By CAROL RYAN DUMAS
Sens. Kirsten Gillibrand, D-N.Y., and Susan Collins, R-Maine, plan to introduce a bill on Tuesday to reform the federal milk marketing order system.
The bill is part of a comprehensive plan to provide a fair safety net for farmers and improve dairy product inventory reporting and transparency, said Bethany Lesser, Gillibrand's director of communications.
But the senators are likely face an uphill battle on federal order reform, due to processor opposition and producer apprehension.
The bill would force USDA to begin a hearing process to restructure the pricing system, currently based on end-product pricing formulas. It would require USDA to consider alternative formulas for Class III milk -- milk to manufacture cheese -- and study different methods of determining federal order prices, including competitive pay pricing or shifting from a four-class system to a two-class system.
National Milk Producers Federation proposed marketing order reform in its Foundations for the Future, the basis for the Dairy Security Act, introduced by Rep. Collin Peterson, D-Minn., last September. The proposal was dropped from the final legislation.
One of the biggest issues National Milk faced was that it is hard to reform the marketing order system while it was also embarking on the largest change in 30 years in the farm safety net, said Chris Galen, National Milk's senior vice president of communications.
The organization's proposal included margin insurance for dairy producers and a milk-supply management program, both contained in the Dairy Security Act.
"It was a challenge to maintain a focus on what to do with FMMOs while also explaining and advocating the DSA. In the end, we focused on the latter," he said.
At the same time, processors were campaigning to eliminate the federal orders, Galen said, so it was hard to build a cross-industry consensus, or even a dialogue, in that acrimonious environment.
That environment still exists.
International Dairy Foods Association, which represents dairy processors and marketers, continues to contend federal orders can't be fixed and should be phased out.
"Government-set pricing systems have far outlived any benefit to the industry or consumers," said IDFA President and CEO Connie Tipton.
Gillibrand's bill is another attempt to force USDA to patch the tire of a 75-year-old pricing system that can't be fixed," she said.
National Milk continues to support the federal order system and opposes eliminating the program, Galen said.
"Instead we advocate an organized, structured approach through the administrative process of USDA to review, modify and improve certain aspects of the present system," he said.