Kicking the milk jug down the road

By Ty Higgins, Ohio Ag Net

For the dairy industry, 2013 will be the same old, same old as far as policies from last year. The farm bill has been extended through September and the dairy price support program is now good through the end of December.

For groups like the National Milk Producers Federation (NMPF) that were hoping for a fresh five-year farm bill including the Dairy Security Act, the actions made by Congress to avoid the Fiscal Cliff were not even close to what the dairy industry needs moving forward.

“The real issue for dairy farmers is that we don’t have a meaningful safety net as we start 2013,” said Chris Galen, Senior Vice President of Communications for NMPF. “Yes, Congress extended the Milk Income Loss Contract (MILC) program, but that really doesn’t help as many people as we would like in the way that we would like.”

Congress also extended the price support program, not at the 1949 level but at the existing level, which is much lower.

“Neither of those two programs that are intended to help dairy farmers are very effective,” Galen said. “What we really need is a margin insurance program. That is a type of program that would help farmers in a year like 2012 when we saw really high feed costs and the issue becomes margins and not just milk prices.”

That is where the Dairy Security Act — a new margin insurance-based safety net for dairy farmers — comes into play. This program would have been part of a full five-year farm bill if Congress had pushed it through before year’s end. But now it will have to wait for action later this year.

“With the Dairy Security Act, if farmers chose to enroll in the program, they would compensated through partially subsidized government insurance premiums when margins are squeezed by low milk prices, high feed costs or a combination of the two,” Galen said. “Times have changed since the MILC program was introduced and this new program is not capped on your volume. MILC only provides payments up to 3 million pounds of annual production and that really doesn’t reflect the reality of where the milk is coming from on today’s farms.”

Now the 113th Congress will be faced with writing and passing what NMPF hopes will be a long-term farm law. Many faces in Washington will be new, but Galen says many of the key players that agreed to a five-year Farm Bill late last year are still in place, and that should make the process a bit less worrisome.

“The new farm bill will not just start with a blank piece of paper,” Galen said. “Lawmakers will build on the work that has already been done for the entire farm bill, but specifically also for the Dairy Security Act, which passed the full Senate and the House Ag Committee last year.”

Congress has plenty of time to put a new farm bill in place. If not, the terms “dairy cliff” and “kicking the can down the road” will be a part of the New Year’s celebration heading in to 2014 as well.

AUDIO – What is the current state of America’s dairy industry? Here is Ty’s interview with Galen.

Part 1

Part 2

 

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