Farm Bill, dairy policy go to Senate

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Fresh off Wednesday’s approval in the House, the 2014 Farm Bill could be brought up for action in the Senate as early as Friday, Jan. 31. Senate Ag Committee chair Debbie Sen. Stabenow (D-Mich.) has said she wants the Senate to finish work on the bill no later than early next week.

“It’s now up to the Senate to take the final step,” she said. “The Senate has twice passed the farm bill with overwhelming bipartisan support. I have no doubt we’ll do it again, and show that it is possible to do something to reduce the deficit and boost the economy when people work across the aisle.”

The House’s 251-166 vote included 162 Republicans and 89 Democrats for the bill; 63 Republicans and 103 Democrats opposed. Fourteen members of the House did not vote. A roll call vote is available  here.

Prior to the vote, the Congressional Budget Office (CBO) released a score for the bill, estimating direct spending for authorized programs would total $956 billion over 10 years, of which nearly 80% ($756 billion) would be for nutrition programs.

U.S. dairy producers won't likely feel the impact of the Farm Bill – at least on dairy policy – until later this  fall. Under the bill, USDA must establish a Margin Protection Program for dairy producers no later than Sept. 1, 2014. The Dairy Title of the Agricultural Act of 2014 (pages 96-117) was outlined previously by Dairy Herd Management.

That would give dairy producers approximately seven months to determine whether they wish to participate. As the bill is currently written, all U.S. dairy operations will be eligible, provided they register (method to be determined by USDA) and pay an annual $100 fee to cover administrative costs.

If a participating dairy operation is operated by more than one producer, all will be treated as a single dairy operation. If a dairy producer operates two or more dairy operations, each must register separately to participate.

Dairy producers who to participate will need to establish a milk production history to determine how many pounds and percentages of annual milk production they wish to cover. Both the pounds of production and desired margin level will determine annual insurance premium costs on a per hundredweight basis.

Dairy operations may select margin insurance to protect between a $4.00/cwt. to $8.00/cwt. milk-feed price margin in 50¢ increments. They may also elect to cover a percentage of their milk production in 5% increments, beginning with 25% and not exceeding 90% of the production history.

There will be two tiers of pricing for annual premiums. The first 4 million lbs. of milk sold annually will have significantly lower premiums than milk production above 4 million lbs. The $4.00/cwt. margin coverage level is available at no cost, but the premiums become increasingly expensive as margins increase. Additionally, premiums below the $8.00 level will be discounted by 25% for the first two years of the program (2014 & 2015) for the first 4 million lbs. of production history.

USDA must also create administrative rules and enforcement procedures, and establish an appeals process.

In the interim, the bill provides for the temporary continuation of the Milk Income Loss Contract (MILC) program until the Margin Protection Program is in place, or Sept. 1, 2014, whichever is sooner. Current milk and feed futures prices indicate no MILC payments would be made during the period, however.

The bill repeals the Dairy Product Price Support Program, Dairy Export Incentive Program and the Federal Milk Marketing Order Review Commission, but extends the Dairy Forward Pricing Program, the Dairy Indemnity Program and the Dairy Promotion and Research Program until 2018.

And, within 120 days of initial operation of the Margin Protection Program, USDA must establish and administer a dairy product donation program to address low-margin periods experienced by participating dairy operations; and provide nutrition assistance to individuals in low-income groups.



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