The dairy industry and entire agriculture sector await action by a divided Congress on a new federal Farm Bill.
However, numerous changes have already occurred recently or are afoot in dairying, Family Dairies USA general manager David Cooper told members at an annual local unit meeting of the cooperative, which has members in six Upper Midwest states.
Cooper reported that Steve Etka, the lobbyist who represents Family Dairies and other dairy organizations on federal legislation noted that legislatures and their aides have no clue on the timing of approval on a new Farm Bill or what the provisions, which still need compromises, will turn out to be.
What's known is that the agriculture committee in the Republican-controlled House of Representatives and the Democratic-controlled Senate are $12 billion apart in the Farm Bill cuts they have proposed to see in spending programs for what has traditionally been legislation covering five years, he noted.
The Milk Income Loss Contract (MILC) program, which provided payments to dairy farmers at times of low milk prices, expired at the end of August and is very unlikely to be renewed, Cooper observed.
But the outfall of the official expiration of the Farm Bill on Oct. 1, thus far without any extension by Congress, could be quiet attention-getting and ultimately harmful for the dairy industry, he pointed out.
After January 1, under existing authority, the Secretary of Agriculture could enact a re-instatement of parity, which would approximately double the current prices for raw milk and dairy commodities, Cooper indicated.
At 75 percent on the parity scale, milk prices would jump to approximately $38 per hundred while per pound prices that would have to be offered (support price) by the Commodity Credit Corporation to support this price, would rise to $3.75 for cheese, $3 for butter, and $3.20 for non-fat dry milk.
Cooper told the cooperative's members that such a scenario would create "a price that you hope for" but he also asked "if it is a price that the market would accept long term."
He predicted that many consumers would buy apple juice, flax and soy milk, and other beverages instead of fluid milk and that manufacturers of various foods would switch to ingredients other than those provided by the dairy industry, which could have long-term damaging effects to an industry.
Whether such a scenario plays out or not, another intriguing pending question is how margin insurance that is incorporated into the Farm Bill discussion - an idea that both houses of Congress are apparently willing to accept in some form - would fare, Cooper stated.
Participation in the program versus non participation can change the outcome of intended programs and legislation, he explained.
What's not known is what level of participation there would be by dairy farmers in a voluntary program for margin insurance, in part because there would be a requirement to limit milk production at certain time or to forfeit payment on a particular amount of milk production, Cooper indicated. "There's no agreement among dairy economists on how this would play out."
Cooper mentioned various private sector, food processor, and consumer initiatives regarding animal welfare issues, noting how dairy product sales could be affected by bad actors in the industry.
He urged all dairy farmers to avoid any practices which give rise to such concerns and to observe animal care protocols that have been developed by the dairy community.
An extremely encouraging trend, Cooper reported, is how dairy farmers in Wisconsin have staged a tremendous turnaround during 2012 on drug residue violations in the meat of dairy cattle sent to slaughter.
He noted that Wisconsin a year ago topped the list of states in the number of such violations but there have been no such repeat violations in the latest reporting periods.
Because of the drug residues in culled dairy cows (and a few bob veal calves), the federal Food and Drug Administration undertook a testing program of milk for drug residues earlier this year, Cooper continued.
Milk samples were taken from 900 dairy farms, which were found on the repeat violators list with drug residues in meat and from 900 others at random in the United States.
Those 1,800 milk samples are tested for possible residues from at least 30 drugs. The results of this project, which are scheduled to be released in early 2013, could create additional steps to ensure a continued safe found supply on the dairy sector, Cooper stated.
Because of a merger proposal involving three dairy cooperatives that have the bulk of their membership in Wisconsin, the Family Dairies local unit meeting here might have one of the last of its kind.
That depends on votes regarding the merger to be taken by members of the three organizations in the coming weeks.
In addition to Family Dairies (about 2,300 members), the other entities considering the merger are the Manitowoc Milk Producers Cooperative (about 2,650 members) and the Milwaukee Cooperative Milk Producers (about 500 members).
Together, they have 219 years of history, mainly as milk testing and field services to dairy farmers shipping to proprietary (non-cooperative) dairy plants.
Negotiations about a possible merger, which began during the spring of 2011, received unanimous approval of the 20 district directors now representing the three separate organizations.
An approval of a merger will lead to a reduction of district directors to nine over a three-year period. For the vote by the membership, two of the organizations will require a two-thirds vote for approval of the merger while one stipulates a majority vote.
Information meetings were held and ballots were sent on Nov. 19 to all of the members eligible to vote. A Web site titled www.yourcoopportunity.com is also devoted to the pending merger.
The Family Dairies USA votes will be tabulated at a meeting on Dec. 18 in Stevens Point. If the merger is approved, the new cooperative will begin operating on January 1 with the name of FarmFirst Dairy Cooperative with the main cooperative headquarters in Madison.