Dairy Policy Action Coalition lobbyist and spokesman Dennis Wolff recently spoke with Progressive Dairyman Editor Walt Cooley about the Pennsylvania-based organization’s agenda to ‘clean up’ dairy policy. Wolff discusses the group’s recent efforts to lobby Congress to increase the frequency of dairy product price reporting. Q. How did DPAC get started? WOLFF: A group of dairy farmers started it about 10 months ago with the help of Bernie Morrisey and Sherry Bunting. This was basically a group of producers who wanted less talk and more action. That would be the reason why it is called the Dairy Policy Action Coalition.

These producers wanted to specifically focus on developing policies that reflect the needed changes in federal dairy policy to improve transparency and price discovery. These issues are not controversial among dairy producers. They are ways of cleaning up very complex policies that only a few people understand in this country.

Q. How did you personally get involved?
WOLFF: I personally got involved because I have been a dairy farmer my entire life here in Pennsylvania. I served as the state secretary of agriculture for nearly seven years. Then I became a partner in Versant Strategies, which is a governmental affairs company that specializes in agricultural issues. With these credentials, the dairy farmers in the coalition thought that I would be a good person to represent them. We not only identify problems but also offer constructive solutions. That is somewhat unique but also quite well received by our state and federal government.

Q. Why do you think your ideas are well received?
WOLFF: Whether it is a congressman and senator in Washington or state representatives at the state capitol, they all have a lot of dairy farmers –individual producers and groups – come visit who are rightfully upset about the prices they received and how difficult it has been to operate their dairy farms in 2009 and the beginning of 2010.

They hear it over and over again, and they found it refreshing to have a group that not only identified some of the problems but actually made constructive suggestions on how to change policy to deal with these very difficult times and improve federal dairy pricing.

Q. What is the dairy electronic reporting issue you’ve been chasing down this past year?
WOLFF: One of things that all dairy farmers agree on is that dairy pricing needs more transparency and better price discovery. Back in 2007 when Congress wrote the current Farm Bill they recognized this and put a section in there –Section 1510 – that directed the U.S. Secretary of Agriculture to implement electronic reporting for dairy products on a more frequent basis. They were concerned about the impact of the CME on prices and the time lag of USDA price reporting is released each Friday.

There were a couple of magic words in that bill that slowed this process down. It said, ‘pending funding,’ so our job – and we thought it was going to be difficult –was to get the dollars rounded up to put electronic reporting in place. We spent quite a bit of time and several trips to Washington to get a price tag on it.

We were pleased when we met with the USDA and they informed us it would only be about a million dollars to implement electronic reporting of dairy products. It would take $600,000 to retrofit the software package of current pork and beef electronic reporting to include dairy and then another $400,000 to go into the field and educate the 97 processing plants that report this data every week.

So we worked with the Senate and House ag appropriation committees and we were pleasantly surprised that through those efforts when the reauthorization for daily electronic reporting for the beef and pork industries came up, which was to expire September 30, 2010, they included dairy reporting in there.

My understanding was the initial discussion included daily electronic reporting of dairy products but that there was a lot of push back from the dairy manufacturers –and more specifically IDFA – who said this would be too burdensome. We really think that daily electronic reporting is the only way to dilute the effect of the CME in milk price formulas because right now the CME is the only market that a manufacturer can look to in order to price a product day to day.

The CME is very thinly traded. Many days there are no products traded there, and it is the market of last resort. Basically a few large manufactures, and of course these buyers have a vested interest in trying to buy products at as low of a price as they can.

We feel that electronic reporting is important because it can dilute the impact of the CME and improve transparency of how dairy products are priced and to help ensure farmers are getting a fair price.

Q. How would daily reporting be different than present reporting?
WOLFF: The current method is that NASS collects product price data every Wednesday for the previous week’s sales and volume and releases it on Friday making the information seven to 14 days old when it is released.

