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Dairy title in Senate farm bill include market stabilization

June 13, 2013 | 0 comments



The farm bill passed by the U.S. Senate this week (see related story) includes dairy provisions similar to those that were passed in the Senate a year ago, in an attempt to get a farm policy package passed during 2012.

This time around the Senate's food and farm bill includes a dairy title that includes policy reforms backed by the National Milk Producers Federation, just as it did last year.

The measure includes the Dairy Security Act, hammered out by NMPF and its farmer members - one which they maintain will create a more effective safety net for dairy producers.

"On this strong bipartisan vote (66-27) the Senate has again shown its determination to put politics aside, and work to implement new and better policies for America, including the country's dairy farmers," said Jerry Kozak, President and CEO of NMPF.

Kozak said he appreciates the "determination" of the leaders of the Senate, and in particular, the leaders of the Agriculture Committee, Chair Sen. Debbie Stabenow (D-MI) and ranking member Sen. Thad Cochran (R-MS), for getting the legislation passed.

The measure is similar to the farm bill approved last June by the Senate, especially where dairy policy is concerned.

The Dairy Security Act inside this farm bill establishes a voluntary margin insurance program, allowing farmers to better manage the twin risks of milk price and feed cost volatility.

Senators also approved what many have dubbed the "supply management" portion of the plan, called a "market stabilization program."

Kozak maintains it will improve the cost-effectiveness of the program to the federal government, helping farmers and taxpayers alike.

The bill's dairy title eliminates the MILC, price support and dairy export incentive programs and channels some of those saved resources into the new programs.

Demonstrating the strong momentum behind the Dairy Security Act there was no effort to significantly alter the dairy title during Senate consideration of the bill, Kozak said.

"We encourage the House of Representatives to also support its Agriculture Committee-passed bill, and reject any dairy processor-backed amendment to undermine the bill's effectiveness by removing the market stabilization program," Kozak said.

Meanwhile there is still interest among some dairy interests in killing the market stabilization portion of the program.

The Wisconsin-based Dairy Business Association (DBA) remains vehement in its opposition to the portion of the bill that would require milk production to be trimmed when supply and feed costs reach certain parameters.

The DBA continues to support an amendment from Representatives Bob Goodlatte (R-VA) and David Scott (D-GA) that mirrors all of the provisions of the dairy title except that it does not include the supply management program provision called the Dairy Market Stabilization Program.

Laurie Fischer, DBA executive director said that a recent Congressional Budget Office report compared the cost of the two programs - one with and one without the dairy market stabilization program. She said the Goodlatte-Scott plan would cost $15 million less than the provisions now in the farm bill.

"The Dairy Security Act would not only cost more, but it would also add more government intrusion into an already highly regulated dairy industry, and it would impose new and costly regulations on the nation's dairy processors," she said.

Fischer said her group would continue to fight for adoption of the amendment, which would "provide an effective safety net option for dairy farmers, without government interference in their businesses or in milk markets."

At a recent WisPolitics luncheon, Congressman Paul Ryan (R-WI) indicated when the farm bill hits the House floor, there's likely to be a strong move to kill supply management, Fischer said.

Other opposition to the dairy title has come from the International Dairy Foods Association (IDFA), which claimed that "the current farm bill includes a new intrusive program that would significantly increase the cost of milk, yogurt, cheese, and other dairy products."

Kozak, at NMPF, said that while the processor group picked a single month to assert that the Dairy Security Act provisions "would have raised (consumer) milk prices by about 32 cents a gallon in September 2012," the study shows that the dairy program, in fact, would have resulted in lower milk prices than were actually found in the marketplace 37 out of 48 months.

Prices paid by consumers would also have been lower than those under the Goodlatte-Scott plan in 36 out of 48 months, he added.

The IDFA claim is based on a recent study of the impact of the DSA and the Goodlatte-Scott amendment, which shows that the DSA would have increased farm milk prices by an average of just one-half cent (0.5¢) per gallon during the period 2009-2012, while the Goodlatte-Scott amendment decreases farm milk prices by one and a half cents per gallon (1.5¢), compared with actual prices during that period.

Kozak said the responsible conclusion from the facts discussed above is that the very temporary increases in the farm milk price that might occur under the DSA program would not result in any discernible change in the cost of milk and dairy products to consumers or to government food assistance programs that use milk.

"IDFA is simply being deceptive in an attempt to alarm consumer groups about a dairy program that would benefit dairy farmers, but not affect consumers," he added.

The House is expected to begin floor consideration of its farm bill next week.

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