With dairies still climbing out of the 2008-10 recession, and the political mood in Washington focused on cutting federal programs, it’s imperative to get dairy economic safety net reforms done right, says this California dairy leader.
By Michael Marsh, CEO, Western United Dairymen
During the Great Recession of 2008-2010, nearly $2 billion in federal and industry funds were spent trying to stem the tide of red ink hemorrhaging from U.S. dairy farms.
According to the Congressional Budget Office (CBO), total federal outlays on dairy unleashed during those three years amounted to just over $1.5 billion. Funds were expended under the Dairy Product Price Support Program, the Milk Income Loss Contract program, and the Dairy Export Incentive Program, as well as dairy donations to feeding programs around the country.
Additionally, Cooperatives Working Together (CWT), operated by National Milk Producers Federation, pumped out additional monies for herd retirements and export assistance in excess of $250 million.
Overseas, the story was little different as other nations attempted to protect their dairy farmers from the havoc. European Union intervention stocks climbed to record levels as attempts were made to reduce milk supplies entering the market.
No one can disagree that the Great Recession was the most devastating economic calamity to strike the global dairy industry in our lifetimes. In the U.S., legacy family operations, some in business for over 100 years, closed their barns and devastated dairy families and their employees. Dairy herds were sold off for beef. The National Cattlemen’s Beef Association was so concerned that Congress was going to weigh in and assist in trimming the national dairy herd that the cattlemen petitioned members to allow no help for struggling dairy farmers.
Nearly $2 billion expended in the U.S. and it wasn’t enough. Billions more spent around the planet and it wasn’t enough.
As the recent debate over raising the federal debt ceiling demonstrated, the political mood in Washington is focused on cutting federal programs—not expanding them. The so-called “super committee” called for by the debt ceiling agreement will be charged with finding $1.5 trillion in additional spending cuts over the next decade, above the $975 billion already in the compromise bill signed by the President.
In this new political dynamic, it is time for the U.S dairy industry to ask tough questions and determine how policy proposals will fare in this contentious environment. The new CBO baseline for dairy programs has been reduced to $766 million over 10 years, and that’s before the debt reduction commission members have even been named, let alone started to recommend cuts. Will that be enough?
What this means is we have to get dairy economic safety net reforms done right. One thing to keep in mind is we’ve only just gotten started here. When was the last time Congress enacted an initial proposal on any subject without any changes? There will be changes to the House Agriculture Committee Democrats’ discussion draft. And California, the nation’s largest dairy state and the Ranking Member on the Dairy Subcommittee representing one of the largest dairy districts in the nation, will have a seat at the table.
We can’t repeat the economic calamity of the past three years. California dairy farm families shouldn’t be put through that again, and the nation’s taxpayers are starting to demand that Congress do better with their money.
We have to see that this gets done right!