp cheddar cheese, from condensed milk to ice cream and 

 yogurt mixes for Ben & Jerry's Ice Cream. Last year Agri-Mark ex- 

 ported product to six continents. 



We live in a world of finite resources. One nation cannot isolate 

 itself from the rest. Consider, if you would for a moment, if my 

 State, Vermont — or it could be your State — decided to close its bor- 

 ders and produce only what we need for ourselves. Vermont's econ- 

 omy would literally dry up and wither away. With that in mind, 

 what will NAFTA do? 



NAFTA provides mechanisms for the elimination of tariffs im- 

 posed on a number of U.S. products. Some are immediate; others 

 are phased out over as many as 15 years. Specifically, dairy prices 

 are determined by national supply and demand mechanisms and 

 markets. 



In dairy, we face a double challenge. Tight prices have forced the 

 accelerated adoption of current technology and management. Cur- 

 rently the national herd average for milk is 15,000 pounds per cow. 

 Consequently, more than half are below the 15,000-pound level. 

 With current technology, allowing for production of over 20,000 

 pounds, and with the adoption of this technology occurring cur- 

 rently at a very rapid rate, we could face as much as a 20-percent 

 increase in production over the next several years. 



Dairy must become, to use Senator Leahy's words, "a reliable 

 and dependable exporter" of significant amounts of production, or 

 our productive capacity must be downsized substantially. Without 

 NAFTA and, thus, without expanded markets, we are headed for 

 a wreck, resulting in a painful downsizing in the number of dairy 

 producers. 



Remember that a 1- or 2-percent increase or decrease in domestic 

 supply causes dramatic increases in prices, as much as 20 to 40 

 percent. Increasing prices are quickly captured at the retail level. 

 Conversely, decreasing prices collapse prices received by producers, 

 while only inching down to consumers. 



Unless product is moved out of the domestic market, prices to 

 producers will have to be reduced dramatically. Without new and 

 expanded markets for dairy, the U.S. and Vermont producers face 

 a very tenuous future. 



One of the major concerns of the dairy industry is the dumping 

 of subsidized product in Mexico which tnen would flow freely into 



