Dairy Farmers Speak Out against Supply Management

10:19AM Oct 05, 2012
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They support the Goodlatte-Scott amendment, saying it provides insurance without government interference in free markets.

Dairy farmers from several states spoke out at World Dairy Expo about the dangers of a dairy supply management program included in the Dairy Security Act.

They voiced support for the Goodlatte-Scott amendment, an alternative proposal they said provides insurance without government interference in free markets.

"Supply management is fundamentally flawed," said LuAnn Troxel, who with her husband milks 130 cows and operates a large animal veterinary practice in northwest Indiana.

"No other commodity groups are being asked to reduce supply," Troxel said. "I don’t want to be the guinea pig for supply management."

Supply management will bring unintended consequences, Troxel added. "It will be negative for exports, which are the answer to those of us who want to increase our production. Also, we’d rather have experts find ways to move our dairy products to the world market."

Also speaking out against supply management were Wisconsin dairy producers John Pagel, Jerry Meissner, Gordon Speirs and Randy Hallet. They were joined by: Mitch Davis, who manages Davisco Foods and operates a 6,500-cow dairy; Maury Cox of the Kentucky Dairy Development Council; and dairy producer Howard Straub of St. Johns, Mich.

The Dairy Security Act is part of the farm bill version passed by the Senate and next up for floor debate and amendments by the House of Representatives. The controversial provision in the Dairy Security Act is known as the Dairy Market Stabilization Program (DMSP). If dairy farmers want to participate in a margin, or risk insurance program, they would have to agree to participate in the DMSP. Under the DMSP, would either have to limit milk production or forfeit a portion of their milk checks when margins fell below $4/cwt.

Farmers are beginning to learn the potential impacts of the program, producers said today. If the program becomes law, dairy farmers would either have had to decrease production beginning back in May, or pay a penalty.

"That deduction, at 8% or even at 4%, has a huge impact on our bottom line," said Pagel of Pagel’s Ponderosa Dairy in Kewaunee, Wis. "That 8% can pay a lot of bills or cover my interest at the bank."

Speirs is a third-generation dairyman who owns and operates Shiloh Dairy LLC with his wife, Cathy, and sons Travis and Tyler. The Speirs family moved its operations from Alberta, Canada to Brillion, Wis. in 2003. Shiloh Dairy is a 1,500-cow dairy and is in the process of expanding to 2,100 cows over the next two years.

"I am opposed to supply management because once regulations are in place and found to be not working, the government will do its best to try to fix it with more regulations," said Speirs. "This was my experience in Canada with the quota system and I expect it will not be different here."

"Dairy farmers in Wisconsin could have been penalized up to $18,000 had this program been in effect now," noted Jerry Meissner, president of the board of directors for the Wisconsin Dairy Business Association, and owner of Norm-E-Lane, Inc., a 2,000-cow operation near Chili, Wis. "This is bad news for Wisconsin."

Wisconsin’s Dairy Business Association (DBA) presented a table that outlines potential impacts of the stabilization program on Wisconsin, as the program would have triggered earlier this year, and still been in effect.

DBA chart 10 4 12

(Source: Wisconsin DBA)

A bipartisan compromise amendment proposed by Reps. Bob Goodlatte (R-Va.) and David Scott (D-Ga.) would remove the stabilization provision, and also would provide dairy farmers with the ability to obtain margin insurance, with catastrophic coverage, as a risk management tool for times of low milk prices and high feed costs. The amendment is expected to be offered and voted upon when the full House considers the farm bill, possibly in the lame duck session that will begin in November.

Dairy producer organizations opposed to the  supply management proposal include:

  • California Dairies, Inc.
  • Dairy Business Milk Marketing Cooperative
  • Dairy Policy Action Coalition
  • National All-Jersey, Inc.
  • North East Dairy Producers Association, Inc.
  • Wisconsin Dairy Business Association
  • Minnesota Milk Producers
  • Alliance Dairies (Florida)
  • Board of Directors of Bongards’ Creameries (Minnesota)
  • First District Association (Minnesota)
  • High Desert Milk (Idaho)