In the 21^st Century there is real-time information on everything. The way most markets operate – weather it is corn, soybeans, oil or natural gas – is trading by the minute. You can see just how outdated and how antiquated dairy reporting is. We think it is good business to bring dairy price reporting up-to-date and to have that report published everyday so at the end of the day it can be put online where producers or processors can see the volumes and prices of products that were traded. Market transparencies by way of daily electronic reporting are what the beef and the pork industry have had for many years now.

Finally dairy was in the discussion. Unfortunately, we couldn’t bring it home so it was daily reporting. It is just basically putting the processing in place but unfortunately this information will still be old when it is released. Hopefully with the next Farm Bill there will be more products added to the list of electronically reported dairy products so instead of just reporting butter, cheddar cheese and powder, there would be different varieties of cheeses and different varieties of additional dairy products reported to have a good indicator of what all dairy prices are doing.

Q. Why do you believe processors would oppose more frequent reporting?
WOLFF: Their response is: “It’s burdensome.” Our response is: “How tough can it be to push the send button at the end of the day?” Manufacturers like the way the current system is working to their advantage. We know if we shine some sunlight on this we will improve the transparencies of how products are priced.

Q. So is this outcome a win or a loss or a draw?
WOLFF: It’s a small step forward and certainly a step in the right direction. It basically directs the USDA to put electronic dairy reporting in place. So the ‘pending funding’ issue goes away. We’re just disappointed that that language didn’t reflect what the last Farm Bill directed the USDA to do which was to increase the frequency of dairy reporting.

Q. How much more would it cost to move from weekly electronic reporting to daily reporting?
WOLFF: It would be minimal. The lion’s share of the electronic reporting cost will be retrofitting the current software for pork and beef and educating the processor on how to use it. It doesn’t matter whether you are pushing the send key once a day or once a week it would not have any significant effect on the cost of implementing daily reporting.

Q. Are dairy producers heard in Washington?
WOLFF: We feel that their voice is not heard. I think that has been one of the reasons why our organization has grown so rapidly and increased in size in just 10 months to represent about 6,500 dairy producers. These producers are not asking for a guaranteed $25 per hundredweight for milk. They are just saying that dairy policy and pricing in particular needs cleaned up because it is too complex, lacks transparency and is the cornerstone for any policy reform.

Q. How would you describe the atmosphere in Washington as it relates dairy issues?
WOLFF: Every time we go there we educate the House and the Senate members’ ag staffers. For example, recently when we were there visiting, one of the ag staffers thought that the change in the electronic reporting that was just passed was a huge step forward because they thought is was previously only reported monthly. We said that this is not accurate, as it has been reported weekly and that this only speeds it up by a day or two. Dairy is the most complicated policy that I have ever worked with, and most Congressional ag staffers will agree it is extremely complex and complicated.

Q. Do you think the dairy industry will ever see daily reporting? If so, how?
WOLFF: It’s going to take a continued effort to see that daily electronic reporting is put into place. You never are successful with one trip to Washington when you are lobbing or discussing particular issues, so we have been working on this now for nearly a year. I think we have done an excellent job in educating the Senate and House ag committees and their staff members about daily dairy electronic reporting and why it’s important. We have moved this agenda forward.

Q. So the next window of opportunity to implement daily reporting is …?
WOLFF: The agriculture appropriation bill, which may be taken up the beginning of next year when the new Congress comes in.

Q. After daily reporting, what will you move onto next?
WOLFF: Dairy product price supports. The DPAC board believes product price support programs do not work and do more harm than good. Also, we are reviewing whether we should have fewer classes of milk, such as whether there should be a fluid class and then one more combined class of the other three current classes so there is at least some competitive spirit when buying milk for manufactured products. Also, we feel the competitive pay method of pricing dairy products needs a second look rather than the product price formulas used today.

Q. In five years, what do you hope to have accomplished?
WOLFF: The DPAC board will know if it has made a difference by whether it has improved federal dairy policy by simplifying its very complex system, by making it more transparent and by restoring dairy farmers’ trust in the system and its ability to deliver fair milk prices. If we are able to do that, we will know that we were successful and have made a positive difference. PD