Price Suppor Roulette Added boost still in play

September 17, 2009 07:00 PM

An additional $350 million for
dairy price supports must survive the Senate and House conference committee negotiations.
With dairy producers facing intense financial pressure, farm-state lawmakers and USDA have been pulling as many policy levers as they can. One effort has focused on an increase in the price supports for dairy products.

USDA temporarily raised price supports for August through October. That won't benefit producers beyond Nov. 1, but an increase in price supports for fiscal year (FY) 2010 may still be in the cards.

Included in the Senate version of the FY 2010 ag appropriations bill is a provision to give the Farm Service Agency an additional $350 million in spending. The dollars are intended to be earmarked for an increase in dairy price supports, and the amendment got the attention of several ag groups that are seeking help from the government. However, the language is very general—which, in turn, caught the attention of nondairy lawmakers.

The reason for the general nature of the amendment—it doesn't specify that the $350 million is to go for an increase in dairy price supports—is that Senate rules prevent lawmakers from "legislating” via the appropriations process. In other words, an appropriations bill is for spending and funding the implementation of policy, not for making policy.

The amendment's author, Sen. Bernie Sanders (Ind.-Vt.), made it clear when he introduced the measure on the Senate floor that it was specifically intended for a dairy support boost. But following Senate rules, he kept the language in the bill vague. So how will lawmakers ensure that the $350 million goes just to dairy producers?

The next step in the process is to reconcile the House and Senate versions of the spending bill in a conference committee composed of members from the respective panels. The House version does not contain the dairy price support boost, so it will be up to Senate conferees to convince their House counterparts that the provision needs to stay in the final plan.

Sen. Sanders has been contacting other dairy-state senators and House members to muster support for his plan. In the Senate, the plan garnered 60 votes, and that is all but unheard of in dairy policy.

USDA Secretary Tom Vilsack has not yet signaled whether he supports the amendment, but given that USDA has already temporarily boosted dairy price supports, it is unlikely the agency will oppose a related effort coming from Congress. Also, Vilsack has been getting an earful from dairy producers at stops along the Obama administration's "Rural Tour.”

Will the provision stay in? USDA is forecasting that net cash farm income for 2009 will be down 30% from 2008 and will also be below the 10-year average. That could send even more groups to Washington to seek some kind of help. So an increase in the dairy price support is certainly very much in the legislative mix.

Roger Bernard is the Policy and Washington Editor for Farm Journal.

Bonus content:

NMPF urges cheese purchases

August milk production down 0.3%

Dairy imports down

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