Because Alaska milk producers pay extra for heated barns and feed shipped from the Lower 48, companies say they cannot afford a fee that pays for national advertising.
The U.S. Department of Agriculture wants to expand to Alaska, Hawaii and Puerto Rico the fee levied on producers in the rest of the country of 15 cents per 100 gallons.
The Bush administration seeks to attach the same fee to imported milk and related products, which could generate $10 million per year. According to World Trade Organization rules, such fees cannot be charged on goods from neighboring countries if they are not in place nationwide.
Opponents testified Friday to the Senate Resources Committee in support of a House Joint Resolution 5, also known as the "No Milk Tax" resolution.
Technically, it is not a tax but an "assessment" similar to union dues, said Chris Galen, vice president of the National Milk Producers Federation.
The money goes to the National Dairy Board to be spent on product promotion, nutrition education, research, finding export markets and other applications.
Congress approved the fee in 1983 but exempted Alaska because it is "milk-deficient," meaning producers make less milk than the demand. Congress is considering amending the dairy promotion act this year.
Galen figures the fee would cost the Alaska dairy industry $27,000 and consumers an extra penny per gallon.
Jlona Richey, a volunteer for the Alaska Milk Coalition, said the fee will have a compound effect on companies; she estimates prices rising 5 to 20 cents per gallon.
In the Bush, jugs of fresh milk are a luxury at $10 each. Many residents resort to buying condensed milk in a can at $3.
A day-care provider for low-income families in Anchorage told the committee that companies buying milk in bulk do not welcome the increase.
"We buy 3,000 gallons of milk a year," said Terri Robertson, owner of Carousel/Gingerbread Day Care. "If the price goes up 20 cents a gallon then that's $600."
The money has been paying for the nationwide "Got Milk?" campaign that successfully increased consumption. As Alaska producers sell all of their product and are still not able to meet the demand, they say they have no need to advertise.
A spokesman from the Dairy Trade Coalition in Madison, Wisc., supports Alaska's resolution and said the fee is controversial in the Lower 48.
"It's an added cost farmers can do without," said Jim Eichstadt of the coalition.
Galen said the state would get two-thirds of the money to spend on anything related to milk research and promotion.
A woman from the Bush called the dairy federation in Washington asking for help to teach residents that milk is healthier than soda. Galen said that request is good cause for Alaska to participate in the promotion.
"Children in many of these communities are drinking sugar-laden soft drinks rather than milk because it's less expensive," said the resolution's sponsor, Rep. Bob Lynn, R-Anchorage.
Earlier this month, the House of Representatives approved the resolution with unanimous consent. The Senate committee passed the resolution on Friday as well.
Andrew Petty can be reached at email@example.com.