The following letter is a response to Jim Dickrell’s “Dairy Talk” column in the March 2010 issue of Dairy Today.
I enjoy Dairy Today and think it is one of the good resources for today's dairy farmers, but you are so wrong in your assessment of NMPF's proposal, and what needs to be done to provide a more stable economic future for our dairy industry.
Despite your headline to your report on NMPF's proposal, there is nothing radical or visionary about it. Their proposal seems to be a duct-taped attempt to deny reality. There is no proposal to reflect rapid changes in the pricing system down to the dairy farmer in such a way that the producer can make responsible decisions on his/her productive capacity to maintain income and stability on the farm.
The risk management idea is almost laughable. First of all, why would we want to involve ourselves in an insurance program that will only be effective if premiums keep rising as the predictable market collapse comes closer? After all our experiences with insurance companies, both health and property, why go on bended knee to them when there is no reason, and when we neither need nor will get a federal subsidy, to make the risk management plan work?
So you don't care much for a supply management plan, obviously, since you keep disparaging it by referring to "Canada South." Current proposals for a growth management plan are not a quota, as any dairy economist worth his salt, like Bob Cropp, would be able to tell you. In this day and age, with the ability to gather production information accurately and on a 24/7 basis, we can have a system that is flexible and responsive to market conditions, like the possibility of a 7-billion pound export market.
We also need a marginal pricing system that only impacts the excess milk over demand and does not bring down the price across the country, as the present CME system does. None of these actions, properly administered, would prevent us from taking advantage of the export potential highlighted by the Bain report. It should be noted that the conclusions of the Bain report are contingent on a number of economic demand factors being reached abroad, particularly in the Pacific Rim. Further economic reporting from that region shows the possibility for the dairy product demand to occur to be extended by a couple of years or so.
The American dairy industry cannot wait that long, though we will have to wait for the 2012 Farm Bill for significant change. Yet another factor is the growing frustration of our banks and lending institutions that have many billions of dollars tied up in dairy farming and fear the real possibility of losing that equity at a time when they can least afford it. The bank industry is becoming a significant voice, with weight, behind an overhaul of the pricing and supply/demand structure of the dairy industry.
I bet you NMPF’s plan as presently formulated will not receive a positive vote from the NMPF board. These are exciting times as we teeter on the precipice, but there is great potential.
Again, thank you for an interesting magazine, but I can't agree with your assessment on this subject.
West Cornwall, Vt.