Smaller farmers, producers fare better under current policy, NFU president says

By CAROL RYAN DUMAS

Capital Press

The National Farmers Union and Western United Dairymen support dairy reform, but both organizations have concerns with the National Milk Producers Federation's Foundation for the Future proposal.

NFU's biggest objection is that the proposal is skewed toward larger producers, NFU President Roger Johnson said.

"The small farmer ends up coming out on the short end of the stick," he said.

Under current policy, all of a smaller producer's production is eligible for Milk Income Loss Contract payments, whereas the new proposal would apply to only 75 percent of production under National Milk's margin-insurance program, he said.

"Smaller producers are better off under current policy," he said.

Western United contends the program is more advantageous for producers in the Midwest and does not offer enough protection for producers in the West, said Michael Marsh, the organization's executive director.

In its analysis, Western United found that over the last 10 years California producers' margins fell to the proposal's $4 trigger point for insurance payments in 30 months. Yet California producers would have received insurance payments in only eight of those months.

That's because the margin formula is based on the national all-milk price and national feed costs, but producers' feed costs in the West are significantly higher, he said.

"We have a different margin," he said.

As a comparison, the $4 margin would have occurred in Wisconsin and Minnesota in only eight months, and producers there would have received insurance payments in all eight months.

NFU also takes issue with the proposal's floating base of production in the stabilization plan, which would assess a fee on a portion of a producer's production over allowable growth.

Producers who want to expand above allowable growth could too easily adjust their base with little to no consequence, Johnson said.

"It really doesn't have an impact in trying to moderate production," he said.

"The challenge with supply management is the definition of supply," Marsh said. "Supply is global."

The industry doesn't want a program that would invite imports or deter exports. But National Milk took the global picture into consideration and did a pretty good job of addressing it, he said.

Reform to federal milk marketing orders is another area of concern.

Western United's concern is whether California plants and producers can remain competitive with the rest of the nation if federal orders -- in which California does not participate -- move to a competitive pay price for Class III milk and Class III producers no longer share in the pricing pool.

Processors with plants in California could shift their production outside California if the price for milk is lower in other states, he said. Also, California plants would have no market for their product if the price of products made elsewhere was lower, reflective of lower milk costs.

The California Milk Producers Council last week gave its official support to the proposal, while California Dairy Campaign applauded NFU's position.

NFU views the "discussion draft" of legislation, modeled on FFTF, now circulating in the House of Representatives as an invitation for suggestions rather than the final legislation, Johnson said.

Online

NFU's resolution: www.nfu.org

Western United's analysis: Westernunitdeddairymen.com