WASHINGTON, July 11, 2012 -An amendment that would eliminate the so-called “supply management” provisions of a new dairy program is sure to ignite fireworks in Wednesday’s House Agriculture Committee farm bill markup.
Reps. Bob Goodlatte, R-Va., and David Scott, D-Ga., plan a move to strike the market stabilization feature that’s designed to temper the overproduction that depresses prices. Their amendment would retain margin insurance similar to that in the committee draft and the Senate-passed farm bill, but tinker with the premiums farmers would pay for margin protection. A knowledgeable lobbyist declined to predict the outcome but expects the vote to be close.
The amendment is being promoted by the International Dairy Foods Association, which represents milk processors, and several groups of mostly large-scale producers. The National Milk Producers Federation and the National Council of Farmer Cooperatives oppose it.
IDFA and the Wisconsin Dairy Business Association tout a new analysis by Mark Stephenson, director of the Center for Dairy Profitability at Wisconsin-Madison, which concludes that the program as amended by the Goodlatte-Scott language would reduce price risk and market price volatility at high levels of participation. His study also suggests that government costs could escalate quickly if participation is high and milk production increases significantly.
IDFA and other Goodlatte-Scott backers say that the market stabilization mechanism would discourage export growth, raise milk prices by controlling the milk supply and artificially create demand for dairy products. They also cite cost estimates that it would save slightly more than the committee draft – $47 million over 10 years, compared with $38 million.
NMPF challenges the cost savings claim. The market stabilization program helps align milk supplies with demand and limits subsidy costs for margin insurance, it said.
“Because this step would otherwise drive up the cost of the margin insurance program and increase federal outlays, the amendment punishes farmers who choose to use the margin insurance program by reducing the amount of insurance coverage offered to them,” NMPF argues.
The amendment “guts the dairy reforms that farmers have worked so hard in the past three years to create,” says CEO Jerry Kozak, “by tearing a hole in the insurance safety net offered to farmers in the farm bill.”
“Severing market stabilization from the rest of the reforms leaves the safety net for dairy farmers woefully incomplete and will cost the American taxpayer millions of dollars over the next decade,” said NCFC President Chuck Conner.
In addition to IDFA and the Wisconsin association, supporters of the amendment include the Pennsylvania-centered Dairy Policy Action Coalition, National All-Jersey, Minnesota Milk Producers, North East Dairy Producers Association, California Dairies Inc., Consumer Federation of America, Consumers Union and the National Consumers League.
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