Congressman Collin Peterson (Dem., Minn.) announced this morning he will introduce federal dairy legislation, "The Dairy Security Act of 2011," this afternoon. It will mirror the changes announced in Foundation for the Future Wednesday.
Peterson is ranking minority member of the House Agriculture Committee. The bill will be co-sponsored by Cong. Mike Simpson (Rep., Idaho). Peterson is in the process of lining up more sponsors from California and the Northeast.
Dairy groups who oppose the bill, waiting for the perfect solution, are "playing with fire," Peterson said in a conference call with reporters this morning. "This is [dairy’s] chance to get a bill through," he says. "It’s very easy not to make something happen in this Congress. I don’t believe we can afford that."
Peterson notes the current Milk Income Loss Contract program is already scheduled to lower payments next year. And the $9.90 support price offers little assistance.
The current dairy bill has a budget baseline of $672 million over 10 years. The "Dairy Security Act" score offers $131 million in savings, or almost 20%.
The bill will offer margin protection insurance for producers at both a base level of $4 income over feed cost and supplemental insurance at higher levels. The base level will be at no cost; the supplement insurance will be subsidized by the government. Producers will be charged a minimal, one-time administrative fee at sign-up.
However, if producers sign up for margin insurance, they will also be automatically enrolled in the Dairy Stabilization program, which will require them to cut back production (or have money withheld from their milk checks) in times when margins fall below certain levels.
Responding to a Dairy Today question, Peterson believes sign-up for the program will be similar to the 70% sign-up for the Cooperatives Working Together program, an industry-led program. "People can decide" if they wish to sign-up, says Peterson. But he also believes lenders will insist they do so, particularly if producers are highly leveraged. "There won’t be much of an opportunity to opt out unless they are independently wealthy," he says.
Peterson also bristled at opposition from dairy processors. "Give me a break. These are the folks who have had make allowances which guarantee profits, and now they are coming up with all kinds of boogey men to oppose it," he says.
Peterson hopes to get work on the dairy bill completed this fall and then fold it into the larger 2012 Farm Bill discussion. But the exact timing of passage is still unknown, since the Congressional "Super Committee" has given no instructions on what kind of budget cuts it will require.