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Battle Over Supply Management In Farm Bill Dairy Title Escalates

Senate, House Agriculture Committees To Mark Up Farm Bills Next Week

Both the Senate and the House Agriculture Committees are scheduled to take up the farm bill next week, and as those panels prepare to mark up that legislation, they are hearing from both sides over the pros and cons of milk supply management.

The Senate Agriculture Committee is scheduled to begin marking up its version of the farm bill starting on Tuesday, May 14, while the House Ag Committee will take up the legislation one day later.

The Senate Ag Committee will be marking up the Agriculture Reform, Food, and Jobs Act of 2013, which was introduced back in January by Senate Majority Leader Harry Reid (D-NV).

That bill, which is the farm bill passed by the full US Senate last year, includes the Dairy Security Act (DSA), which was developed by the National Milk Producers Federation (NMPF). The DSA includes a voluntary Dairy Producer Margin Protection Program as well as a Dairy Market Stabilization Program that would be mandatory for dairy producers who sign up for the margin protection program.

On Wednesday, NMPF and more than 50 other dairy producer organizations sent a letter to members of the House Ag Committee, urging that panel to include the Dairy Security Act in the farm bill it begins drafting next week.

The producer entities signing the letter said they support the DSA’s provisions, which were included in the farm bill approved by the House Ag Committee last year, and oppose any effort by US Reps. Bob Goodlatte (R-VA) and David Scott (D-GA) to “weaken the safety net” through their recently introduced Dairy Freedom Act.

The Dairy Freedom Act includes a dairy producer margin insurance program, but doesn’t include a market stabilization program.

“The DSA offers dairy farmers the ability to insure against catastrophically-low margins, such as those experienced by dairy families in 2009, and again in 2012,” the letter stated. “It also helps to moderate the volatility in milk prices by maintaining better market balance, which benefits consumers as well as farmers.

“This last point must be reiterated in light of the competing philosophy offered by Goodlatte-Scott,” the letter continued. “When margins are tight, farmers feel pressure to produce more milk not less, in an effort to cash flow their businesses. Individually, this may seem to be a prudent decision, but collectively, more milk at a time when supplies are excessive simply exacerbates the low margin conditions.

“This is why the DSA contains a market stabilization component,” the letter added. “Market stabilization sends a clear signal to farmers participating in this program that a bit less milk is needed. Not only does this hasten a rebound in low-margin situations, it reduces the cost of the program to the government.”

The Dairy Freedom Act is supported by processors “precisely because it offers them the prospect of lower milk prices, subsidized by government insurance payments,” the letter stated. “This scenario is ...More