Dairy price stabilization introduced to Congress

WOOSTER, Ohio — A bill designed to stabilize dairy prices and control the growth of dairy farms that want to expand has officially been introduced to Congress.

Known as the Dairy Price Stabilization Act — the legislation is a hybridization of plans by Holstein Association USA, Milk Producers Council of California, and many others concerned about the future of dairy.

Responding to poor year

The past year saw dairy farmers across the nation experience one of the worst price crises of the past 40 years, with prices in June dropping to less than $7 per hundred pounds of milk, two-three times below their normal June values.

Dairy price stabilization seeks to do just that — stabilize an otherwise volatile market by setting prices paid to farmers according to the growth and decrease in market demand, and charging a market access fee if they choose to expand beyond current production.

The legislation was introduced May 12 by Congressmen Jim Costa, D-Calif.; Peter Welch, D-Vt.; Joe Courtney, D-Conn.; Rick Larsen, D-Wash., and John B. Larson, D-Conn.

Costly conditions

“While periods of boom and bust are not new to the dairy industry, our dairy families cannot afford another year of low milk checks that don’t even cover the cost of production,” Costa said in a released statement. “The dairy price crisis is devastating our local economy and ability to create and sustain jobs. This bill will help the dairy industry get back on track and curb the milk price volatility that is driving dairy farmers in the Valley and our nation out of business”

A dairy price stabilization plan has been in the works for at least the past two years, as its leaders traveled the country promoting the concept. California dairyman Doug Maddox made multiple trips to Ohio to speak on the issue. He is past president of Holstein Association USA.

Rep. Welch said by way of a release, the nation has responded to the dairy crisis with short-term support measures, and must now seek long-term reform.

“This bill sets an important marker as we find consensus within the industry about how to ensure the survival and prosperity of dairy,” he said.
Opposition. But finding a “consensus” could be a challenge. The biggest dairy organization in the country — National Milk Producers Federation — is against dairy price stabilization policy.

“We’re pursuing a different direction for the future of dairy policy,” said Chris Galen, spokesman for NMPF. “Our organization has not endorsed the Holstein Plan and would not support any bill that is in essence, the Holstein Plan.”

NMPF is pushing its own plans to help dairy farmers, called the Foundation for the Future Program, and Dairy Price Producer Income Protection Program.

DPIPP focuses on margins (all-milk price minus feed costs), providing a margin safety net on a fixed percentage of a farm’s historic average. Farmers participate for five-year terms.

Offering support

In a letter he wrote May 14, Rob Vandenheuvel, general manager of Milk Producers Council of California, called the dairy stabilization act “a production management program” that allows producers to continue growing to meet the increasing demand for dairy products, “while at the same time creating a financial incentive that will help ensure that not all 65,000 producers expand their production at the same time.”

Now is the time

Vandenheuvel participated in a panel discussion in Wooster, Ohio in April, where he debated stabilization policy with National Milk’s Jim Tillison.

Vandenhuevel said the market access fee “creates incentives where they (producers) have to manage their growth.”

Tillison said reform isn’t likely until the 2012 farm bill, but Vandenheuvel said producers need answers now.

“You need to have a call to action,” Vandenhuevel said. “Now is the time to educate yourselves and rally behind this proposal,” he told producers following the bill’s introduction to Congress.