Dairy Producers Want a ‘Simple’ Safety Net without Supply Management

August 6, 2012 08:58 AM

At briefing, speakers focus on downside of stabilization program in proposed Dairy Security Act.

Source: Wisconsin DBA news release

Dairy producers want tools that will limit risk, that are easy to navigate, and which are not tied to supply management.

That was the message today from Dr. Eric Erba, chief strategy officer at California Dairies, Inc. (CDI), the nation’s second largest dairy cooperative.

Speaking at a briefing in Green Bay , Wis., Erba was joined by Dr. Mark Stephenson, Director of Dairy Policy Analysis at the University of Wisconsin’s College of Agricultural and Life Sciences; dairy farmer and Wisconsin DBA vice president John Pagel of Pagel’s Ponderosa Dairy in Kewaunee; and nearly 50 House and Ag Committee staffers.

Rep. Tom Petri (R-Wis.), Rep. Devin Nunes (R-Calif.) and Rep. Ron Kind (D-Wis.), members of the U.S. House of Representatives Dairy Farmers Caucus, sponsored today’s briefing which was offered to present an alternative view point to that presented at a session last week on the Dairy Security Act.

The conversation centered on the Dairy Market Stabilization Program, a controversial new dairy program designed to periodically limit milk production that is included in the Dairy Security Act, part of the House Agriculture Committee’s version of the Farm Bill.

Dr. Stephenson’s presentation “Dairy Options for the Farm Bill” called attention to the “Unintended Consequences” of the Dairy Market Stabilization Program, including the speed at which circumstances change in the dairy industry, and the fact that the current drought situation has moved the dairy industry into concern about not having enough milk.

“If the stabilization program were law, the supply management program would be in effect now and would be reducing already lower milk production by 4%,” Stephenson noted.

“The 4% deduction has a huge impact on our bottom line,” said Pagel. “That 4% can pay a lot of bills or cover my interest at the bank.”

“Supply management has been tried before, and did not work at all” Erba said. “Good intentions, but horrific results.”

Stephenson offered his opinion on the bipartisan amendment offered by Reps. Bob Goodlatte (R-Va.) and David Scott (D-Ga.) that would remove the program and offer a stand-alone Margin Insurance Program similar, but not identical, to the margin insurance portion of the Senate farm bill, noting that it would have a moderating effect on price volatility, without affecting markets too much.

“I have been working with dairy producers for more than 30 years,” said Stephenson, “and in my opinion, not more than 40% will sign on to the stabilization program. And, those who register for the basic level of margin protection, will be carrying all of the obligations of supply management, but receiving few of the benefits of the insurance indemnities.”

The Dairy Business Association is an industry organization comprised of dairy producers, corporate as well as allied industry supporters.

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