Peterson, Simpson Introduce The Dairy Security Act of 2011

September 22, 2011 07:07 PM

The legislation will replace current, outdated dairy programs with new risk management tools.

WASHINGTON – U.S. House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn., and Rep. Mike Simpson, R-Idaho, today introduced The Dairy Security Act of 2011. The legislation will replace current, outdated dairy programs with new risk management tools addressing the realities of today’s dairy industry, such as rising input costs and a growing export market.

"If we have another crisis like we had in 2009, when milk prices dropped and input costs skyrocketed, I fear we could lose half our dairies," Peterson said. "The dairy safety net did not work then and it won’t work if similar events occur now. Producers cannot wait for another crisis or a new farm bill for Congress to fix the broken dairy safety net. Feedback from all sectors of the diverse dairy industry has been instrumental in drafting this bill, and I look forward to continuing these conversations, as well as working with other members of Congress to advance dairy reform."
The Dairy Security Act of 2011 consists of three main components – a Dairy Producer Margin Protection Program, a Dairy Market Stabilization Program and reforms to the Federal Milk Marketing Order system. 

Changes to the previously released discussion draft include:
·                     Participation in the stabilization program is optional. Only dairy producers that elect to participate in the margin protection program will automatically be enrolled in the stabilization program.
·                     The basic margin program payment rate is increased to 80%.
·                     Funds collected when the stabilization program is in effect would be remitted to the Commodity Credit Corporation, which would then make all of the funds available to the stabilization program board.
·                     The proposed reforms to the Federal Milk Marketing Order system have been redrafted to direct the Secretary of Agriculture to amend the system through a hearing process. The language specifies the areas that the Secretary is to amend, and requires the Secretary to conduct a referendum of the proposed amendments before they can take effect.
·                     The Dairy Export Incentive Program is repealed.
·                     Annual administrative fees will be required for all basic margin protection program participants – $100 for producers marketing less than 10 million pounds of milk; $400 for producers marketing between 10 million and 40 million pounds of milk; and $1000 for producers marketing more than 40 million pounds of milk.
The National Milk Producers Federation (NMPF) is giving its full support for the new bill.
"It’s been a long journey of reforming dairy policy following the difficult days of 2009, when America’s dairy producers lost billions of dollars in equity, but the introduction of the Dairy Security Act is a huge step towards ending an ineffective program, and replacing it with something much better," said Jerry Kozak, president and CEO of NMPF.
"We are thankful for Congressman Peterson’s diligent attention this issue, as well as his commitment to real reform, and we look forward to working with him and Congressman Simpson to get this bill passed," Kozak added. The bill reflects the changes endorsed this week by NMPF to its initial "Foundation for the Future" proposal to reform dairy policy.

"It’s been helpful to me to hear from Idaho’s dairy industry about changes that we can make to the dairy program to prevent another economic crisis like that the industry faced in 2009," co-sponsor Simpson said. "I appreciate the cooperative spirit and contributions of the members of the dairy industry thus far and look forward to continuing this conversation as the legislation moves through the committee process. I am confident that the Dairy Security Act of 2011 will provide an effective economic safety net for the U.S. dairy industry while saving taxpayer dollars."

The Congressional Budget Office (CBO) has reviewed The Dairy Security Act of 2011 and determined it shows savings.

Additional information:
Bill Text
Fact Sheet
Myths & Facts

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