Despite Senator Arlen Specter's switch to the Democratic Party yesterday, his dairy bill, "The Federal Milk Marketing Act of 2009,” is still a very, very long shot to become law.
S. 889 is quite a radical departure from current law, collapsing Class II, III and IV milk into a single Class II milk. It would also set the price of this new Class II at the national average cost of production. Current Class I differentials would be added to the Class II price to set Federal Order minimums for fluid milk in each Federal Order. The bill would also bring California into the Federal Order system.
USDA would become even more active in milk prices, calculating national average costs of production and then applying that to minimum Class II prices. If surplus milk was created as a result (and if U.S. exports exceeded imports in terms of volume and value), milk prices could be reduced to bring supply back in line with demand. The reduction in price could not be more than half the minimum price of Class II, and would be applied to no more than 5% of annual U.S. production (excluding Alaska and Hawaii). If these price cuts were still not enough, further price reductions could be placed on milk coming from farms that produce more than 3 million lb. of milk per year.
"This is a very complex proposal, and would drastically reshape the dairy industry, including what products were produced where,” says Chris Galen, spokesperson for the National Milk Producers Federation. "I don't see it moving forward.”
Jerry Slominski, senior V.P. of Legislative Affairs and Economic Policy for the International Dairy Foods Association, agrees. He says the bill may have some support within Pennsylvania, but doubts it has much producer support elsewhere. And bringing California into the Federal Order system would need California's consent. "California is clearly the most powerful state politically. And it would be very hard to do something that California doesn't want to have happen,” he says.