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Reaction continues to farm policy extension

Jan. 10, 2013 | 0 comments

Reaction continued this week to the extension of old farm policies enacted by Congress during it's brinksmanship with so-called "fiscal cliff" legislation on Jan. 1.

In a rare New Year's Day session, both houses of Congress moved to extend current farm policy for nine months, putting off any new decision on farm legislation for the new session of Congress, which began only a few days later.

The extension measure, critics said, fails to address real budget issues since a new farm bill could have saved from $23-$35 billion depending on which version was ultimately passed.

Critics also noted that the extension fails to include federal farm programs that expired more than a year ago, including some livestock, disaster and conservation programs. Several organic and young farmer programs were also not included in the extension.

The Wisconsin Farm Bureau Federation called the recent fiscal cliff negotiations "a lost opportunity for true farm policy reform," but said the extension of the 2008 farm bill will give Wisconsin farm families the certainty they need for the 2013 growing season.

"We are disappointed that Congress did not agree on a new five-year farm bill that would have provided true reform to federal crop and dairy programs, and enhanced risk management tools," said Jim Holte, WFBF President.

Instead, Congress extended some provisions of the 2008 farm bill through most of the coming year. Advocates for new farm policy said it might be more difficult to get an overhaul of farm, food and renewable energy policies this year because budgetary concerns will be even more pronounced.

"Passage of a new farm bill needs to be a priority of Congress in 2013," Holte said. "In the meantime, farmers will be working under the familiar parameters of existing programs."

Despite legislative consensus to reform federal dairy policies in the context of a new farm bill, an extension of the previous farm bill brings back the Milk Income Loss Contract (MILC) program, which acts as a safety net for dairy farmers when feed costs exceed the price they receive for their milk.

But in its current state the MILC is a far cry from what it looked like when it was passed, as the triggers for the price of milk and the percentage that farmers get from the program have been reduced over the years.

The MILC has never been a favorite of the growing number of large dairy operations throughout the country, since it limits the ability of those farms to benefit from it, by virtue of a payment cap. The greatest benefit of the program goes to farms with herds of about 150 cows.

The fiscal cliff package also renewed the dairy price support program through Dec. 31 of this year.


The Dairy Business Association (DBA), a Green Bay-based organization, was "extremely pleased" with the extension of the 2008 Farm Bill because it did not include the proposed dairy title, one which included a supply management component.

"The supply management program was rejected because legislators in Congress realized that if it were passed this communism style of dairy policy would intrude on dairy markets by controlling the milk supply and artificially creating demand for dairy products at higher prices," said Laurie Fischer, Executive Director of the DBA.

Supply management programs have been tried before, been proven to be a mistake and a costly failure, she said.

"We can't continue to make the same mistakes. The removal of the Dairy Security Act from the farm bill extension is a victory for the nation's dairy producers."

Members of the DBA have been vocal in their opposition to the supply management portion of the dairy title, which was designed to limit milk production during times when farm milk prices dipped and feed prices rose - as they did in 2009, when dairy farmers around the country lost generations' worth of equity in their operations.

Opponents were not won over even when lawmakers proposed to make the supply management portion of the bill voluntary and only for those taking advantage of a government-subsidized margin insurance plan, similar to crop insurance.

Fischer said her members were concerned that the supply management provision and a smaller milk supply would limit the ability of the U.S. dairy industry to meet export needs and that dairy plants would have a hard time if the milk supply dipped.

Fischer says that DBA has advocated for reforming the dairy safety net programs, but believed the dairy title contained in the measure that passed the Senate in June and the House Agriculture Committee in July "would have taken our nation's dairy industry in the wrong direction."

Jerry Meissner, DBA president, said that all dairy farmers were not in favor of supply management. "Farmers from across the nation are not in favor of this provision.

"The world marketplace is hungry for and demanding dairy products. To limit milk production will take the United States out of the running to fill those world demands," he added.


Jerry Kozak president and CEO of the National Milk Producers Federation, an association of 30 or so dairy cooperatives, said this week that the status quo is not an acceptable outcome, either for farmers or taxpayers, when it comes to dairy and farm policy.

The organization's leaders will spend the coming months figuring out how to move farm policy forward in the new Congress, he said.

Thousands of news stories in the last two weeks of December speculated that consumers would face a "dairy cliff" after Jan. 1 - the potential return of the 1949 agriculture law that potentially could double farm-level milk prices and hit consumers hard at the dairy case.

During its post-Christmas lame duck session, Congress considered including the Dairy Security Act - the new margin insurance-based safety net for dairy farmers - in the overall farm bill extension as a way to prevent the permanent law from returning. In the end, however, most existing programs were extended.

Kozak's organization, which helped craft the measures in the dairy title known as the Dairy Security Act, had worked for three years on the policy package. Members of the group had asked NMPF to do so after the economic devastation farmers felt in 2009.

"As 2012 ended, we helped make visible the need to create a better dairy policy for farmers," Kozak said. "Returning to the 1949 law is not a viable long-term solution, but neither is the system we still have, featuring price supports at ineffectively low levels, along with direct payments that don't recognize the realities of today's dairy sector.

"We need to keep that need visible in 2013 so we end up with a better system," he said.

Kozak and Wisconsin Farm Bureau's Holte both expressed satisfaction that the overall fiscal cliff deal prevented the estate tax from returning at punitively high levels in 2013.

The fiscal cliff package included a 40 percent rate on estates valued at more than $5 million, up from the previous 35 percent rate, but far less than the 55 percent top rate on $1 million estates, with no exemption for a spouse, that could have become permanent if Congress hadn't passed the new package.

"The changes to the estate tax law are extremely important to Wisconsin farm families who look to pass their businesses on to the next generation," Holte said.

Holte said his organization appreciated the bipartisan vote by Wisconsin's congressional delegation to the farm bill extension. Senators Kohl and Johnson, along with Representatives Ryan, Baldwin, Kind, Ribble and Moore voted in favor of the legislation.


The Washington-based National Grange, expressed disappointment that Congress failed to ratify a new Farm, Food and Jobs bill, opting instead to extend provisions of old farm policy.

The extension lacked input from farm leaders in Congress and failed to address the hardships experienced by rural constituents and provides no alternative for several expired programs, the organization said.

"While the Grange understands the importance of avoiding a tax increase for 99 percent of Americans, those same Americans need the farm bill to ensure a safe and reliable food supply," National Grange President Ed Luttrell said. "The Farm Bill protects our growers and producers, expands opportunity in rural America, and provides one in 12 jobs in this country."

Luttrell criticized the extension because it does not include provisions for the Dairy Security Act, funding for the energy title, specialty crop and organic provisions, or beginning farmer and rancher programs. It also continues the direct payment method, despite its removal in both the House and Senate versions of the 2012 Farm Bill.

The most frustrating part of the extension, he said, is that Congress had plenty of time to put in place a new Farm Bill.

"Congress has had nearly six months to address this issue," Luttrell said. "Congressional leaders are not giving rural constituents the attention and assistance they require to continue feeding our nation and the world."

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