Vilsack claims milk supply limitation key to holding down cost

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, July 25, 2012 -For the first time, Secretary of Agriculture Tom Vilsack has put the Obama Administration firmly behind a dairy supply-limiting system in the farm bill making its way through Congress. If critics want to strip the feature from the bill, they have an obligation to propose an alternative “that doesn't break the federal bank,” he told Agri-Pulse last week in an exclusive interview.                         

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Vilsack said that the language introduced by Rep. Collin C. Peterson, D-Minn., and accepted by both agriculture committees was “a step in the right direction” to forestall the kind of cost-price squeeze dairy farmers faced when he was confirmed.

“When I came into this office in 2009, dairy was stressed. What absolutely floored me was how deep the reductions were and how quickly they followed one another.” He said milk price charts looked “like an electrocardiogram - a very deep decline followed by an uptick followed by another deep decline.”

Vilsack says it was unacceptable that the country “lost nearly a half the [dairy] producers in the last 10 years.” The current legislation could help stabilize the situation by creating “an assurance that there will always be a margin between feed costs and the price of milk, which should allow most producers to get through a difficult time.”

But he insisted that, “at the same time there has to be a mechanism that does not break the federal bank. If all you do is provide the insurance protection, given the nature of dairy, you could put yourself in a position where you are making payments on a fairly regular basis, which would be very, very expensive.”

Vilsack said the potential for runaway costs was “the reason why there's the second piece of it, the more controversial, the supply side piece. The folks, if they don't like that, they have to come up with some other kind of mechanism in which the government's liability is limited, or is defined, in a way that doesn't create this huge fiscal cost.”

He gave credit to the Dairy Industry Advisory Committee, which he appointed in late 2009, and the National Milk Producers Federation for creating the momentum that propelled the reform proposal through the Senate Agriculture Committee, the Senate floor and the House ag panel. “It's making its way through the process and that's a positive step,” he said. “It's certainly something more than had been done prior to 2009 when people just debated,” he said.

Vilsack also applauded Peterson “for getting this dialogue started. He's moved it a lot further than a lot of people thought he was able to given the differences in dairy.” He acknowledged, “It's a complicated issue and it's one that has been troublesome for some time.”

 

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