Milk Producers Council
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From The MPC Newsletter
Friday, August 13, 2010

Continuing to Delve into the Details of the DPSP
By Rob Vandenheuvel, General Manager

This newsletter continues to commit a lot of space looking at the details of H.R. 5288 and S. 3531.  One of the criticisms of the bill is directed at the fact that it is a program that relies on government involvement.  I can certainly relate to the anti-government sentiment behind these arguments.  Our dairies already face strict government regulations – in how your milk is priced, how you treat your animals, and in how you manage your air and water resources.  So the thought of any more government involvement is understandably enough to raise serious questions.

On that note, this article will take a look at what additional powers the government (USDA) would actually have if we were to implement H.R. 5288/S. 3531.  If you want to see for yourself what the bill would and would not do (rather than letting the critics define the bill for you), the actual bill text can be found at www.stabledairies.com.

Determining how much milk you can produce on your dairy.  Nothing in H.R. 5288/S. 3531 would tell you how much milk you can produce.  Instead, the bill creates a structure where you will be entitled to an actual check in each quarter you manage your production to less than 3% over the same quarter last year.  The only time you wouldn’t receive this check is during periods when your dairy decides to expand your share of the market and grow beyond 3%.  During these periods of growth, you would temporarily forfeit your share of those dividends for the next year while you are establishing your higher share of the market, and you will have to budget for a market access fee to be paid during that time.  That fee will be used to fund the dividends that are paid to your colleagues who are holding their production growth to less than 3% in those quarters you are growing.  H.R. 5288/S. 3531 is an agreement amongst the 65,000 dairies that at any given time, some dairies will be in “growth mode,” and the rest will be receiving a financial benefit for managing their production.  The USDA will have no say in how much milk you produce.

Setting the “market access fee” and the “allowable year-over-year growth.”  Under the bill, USDA would have no ability to affect these figures.  The fees and allowable growth are automatically adjusted by a set of triggers clearly outlined in the legislation.  These triggers move the fees and allowable growth up and down, depending on the general economic health of the dairy industry.  The only opportunity to adjust how these triggers operate is if 2/3 of the producer board agree that a change is necessary – a very high threshold, considering what we’ve seen in our industry’s ability (or inability) to agree on just about anything.

So what is that USDA would actually do under H.R. 5288/S. 3531?  It’s simple – they would serve as an escrow-type service, collecting the fees each quarter from the expanding dairies and distributing them to the rest of the dairies.  That’s what it boils down to.  So what’s so scary about that?  If your cooperative or trade association is hiding behind this anti-government sentiment as a reason for staying on the sidelines in this debate, they need to hear from you and come up with a better excuse for not supporting this common-sense proposal.

 

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