Processing firms fear proposed supply management will cripple export market

By CAROL RYAN DUMAS

Capital Press

An amendment to drop the proposed milk supply management from the Senate's version of the farm bill was offered April 24.

Sen. Mike Bennett, D-Colo., offered the change one day before the Senate was to begin marking up the bill.

The amendment would strike the proposed milk supply management system based on House Resolution 3062, offered by Rep. Collin Peterson, D-Minn., and based on a proposal by the National Milk Producers Federation.

International Dairy Foods Association strongly opposes any supply management and sees Bennett's amendment as the voice of reason, said Peggy Armstrong, IDFA vice president of communications.

The Senate draft contains the margin-insurance plan proposed by Peterson, but that plan would tie margin insurance to supply management.

Bennett's amendment makes sense for dairy policy, Armstrong said, and IDFA sees it as a true compromise.

IDFA is hopeful the amendment will pass, she said.

A few IDFA member processors were in Washington, D.C., on April 24 to tell Senate Agriculture Committee members how supply management would negatively impact their ability to grow and innovate.

"I think they carried a very powerful message to the Hill," she said.

Those members and IDFA's Jerry Slominski, senior vice president for legislative affairs, were in meetings all day, but IDFA held a press briefing on the issue this morning and processors provided prepared statements.

"Congress has been told that they can attempt to control milk supply and demand without harming consumers and the overall industry, and that is simply not true," Slominski said.

The U.S. dairy industry has spent millions of dollars during the past 30 years to become a relevant dairy supplier to the world. A supply management policy would shut down the supply of milk and set back the industry for years to come, said Jon Davis, president and CEO of Davisco Foods International and Jerome Cheese.

Over the last five years, the U.S. dairy industry has gone from importing more than it exports to a trade surplus of $2.4 billion and record high dairy exports in 2011, he said.

The United States has less than 5 percent of the world's population. This legislation would effectively eliminate 95 percent of the dairy industry's potential customers, he said.

"That's bad policy anytime but especially now after all of the positive strides our industry has made by becoming a supplier of choice ... throughout the world," he said.

The existence of a government supply-control program would be a signal to foreign competitors and trading partners that the United States is not a serious and reliable long-term supplier, said David Ahlem, vice president of dairy procurement and policy for Hilmar Cheese.

Hilmar has invested heavily to take advantage of growing international demand and now exports to more than 40 countries, he said.

Supply management would have a serious impact on the company's ability to continue to grow, he said.

Hilmar is not alone in investing in the country's future dairy industry, based on growth in export demand. A supply-management program puts that investment infrastructure at risk, he said.

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