I am a dairyman and I hate supply management. It’s the market place that ultimately determines the size of my milk check, not the government. I’m a free market guy who would rather the government not regulate the dairy industry at all.
Yet I’m giving serious consideration to Congressman Collin Peterson’s proposed Dairy Market Stabilization Program, despite the fact it contains a temporary supply management component.
While many of us don’t want the government involved in managing supply, there is an even larger majority of farmers who want the government to provide some type of safety net to shore up prices in extreme situations. It would be very easy for me to follow dairy groups and processors in speaking against the supply management component while being in support of the margin insurance plan to strengthen the safety net for all milk production.
However, I have not forgot the events and prices of 2009 that brought the dairy industry to its knees. The downturn in the world economy caused a loss of half of our export market. Most dairy farmers were bleeding red ink on their bottom lines because our safety net (the price support program) proved to be totally useless. As a result, some farmers lost most or all of the assets that had taken a lifetime to acquire.
Almost overnight, we had excess supply that the government couldn’t afford to buy at a fair price. It was an ugly, costly year for the U.S. dairy industry that resulted in strange bedfellows as the vocal minority of supply management advocates were joined by many supply management haters in begging the government to do something about the low prices.
With the growing importance of global markets and the obvious weaknesses in the domestic dairy policy, the National Milk Producers Federation began to flesh out its Foundation for the Future Plan. It sought to improve our trade position while replacing the price support program with a safety net that would protect all milk produced. Given our nation’s debt situation, it would also have to cost less than the status quo.
NMPF ’s plan is now the basis for Peterson’s bill. It features a margin insurance plan that appears to provide an effective safety net. Yet signals from Washington are that without the temporary supply management component, it will be too costly for our cash-strapped Congress to pass.
It’s temporary because it only kicks in to deal with excess supply when times get really bad, and the base does not take on value. In other words, it’s not the supply management your grandpa knew.
I want to see reform that gives us greater access to growing foreign markets while providing a stronger risk protection plan for years like 2009.
Had this plan been reality two years ago, every dollar that I would have invested in managing supply would have returned eight more. What’s not to like about that?
Before I reached my decision to support this plan in its entirety, a friend asked me if I was going to “stand on principle or walk in reality.”
It’s time for the U.S. dairy industry to ask itself the same question.