Milk Producers Council
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From The MPC Newsletter
Friday, April 27, 201
2

A Big Week In Congress For Dairy Policy Reform
By Rob Vandenheuvel, General Manager

While dairy farmers across the country are continuing to struggle under the economic stress of a milk price that fails to cover the costs of producing that milk, our elected officials that serve on the Senate Committee on Agriculture, Nutrition and Forestry (we’ll use “Senate Ag Committee” for short) took bold and decisive action this week that should give dairies throughout the country reason for some mild optimism.

This past Thursday, the Senate Ag Committee approved their version of the 2012 reauthorization of our nation’s farm policies (known as the “Farm Bill”), with a bipartisan vote of 16-5. Included in the legislative package are provisions from the Dairy Security Act (also known as the “Peterson-Simpson Bill”). As regular readers of this newsletter know very well by now, MPC strongly supports the Dairy Security Act, and we’re not alone. Dairy trade associations and cooperatives from around the country have lined up in support of this legislation to reform our Federal safety net policies. In case you missed it last week (http://www.milkproducerscouncil.org/updates/042012.pdf), MPC co-signed a letter with 28 other dairy organizations/cooperatives from around the country in support of the Dairy Security Act provisions outlined in the Senate Ag Committee’s version of the 2012 Farm Bill.

While this week’s passage of the dairy legislation out of the Senate Ag Committee is an important and exciting milestone, it is also a reminder of how much work we still have in front of us. The Committee-passed Farm Bill now goes to the full U.S. Senate to be debated and voted on by all 100 U.S. Senators. The U.S. House of Representatives must also go through their process of having the House Ag Committee write a Farm Bill and have it debated/voted on by the 435 Members of the U.S. House of Representatives. At that point, any differences between the Senate and House versions of the 2012 Farm Bill would have to be reconciled, possibly through a “conference committee.” Ultimately, both the House and Senate will need to pass identical legislation. Then, after all that happens, the President must sign the bill in order for it to become the law of the land. So long-story-short: we have more work to do. For those of us who have fought hard to promote the Dairy Security Act, we need to continue calling/writing/emailing our Members of the House and Senate.

At the same time the Senate Ag Committee was wrapping up their process of writing and approving their version of the 2012 Farm Bill, the House Ag Committee’s Subcommittee on Dairy, Livestock and Poultry was holding a hearing on dairy policy in the 2012 Farm Bill. While there was quite a bit of testimony given in support of the Dairy Security Act, it was clear that the International Dairy Foods Association (IDFA, which is the main lobbying organization for many of the nation’s dairy product processors) continues to use all the tools available to them to attack the Dairy Security Act. Their opposition in the hearing, which was expressed in testimony by Jon Davis, CEO of Davisco Foods International, Inc., is specifically aimed at the Dairy Market Stabilization Program – the piece of the Dairy Security Act that empowers dairy farmers to collectively and quickly respond to supply/demand imbalances by temporarily adjusting milk production.

IDFA’s opposition comes as no surprise. Dairy farmers have a perishable product produced by a living animal, giving us a constant supply of milk we must sell everyday. And due to factors that are too many to go into in this article, our individual dairies have every incentive to produce as much milk as possible everyday, regardless of the profitability of producing that milk at any given time. On the other side of the equation, those who buy our milk are under no obligation to buy milk everyday, nor are they forced to buy from any specific dairy. That inherently creates a severe imbalance of power within our industry – an imbalance that greatly favors the processors who buy our milk.

What the Dairy Security Act – and specifically the Dairy Market Stabilization Program – does is begin to shift some of that power. The program is designed to be used quickly, temporarily and rarely. But the fact that under the program, U.S. dairy farmers would have the ability to collectively respond to negative on-the-farm margins with production adjustments is something that IDFA correctly sees as a fundamental shift of market power away from them and towards the individual dairy farmers. This is a legislative change they will fight to the bitter end, so as dairy farmers, we must be fully engaged in the legislative process, defending the Dairy Security Act through the Senate, through the House of Representatives and all the way to the President’s desk.

 

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