‘Dairy cliff’ avoided, but real policy reform is needed in 2013

2013-01-10T09:54:00Z ‘Dairy cliff’ avoided, but real policy reform is needed in 2013BY PEGGY COFFEEN, DAIRY/LIVESTOCK EDITOR Agri-View

The fiscal cliff package was finally approved by the U.S. House of Representatives on the first day of the new year, avoiding the so-called ‘dairy cliff.’ This action extended the 2008 farm bill, which includes the familiar safety net of the Milk Income Loss Contract (MILC) program through Sept. 30. Coming just in the nick of time, the move also avoided reverting to an outdated 1949 law that would have increased federal price supports for dairy commodities and dangerously doubled not only the price paid to producers for their milk, but also the cost to consumers.

Leading state and national dairy groups spoke up through statements issued last week, some with words of praise and others with sharp tongues. Both sides of the issue agreed on one thing: real dairy policy reform is needed in 2013.

DBA CALLS IT A ‘VICTORY’

Wisconsin’s Dairy Business Association (DBA) was “extremely pleased” with the extension of the 2008 Farm Bill that did not include the proposed dairy title that would have limited milk production.

“The supply management program was rejected because legislators in Congress realized that if it were passed, this communism style of dairy policy would intrude on dairy markets by controlling the milk supply and artificially creating demand for dairy products at higher prices. Supply management programs have been tried before, been proven to be a mistake and a costly failure. We can’t continue to make the same mistakes,” said Laurie Fischer, DBA’s executive director. “The removal of the Dairy Security Act from the farm bill extension is a victory for the nation’s dairy producers.”

Leading dairy processing group, the International Dairy Foods Association (IDFA), shared support for the agreement as well. The group’s membership represents more than 85 percent of the milk, cultured products, cheese and frozen desserts produced and marketed in the United States.

“IDFA congratulates Congress and President Obama for reaching an agreement on how to address the important ‘fiscal cliff’ legislation. We appreciate that the bill includes provisions that will avoid the resurrection of dairy policies from more than 50 years ago. This agreement allows Congress time to fully and openly consider future reforms to our nation’s dairy policies,” said IDFA President and CEO Connie Tipton.

If IDFA and DBA have it their way, future reform will include a producer safety net in the form of a margin insurance program without restrictions on the right to produce milk. Wisconsin dairy producer and DBA President Jerry Meissner stated, “Limiting milk production and paying producers to not produce milk just doesn’t make sense.”

NMPF SAYS IT’S A ‘DEVASTATING BLOW’

Meanwhile, the National Milk Producers Federation (NMPF) called the extension of current farm policy without the Dairy Security Act a “devastating blow to the nation’s dairy farmers” in a statement last week.

“Despite the progress made in 2012 on the farm bill, we’re starting 2013 on a bad note. We oppose any farm bill extension of any duration that does not contain the Dairy Security Act and resolve to work this year on achieving that as a long-term goal,” said NMPF President and CEO Jerry Kozak.

This came as a disappointment to the group as the original bills approved by the full Senate and by the House Agriculture Committee included the measure, which promoted a combination of supply management and margin insurance.

“These stop-gap efforts don’t even qualify as kicking the can down the road. It’s little more than a New Year’s Day, hair-of-the-dog stab at temporarily putting off decisions that should have been made in 2012 about how to move farm policy forward, not offer more of the same,” he said.

NMPF has no plans of backing down in 2013. Kozak said that dairy farmers will reiterate the value of the Dairy Security Act as the Senate and House Agriculture Committees convene to draw out a full, five-year farm bill. “We need to spend the coming months figuring out how to move farm policy forward,” he said. “The renewal of current programs doesn’t offer dairy farmers a meaningful safety net.”

On the home front, Wisconsin Farm Bureau Federation (WFBF) President Jim Holte called last week’s negotiations a “lost opportunity for true farm policy reform.”

“We are disappointed that Congress did not agree on a new five-year farm bill that would have provided true reform to federal crop and dairy programs and enhanced risk management tools,” he said.

However, he acknowledged that the extension of the 2008 farm bill relieves some uncertainty for producers as they make their plans for 2013.

“In lieu of extensive dairy reform, Wisconsin dairy farmers appreciate having this safety mechanism back in place,” Holte stated.

Agriculture Secretary Tom Vilsack made known his disappointment in his Washington peers, specifically citing implications on the dairy industry.

“I am pleased that Congress passed needed middle class tax relief and continued unemployment insurance protection for 2 million unemployed Americans. However, while I am relieved that the agreement reached prevents a spike in the price of dairy and other commodities, I am disappointed Congress has been unable to pass a multi-year reauthorization of the Food, Farm and Jobs bill to give rural America the long-term certainty they need and deserve. I will continue to work with Congress to encourage passage of a reauthorized bill that includes a strong and defensible safety net for producers, expanded rural economic opportunity in the new bio-based economy, significant support for conserving our natural resources, increased commitment to important research, and support for safe and nutritious food for all Americans.”

Mark Stephenson, Director of Dairy Policy Analysis at UW-Madison, says U.S. Sen. Patrick Leahy (D-Vermont) “drove to the hoop... to insist that a change be made in the package to extend the MILC program using the pre-September 2012 program parameters. Without Leahy’s intervention, the MILC program would have been extended at the lower, post-Sept. 1 rates.”

Says Stephenson, “The bottom line is that life will continue much as we know it... The unfortunate thing is that we face another year of contentious debate on dairy provisions and other aspects of the farm bill.”

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