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Farm bill dairy deal emerges

Dairy compromise could adjust margin insurance premium rates to help limit upside potential of excess milk supplies.

An impasse over how to handle dairy policy may have been breached late this week, although full details were not released. If the deal works out, it could allow for a vote on the farm bill as early as Jan. 27.

House Speaker John Boehner (R., Ohio) had threatened to prevent the farm bill from coming to the floor for a vote if it included the "Soviet-style" supply management program in the Dairy Security Act introduced by Rep. Collin Peterson's (D., Minn.) and included in the Senate farm bill. The House had removed the supply management provisions via an amendment with nearly 2/3 of the chamber supporting removing the mechanism that triggers penalties to producers when milk supplies skyrocket to discourage production.

A statement from Jim Mulhern, president and chief executive officer of the National Milk Producers Federation, said in a statement Thursday that NMPF was heartened that the DSA language was included in the House-Senate farm bill conference committee that was planned to be presented to the full conference. Despite the long-standing opposition to this plan from Boehner, Mulhern said he was "confident" there were the votes in the conference committee to defeat any amendment to strike the market stabilization program.

Because of Boehner's threat to not allow for a vote on any conference bill that includes the marketing stabilization program, Mulhern said NMPF is engaged in discussions with agriculture committee staff on an alternative approach to creating a dairy safety net that would contain inducements to help achieve a supply-demand balance and prevent catastrophic milk price collapses like what was experienced in 2009.

"At this point, it is conceivable that an alternative mechanism could be developed, relying upon adjustments to the program’s margin insurance payout structure and participant premium rates, among other options. Any such approach must still offer an effective risk management tool to farmers, while containing suitable incentives to program enrollees to achieve cost controls," Mulhern said.

The devil is in the details and both NMPF and Peterson have said there are components of concept that could gain their support, but further details need to be worked out over the recess during the week of Jan. 20.

“I have not agreed to anything at this point and still support the Dairy Security Act. While the proposed concept at least appears to move in the right direction and may be something I could reluctantly support, without further details a lot still needs to be worked out,” said Peterson.

Another sticky issue remains the actively engaged in farming definition. A new Congressional Budget Office report shows that Sen. Chuck Grassley's (R., Iowa) provisions to place a hard cap on farm payments and ensure that farm payments go to people actively engaged in farming save $387 million over 10 years, which is an additional $210 million over previous estimates.

Both the House and Senate bills contained the reforms, but Southern interests have pushed to have them relaxed in a final bill. 

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