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RSS By: Jim Dickrell, Dairy Today

Jim Dickrell is the editor of Dairy Today and is based in Monticello, Minn.

The Farm Bill Game

Nov 18, 2013

If costs go too high, it might be our last farm bill dairy program.

Believe it or not, we might, just might, get a farm bill.

Sources tell me congressional staffers are quietly meeting to hammer out differences in the Senate and House versions.

In anticipation of final passage, we asked Marin Bozic, a dairy economist with the University of Minnesota, to lay out some of the things dairy farmers should consider. He presented those thoughts at our Elite Producer Business Conference in Las Vegas last week. 

The devil, of course, will be in the details. If the Senate/House Conference Committee accepts the Senate version, the dairy program would include a market stabilization program, which would require participants to reduce milk production (or forfeit a portion of their milk check) if margins fall below certain thresholds. If the House version prevails, there would be no market stabilization program.

Another critical factor will be deadlines for annual sign-up. Note: If you sign up to participate in the Senate version, you’ll need to participate for five years. But the program would allow you to change the level of margin protection you want each year. The House version allows you to participate on annual basis.

When you’ll be required to make that decision each year is critical. Under the House language, you’ll be required to pay margin insurance premiums by Jan. 15 of the calendar year of participation. This would allow farmers to know market conditions, especially for the first half of the year, and give them a pretty good idea if indemnities are likely.

But if the program is patterned after crop insurance, deadlines might be set at March 15 for the federal fiscal year starting Sept. 30. That way, farmers won’t know what crop growing conditions are and will be far less able to predict margins.

Dairy Today polled EPBC attendees last week on their preferences. Keep in mind that attendees to our conference average well over 2,500 cows per herd. This peer group represents fully one-third of U.S. milk production. And their participation (or non-participation) will go a long way in the dairy program’s success or failure.

Not surprisingly, of those responding to our poll, more preferred the Jan. 15 deadline. Twenty-eight percent said they’d participate if the deadline under the Senate version was Jan. 15 versus 17% for the March 15 deadline. The trend was similar for the House version, with 34% preferring Jan. 15 versus 25% preferring March 15.

"The big drop from Jan. 15 to March 15 indicates that some producers do not need the risk management program, and won’t use this unless it’s an investment vehicle," says Bozic.

Interestingly, 44% were leaning against participation in either program if the sign-up deadline was March 15. Non-participation ranged from 33% even with the Jan. 15 sign-up under the Senate version versus 22% under the House version.

In other words, these large farms would love a program that gives them a greater chance of a return on their insurance "investment." That’s human nature, I guess.

But, in my opinion, it really doesn’t drive the industry toward a risk management mindset. It’s more of a reversion to a "farm the government" mindset.

Ohio State University analysis shows the new dairy program could cost substantially more than the (now expired) Milk Income Loss Contract (MILC) program. Without market stabilization, the analysis shows costs could be 3X MILC. Even with effective market stabilization, costs could double.

USDA rule writers have a dilemma on their hands. Go with a March 15 sign-up, and participation could suffer. Go with the Jan. 15 sign-up, and costs could soar.

But here’s the thing: If the price tag to taxpayers gets too high, it might be our last farm bill. 

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COMMENTS (1 Comments)

Senior PA Dairy Farmer - PA
Senate or House “version,” it does not matter, real dairy farmers, “elite” or not, get screwed! It always happens that way in this unscrupulous era of “New World Order,” “Farm” Bills. To think that we have come to such a despicable point in our nation’s history that decent rural Americans, no matter the size of their herds, suppress conscience and think NOTHING is wrong in supporting more of the same malicious “dairy” policy schemes that have progressively eliminated our once thriving independent, private property-based, traditional dairy farms that provided fresh, local milk, and dairy products for most Americans along with a prosperity for local, rural support businesses that have also been deep-sixed into the economic toilet since federal dairy policy was insidiously co-opted by the cabal better known as “the Dairy Industry.”

Now we have, since the preposterous “Federal Order Reform” was voted on in 2000, by corruption of the political process, a scandalous, rigged farm milk pricing system that totally disregards the cost of production needs of dairy FARMERS, instead tilting federal milk-pricing policies towards the avaricious demands of milk buyers, both proprietary and “cooperative,” expecting taxpayers to pick up the tab for the inevitable farm milk price shortfall under various schemes like “MILC” and now taxpayer subsidized dairy “margin insurance,” so the milk “buyers” can continue to get the farmers’ milk as far below true farm “cost of production” as possible!

This farm milk-pricing disaster was foisted on dairy farmers by the Capper-Volstead cooperative system, with its undemocratic, paternalistic “block-voting” and monopolistic domination of milk procurement and the “market.” The powerful “Dairy Industry” lobby has succeeded in turning the original intent of federal dairy policies upside down by buying the active, arrogant DC bipartisan political support needed to legislate these dairy policies that are inimical to the preservation of our dairy farmer class.

These are the same politicians who deliberately look the other way and refuse to allow US Department of Justice (DOJ) staff to do their job on behalf of the public by investigating the obviously corrupt “Dairy Industry” and publishing their findings. This suppression of DOJ investigations is also bipartisan, as evidenced by the Bush Administration’s stonewalling the findings of Allee Ramadhan and the Obama Administration’s terminating Christine Varney’s field investigations into the obvious problems overwhelming dairy farmers in the “marketplace.”

This dairy house of cards will, inevitably, come tumbling down on top of everyone, of course, and not just farmers, but also consumers, taxpayers, the politicians, and, yes, especially “the Dairy Industry” itself because it has been fashioned by corruption with a hubris that lumbers along with glaring disregard for decency and justice and a flagrant, institutionalized disrespect for the God-given rights of others, especially dairy farmers.

Has everyone supporting “margin insurance,” with or without draconian milk production supply constraints, lost all semblance of commitment to our Judeo-Christian moral compass??? Do the supporters of “margin insurance” really believe this is a “safety-net,” when the dairy farmers’ legitimate business costs are purposely eliminated from the federal minimum farm milk pricing formula?

“Safety net”--- NO! Rather, the current “Farm” Bill dairy provision places another NOOSE around the economic and literal necks of dairy farmers! With the evil inherent in such deceitful dairy policies, more dairy farmers will fall victim to insolvency, bankruptcy, loss of their farms, cattle, and even their lives, from stress and suicide, as has happened too often since the federal government started maliciously playing with the farm milk price in April 1981.

Don’t be fooled! The current dairy provisions in the “Farm” Bill reflect just another phase of long-standing central planning designed to benefit the global, corporate system of “dairy” special interests that swell from the constant infusion of corporate welfare contained in all recent and current “Farm” Bill dairy policies, including dairy “margin insurance," with or without the phony Goodlatte-Scott amendment.

There is no shortage of political scandal in Washington---never has been! What continues to be perpetrated against dairy FARMERS is “Big Dairygate,” and, while still lurking in relative obscurity, it is right up there with Teapot Dome; Enron; “weapons of mass destruction;” Solyndra; Benghazi; the AP, NSA, and IRS scandals; Obamacare, and so on, you name it!

Regardless how long the prideful “Dairy Industry” may delude itself, God’s justice will prevail, and I myself am looking forward to that Hallelujah day!

4:22 PM Nov 19th


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