That’s why this proposal contains an explicit clause that prevents the DMSP from kicking in if U.S. prices are 20% or more above world prices for cheddar cheese and skim milk powder. This clause will ensure that any market stabilizing slowdowns in milk production don’t unintentionally distort the relationship between U.S. and world prices.
- The program contains new taxes on farmers.
FACT: Any revenue collected from the DMSP will help ensure two things: one, that commercial products are purchased and used for feeding programs that benefit needy consumers; and second, that the costs of this overall package are mitigated through the DMSP revenue collection. The money collected is not a tax on consumers; it’s a user fee paid by farmers which will, only as needed, be used to help stimulate demand, and help defray the overall costs of the Foundation for the Future program. Similar fees are already collected from farmers to pay for the operation of the Federal Milk Marketing Order system.
Dairy farmers understand the importance of this approach in order to keep government expenses down in a period when reducing federal spending is a key priority in Congress. In fact, the Congressional Budget Office calculates that the savings of this program will amount to $166 million over five years, a 25% reduction from the current federal dairy program budget.
- The proposed Federal Milk Marketing Order reforms are insufficient.
FACT: This proposal establishes only two prices for milk: a Class I price for bottled milk, and a manufacturing price for all other forms of dairy products. There is no longer a minimum price for four separate classes of milk, as there is today under the current system. Under the new program, the manufacturing class of milk will be determined by a competitive pay price, and not tied directly to Chicago Mercantile Exchange prices for commodities such as cheese, whey, butter and nonfat milk powder. This evolution is the most significant change in milk pricing in a generation, and will eliminate controversial elements such as end-product pricing and make allowances.”
From Jerry Kozak, President and CEO of the National Milk Producers Federation