Editorial: Farm bill provides dairy with some stability

Editorial: Farm bill provides dairy with some stability

Dairy once again proved it can be a divisive issue. Reportedly, the farm bill’s dairy provisions were still being hammered out just hours before the final bill was filed with the House Rules Committee. All this took place less than 48 hours prior to the full House vote and its eventual passage. From our vantage point, the extra time was well worth it. The dairy portion of this farm bill offers us far better shelter against price volatility than previous programs even though it isn’t the complete package many of us lobbied for over the past three years.
How heated was the dairy debate?

“If I expire in the next three days, I want a glass of milk carved on my tombstone — because it’s what killed me.” That was the direct quote from House Agriculture Committee Chairman Frank Lucas (R-Okla.) right after the farm bill was publicly released by the conference committee.

Of course, Lucas expended a great deal of energy because he was pinched in a vise on the right by House Speaker John Boehner (R-Ohio) and from the left by House Agriculture Committee Ranking Member Collin Peterson (D-Minn.) who worked for years on this bill. That pressure came from polarized thoughts on the Dairy Security Act’s Market Stabilization component if you’re on Peterson’s side or “Soviet-style” supply management if you stood in Boehner’s camp.

The International Dairy Foods Association (IDFA) deployed an effective strategy of both time and money to build momentum behind the Goodlatte-Scott Amendment which aimed to strip out Market Stabilization. In that effort, IDFA propelled its theory that farmers were trying to raise milk prices and that could cause consumer prices to skyrocket if representatives supported Market Stabilization even though there wasn’t one study to support that notion.

Despite its failure in the House Ag Committee twice, Goodlatte-Scott eventually passed the full House only to die a quick death when the June version of the farm bill was voted down the same day. Yet, Goodlatte-Scott mortally wounded any supply controls even for short periods of time to right dairy’s supply-demand ship.

That strategy alone did not end the well-researched, dairy farmer-endorsed Market Stabilization program. Boehner ultimately held the trump card on the issue because he could prevent the farm bill from reaching the House floor as Speaker of the House representing the majority party. The 291 to 135 vote on Goodlatte-Scott fortified his resolve; well-documeneted campaign contributions didn’t hurt either.

In the end, the insurance program known as the Dairy Producer Margin Protection remained a centerpiece. However, inserted were tiers that make insuring for the first 4 million pounds of annual milk production on all farms almost a no-brainer decision at the extremely low-premium levels. This concept also offers a break to small and midsized farms. Production over the 4-million-pound mark would still be eligible but at higher premium rates.

This last-minute tinkering came with quite a price tag. Boehner and his anti-supply-control advocates were willing to sign off on tripled spending levels to get the bill done and keep a steady stream of milk flowing to processors. The Congressional Budget Office (CBO) projected dairy program costs tripled from $300 million in the original dairy-farmer-supported Dairy Security Act to $900 million due to the final compromise.

The majority of the added costs come from the fact there is no lever to place downward pressure on milk flow and help prices rebound in dire situations with Market Stabilization out of the bill. That action would vastly reduce insurance payouts to farms. The late addition of the Dairy Product Donation Purchasing Program also added new costs.

If we could read one statement into the record on the passage of this bill, it would be this: “Dairy farmers strongly supported the lower spending plan, but processors so adamantly opposed any muffler on milk production that it convinced fiscal conservatives to allow tripled spending on dairy provisions.”

A number of dairy leaders across the nation deserve credit for a revamped dairy program. The National Milk Producers Federation forged early discussions across the nation. Credit also goes to elected officials who stood up for dairy producers and built a much-improved dairy policy. Articles on pages 115 and 140 of this issue offer more insight to its actual mechanics.

We firmly believe every U.S. dairy farmer should take a hard look at the program. We see very little reason not to sign up for the minimum coverage. Levels beyond that could certainly warrant your purchase, as well. Run your numbers, and make a decision before the sign-up period ends late this summer.

This editorial appears on page 124 of the February 25, 2014 issue of Hoard's Dairyman.

Return to the Hoard's Dairyman feature page.

Visit the Dairy Policy E-Sources