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Disagreement over milk supply management continues

Published on May 21, 2013 3:01AM

Last changed on May 21, 2013 7:50AM

Sean Ellis/Capital Press
Cows feed at a dairy near Kuna, Idaho, May 13. Congress is weighing two plans to protect dairy farmer against low prices.

Sean Ellis/Capital Press Cows feed at a dairy near Kuna, Idaho, May 13. Congress is weighing two plans to protect dairy farmer against low prices.

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Capital Press

Proponents of the Dairy Security Act, included last week in farm bills passed by the House and Senate ag committees, say they are pleased the proposal remained intact.

But opponents of the milk supply management portion of the bill anticipate a different outcome when the House bill is debated on the floor and say they have a good chance of prevailing when the farm bill goes to conference committee, said Jerry Slominski, the International Dairy Foods Association's senior vice president for legislative and economic affairs.

Dairymen and processors seem united on the bills' proposal to create insurance to protect dairymen's margin between the price of their milk and feed costs.

However, milk supply management has remained controversial, with processors staunchly opposed to it.

The National Milk Producers Federation, which spent nearly four years developing the two-pronged proposal, contends margin insurance and a program to trim back milk production in times of low margins provides the best combination of effective risk management for dairy farmers.

International Dairy Foods Association, which represents processors of dairy products, vehemently disagrees, saying milk supply management will increase prices to consumers and hurt the industry and exports.

IDFA cites letters of opposition to supply management signed by nearly 150 national and regional organizations sent to members of Congress.

Those groups oppose the proposed Dairy Market Stabilization Program, contending it will keep milk prices artificially high; increase prices to consumers, retailers, restaurants, and food manufacturers; raise prices on dairy products for government nutrition programs; stunt the dairy industry and farm and job growth; and have an adverse effect on dairy exports.

Those groups include: IDFA; California Dairies Inc., Dairy Institute of California, Davisco, Dean, Glanbia, Hilmar, Kraft, Lactalis, Leprino, Saputo, Sargento, Sartori and Wisconsin Dairy Business Association.

National Milk rebuts those claims, starting with supply management raising the price of milk.

According to an analysis, milk prices change each month by far more than the half-cent-a-gallon effect of the Dairy Security Act, said Chris Galen, National Milk's senior vice president of communications.

The effect on consumers would not even be perceptible, he said. Dairy farmers only get about 30 cents of every dollar consumers spend on milk. They don't set retail prices, and a change in their milk check doesn't translate to retail prices, he said.

In addition, milk supply management would go into effect only when margins between dairymen's milk price and feed costs are extremely small. In the last four years, supply management would have been triggered only a couple of months in 2009 and 2012, he said.

The small effect on milk prices and the limited scope of production cuts, in length and in a very small percentage of a producer's production, would not cause any of the problems opponents are claiming, he said.

IDFA and some others in the dairy sector prefer a proposal by Reps. Bob Goodlatte, R-Va., and David Scott, D-Ga., that would provide margin insurance but not supply management. That amendment was defeated 26-20 by the House Ag Committee last week after being defeated in the committee 29-17 in July 2012.

"We think that Congress will eventually adopt the Goodlatte-Scott approach that offers an effective safety net for dairy farmers but without periodically penalizing dairy farmers to force them to limit milk production," IDFA's Slominski said.

The House vote was much closer this time and was encouraging as the Goodlatte-Scott bill was up against Chairman Frank Lucas, R-Okla., and Ranking Member Collin Peterson, D-Minn., who introduced DSA, and still came very close to winning, he said.

The Goodlatte-Scott bill is bad for dairymen, National Milk contends.

Without a mechanism to put the brakes on potential excess milk production, the bill offers processors an over-abundant, cheap milk supply that will help their corporations' bottom lines while ensuring farmers are underpaid for their milk, National Milk stated when the amendment was introduced in late April.

That proposal has been defeated twice in the House Ag Committee, and supporters should take a hint that it's not supported by dairy farmers or Congress, Galen said.


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