Principal designer of DMSP drops its support of Dairy Security Act In a letter to co-op members in October, Agri-Mark publicly announced its opposition to pending dairy reform legislation known as the Dairy Security Act of 2011, introduced into the house by Rep. Collin Peterson and co-sponsored by eight other House members. The co-op renounced its previous support of NMPF’s Foundation for the Future, which was the basis for Peterson’s bill, because the current legislation does not require mandatory participation in supply management during low profit margins by all U.S. dairy farmers.

Agri-Mark claims the Dairy Market Stabilization Program, which was initially adopted as part of NMPF’s Foundation for the Future, was very similar to its own marginal milk pricing program.

However, in September, NMPF members voted to change the program from being mandatory only for those who accept government-sponsored dairy margin insurance. Agri-Mark, a voting member of NMPF, opposed the change.

“If all dairy farmers could reduce milk production by just 2 percent or 3 percent when milk prices first began to fall, we could very likely stop those prices from falling the 20 or 30 percent that they have done in the past,” Agri-Mark’s VP of Economics, Communications and Legislative Affairs Robert Wellington said in the letter dated Oct. 17.

“The simple math shows that every dairy farmer would be better off shipping 3 percent less milk for a few months if it meant a $5 higher price on the 97 percent of the milk that was shipped.”

Agri-Mark says the supply management program included in the Dairy Security Act of 2011 will not be effective “unless there is mandatory participation or at least participation by nearly all U.S. dairy farmers.”

“Any dairy farmer income safety net program enacted should meet or exceed the benefits provided to Northeast dairy farmers by the MILC program over the past nine years,” the letter says.

The co-op has indicated it will work with members of Congress from the Northeast to “make improvements” to the current dairy reform legislation.

Senator wants to decouple government payments from mandatory supply management
New York Sen. Kristen Gillibrand (D-NY) recently introduced an amendment that would prohibit dairy producers who receive government milk margin support from participating in mandatory supply management.

The Dairy Security Act of 2011 as introduced in the House has been included in a similar form in a Senate bill introduced by Sen. Dick Lugar (R-IN). Both bills are reportedly being presented to lawmakers participating in the debt-reduction Super Committee for consideration.

Gillibrand’s amendment, which was attached to a separate proposed spending bill, would decouple acceptance of government-sponsored insurance from compulsory participation in supply management. As reported in the Watertown Daily Times , Gillibrand opposes tying supply management to insurance.

Instead, she would propose milk marketing orders could opt out of supply management if the “amount of milk processed by plants is greater than the order’s production,” the paper reported.

“Dairy farmers should not have to pay extra for what they are getting now for free,” said Mrs. Gillibrand’s spokeswoman, Bethany Lesser, in an email sent to the paper. “This is our line in the sand.”

Economists analyze farm-level and market impacts of the Dairy Security Act of 2011
In late October, Dr. Chuck Nicholson of Cal Poly – San Luis Obispo and Dr. Mark Stephenson of the University of Wisconsin released two short papers – one on the farm-level financial impacts and the other on the market impacts of the Dairy Security Act of 2011 (H.R. 3062) and the Dairy Provisions of the Rural Economic Farm and Ranch Sustainability and Hunger Act of 2011 (S.1658).

In the farm-level paper they stated, “Two proposed pieces of dairy legislation could reduce variation in Net Farm Operating Income (NFOI) for four representative U.S. dairy farms and decrease the frequency of negative NFOI.”

Based on their modeling, that reduction in variation also resulted in lower average NFOI during 2012 to 2018. Those farms choosing to participate in margin protection and supply management programs would receive more in indemnity payments than they pay in premiums under assumed levels of participation.

However, they caution, “Each of these assumptions about how producers will respond to the program is highly uncertain.”

The market impact paper says the proposed legislation “could reduce variation in U.S. milk prices, reduce average milk and product prices, have different impacts on government expenditures and would not markedly affect milk marketed during the period 2012 to 2018.

The programs would reduce the value of U.S. dairy exports but also reduce the value of U.S. dairy imports.” To read the papers in full, visit http://dairy.wisc.edu/PubPod/Pubs/DSA Farm.pdf and http://dairy.wisc.edu/PubPod/Pubs/DSA Market.pdf . PD

Dairy Security Act of 2011

Sponsor:
Collin Peterson (D-MN)

Co-sponsors:
Mike Simpson (R-ID), Jim Costa (D-CA), Joe Courtney (D-CT), Rick Larsen (D-WA), Billy Long (R-MO), Kurt Schrader (D-OR), Peter Welch (D-VT), Bruce Braley (D-IA) NEW

Latest action:
Referred to the Subcommittee on Livestock, Dairy, and Poultry

Several dairy organizations, cooperatives and companies have publicly released their support for or opposition to the Dairy Security Act of 2011.

Note: This list was compiled at press time. Additions and changes may have occurred since that time.

“These changes are long overdue, and the new programs are a vast improvement over the current flawed system. I am confident that the Dairy Security Act of 2011 will move the dairy industry to a more market-focused industry while encouraging risk management and requiring less taxpayer assistance, positively impacting Idaho’s economy.”
Rep. Mike Simpson
(R-Idaho)

Yes:
American Farm Bureau Federation
Continental Dairy Products
Cooperative Milk Producers Association, Inc.
Darigold, Inc.
Dairy Farmers of America
Dairy Producers of New Mexico
Dairylea Cooperative Inc.
Farmers Cooperative Creamery
Foremost Farms USA
Holstein Association USA, Inc.
Idaho Dairyman’s Association
Land O’Lakes, Inc.
Lone Star Milk Producers
Maryland & Virginia Milk Producers Association, Inc.
Michigan Milk Producers Association
Milk Producers Council
Missouri Dairy Association
National Council of Farmer Cooperatives
National Milk Producers Federation
Northwest Dairy Association
Oregon Dairy Farmers Association
Prairie Farms Dairy, Inc.
Select Milk Producers, Inc.
St. Albans Cooperative Creamery, Inc.
United Dairymen of Arizona
Upstate Niagara Cooperative
Washington State Dairy Federation
Wisconsin Farm Bureau Federation

“Risk management tools like margin insurance are important, but should not be packaged with other programs that surely will have unintended consequences. We need to enact policy that will help our dairy sector compete in today’s global marketplace.”
Jerry Meissner
President of the Wisconsin Dairy Business Association

No:
Agri-Mark
Americans for Tax Reform
California Dairies, Inc.
Citizens Against Government Waste
Dairy Business Milk Marketing Cooperative
Dairy Policy Action Coalition
International Dairy Foods Association
National Taxpayers Union
Wisconsin Cheese Makers Association
Wisconsin Dairy Business Association