Dairy reforms aim smaller

Dairy reforms aim smaller

- Bill to exempt 200 cows from supply management. - USDA must study and restructure dairy pricing. - Mandatory cold storage reporting

AS the Senate gears up for its farm bill debate, Sen. Kirsten Gillibrand (D., N.Y.) reintroduced several dairy reform bills she first sought in last year's debate plus new measures to help provide a better safety net for smaller producers and improve inventory reporting and transparency.

Speaker of the House John Boehner (R., Ohio) has made it no secret that he's opposed to the dairy production supply management component proposed during last year's farm bill debate. Gillibrand said she shares some of the same concerns about supply management but wants to ensure that consolidation doesn't push smaller dairies out of business because of the way the program is written.

As currently structured, the margin insurance program would provide margin-based assistance for producers equal to the difference between the all-milk price and a national feed cost and would be tied to the Dairy Market Stabilization Program, the supply management component. However, the Congressional Budget Office said the proposal would cost more than first estimated because lower milk prices increase the cost of the margin program.

Gillibrand introduced the Dairy Income Fairness Act, which would give farms with 200 cows or fewer a guaranteed $6.50 margin -- the cost of milk minus the cost of feed -- per hundredweight and would exempt the first 200 cows from supply management for operations of any size.

Another piece of the bill extends the current Milk Income Loss Contract program for nine months, pegged to inflation, while the U.S. Department of Agriculture establishes a new and more sustainable program for dairy farmers. During roundtable discussions with dairy producers in New York, Gillibrand said farmers expressed the importance of having a safety net as new programs are put into place.

A bill from Gillibrand and Sen. Susan Collins (R., Maine), the Dairy Pricing Reform Act, builds on language Gillibrand secured in the Senate farm bill last year requiring USDA to study different methods of determining dairy prices, including competitive pay pricing or shifting from a four-class to a two-class system. It would force USDA to begin the hearing process to restructure the pricing system and would direct the secretary of agriculture to release USDA's recommendations to Congress.

"A lot of our advocates in the industry don't want to see changes, but that doesn't work for small dairies, and that's why we need to change it," Gillibrand said of how current dairy pricing operates.

She said people want to know why milk pricing doesn't accurately reflect the cost of production and fuel.

"Until there is new pricing, the hardest and first hit will be smaller dairies," she said.

Gillibrand led the effort to include a provision in the Senate farm bill that would make it mandatory for cold storage facilities to report inventories to the USDA National Agricultural Statistics Service (NASS) and would give USDA the authority to audit warehouse inventories to help bring more stability to dairy trading prices.

Inventories of certain types of classified cheeses have the ability to significantly influence trading activity on the Chicago Mercantile Exchange. However, NASS cold storage facilities are currently not required to report their inventories of dairy products and do so only on a voluntary basis, creating an environment of volatility and uncertainty for dairy trading. In fact, by February of 2009, the low point of the dairy crisis, NASS reported that cold storage inventories had been inflated by approximately 9%.

Gillibrand does not expect the report to cost extra because it is currently voluntary, and mandatory reporting will not create any more burden for the government.

To provide more transparency to dairy cooperatives and equip dairy farmers with more of the information they need, Gillibrand secured language in the Senate farm bill based on her previous Democracy for Dairy Producers Act.

The legislation would require dairy cooperatives that engage in bloc voting to provide their member farmers with written notices when votes occur. It also would require each milk marketing order to establish an information clearinghouse to provide information regarding any proposed milk marketing order reforms. This information is required to be published online and distributed to producers.

Volume:85 Issue:14

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