In late April, the Senate Committee on Agriculture, Nutrition and Forestry voted 16-5 to approve the Agriculture Reform, Food and Jobs Act of 2012, thus sending it to the full U.S. Senate for consideration. The dairy title of this legislation repeals the Milk Income Loss Contracts (MILC), Dairy Product Price Support Program (DPPSP) and Dairy Export Incentive Program (DEIP). These programs are replaced with the Dairy Production Margin Protection Program, which offers no-cost insurance coverage at $4 margin of the all-milk price over the national average feed cost.

It also includes a supplemental margin insurance component with a two-tiered premium structure where dairy producers can purchase margin insurance for up to 90 percent of their base milk production at levels from $4.50 to $8.

Those who opt to enroll in the margin program will also be subject to the Market Stabilization program that asks dairy producers to reduce milk production up to 8 percent depending on certain milk-feed margins.

The plan is similar to the Dairy Security Act, introduced in the House by Rep. Collin Peterson (D-Minnesota).

However, the committee also approved two amendments to the dairy title of the Farm Bill – one, offered by Sens. Johanns (R-Nebraska) and Casey (D-Pennsylvania), that authorizes a review of the Market Stabilization program at the end of the five-year bill’s lifespan; and a second, offered by Sen. Gillibrand (D-New York), that extends the MILC program through June 2013, at a reduced rate, so there is a safety net in place while the USDA implements the new dairy margin insurance program.

An amendment offered by Sen. Michael Bennet (D-Colorado), which would have struck the Dairy Market Stabilization Program from the bill and left a stand-alone dairy producer margin insurance program, was withdrawn.

To view a copy of the Agriculture Reform, Food and Jobs Act of 2012, click here to visit the Senate Agriculture Committee website.

—Compiled by PD staff

NMPF pleased with Senate bill
“The Senate has taken a huge step in the right direction by including the dairy reforms modeled after NMPF’s Foundation for the Future program,” said Jerry Kozak, president and CEO of the National Milk Producers Federation (NMPF).

According to Kozak, the bill was not amended in any way that diminishes the value of the margin protection or market stabilization elements.

—From NMPF news release

DFA: Better protection offered to producers
“Since the devastating dairy economy crash of 2009, dairy farmers, industry organizations and cooperatives – including DFA – have worked to develop a new system that better protects the interests of producers in a highly volatile industry,” said John Wilson, senior vice president, Dairy Farmers of America, Inc.

“The dairy provisions included in the Farm Bill provide producers options to protect their margins and the ability to strengthen exports, both of which will be instrumental in maintaining the vitality of the U.S. dairy industry.”

—From DFA statement

MMPA applauds approval of dairy policy reforms
“The dairy title contains much- needed improvements to current dairy programs that will better protect dairy farmers and benefit consumers,” says Ken Nobis, Michigan Milk Producers Association (MMPA) president. “We look forward to the next step in the legislative process and urge the full Senate to preserve the important components of the dairy title.”

—From MMPA news release

Midwest Dairy Coalition praises Senate ag committee work
“We recognize the work that the committee has done to address the concerns raised by Midwest Dairy Coalition members,” said Steve Etka, coordinator, Midwest Dairy Coalition. “The modifications take into account the economic needs of most of our region’s dairy producers.”

Of primary concern to the coalition were three modifications it sought to the original DSA bill:

• Removal of federal milk marketing order provisions

• Addition of a two-tier premium structure to the Supplemental Margin Protection Program provisions

• Inclusion of provisions to reinforce that a producer’s production base under the Dairy Market Stabilization Program would be a temporary, rolling base

The coalition also asked for inclusion of provisions to allow for a continued safety net for dairy producers in the interim period following passage of the new dairy legislation until it has been implemented by the USDA.

—From Midwest Dairy Coalition news release

Provisions fail to address concerns of Minnesota dairy farmers
The Minnesota Milk Producers Association (MMPA) Board of Directors has voted to oppose the dairy provisions contained in the draft 2012 Farm Bill released by Senate Agriculture Committee. MMPA believes the bill does not adequately address the challenges facing Minnesota’s dairy farmers unless all language referring to “milk stabilization” is removed.

Second, while MMPA applauds the inclusion of a margin insurance program for dairy in the proposed bill, it is not actuarially sound at the higher coverage levels. The premiums are currently structured in a manner that creates extra incentives for certain producers to keep producing more milk in order to receive hefty margins via insurance payments from the USDA.

