By JIM WERKHOVEN
For the Capital Press
While there are still some hurdles to clear, the dairy reform plan put forward by the National Milk Producers Federation last summer is steadily gaining support on Capitol Hill.
There are three reasons why.
The first is practical. The NMPF plan is the only comprehensive dairy proposal on the table as Congress settles down to write a new multiyear farm bill.
The second is realistic. The NMPF plan offers the best chance for avoiding a repeat of 2009, when a perfect storm of plummeting milk prices and high feed costs pushed profit margins to the brink.
And the third -- perhaps the most important on Capitol Hill -- is financial. At a time when all federal spending is under intense scrutiny, the NMPF plan saves nearly $170 million over five years. As a result, it offers a timely down payment on the $1.2 trillion in deficit reduction Congress wants to approve by Thanksgiving.
For dairy farmers in the Northwest and across the country, the NMPF plan is a clear win. By reorienting dairy policy from an emphasis on price to a focus on maintaining adequate margins, it would help deal with the wild price swings that have plagued our industry in recent years.
The bill scraps the current farm-level safety net, and establishes what amounts to an insurance program to protect farm income when margins shrink to dangerous levels. To prevent steep milk price declines or prolonged low-margin situations, a standby program would limit milk production for short periods.
That supply management feature has caused some debate among farmers. But, since the program is voluntary, those who do not want to participate won't have to. All producers will have a choice between a free-market approach, and one in which the government provides a basic safety net, but also requires producers to regulate their output when necessary.
The NMPF plan, introduced in the House as the Dairy Security Act of 2011, would also simplify the federal order system -- but only with dairy farmer approval. It would order the Agriculture Department to eliminate cumbersome price formulas for milk used in cheese making and create a new, more marketed-oriented means of establishing farm-level prices. A majority vote of producers would be needed to put these changes into effect.
This country has the best dairy producers in the world. We need a safety net that works for us and that keeps pace with the challenges facing our industry. The current dairy program is hopelessly out of date, as the devastation in 2009 proved.
The bipartisan Dairy Security Act, introduced by former Agriculture Committee Chairman Collin Peterson, D-Minn., and senior Idaho Republican Mike Simpson, offers the best hope for future stability and growth. It protects producers, assures an abundant supply of milk and saves tax dollars. It deserves the support of all dairy producers and quick adoption by the House and Senate.
Jim Werkhoven, a dairy farmer from Monroe, Wash., is chairman of the board of Northwest Dairy Association, a Seattle-based cooperative with more than 540 members in six western states.