California Producers Listen to Holstein Association’s Growth Management Proposal

August 12, 2009 04:22 PM
 

By Catherine Merlo

 

The pain felt by California's financially strapped dairy producers was evident yesterday as they gathered to hear about a new growth management program proposed by Holstein USA Association.

 

A town hall meeting to discuss the association's Dairy Price Stabilization Program (DPSP) drew an estimated 150 dairy producers to the International Agri-Center in Tulare, Calif.

 

Hank van Exel, a California dairy producer and Holstein USA board member, led the group through an explanation of the DPSP program.

 

Designed to eliminate milk price volatility, the proposed plan would be a mandatory, national program. It would be "global and national in scope, market oriented and flexible to adjust to changing conditions,” van Exel said. It would run over seven years with a five-year review for continuation and/or modification.

 

The program is needed not just because 2009 "is the worst year ever,” van Exel said, but because the price volatility that has plagued the dairy industry in recent years "won't change on its own.”

 

The DPSP is not a government supply management program or a significant barrier to growth, van Exel said. "It is an American concept that creates financial incentives to pay attention to the amount of milk produced,” he said.

 

The DPSP program would operate using two numbers announced quarterly:

  • a Producer's Allowable Milk Marketings figure, and
  • a National Market Access Fee, paid by producers who want to expand beyond their allowable milk marketings number.

USDA's Farm Service Agency would administer the DPSP program. (Read details of the proposed DPSP program at http://holsteinusa.com/association/dpsp.html.)

 

Aiding Van Exel in explaining the DPSP program were California dairy producers Steve Maddox, Doug Maddox, Syp Vander Dussen and Joey Airoso.

 

"The plan is not set in stone,” van Exel told the crowd. "We need input from you,”

 

One producer responded by saying the plan was worth considering because "the worst thing is to do nothing. The cow kill is never going to get us there.”

 

Several audience members questioned the program's board and regional representation, whether the DPSP would replace or phase out other industry supply-management programs, why a producer's base could be transferred but not sold, and whether high milk prices would make the U.S. market more attractive for imports.

 

Pointing to rising heifer numbers through sexed semen use and Canadian imports as well as increased dairy expansion in Texas, one producer said, "We're all at risk. We've got to make a profit and get out of the red.”

 

While not all aspects of the DPSP proposal are clear or certain yet, "we have to look to the whole plan,” another member of the audience said. "The tweaks will come. We've got to move forward collectively.”

 

If something isn't done to end the dairy industry's boom-bust cycle, "We'll be right back to where we are today,” another said. "Let's don't stop this time, let's finish the job.”

 

Airoso urged audience members to "go home, think about it and talk to your boards and processors.”

 

The DPSP would have to follow the legislative process and pass both the House and the Senate before it could be implemented.

 

The association, which counts some 30,000 members nationwide, began developing its DPSP program in January 2009. It has hired economist Robert Cropp, professor emeritus with the University of Wisconsin, to help formulate the program.

 

Yesterday's meeting marked the second of five that will be held in California. More are taking place around the country as the association actively works with the industry to develop the DPSP program.

 

Catherine Merlo is Western editor for Dairy Today. You can reach her at cmerlo@farmjournal.com. 

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