Industry fails to unite on single proposal as processors, producers trade more barbs

By CAROL RYAN DUMAS

Capital Press

In a period of nine days, Sen. Bob Casey, D-Pa., has introduced two dairy bills, one with a supply-management program and one without.

The Federal Milk Marketing Improvement Act, S1640, introduced Oct. 3, includes a supply-management plan. The Dairy Advancement Act, S1682, introduced Oct 12, does not. Neither bill has any co-sponsors.

Rob Vandenheuvel, manager of California Milk Producers Council, is paying close attention to Casey's introduction of two bills with different constituencies.

"Rather than come together on a common proposal ... we're seeing dairy groups across the country jump on different bills," he said.

That lack of consensus likely pleases the International Dairy Foods Association, which adamantly opposes any supply management, he said.

The Federal Milk Marketing Improvement Act provides that if the secretary of agriculture determines there is an oversupply of milk, he can reduce minimum prices by half of the Class II price on 5 percent of production. If an excess of milk still exists, the secretary can reduce the price on any production over a producer's historic base.

The bill is an updated version of the Spector-Casey Act, which never made it out of committee.

The Dairy Advancement Act does not have a supply-management element. It would eliminate the dairy product price support program and allow producers to continue to participate in the Milk Income Loss Contract or Livestock Gross Margin-Dairy programs, which pay producers on a portion of their milk when prices are below a trigger level.

Pro Ag, the most vocal supporter of the Federal Milk Marketing Improvement Act, does not support the Dairy Advancement Act, said Arden Tewksbury, Pro Ag manager.

"We're not going to support anything that doesn't give dairy farmers cost of production and a reasonable profit. (The bill) doesn't do anything about pricing milk differently to dairy farmers than today," he said.

Another reason he's against the bill is that it is supported by International Dairy Foods Association, which represents processors. Processors have never been interested in a fair price for producers, he said.

"If Connie Tipton, of IDFA, thinks it's a good bill, I want to run the other way," he said, referring to the president and CEO of the processor organization.

Tipton does support the bill, saying it moves the dairy industry toward consensus.

"Most importantly, the bill will not hamstring our industry with a new government program to limit milk supply as does the controversial Peterson proposal," she said in a written statement.

The bill also includes critically needed risk-management tools with MILC and LGM-D, she said.

The problem is the proposal relies solely on those two programs as dairymen's only safety net, Vandenheuvel said.

Large dairies aren't helped by MILC because of its cap on covered production. And while LGM-D is a good program, it has a limited budget and covers only a miniscule amount of production. The program was funded at about $16 million in fiscal 2011 and cut by about half in fiscal 2012, he said.

The potential for growing the program is a concern, given budgetary constraints in Congress, he said.

The bill does not have a supply-management component that would allow producers to respond to supply-demand imbalances, and neither bill offers the margin insurance proposed in a bill offered by Rep. Collin Peterson, D-Minn., he said.

S1640 was referred to the Senate Ag Committee. No action has been posted on S1682.