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February 2010 Archive for Dairy Talk

RSS By: Jim Dickrell, Dairy Today

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

USDA’s ID Decision Leaves U.S. Vulnerable

Feb 12, 2010

By Jim Dickrell

 

Critics of USDA’s National Animal Identification System (NAIS) were celebrating last week after the Ag Department announced that it was going back to square one on NAIS. But this may be a case of being careful what you wish for.

In its announcement Feb. 5, USDA says it wants to develop a new, more flexible framework for disease traceability incorporating the four following tenets:

• Federal animal ID rules will only apply to animals moving interstate.

• The program will be administered by states and Tribal Nations to provide flexibility.

• The program will encourage the use of lower cost technologies, including freeze and hot brands.

• The program will be implemented transparently through federal rulemaking.

 

USDA will convene a forum next month “to initiate dialogue” about how to develop such a system. The plan is to have a proposed rule published by next winter with the requisite 90-day comment period to follow. After that, it’s anyone’s guess when—or if—the new rule will be become law. After that, more time will be needed, perhaps years, for states to implement.

This new start on national animal ID effectively pushes back trace-back efforts nearly a decade, when USDA first started talking about such a system in 2001, says Robert Fourdraine, CEO of the Wisconsin Livestock Identification Consortium.

If there is any good news, it’s that states haven’t been standing still this past decade. “I’m glad that in Wisconsin and Michigan we didn’t waste our time and we developed our own systems,” he says. Both states mandate premise registration, for example. “But we don’t want to become an island—or create 50 islands within 50 states, each with its own system,” he says.

 

The other wild card is international trade. With some 10% of U.S. milk solids, 10% of U.S. beef and nearly a quarter of U.S. pork now being marketed overseas, we are increasingly vulnerable to internal market disruptions when trade goes awry. If anyone doubts this, think back just a year ago when export markets dried up for a third to a half of U.S. dairy exports. Imagine what could happen, will happen, if the U.S. experiences a major disease outbreak and exports are completely halted.

The U.S. desperately needs a national system that can assure world markets we can trace, track and control diseases quickly. Without a nationally integrated system, 48-hour trace-back will be all but impossible. High-volume livestock markets will be hard-pressed to read and accurately record metal ear tags, tattoos, or even brands as hundreds of animals pass through their auction rings daily.

 

USDA’s new approach doesn’t change the fact that states have been and will continue to be responsible for identifying and tracking animal diseases within their borders. Several Midwest state veterinarians I talked with actually welcomed USDA’s decision. The impression I got was that all the anti-NAIS rhetoric was simply getting in the way of moving forward. Minnesota, for example, even proposed a more state-centric approach.

            Bill Hartmann, Minnesota State Veterinarian, says his agency is already using USDA’s generic database to register premises, administer disease control programs and track animals. Under USDA’s new plan, states will presumably be allowed to continue to use that generic system, or develop systems of their own. “I don’t see that as a big issue as long as the data is compatible,” Hartmann says.

           

But therein lies the rub. So far, the states have been able to work together to trace animals. But these cases have involved slow-moving diseases such as Brucellosis or Bovine TB.

            An outbreak of a highly contagious disease, such as foot-and-mouth disease, would be an exponentially more difficult challenge. Such as outbreak would shut down animal movement and milk shipments for days, perhaps weeks, perhaps longer. No one would be immune. Not conventional producers. Not organic producers.

            The very same people who claim NAIS is an infringement on their privacy rights and is too expensive would be the first screaming at USDA to fix the problem—and compensate them for their losses. No one wants big government until big government is needed. Be careful what you wish for.

 

Jim Dickrell is editor of Dairy Today. Contact him at jdickrell@farmjournal.com.

National Milk’s Radical New Dairy Plan

Feb 02, 2010
By Jim Dickrell

Finally. Jerry Kozak, National Milk Producers Federation (NMPF) president and CEO, has started talking publicly about his organization’s proposal to revitalize U.S. dairy policy for the 21st century.

It’s a decade late. But change always comes slowly—and usually incrementally—to dairy policy. Safe to say, too, that without the debacle on 2009, co-ops would still be arguing amongst themselves about product pricing formulas and make allowances. Nothing galvanizes the mind as a crisis, and it appears NMPF put this latest one to good use.

Kozak made appearances in Georgia and Wisconsin (at Lambeau Field in Green Bay, no less) last week to outline the plan. Parts of the plan are bold and creative. Parts are head scratchers. And there are one or two really dumb things as well. “Everybody will hate something in our package a little bit,” Kozak acknowledges. “But that’s a sign of a good program for an industry as diverse as ours.”

The program has three legs. Each is needed to support the other two; the program pretty much collapses without all three, he says.
 
• Federal Order reform. Class I would be retained for fluid milk along with differentials, but only the differentials would be pooled. Classes II, III and IV would be collapsed into a single class, and price formulas and make allowances would be eliminated. Class II prices would be based on competitive ability to pay. Reporting of these competitive prices would be mandatory to ensure transparency and to set a base for Class I prices.

• Dairy Producer Income Protection Program (DPIPP) established. The Dairy Price Support Program and the Milk Income Loss Contract program would be eliminated. Budget savings would be used to fund the DPIPP, which would be a margin-over-feed-cost insurance program.

DPIPP would pay an insurance indemnity when the margin—either because of low milk prices or high feed costs—falls to a certain level. Producer participation would be voluntary, but government-subsidized (like crop insurance) for minimal protection. Producers would also be able to purchase additional coverage at their own expense. The program is patterned after the current Livestock Gross Margin-Dairy insurance, but will be simpler and would pay indemnities much faster.

Eliminating the Dairy Price Support Program would mean prices could—and would—fall to market clearing levels. “The DPSP has outlived its usefulness,” says Kozak. The U.S. has become the balancing plant for the rest of the world with current price support levels—allowing lower-cost producers such as New Zealand and Australia to continue to profit with our $9.90 floor even in times of surplus. Eliminating that floor will put all competitors on the same footing, he says.

• Revitalized Cooperatives Working Together (CWT). “People [who participate in CWT] are tired of free riders,” says Kozak. Current participation is at just 68%. So NMPF is looking for ways to increase voluntary participation and is considering making the program mandatory. New programs might include partial herd retirements and heifer buyouts—a couple of the dumber ideas, in my opinion. Remember USDA’s diversion program of the 1980s that accomplished nothing?

More creative options include a “domestic product diversification initiative”—fancy lingo for a program to help U.S. manufacturers produce products such as liquid casein that is currently being imported. Also being considered is an Export Marketing Agency in Common (stealing a page from the Kiwis’ bag of trade tricks) and Food Bank Assistance to move commodities to domestic feeding programs for the disadvantaged.

Final approval of the package by the NMPF board of directors could come as early as June. Then the real selling begins—to producers, processors and Congress. NMPF’s goal is to get the package passed into law in the 2012 Farm Bill. Phased implementation will take years more.

This is not a quick fix. Current federal dairy programs took some 75 years to get to their present state. It will take a few more to dismantle them.

Jim Dickrell is editor of Dairy Today.
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