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Dollars in the Details

Published on: 14:10PM May 03, 2013

In the two embattled proposals for federal dairy legislation, what’s left out can be as important as what’s still there in black and white.

When it comes to loan documents, warranties, insurance policies and just about any other legally binding piece of paper, ignoring the fine print is done so at your peril.

In the case of re-introduced federal dairy legislation, reading the fine print is the easy part. You actually have to go back and compare what was in the original proposal to what is being proposed currently. What’s left out can be as important as what’s still in front of you in black and white.

Such is the case with the Goodlatte-Scott amendment, known as the Dairy Freedom Act, re-introduced to the House of Representatives April 25. In the original version, dairy farmers could sign up for margin insurance only at the beginning of program. Once they did, their production base was fixed for the life of the program. The new version simply eliminates Section (e) (1), thus allowing farmers to change coverage and update production history each year.

In the past, opponents of Goodlatte-Scott, most notably the National Milk Producers Federation, pointed out that Goodlatte-Scott provides less coverage (80% of a farmer’s production history) than the Dairy Security Act (which provides 90% coverage). Opponents also pointed out that the Goodlatte-Scott coverage would "decline" annually if a farm expanded through the five-year farm bill. What was 80% coverage could become 70% or 60% or less, depending on the amount of the expansion.

Personally, I never saw that as a huge impediment. What farm now has 60% or 70% or 80% risk management/margin coverage? But it was a talking point—and a negative one at that.

The cost of Goodlatte-Scott has also increased with the ability to increase a farm’s annual production history. Prior to the change, the Congressional Budget Office (CBO) estimated Goodlatte-Scott would cost taxpayers $334 million over 10 years. The new number is $434 million. Most of us would say $100 million is a pretty significant budget hit, even if it’s over 10 years.

But keep in mind the Dairy Security Act’s CBO score is $441 million over 10 years. National Milk scoffs at the CBO scoring process because DSA still costs the government $7 million more than Goodlatte-Scott. That’s despite the fact DSA contains the market stabilization program (which is specifically designed to keep government costs from sky-rocketing).

"I don’t believe the CBO numbers," says Jerry Kozak, NMPF president and CEO. "CBO doesn’t have the intellectual capacity to calculate dairy stabilization program impacts."


That's strong stuff, given NMPF touted CBO-scored budget savings when the DSA was originally introduced. 


In the end, though, the dairy debate won’t be won or lost on CBO scoring minutiae. Keep in mind that the entire farm bill’s price tag comes in at nearly $1 trillion. Dairy’s portion, be it $434 or $441 million, works out to 0.04% or there-about. Pencil dust, as the pundits are fond of saying.

Mark-up in both the House and Senate Agriculture Committees is scheduled this month. You can bet your bottom dollar more changes are on the way.

For more on the Goodlatte-Scott amendment, click here