Congress must complete dairy policy reform

WILSON – After months of uncertainty and false starts, May could be a turning point in Washington, DC, when it comes to reforming farm policy. This month, the agriculture committees in both the Senate and House are planning to restart the process of writing and passing a five-year farm bill that will have a big impact on the fortunes of dairy farmers, in Michigan, Wisconsin, and across the country.

Dairy farmers have been working for four years to design a comprehensive reform of the safety net programs that are authorized every half-decade by Congress, and they are anxiously awaiting hoped-for change. The current program – direct payments tied to a milk price set in the 1990s, and an unwieldy program where the government buys and stores surplus dairy commodities – doesn’t work any longer.

It didn’t help us during the Great Recession in 2009, when milk prices collapsed and feed prices soared, causing dairy farmers to lose a collective $20 billion in net worth. And it didn’t help us last year, when the drought caused feed prices to soar again.

America’s consumers also have a stake in efforts to pass a farm bill. If Washington doesn’t pass a farm bill this year, consumers could again be facing the possibility of government-induced high milk prices. The “dairy cliff” that was in the news in December was delayed, but not fixed, at the start of this year. Congress tried to pass a farm bill last year, but they couldn’t finish the deal – leading to the prospect of the dairy cliff on Jan. 1st. That point of reckoning was pushed back 12 months, but it hasn’t been eliminated.

But the real reason a new farm bill is needed is that dairy farmers and the nation aren’t well-served by what we have right now.

Why farmers in the Upper Midwest are asking Congress to replace the ineffective dairy program we have now with a reform plan known as the Dairy Security Act. The DSA ends the direct payments from the government to farmers; it also ends the role of the government as a purchaser of surplus products. Most importantly, it represents a shift in philosophy: it will help farmers use risk management tools to maintain adequate margins, the crucial gap between what farmers receive for their milk, and what it costs them to produce it.

The DSA is a dairy program for the 21st century. It’s a backstop for hard times, not a free lunch when times are good. It’s jointly funded by government and the farmers themselves. Farmers can choose whether to participate. But if they accept help, they must also agree to adjust the amount of milk they produce when cuts are needed to balance supplies with demand. This helps keep the costs of the insurance program down by temporarily putting the brakes on milk production when conditions are bad.

These reforms are taxpayer-friendly, which should appeal to those on Capitol Hill in an era when every government program is being scrutinized like never before. An alternative approach being offered in Congress would give farmers the insurance program without any expectation that they have to help reduce milk production occasionally to keep the cost of the program reasonable. It offers federal aid with no limit on insurance payouts if milk prices collapse. That’s not responsible, and it won’t be effective.

The Dairy Security Act is the right program for the future. It deserves the support of Congress and, especially, First District Rep. Dan Benishek, a member of the House Agriculture Committee.

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Peter Kleiman is a dairy farmer in Wilson and is president of FarmFirst Dairy Cooperative. FarmFirst Dairy Cooperative represents more than 5,000 farms in Michigan, Wisconsin, Minnesota, South Dakota, Iowa, Illinois and Indiana.