Factions disagree on proposals

Supply management would skim off percentage for food programs

By CAROL RYAN DUMAS

Capital Press

Dairy groups have had mixed reactions to dairy margin insurance and a supply management program contained in the Senate Ag Committee's farm bill.

The voluntary margin insurance program ensures producers margins between the milk price and feed costs when the national margin falls below $4 per hundredweight for two consecutive months. The program is fully subsidized by the federal government and covers 80 percent of historic production, but producers can purchase additional coverage.

Under the supply-management program, processors would pay producers for only 96 percent to 98 percent of their milk. Processors would send payment for the remainder to USDA to be used for dairy product purchases for food assistance.

The ag committee also passed amendments authorizing a review of the supply-management program at the end of the five-year farm bill, and the other extending the Milk Income Loss Contract program though June 2013 at a reduced rate.

Idaho Dairy Association Executive Director Bob Naerebout was positive about the bill's provisions.

The proposal provides better security to dairy producers than the current Milk Income Loss Contract, he said.

The proposed dairy policy adds a legislative safety net and also has the ability to help adjust the milk supply situation, which is critical, he said.

The milk-management program contained in the proposal is a bone of contention for some producer groups.

Several groups, including Wisconsin Dairy Business Association, Minnesota Milk Producers Association and Northeast Dairy Producers Association, oppose that proposal, saying it would harm dairy farmers, communities and local and state economies.

Supply management would harm Minnesota dairymen by harming processing infrastructure. Minnesota plants already need more locally sourced milk, said Bob Lefebvre, executive director of Minnesota Milk Producers.

"Cutting back on milk production ... is a step in the wrong direction," he said.

Plants could be forced out of business, and dairymen could lose more infrastructure, he said.

"If our plants aren't running at optimum efficiency, neither are we," he said.

While the organization applauds and appreciates the margin insurance proposal as a risk-management tool, it contends all language regarding supply management must be removed from the legislation.

Chris Galen, senior vice president of communications for National Milk Producers Federation, said both the supply management and the margin insurance would be effective for dairymen.

Just-released analysis of the policy by Scott Brown, of the University of Missouri and the Food and Agriculture Policy Research Institute, found the dairy proposal would reduce margin volatility at the farm level, without negatively affecting milk supply to either domestic or international markets.

During the 11-year period studied, the all-milk price would only be 5 cents per hundredweight higher than if the policy was not in place.

"The purpose ... is not to raise farmer prices but to reduce margin volatility and prevent catastrophic losses," Galen said.