It’s one of those she said, he said days. At 2:12 Central Time, the International Dairy Foods Association (IDFA) e-mailed a press release to dairy media claiming that a market stabilization plan, aka supply management, would be in effect had current proposals in the Farm Bill be in force.
One hour and 25 minute later, the National Milk Producers Federation (NMPF) issued a response, claiming IDFA had “mischaracterized the real issue facing dairy farmers this summer.”
IDFA says the market stabilization program would have already kicked in in May and would likely still be in effect this month. “Not only will consumers be facing higher prices in the near future, because cows produce less milk during high heat conditions and the cost of feed will be higher, but this new program would have already dug the hole deeper,” says Connie Tipton, IDFA president and CEO.
“This is an excellent example of why it doesn’t make any sense for Congress to attempt to manage the supply of milk,” adds Jerry Slominski, IDFA senior vice president. “The weather changes faster than government can change its rules and regulations, and this will cause prices to swing more wildly once the impacts of the drought are felt by the industry.”
Jerry Kozak, NMPF president and CEO, fired back with this statement:
"Summer heat always leads to a slowdown in milk output – this year will be no different – but the USDA reported last week that milk production in the second quarter of 2012 was up 2.0% compared to 2011, while the first quarter was up a whopping 5.3%. The U.S. is well on track to produce a record volume of milk this year, a hot summer notwithstanding.
"As a result, farmers’ prices this June were down 18% from June 2011, 30 cents a gallon less. Consumers really should be asking if the price they pay at retail for dairy products have dropped by the same amount. The answer is, retail prices haven’t changed, even as the farm price this year has reflected the fact that supply has raced ahead of demand. Meanwhile, grain prices reflect the opposite: That supplies are short in relation to demand.
"The dairy policy provisions in the Senate and House farm bills are tied to the critical difference between the farmer’s milk price, and the cost of feed. When that margin contracts to dangerously low levels, those who volunteer to use the proposed program will be insured against these low margins – and they are also expected to trim their milk output until margins reach healthy levels.
"These summer temperatures, and the possibility of a poor crop harvest, are exactly why we need a dairy farm safety net that takes into account higher feed prices, and also gives us a tool to better align supply and demand. Relying on the weather to perform this process is foolish."