A Start to Build From

June 5, 2011 07:35 PM
 

CarlsonsCarlson Dairy, LLP

(Curtney & Louise Carlson, Chad & Kindra Carlson, Carl & Kellie Carlson)

Willmar, Minn.
The Carlsons milk 950 cows on a 120-year-old family farm.

 


*Extended comments are highlighted in blue.

 

Most dairy producers agree that dairy policy reform is needed. The challenge is trying to agree on what the change should look like.

Our farm supports NMPF’s Foundation for the Future. It may not be the perfect solution, but we need to start somewhere and build from there. This means we all might have to make some compromises.

The current safety nets such as MILC and the Price Support Program are not adequate. While our farm has enjoyed the temporary cash infusion from the MILC program a few times in the past five years, its effect is very short-lived and diluted because of the 2.985-million-pound cap. FFTF at least treats all dairy farms equally.

It’s been emphasized that one of the keys to the FFTF program is the movement away from price protection to margin protection. Existing dairy policies have not put enough emphasis on the costs associated with producing milk. We appreciate that FFTF seeks to provide a realistic model that factors in both milk prices and feed costs. Our farm likes that there’s a no-cost base program with additional access to a supplemental paid-for policy. Hopefully, this program doesn’t just sound good in theory but truly does help control volatility. Again, we need to start somewhere, and this seems like a logical first step.

In regard to Federal Milk Marketing Orders reform, we like the idea of going to just two classes of milk. Quite honestly, trying to understand the current system seems practically impossible. The transparency of milk pricing needs to drastically improve. NMPF’s proposal looks to be more market-oriented. Unlike the current system, it also looks like it will help encourage manufacturers to produce new products through a new balancing program, which will result in higher returns for them and dairy producers.

We have to admit that we’re typically skeptical of programs that try to limit producers’ ability to make their own decisions about how much milk to produce. FFTF’s Dairy Market Stabilization Program has been described as a "smoke detector" that will swiftly and infrequently address brief market imbalance. In our opinion, the program makes a lot of sense--more sense (especially when coupled with the other items FFTF is proposing) than what other new proposed supply programs do.

FFTF’s program seems fair across the national landscape and doesn’t seem to discriminate by geography or producer size. Again, we struggle with the idea of an outside source deciding what’s "right" for our dairy. However, perhaps this is an area where our farm needs to compromise. The fact that any program money "collected" will be used to stimulate domestic and international consumption of dairy products also makes it more palatable to us.

Adequate dairy policy reform will help protect us, but we believe it’s also up to each of us producers to utilize the risk protection tools currently available--i.e., hedging and options--to stay competitive. Our farm has been pretty aggressive in this area during the past few years for both milk and feed. 2009 and 2010 were no picnics, but price protection at least made those years more bearable.

Reform and compromise are needed. Let’s each do our part and work together to make the needed changes.

Carlsons' April Prices  
Milk (3.7% bf, 3.10% prt) $18.86/cwt.
Cull cows $70/cwt.
Springing heifers $1,600/head
Alfalfa (milk cow) $150/ton
(160 RFV)
Dry beet pulp $110/ton
Ground dry corn $239/ton
Canola $224/ton

 

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