Against the backdrop of thousands of farmers attending World Dairy Expo in Madison last week, the Dairy Business Association held a press conference to mark their opposition to the supply management portion of the dairy title in the pending Farm Bill.
They brought in a group of like-minded farmers who spoke about problems with the dairy supply management program that has found broad support in Congress - though the House of Representatives adjourned for the pre-election recess without bringing a Farm Bill to a vote.
The legislation passed by the Senate and the House Agriculture Committee includes the supply management portion of the dairy title.
Under those proposals, any farmer wanting to participate in the margin insurance program would have to agree to limit their milk production during times when prices for feed were high and milk prices were low.
The program, similar to crop insurance for grain farmers, was developed as a result of the crushingly low margins dairy farmers experienced in 2009, when dairy organizations began creating this plan.
The Dairy Market Stabilization Program (DMSP) is contained in both the Senate's version of the Farm Bill, passed in June, and in the House Agriculture version that was given overwhelming bi-partisan support in July.
The dairy title in the Farm Bill is virtually the same as the Dairy Security Act, a stand-alone bill that was introduced by Rep. Collin Petersen (D-MN) last year.
Dairy Business Association president Jerry Meisner told a room packed full of farm reporters and other farmers that the supply management portion of the Farm Bill is dangerous for the dairy industry. "We want to make sure the Farm Bill is done right," he said during the press conference.
The supply management portion or DMSP title in the bill, he said, will limit the growth of the dairy industry and curtail exports.
"We do not think this will be great for our industry."
The Wisconsin-based DBA is "all about margin insurance," said Meisner, but its members are "totally against supply management."
In Wisconsin, dairy farmers have worked with processors to grow the dairy industry, produce more milk and increase cheese production in the state, Meisner said. The dairy program being contemplated by lawmakers "puts the U.S. Department of Agriculture between producers and processors," he added.
That's because when margins reach a certain point, the USDA would kick in the supply management portion of the farm legislation, and tell producers how much milk they could market - based on their past production. (Actually they could continue to produce as much milk as they wanted to, but would be paid less for the milk that was over their historical production level.)
John Pagel, a Kewaunee dairy producer and DBA member, said that part of the Farm Bill would affect farmers and future farmers. "Supply management is not the right message."
Pagel added that without enough participation in the margin insurance and thus the DMSP program, the program wouldn't achieve its goal of balancing supply and demand anyway. The way the program is structured, he said, it won't affect milk production enough to affect prices.
"Once the program doesn't work, and I don't believe it will, they will come back and make their voluntary program a mandatory one," he said. "This program's not right for Wisconsin and it's not right for the U.S. dairy industry."
Mitch Davis, with Davisco Foods, a company that produces 370 million pounds of cheese and milks 6,500 Jersey cows, said that the whole discussion of supply management has gotten caught up in a lot of minutiae but for him it comes down to the idea of growth.
"In any business if you're not growing, you're dying."
Davisco plans to increase the size of its dairy herd to 9,000 cows, he said. The DMSP measure would "stymie or stop the growth of dairy production" in regions of the country that can capitalize on ample supplies of feed and water, Davis added.
Maury Cox, a Kentucky dairy farmer milking 830 cows, said that their area is one that is milk deficit, meaning they have to bring in more milk to fill local needs than can be produced locally. It costs $1.50-$1.75 per hundredweight to bring in the extra milk that's needed now, adding that it wouldn't make much sense for them to cut back production.
FARMER CALLS IT SOCIALIST
Daniel Brandt, a Pennsylvania producer with 350 head of registered Holsteins, said there should be fairness in dairy policy and supply management will lose the fundamental fairness. He called supply management a "socialist idea."
Farmers shouldn't have to accept supply management in order to get margin insurance, he added. "Corn growers aren't told they can only produce 110 bushels per acre in order to get crop insurance."
The Goodlatte-Scott amendment, which has the official support of the DBA, saves taxpayers dollars and offers margin insurance coverage with no supply management component, Brandt said.
Michigan producer Howard Straub said it is necessary to enact new dairy legislation in the Farm Bill, but said the dairy title with supply management in it is totally unacceptable. With it, U.S. dairy farmers will be asked to "balance the world's milk supply," he added.
"We will become a nation that nobody can rely on for milk," he said. "Without the Goodlatte-Scott amendment we're going to head for disaster."
According to the DBA, the amendment, offered by Reps. Bob Goodlatte (R-VA) and David Scott (D-GA), leaves the provisions of the Dairy Security Act 80 percent intact, but removes the DMSP, the most controversial item, and one which these producers agreed is bad policy.
If the Farm Bill moves forward, the Goodlatte-Scott Amendment should be considered, and supported, by the House of Representatives, they said.
However, it was voted down in the House Agriculture Committee's deliberations on the Farm Bill this summer.
Other farmers who spoke at the press conference said that the world population, which continues to grow, is hungry for the proteins produced by U.S. farmers; they felt that once this dairy program is in place, farmers would not ever be able to get rid of it and it would impair overall U.S. production.
Like other U.S. farm programs, it would remain in place as lawmakers tinkered with it and tried to fix it, they said.
LuAnn Troxel, an Indiana dairy farmer, said she believes in free market and fears for what will be ushered in with a supply management program. She has four sons and one of them just gave up a teaching career to join the family farm.
"In order for that to be successful we have to have more income. Supply management throws an awful lot of stress on that situation.
"Expansion is a big stressor and adding supply management to that makes it even worse," she said.
Jeff Mulligan, a western New York producer with a herd of 1,200 cows, said there has been tremendous growth in the dairy business in his area thanks to the explosive consumer interest in Greek yogurt. There are 29 plants in some stage of construction or development that will soon be making Greek yogurt.
The area, said Mulligan, is 125,000 to 250,000 cows short to fill that demand.
"I do not need the government telling me how much milk I can produce," he added.
Using August 2012 milk production and September 2012 all milk prices (paid for milk marketed in August) the DBA says that if the DMSP program had been law in the past year, it would have triggered supply controls for the past five months.
They maintain that it would have cost a 100-cow Wisconsin dairy over $1,700 in monthly "income penalties" under the plan. It would have cost a 500-cow dairy $8,596 and a 1,000-cow dairy over $17,000, based on average milk marketed by dairy farms of those sizes, according to DBA materials.
The organization calculated those losses based on Dairy Security Act farm milk income versus farm milk income with the Goodlatte-Scott amendment in place.