Unity critical for dairy policy reform this year

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I was trying to be open-minded. After all, the much-ballyhooed Congressional Super Committee had just gone down in flames and the whole Farm Bill debate was back to square one.

On Dec. 22, I sat in on a phone conference called by proponents of the Federal Milk Marketing Improvement Act of 2011, who were asking everyone, including me, to take a second look at their proposal.

While listening, it became increasingly obvious to me that “this just isn’t going to fly.” Requiring processors to pay minimum prices based on the national average cost of production would essentially guarantee a profit for many farms. That, in turn, would lead to inefficiency and possible overproduction — something that would not go over very well with the general public. Most businesses in this country can only dream of having their costs covered up front.

It’s really not a matter anymore of what we in the dairy industry think; it’s what the U.S. Congress and general public think in the current political environment.

On Jan. 16, U.S. Senator Kent Conrad (D-N.D.), a senior member of the Senate Agriculture Committee, called the latest Farm Bill negotiations some of the most challenging — and critical — of his career. He said it will be very important to develop a new Farm Bill that is easily defensible to the broader public.

The economic difficulties faced by many Americans, along with the budget-cutting pressure on Congress, will make it difficult to pass the kind of Farm Bill we have had in the past, especially one based on direct payments as Farm Bills have been for t past 20 years.

Besides that, it may be difficult to get a Farm Bill done in an election year. Postponing it to later years will just make matters worse, since the budget-cutting pressure in Washington will only increase. Anything pushed back to 2013 is likely to be leaner and meaner.

“I think it is still possible (to get a Farm Bill passed this year), but it is a tough, tough lift,” U.S. Rep. Frank Lucas (R-Okla.), chairman of the House Agriculture Committee, told Agri-Talk radio on Jan. 18.

In order to get a Farm Bill done this year, Lucas said farm groups will need to pull together and develop consensus. Differences between the various commodities and geographic regions will need to be worked out.

When it comes to dairy policy, the legislation with the best chance of passing is contained in the Dairy Security Act of 2011. It was sent to the Congressional Super Committee last fall by the House and Senate ag committee leadership. It is backed by the National Milk Producers Federation, which represents about 60 percent of the U.S. milk supply. It would be voluntary, so farmers can choose to participate if it fits their particular needs. And, it would cost the taxpayers less money than current federal dairy policy.

The public will sympathize with farmers having the opportunity to purchase insurance against catastrophic losses, such as those experienced in 2009. The public will understand shared risk and responsibility much more than the guarantees and direct payments that have characterized Farm Bills in the past.

Let’s get behind the Dairy Security Act of 2011.



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Tammy Piotraschke    
Powers, MI  |  February, 06, 2012 at 02:47 PM

something, (such as what is being proposed currently) is better than nothing at all. We all know if the current farm bill expires; we will revert back to something none of the masses can afford.

Harry Stugart    
Butler,Pa.  |  February, 06, 2012 at 03:44 PM

I agree that the Federal Milk Marketing improvement act could never fly. First it would not be WTO compliant. Second it the manufacturing price would be above the other exporting countries prices which means that we would loose those markets and the near 15% of current production being exported would stay in storage until 15% of our production got put out of business. Then since the plan has a supply management feature that reduces price on just 5% of the milk in all areas of the country including regions that are already deficient for domestic supplies, it will damage those producers by the time production is reduced enough to get back in balance with domestic consumption.

Bruce Burroughs    
California  |  February, 06, 2012 at 08:33 PM

I can't see how any California dairyman is going to participate in the Dairy Security Act of 2011 unless the California milk price is used as the basis for our margins in the margin insurance part of the program for California dairies. With the differences between Federal Class III price and the California IVB price there will be no margin for California producers to insure. We also think we need the national average corn and soybean meal prices instead of CME futures for that part of the margin insurance program. If what we get is the same as the current LGM program, you are going to have Californians expanding to the best of their ability when participants are being cut back. I just don't think that is going to work very well for anyone.

Alan    
Millersburg, Ohio  |  February, 07, 2012 at 08:15 AM

I believe that it is halftime in the dairy debate. Not one independnt dairy economist supports the DSA. According to the public available version all producers are projected to lose $1 pr cwt over the life of the bill. Those that choose to participate will be required to cut back on production, ( or find a way to cheat), before the margin insurance even begins to ease the economic pain. The US will again become the balancer of the world supply. The Supply Management portion is meant to limit the cost of the policy for the taxpayers NOT to raise milk prices or margins for producers. Independant analysis project that the DSA could cost US taxpayers more than 4 times the budget for the DSA...then what? The Ag Committee tried to push the farm bill through to protect the high ticket programs availble to commodities other than dairy. It wasn't about what was best for dairy. It is halftime in this debate, back to the locker room to change the gameplan for the second half.

Alan    
Millersburg, Ohio  |  February, 07, 2012 at 08:15 AM

I believe that it is halftime in the dairy debate. Not one independnt dairy economist supports the DSA. According to the public available version all producers are projected to lose $1 pr cwt over the life of the bill. Those that choose to participate will be required to cut back on production, ( or find a way to cheat), before the margin insurance even begins to ease the economic pain. The US will again become the balancer of the world supply. The Supply Management portion is meant to limit the cost of the policy for the taxpayers NOT to raise milk prices or margins for producers. Independant analysis project that the DSA could cost US taxpayers more than 4 times the budget for the DSA...then what? The Ag Committee tried to push the farm bill through to protect the high ticket programs availble to commodities other than dairy. It wasn't about what was best for dairy. It is halftime in this debate, back to the locker room to change the gameplan for the second half.

Rick    
MN  |  February, 07, 2012 at 07:39 PM

Alan, You are right...Hopefully, with this next price crash will make us all realize we need to cut supply. We are all notorious for working harder when times get tough, but when we can't cover our direct costs...working harder and milking more cows doesn't make it better it just mangifies our losses. It just drives the price lower. We need to learn from the swine industry when they decided they needed to shrink their inventories. Now they have been rewarded with 3 years of great margins and they can lock in profits until mid 2013 today.. The dairy industry has never enjoyed this length of profitability as we always keep producing too much product. If everyone would send 5 % of our cows tomorrow.... we would make the inventories short over night and the end users would have to pay what it's worth.

David    
NJ  |  February, 10, 2012 at 12:02 PM

The only tool in our tool box missing; is daily electronic reporting for our processors. How are we as producers suppose to trust the markets when the markets react to t production reports that are 2 months behind the markets. Our coop has the driver picking up our milk send the tank reading via electronic reporting directly to Arden Hills DAILY!!! Did every Body get the MEMO? Right now class3 is droping $$$$ the Dairy farmer is going to wait 60 days for the export production reports from USDA To have impact on our prices on the CME!!! Who benefits from this lag? Better yet who is having their spring flush now? The dairyman is taking the screwing while our " leaders" beg us to support there plans for utopía. Daily prices and audits aré already in the farm bill NOW put them in place for the sa ke of my children!!! Please


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