Dairy Policy Consensus Building
Nov 08, 2010
There is growing agreement that U.S. dairy producers must go to Congress united and actively support a single plan if they have any hope of passage. Will it be Foundation for the Future or same old, same old?
While there are still a lot of questions surrounding the National Milk Producers Federation’s “Foundation for the Future”
plan, there is growing consensus that this is the horse dairy producers will ride into Congress—and perhaps the future.
Time and again, as I spoke to dairy producers at National Milk’s annual meeting in Reno two weeks ago, there was excitement (or resignation) that Foundation for the Future was really the only option moving forward.
Virtually everyone I talked to doesn’t like some aspect of the plan:
• The plan contains a supply management component, or in contrast, the supply management component isn’t strong enough.
• The plan does away with Milk Income Loss Contract (MILC) payments, which is a massive, $800 million shift of revenue, much of it out of the Midwest and Northeast.
• The Federal Order reform components, particularly Class IV, are still sketchily defined, or not defined at all.
• Ditto for new price discovery mechanisms for Class III and IV, though there does seem to be universal agreement among producers that moving away from the thinly traded Chicago Mercantile Exchange is needed.
Despite all those reservations, there is growing agreement that U.S. dairy producers must go to Congress united and actively support a single plan if they have any hope of passage. That’s particularly true after last week’s election, with all the Rand Paul look-alikes who can’t find a federal spending program they’ll support.
Most telling is an Oct. 29 column
by Rob Vandenheuval, general manager of California’s Milk Producers Council (MPC). (MPC is the driver behind the Costa/Sanders bill
, which embodies much of the Holstein Association supply management scheme.)
In the column, Vandenheuval wrote: “…at the end of the day, the only chance we have for successfully making positive change for our industry is if the producer side of the industry is unified behind a single legislative proposal. We’ve documented the predictable, yet disappointing, opposition by the nation’s processors (the International Dairy Foods Association) toward any effort to implement a production management strategy as part of our solution. Given this inevitable opposition, the producer sector doesn’t have the luxury of bickering amongst ourselves once we are ready to go to Congress with a proposal for reform. And we are rapidly approaching that point; hence the need for unity in the ranks.”
For its part, National Milk must clean up the details on price discovery and Federal Order reforms. It also must honestly and forthrightly address producer and co-op angst.
During the NMPF Town Hall Meeting, Paul Toft, producer chairman of Associated Milk Producers, Inc., raised the concern that loss of MILC payments would be a shift of federal dairy support from small producers to large. Toft said that a 100-cow producer would receive $59,000 less in payments under the Foundation plan. But a 1,000-cow producer would receive $159,000 more.
Jerry Kozak, NMPF President and CEO, almost dismissed the concern. “This is not an entitlement program, and your numbers misconstrue the concept. [Our margin insurance program is] intended to kick in when needed. To contrast it between small and large does not help promote the cause.”
Kozak is right: It doesn’t help the cause. But his response didn’t, either. A more forthright response would have been this: ‘We understand your concern. But the political reality is that giving up MILC is the price smaller producers will have to pay to achieve fundamental dairy policy reform that makes us competitive both here at home and in global markets. Large herd states--Arizona, California, Florida and Texas--simply have too much congressional clout and will stymie our efforts if MILC remains part of the package.’
So back to Vandenheuvel. He says NMPF must now develop the legislative language to implement the Foundation for the Future plan. “When those details are in place, every dairy association, cooperative and other interested producers across the country will need to make a decision about whether or not the policy proposal improves our position from the status quo.”
He is right. It’s either Foundation for the Future or same old, same old.