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Dairy supply control still sticking point in Farm Bill

July 26, 2012 | 0 comments

When the House version of a Farm Bill was voted out of the House Agriculture committee July 12 the dairy reform package remained intact, but there is still controversy over the supply management portion of the measure.

Wisconsin Farm Bureau President Bill Bruins said that with the Farm Bill one step closer to reality, "we could not be more pleased that it includes the most significant reform to dairy policy in generations."

With the Dairy Security Act (DSA) still intact within the Farm Bill, Bruins said he was "very encouraged to finally have consensus on dairy policy reform."

But two Wisconsin groups are not happy with the portion of the bill that would seek to control the supply of milk from farms to the marketplace through a "dairy stabilization plan."

The supply management plan is part of a package of reforms in the Farm Bill that derived from the "Foundation for the Future Plan" created by the National Milk Producers Federation. That plan was rolled into the DSA, which was introduced last year and then became part of the Farm Bill this year.

The Dairy Business Association (DBA) and the Wisconsin Cheese Makers Association (WCMA) still say they oppose that supply management portion of the bill. The two groups supported the Goodlatte-Scott amendment that was voted down in the House Agriculture committee.

Introduced by Reps. Bob Goodlatte (R-VA) and David Scott (D-GA), the amendment would eliminate the portion of the dairy title that would have farmers reduce their milk sales when conditions of low margins prevail - that is, low milk prices and high feed costs.

National Milk president Jerry Kozak says the amendment would "gut" the dairy title and the package of reforms that has been painstakingly negotiated over the past several years.

The dairy program, as it stands in the Senate Farm Bill and in the House committee version, would offer dairy farmers a basic level of margin protection at no cost, subsidized by the government.

Dairy farmers would also have the option of purchasing supplemental margin insurance to cover a wider gap between the cost of feed and the milk price and give themselves more protection for times when feed costs and milk prices are widely divergent.

Farmers who choose to participate in this voluntary program would be covered by the market stabilization program, which would have them cut back milk production when margins are poor.

Wisconsin's only member on the House Agriculture committee, Reid Ribble, a Republican, supported the Goodlatte-Scott amendment in the committee vote, something the DBA and WCMA said they appreciated.

"Congressman Ribble worked to find a compromise to eliminate the so-called 'dairy stabilization plan,' a complex government intervention in commercial transactions intended to control the supply of milk from farms. Congressman Ribble supported reducing milk price volatility without restricting milk supply," said Laurie Fischer, executive director of DBA.


Fischer said her organization believes that federal dairy policy should allow the marketplace to determine what prices get paid to farmers.

The amendment would have allowed dairy farmers to still have the ability to get margin insurance and catastrophic coverage as a risk management tool for times of low milk prices and high input costs but would have eliminated the supply management portion.

Those backing the Goodlatte-Scott amendment, including Ribble, understand the importance of producers utilizing risk protections but also recognize how important it is to continue to increase dairy product sales both domestically and globally, Fischer said.

"A government program to curb milk production will risk our reputation as a consistent supplier in world dairy markets," Fischer said.

The Wisconsin Cheese Makers Association said it sees "immense growth" in Wisconsin exports of cheese and whey products and views a government program to regulate supply as a bad idea.

"Wisconsin is the second largest cheese exporting state in the United States and market opportunities are expanding rapidly," said John Umhoefer, executive director of WCMA.

"Representative Ribble understands this opportunity for our state dairy farmers and voted for a free-market oriented amendment that would allow Wisconsin to grow. We applaud his principled stand."

The Goodlatte-Scott amendment, which lost out in committee, will likely be offered again when the full House of Representatives starts debating its version of the Farm Bill.

The amendment, said Umhoefer and Fischer, would allow consumer demand to send signals to the dairy market.

They oppose a government supply management program because it would "arbitrarily penalize consumers and dairy product manufacturers by uniformly requiring milk supply contraction and raising milk prices."

Dairy is the only U. S. commodity program that would allow this level of government intervention in a free-market industry in the Farm Bill now being considered.

"Supply management would be particularly harmful to Wisconsin dairy processors," Umhoefer said. "Wisconsin has more markets for cheese than we have milk in the state.

"Any program that works to intentionally slow milk production reduces our members' efficiency and opportunities in the marketplace. There's no milk surplus here that needs government intervention," Umhoefer said.


Farm Bureau's president Bruins, who is also a dairy farmer, said farmers must push their lawmakers to work out the differences that exist between the House version that was just passed by the Agriculture committee and the Senate's bill that was passed last month.

Most of differences are in varying levels of support for food assistance programs, including food stamps, and some slight variations in risk management programs for crops. The House version would cut more from federal feeding programs than the Senate's version.

"Our biggest challenge is not on the ag side, it's on the food and nutrition said," Bruins said.

"It's so tragic to hold agriculture hostage because we can't decide if people on food stamps must buy potatoes rather than a bag of potato chips."

Farmers must continue to advocate for theses differences to be worked out and for a new Farm Bill to be signed before the current one expires on Sept. 30, especially in light of the drought that is gripping the majority of the country's growing regions, Bruins said.

"Farmers above all else need certainty," Bruins said. "To have a Farm Bill in limbo makes it extremely difficult to look forward.

"That's the very least the federal government can do at this time. Farmers need to think forward to what decisions will be made next year."

There has been no announcement of the full House scheduling debate on the Farm Bill.

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