Processors, producers have competing goals

By CAROL RYAN DUMAS

Capital Press

Processors and producers are split on proposals for supply management and raising the national standard for fluid milk.

The proposals were two of the most highly contested issues in the Dairy Industry Advisory Committee's deliberations on how USDA can help producers.

The committee voted on its recommendations March 3. Both issues were divided along producer-processor lines.

The recommendation for a national growth-management plan passed by only one vote on the 17-member committee. And while the recommendation that USDA "explore" raising fluid milk standards passed unanimously, that consensus only came after the committee reversed its earlier recommendation adopting a higher standard.

Dairy Farmers of America supports a growth-management concept that allows producers to manage production to meet global demand and provides a mechanism to address extreme volatility, said Kristi Dale, media relations manager.

Any growth management program "needs to have a triggering mechanism that activates the program when it's needed and deactivates when market balance is achieved," she said.

In seeking comment from processor Dean Foods, Capital Press was referred to International Dairy Foods Association, which is vehemently opposed to any supply management plan.

"Basically, IDFA believes the industry is better served to have market forces help rather than government forces," said Peggy Armstrong, vice president of communications.

World demand for dairy is growing, and supply management would hinder U.S. dairy's ability to take advantage of new opportunities, both domestically and internationally, she said.

"Processors have made no secret of the fact they are opposed to any attempt by producers to unify and manage supply with demand," said Rob Vandenheuvel, manager of California's Milk Producers Council. "I understand processors' philosophical objection, but I've yet to hear any rational explanation."

The growth-management programs being discussed are standby, short-term, market-stabilization programs to help producer prices rebound, he said. With market allowances and pooling, processors are far more protected from down markets.

The committee's recommendation is for a program that would allow new producers to enter the industry and allow producers to expand, he said.

On adopting California's higher fluid milk standards, IDFA is pleased the recommendation was to explore the issue further and review the impact that the fortification standards would have if they were applied to all U.S. fluid milk, Armstrong said.

The processor organization is opposed to requiring the standards for all fluid milk sold in the country.

"It limits consumer choices, raises milk prices, and unnecessarily increases the cost for government nutrition and feeding programs," she said.

DFA supports more study of the issue.

"It is important to understand what national application of these standards would mean for producer prices and consumer demand," Dale said.

Michael Marsh, executive director of Western United Dairymen, says opposition to "putting more milk in milk" is perplexing.

"Milk has so many competitors for room in the stomach. It simply makes sense ... to give them more nutritious products," he said.

Consumers outside California have responded favorably in taste tests conducted by the California Milk Board, saying they'd be willing to pay substantially more for the fortified milk, he said.