Now that the Farm Bill is signed and new dairy policy moves beyond the conception stage, a sixth-month gestation period is underway at USDA before a new Dairy Margin Protection Program must be birthed.
The document now goes to USDA, where Ag Secretary Tom Vilsack will be in charge of implementing and administering its programs. The bill calls for a new dairy program by Sept. 1.
The new dairy policy has a name and an approximate birth date. Now we have to see if it walks. Some questions remain until USDA comes up with a formal plan, according to Marin Bozic, University of Minnesota dairy economist.
“The final bill leaves a lot of discretion to the Secretary of Agriculture, and while the Farm Bill language is no longer subject to change, we will not know for a few more months what the USDA rules will allow, and what will not be permitted,” he said.
Those answers have been a long time coming, starting in the one of the worst economic periods in dairy history.
”It has been five years now since the dark days of early 2009, when the combined assault of collapsing milk prices and elevated feed costs produced a hemorrhage of red ink from America’s dairy farms,” said Jim Mulhern, National Milk Producers Federation (NMPF) president and CEO, in a monthly editorial on the NMPF website. “Collectively, dairy farmers lost $20 billion in net equity between 2007 and 2009, with most of that money disappearing in huge chunks during 2009, when gallon after gallon of milk left the farm at a severe loss. Five years later, the pain and memory lingers, even as balance sheets are recovering.”
The path started with creation of a USDA Dairy Industry Advisory Committee, which found some consensus, but not on major issues. “Foundation for the Future” dairy policy was developed by the NMPF in 2010, which eventually evolved into the Dairy Security Act. That was approved last year in the Senate, but not in the House. Under pressure from House Speaker John Boehner (R-Ohio), the bill was ultimately stripped on any dairy supply management provisions, becoming the dairy title of the Farm Bill signed this week.
“(T)hose of us working on behalf of dairy farmers had to regroup and, using the tools at our disposal, re-craft the margin insurance program so that it can still provide an effective safety net while not encouraging excessive milk production and high taxpayer costs,” Mulhern said. “Adjustments that have been made in our original margin insurance program will make it affordable and effective, and should ensure that the margin protection safety net is just that – a safety net, and not a production stimulus.”