Jerry Kozak, National Milk Producer Federation (NMPF) president and CEO, proposed an end to both the dairy price support and Milk Income Loss Contract (MILC) programs in the next Farm Bill in his address to the NMPF annual meeting this week in Nashville.
"Clearly, both the price support program and the MILC will be of little value to dairy farmers in this new high cost of production environment, where milk prices are too high to trigger meaningful assistance, but too low to cover the cost of high feed and fuel expenses—not to mention labor, health care and taxes,” he said.
Kozak said the funds now used for both programs should be replaced with tax incentives and other initiatives that will reward the use of technology and innovation. "I also think we should consider a feed-adjustor type mechanism, as part of government-run margin protection program, similar to crop insurance, to help mitigate risk and protect operating margins,” he said.
Kozak also stressed the need to reform and revitalize the Federal Milk Marketing Order program. He proposed "replacing the make allowance structure with a competitive pay price that would allow processing plants to pay what they must for the milk they procure.” NMPF's Federal Order task force had not yet come up with a way to do this, however.
A third area addressed was immigration reform, since "the issue of a stable and available workforce is of paramount importance to the dairy industry,” Kozak stated. "No other issue has the potential to cause catastrophic results with respect to the production and marketing of milk in this country than the failure of our leaders in Washington to pass meaningful immigration reform.” NMPF's members need to come together behind those efforts in 2009.
Kozak's fourth point was that the industry should take a more comprehensive approach to animal care and well-being and environmental initiatives. "Many people are concerned more and more about the environment, their own health, and the quality of the food they consume,” he said, with part of that concern stemming from a heightened interest in animal care.
To further NMPF's resources in that area, Kozak said NMPF is assimilating the programs of the Dairy Quality Assurance Center in Iowa into a new national program available to all producers. Kozak also said NMPF's members should start work on helping dairy farmers be well-positioned to take advantage of a growing carbon credit market that will develop when Congress passes a cap and trade system to control greenhouse gases.
For his final point, Kozak addressed the need to maintain, adapt, and expand Cooperatives Working Together, the farmer-funded self-help program in it sixth year of operation. "Precisely because the government won't have the resources or the inclination to help farmers as much in the future, now more than ever, we need to have a self-help program, without government involvement,” he said.
Kozak said CWT's export program should be expanded through creation of a U.S. Marketing Agency in Common (USMAC) to use the potential of NMPF's cooperative structure. CWT also should create financial incentives to produce products from American milk that are not being manufactured today.
To address the "free-rider problem” and expand membership, Kozak said "we have to find new creative ways to reward CWT's members, above and beyond those who don't contribute to the program.”