Third, dairy farmers deserve promised market reform. There is very little in terms of market reform in the proposed legislative language. The U.S. dairy industry must move toward a two-tiered pricing system, and it must move toward a competitive pay price. Also, there is no language that would put California under the Federal Milk Market Order system.

—From Minnesota Milk Minute

Farm Bill ignores true cost of production caps to dairy farms
The executive board of the Dairy Policy Action Coalition (DPAC) expressed disappointment to see the Senate Ag Committee move its Farm Bill forward with production caps on dairy producers who sign up for margin protection. The group issued a statement saying bill also lacks a framework to simplify the complex federal milk pricing system and improve accountability.

—From DPAC news release

DBMMC opposes dairy policy
The Dairy Business Milk Marketing Cooperative (DBMMC) Board of Directors voted to oppose the dairy policy included in the draft 2012 Farm Bill. DBMMC has gone on record as opposing all government-run efforts to limit milk production, which will harm the future of the dairy industry.

—From DBMMC news release

DBA Board unanimously opposes dairy provisions
The Dairy Business Association (DBA) Board of Directors unanimously voted to oppose the Senate version of the 2012 Farm Bill. DBA has been vocal in its opposition of the supply control mechanism contained in the Dairy Security Act, which has been included in the 2012 Farm Bill proposal.

The group says any governmental interference in maintaining that consistent supply of milk will harm Wisconsin’s dairy industry, directly contradicting programs Wisconsin has recently implemented to increase milk production.

—From DBA news release

NSAC commends Senate version of Farm Bill for subsidy reform
According to a national grassroots coalition, the Senate Agriculture Committee bill includes historic reforms to commodity subsidies. In addition to replacing automatic direct payments with a shallow loss revenue-based payment, the National Sustainable Agriculture Coalition says the bill limits payments to not more than one farm manager per farm operation.

“We applaud the Senate Agriculture Committee for including common sense rules to commodity payments and ending years of abuse by closing program loopholes,” said Ferd Hoefner, policy director for the coalition.

The coalition said while the committee made progress on these commodity and crop insurance issues, there are several outstanding gaps in the proposed changes to the farm safety net.

“The bill lacks a cohesive strategy to assist the next generation of American farmers,” said Hoefner. “Most noticeably, the committee failed to provide adequate funding for the Beginning Farmer and Rancher Development Program, thus limiting critical resources that new farmers need to succeed.” PD

—From NSAC news release

On both sides of the issue …
Since the Dairy Security Act was announced last fall, Progressive Dairyman has been tracking organizations, cooperatives and companies for or against this plan of dairy policy reform.

In favor
Agri-Mark
Alabama Dairy Producers
American Farm Bureau Federation
Associated Milk Producers Inc.
Continental Dairy Products
Cooperative Milk Producers Association, Inc.
Darigold, Inc.
Dairy Farmers of America
Dairy Farmers Working Together
Dairy Producers of New Mexico
Dairy Producers of Utah
Dairylea Cooperative Inc.
Ellsworth Cooperative Creamery
Farmers Cooperative Creamery
Foremost Farms USA
Holstein Association USA, Inc.
Idaho Dairyman’s Association
Iowa State Dairy Association
Land O’Lakes, Inc.
Lone Star Milk Producers
Maryland & Virginia Milk Producers Association, Inc.
Maryland Dairy Industry Association
Michigan Milk Producers Association
Midwest Dairy Coalition
Milk Producers Council
Missouri Dairy Association
National Council of Farmer Cooperatives
National Farmers Organization
National Milk Producers Federation
Northwest Dairy Association
Oregon Dairy Farmers Association
Prairie Farms Dairy, Inc.
Select Milk Producers, Inc.
South Carolina Dairy Association
South Dakota Dairy Producers
St. Albans Cooperative Creamery, Inc.
United Dairymen of Arizona
Upstate Niagara Cooperative
Washington State Dairy Federation
Wisconsin Farm Bureau Federation

Opposed
Alliance Dairies
Americans for Tax Reform
Bongards’ Creameries
California Dairies, Inc.
Citizens Against Government Waste
Dairy Business Milk Marketing Cooperative
Dairy Policy Action Coalition
Davisco Foods International, Inc.
First District Association
Glanbia Foods
High Desert Milk
Hilmar Cheese Company
International Dairy Foods Association
Minnesota Milk Producers Association
National Dairy Producers Organization
National Taxpayers Union
Northeast Dairy Producers Association
Saputo Cheese USA Inc.
Sargento Foods Inc.
Schreiber Foods, Inc.
Wisconsin Cheese Makers Association
Wisconsin Dairy Business Association