Farm Bill dairy programs draw comments from both sides of issue

A draft of farm and food legislation released late last week by the Senate Agriculture committee is receiving praise from some farm groups and raspberries from others.

The draft includes key components of the dairy reform, dubbed "Foundation for the Future" developed by the National Milk Producers Federation (NMPF.) Though the farm policy package contains proposals for many parts of the food system, the dairy programs were receiving the most attention.

In Wisconsin, the Dairy Business Association board voted unanimously to oppose the Senate version of the 2012 Farm Bill released by Senate Agriculture Committee chair Debbie Stabenow (D-MI) and ranking member Pat Roberts (R-KS).

The DBA has been vocal in its opposition to the supply control mechanism contained in the Dairy Security Act, which has been included in the 2012 Farm Bill proposal.

In a statement, the DBA said that dairy processors purposely locate in areas where there is a consistent supply of milk and that any governmental interference in maintaining that consistent supply of milk will harm Wisconsin's dairy industry.

The group said this flies in the face of programs Wisconsin has recently implemented to increase milk production.

The DBA board also said that "supply control policies will cap the success dairy producers could achieve" at a time when the U.S. dairy industry is positioned to meet the predicted global increase in demand for dairy products.

"Supply control policies will not allow the U.S. to consistently participate in the global dairy markets," DBA said.

Board members believe the draft farm bill must remove all language referring to "market stabilization" to ensure the long-term success of Wisconsin's dairy industry.

Jerry Kozak, president and chief operating officer of NMPF, takes a different view, saying that the bill "reflects the best-possible outcome for America's dairy farmer community, which is in great need of a better federal safety net than what we have now."

The package of reforms has received support from other state and national farm groups.

The Senate draft contains the major elements of the Dairy Security Act (DSA), introduced last fall in the House by Reps. Collin Peterson (D-MN) and Mike Simpson (R-ID).

The core of the DSA is a margin insurance program that protects farmers from dire economic conditions - like those of 2009 - caused by either low milk prices or high feed costs. The margin insurance program would replace existing dairy programs, including the MILC and Dairy Product Price Support programs.

Farmers would have the option of signing up for the margin insurance program and if they choose to do so, they would then be enrolled in the Market Stabilization program through which they will be asked to manage their milk output when worst-case conditions appear.

Kozak said he believes the Senate measure "will generate broad, bipartisan support" by allowing dairy farmers to better manage their risks, "in a deliberate approach that offers a superior safety net, reduces government involvement in our industry, and positions our entire industry to compete in a global marketplace."

The DSA proposal would saves money compared to existing programs, he said, "and will be affordable and convenient for farmers to use."

The measure also "treats all farmers equally, and doesn't produce regional or size-based outcomes that are inherently discriminatory," Kozak added.

As discussions continued early this week, the DBA announced its support for an alternative dairy policy being offered by Senator Michael Bennet (D-CO) that they believe will be a better approach to "protect all dairy farmers and our nation's ability to be the consistent supplier of dairy products for the world marketplace."

The amendment, DBA board members said, will simplify and expand management tools for dairy farmers and result in reduced volatility in milk prices, without limiting the growth of the dairy industry.

It offers catastrophic and supplemental production margin protection for farmers without relying on a supply management program to fund it, they said.

This alternative program is funded by nominal premiums on lower coverage levels. Unlike DSA provisions, a farmer is permitted to select any amount of milk production up to 80 percent of their historic milk production to cover margin levels in 50-cent increments from $4 per hundredweight to $6 per hundredweight.

According to the DBA, under the alternative proposal, administrative costs are significantly lower.

In a non-dairy comment, National Farmers Union president Roger Johnson urged strengthening of certain programs.

"The draft legislation put forth by Senators Stabenow and Roberts provides for strengthened crop insurance programs and simplified protection options for farmers against yield losses through the Agricultural Risk Coverage (ARC) program," said Johnson. "ARC has promise as an effective safety net program and will better ensure that only farmers who need assistance will benefit from the program."

Johnson thanked committee leadership for including livestock health and disaster programs, and offered support for amendments to adopt prohibitions on packer ownership of livestock, along with other market reforms.

He also called for more funding for energy programs.

"We strongly urge the committee to include the amendment by Sen. Kent Conrad, (D-ND) and Sen. Richard Lugar, (R-IN) which provides $800 million in mandatory funding for core energy programs," said Johnson. "These programs are critical for rural development and for helping America become more energy independent."