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Midwest Dairy Coalition brings regional perspective to dairy debate

Feb. 16, 2012 | 0 comments

A coalition of Midwestern dairy farmers and organizations has been bringing its unique perspective on dairy policy to Washington for 15 years and that has never been more important than this year - with discussions continuing on a Farm Bill.

Steve Etka, a Washington consultant and lobbyist, has worked for the Midwest Dairy Coalition for 15 years after working for Wisconsin Sen. Herb Kohl and for the American Farmland Trust.

He spoke at several dairy gatherings last week in Wisconsin, including the annual meeting of Scenic Central Milk Producers Cooperative in Richland Center Thursday (Feb. 9.)

"Every region has a very clear voice in this discussion and what we try to do is make sure the manufacturing segment is heard from," he said.

The coalition, which recently added Ellsworth Cooperative Creamery and Scenic Central to its membership, represents 56 percent of Wisconsin dairy farmers and 65 percent of the dairy farms in Minnesota, Etka said.

Ninety percent of the milk in Wisconsin ends up in cheese, butter and powder, and the coalition has weighed in on policies designed to prop up fluid milk prices at the expense of manufacturing milk.

"We had to raise those objections."

An election year in Washington, he said, makes it very difficult to pass legislation, but even in turbulent times some compromises can be hammered out. Sitting down with dairy interests from the Northeast several years ago led to creation of the Milk Income Loss Contract (MILC) program in lieu of the regional compacts that leaders from the Northeast had originally wanted, he said.

The MILC program was also improved in 2008 with the addition of the feed cost adjuster, he added.

About a third of the milk produced in the United States ends up as a fluid product, while two-thirds ends up in manufacturing.

The coalition's members had concerns several years ago that the federal Milk Marketing Order system's policies insulated fluid milk prices from price fluctuations. A consistent voice from the Midwest Dairy Coalition has stifled various proposals to bump up Class I (fluid) milk prices at the expense of Class III (manufacturing) milk, he said.

"Now that policy is off the table in the current discussion."

Speaking to members of Scenic Central, most of whom have small herds, Etka said dairy policy "must address the needs of family dairy farmers" while respecting farms of different sizes and scales.

Eighty-eight percent of dairy farms, he said, milk 200 cows or less and only 3 percent of dairy farms have 1,000 cows or more. Still, these larger herds produce 50 percent of the milk volume, he said.

A "trial run" at a Farm Bill was attempted in the Super Committee process late last year in which the chairmen and ranking members of the two agriculture committees held secret discussions on farm programs.

Though that process failed and the secret agreement has never been released, it is widely recognized that the Foundation for the Future plan from National Milk Producers Federation was the starting point for the dairy programs.

"That plan has many good aspects, but we have concerns about whether it addresses the concerns of small- and medium-sized dairy farms. It was largely a reaction to the horrible price situation in 2009," he said.

The pain caused by dairy prices in 2009 led to this need to overhaul dairy programs.



Dairy margin

insurance program

One of the coalition's proposals addresses the dairy margin insurance program under which farmers would pay premiums to get protection for their prices. It uses a formula calculating the price of feed and relates it to the price of milk.

"We've proposed two tiers for premiums with one level for the first four million pounds of production at a lower premium and above that level of production a higher premium," said Etka.

"We think this would make it more affordable for smaller and medium-sized dairy farms."

Etka indicated that several key lawmakers have endorsed the idea, including Collin Peterson (D-MN), the ranking Democrat on the House Agriculture Committee.

The secret plan that was part of the Super Committee deliberations included a version of this two-tier margin insurance plan, he said.

The Dairy Security Act, introduced by Peterson last year, will likely be the starting point of the dairy policy debate this year. And that proposal was based on Foundation for the Future.



More delays

in Washington

But there are concerns that Congress may not get anything done before the fall elections.

The Senate Agriculture Committee has announced some Farm Bill hearings, but so far the House hasn't made any announcements about its process.

Etka cautioned that that MILC program will ratchet down several notches in September as mandated in the 2008 Farm Bill and that will result in a reduced safety net for farmers if no new policy is enacted.

"It's very rare for Congress to meet a deadline."

Etka told farmers that there is a lot of frustration that the U.S. Department of Agriculture (USDA) and the U.S. Department of Justice (DOJ) have not done anything in the wake of anti-trust hearings on dairy trading.

If anything, when dairy trading moved from Green Bay to Chicago - from one thinly traded market to another - it became less transparent, Etka said.

A huge hearing in Madison on dairy issues, held by USDA and DOJ's top officials, resulted in a "lot of identification of the program, but not a lot of answers."

At least dairy farmers in the Midwest can appreciate the fact that this region is the most competitive in the country. There are many milk buyers out in the countryside looking for milk.

"That's a good example of what can happen where there's competition."

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