Gillibrand Announces Dairy Policy Proposal

April 3, 2013 12:18 AM
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Will push plan as part of farm bill debate

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A plan to help provide long-term support and certainty for dairy farmers by providing a safety net for small producers, as well as improving inventory reporting and transparency, was announced Tuesday by Sen. Kirsten Gillibrand (D-N.Y.), a plan she "doesn't think it will cost that much."

The plan, dubbed the Dairy Pricing Reform Act, would reform the way the USDA sets dairy prices.

"In the next few weeks, the Senate will again be considering the farm bill. That's a bill that I have worked very hard on over the last several years, traveling around to our farming communities across the state to develop our priorities for the bill that can strengthen our agricultural industry," Sen. Gillibrand said. "Last year, the Senate did our part, and we passed the five-year farm bill. However, the Republican leadership in the House failed to pass the farm bill through the House. We were forced to debate this bill again, and we have to pass this bill once again this year."

"The squeeze facing our dairy farmers is driving them out of business and preventing them from growing to meet demand," Gillibrand said. "We can't afford any more delay in Congress. We need to take action now to set the environment for our dairy farmers to thrive. These common-sense proposals can give our dairy farmers the certainty and stability they need to grow their businesses, and help strengthen our state's rural economies."

Setbacks. According to a press release, while dairy remains New York's leading agricultural product - producing nearly 13 billion pounds for a value of $2.75 billion annually - dairy farmers are suffering from a range of setbacks. High fuel costs and severe grain and hay shortages continue to push up the cost of production, yet the price paid to farmers remains stagnant - putting a squeeze on farmers, preventing New York from maintaining its competitiveness among other dairy states and holding farms back from a growing business.

Gillibrand said she and and Sen. Susan Collins (R-Maine) will be introducing the Dairy Pricing Reform Act, which she said would force USDA to begin the hearing process to restructure the pricing system and direct the Secretary of Agriculture to release the department's recommendations to Congress.

Gillibrand also supports the Dairy Income Fairness Act, which would give farms with 200 cows or less a guaranteed $6.50 margin, which is the cost of milk minus the cost of feed, and exempts the first 200 cows from supply management. The bill would also extend the current Milk Income Loss Contract (MILC) program for nine months, pegged to inflation, while the USDA establishes a new and more sustainable program for dairy farmers.

Importantly, Gillibrand suggests exempting farms of fewer than 200 cows from federal herd reduction requirements when the national milk supply is too large. If adopted, that exemption would favor New York, where farms are not meeting the state’s demands for milk, which are only expected to grow as more yogurt plants come on line.

“The flawed dairy policy is forcing dairy farms to go out of business at an astonishing rate,” Gillibrand said. Even as yogurt production has risen and promises to be a great boon to New York farmers, the state lost 65,000 cows in the last decade, Gillibrand said. The Finger Lakes region, including Rochester, was the only region to gain cows, with an increase of 12,900 cows between 2002 and 2012. “The price of milk at the store has continued to rise from 1970 to today,” Gillibrand said. “The price of milk paid to the farmer has largely been stagnant.”

Cold storage facilities are currently not required to report their inventories of dairy products to the USDA National Agricultural Statistics Service, but would be required to under Gillibrand's proposal. By only reporting inventories of dairy products on a voluntary basis, Gillibrand said it creates an environment of volatility and uncertainty for dairy trading within the Chicago Mercantile Exchange. However, she said she is unsure how much this would increase costs.

"I don't think it will cost that much, because basically we are asking for more transparency," she said. "So, right now, we are basically saying, 'You have to report your cheese price, you can't just do it voluntarily.' One of the concerns the industry has is that there is fraud in pricing and that any manipulation taking place is at the price of cheese in Chicago; they aren't receiving accurate cheese prices."

The bill, she said, would also offer transparency and information for dairy farmers. The legislation would require dairy cooperatives that engage in bloc voting to provide their member farmers with written notices when votes occur and would require each milk marketing order to establish an information clearing house to provide information regarding any proposed milk marketing order reforms. This information would be required to be published on a website and distributed to producers.

Comments: A new farm bill has several hurdles to clear, including eventually getting one savings figure rather than the divergent savings in coming Senate and House farm bill proposals. Another even bigger hurdle will be the savings coming from food stamps (SNAP), as there are major differences between House and Senate leaders on this matter, and between Democratic and Republican lawmakers. As for dairy policy, an eventual key in the Senate will be which plan gets the support of Sen. Patrick Leahy (D-Vt.) who, history shows, can get lawmakers to follow his support for or opposition to various dairy policy proposals. Over in the House, Speaker John Boehner (R-Ohio) has been very vocal in his opposition to last year's proposed dairy gross margin proposal, especially supply management language contained in the program pushed hard by Rep. Collin Peterson (D-Minn.), ranking member on the House Ag Committee.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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