Jim Dickrell is the Editor of Dairy Today.
There was more than the usual gnashing of teeth and beating of breasts when Congress and President Obama extended the old farm law at the end of last year.
I wasn’t jumping for joy either. But the alternative—a 2012 farm bill passed by congressional and presidential edict without a floor debate in the House of Representatives—was potentially worse. Much worse.
Go back to the mid-1990s when the 1996 farm law was debated and eventually passed. A five-minute-tomidnight deal, made in the Senate-House conference committee, delivered us the Northeast Interstate Dairy Compact. We’re still dealing with the ramifications of that backroom meeting 17 years later.
The Northeast compact was supposed to be a temporary response to the Federal Order reforms that were then being put into place. New England politicians, in particular Sen. Patrick Leahy (D-Vt.), feared that the reforms would depress milk prices so severely that a special program, created specifically for New England, was in order.
The Northeast compact outraged producers in just about every other region of the country. The Southern states even tried to form their own compact.
The "temporary" Northeast compact was eventually extended two years, finally expiring in September 2001. Taking its place was the Milk Income Loss Contract (MILC) program, which continued to use the same Boston Class I target price of $16.94 per cwt.
Although the MILC program was national in scope, it was
limited to the first 2.4 million or 2.985 million pounds of
annual milk production, depending on the particular period. While every dairy producer qualifies for this coverage, it
might represent 12-month protection for a herd with less
than 150 cows but just one month’s protection for a herd
with 1,500 cows and a couple of weeks of protection for a
herd with 3,000 cows.
That lack of fairness basically brought us to the Dairy Security Act (DSA) in the 2012 farm bill. DSA has two main components: a margin protection program and a market stabilization program for those who sign up for margin protection. Most importantly, all herds are covered—producers merely need to sign up.
But the market stabilization program—dubbed "supply management" by its opponents—is still highly controversial. Had Congress and President Obama enacted DSA without a House floor debate, dairy processors and many dairy producers here in the Midwest would have been mighty unhappy.
- February 2013