Posted: Thursday, July 21, 2011 11:00 AM
Carol Ryan Dumas/Capital Press
Profits on milk from these cows on Si-Ellen family dairy, Jerome, Idaho, could be better protected if draft legislation by Rep. Colin Peterson, D- Minn., makes it into law.
Budget limitations force changes to draft legislation, supporters say
Supporters say the National Milk Producers Federation's proposal to overhaul federal dairy policy made it through to a legislative draft fairly intact.
House Ag Committee ranking member Collin Peterson, D-Minn., released a draft July 14 that includes the three fundamental components in Foundation for the Future, which the federation contends must be passed as a package to be effective.
The proposal contains a federally funded margin-insurance plan, a supply management plan and changes to federal milk marketing orders.
The draft makes two changes to the federation proposal. Instead of covering 90 percent of a producer's milk production, the margin insurance would cover 75 percent. The draft still provides a supply-management scheme that includes an assessment on farmers who expand their production beyond an allotted amount. Instead of all of the assessment going to programs to stimulate demand, half would go to the Treasury Department.
With those two changes, the Congressional Budget Office found $166 million in savings over five years, a 25 percent budget reduction in current federal dairy outlays.
"Both changes in the legislative discussion draft were made in light of budgetary limitations. Without these compromises, we won't be able to move FFTF forward," said Chris Galen, the federation's senior vice president of communications.
California dairymen need to evaluate those changes, said Jamie Bledsoe, a Riverdale producer and president of Western United Dairymen. Lowered insurance coverage could affect California dairymen's ability to compete nationwide, he said.
Producers still have the option of purchasing supplemental insurance up to 90 percent of their historical base, and with a 3 million pound cap in the Milk Income Loss Contracts program not much of Western-size producers' production is currently being protected, Galen said.
"I would wager it's a lot less than 75 percent. So we can certainly make the case that the margin-protection program is the better safety net going forward," he said.
As for giving half the assessment from the supply-management program to the Treasury, Bledsoe said if producers are going to forfeit payment on milk, it should be used to help themselves by creating demand and correcting the market.
Remitting half of the money collected will benefit producers by partially offsetting the cost of the margin-protection program, Galen said.
"The bottom line is that farm programs have to reflect what's best for producers, as well as what's achievable in light of the limited federal budget going forward, given that farm programs are looking at an ax headed toward them," he said.
Idaho Dairymen's Association voted to support Foundation for the Future last summer with the caveat that it could pull that support if it didn't like the draft legislation.
"I don't envision the (IDA) board pulling back support," said Bob Naerebout, IDA executive director.
Both changes are understandable in this budgetary environment, he said.
Producer support of the draft and the changes will show Congress that dairymen believe this is a good program and are willing to step up to the plate and help cover the cost, he said.