WASHINGTON, April 26, 2012 - A “market stabilization” plan designed to tame milk price volatility and reduce dairy program costs has become the most contentious feature of dairy reforms in a new farm bill. Members of a House Agriculture subcommittee showed divisions at a hearing Thursday afternoon that mirrored the different opposing views of dairy cooperatives and milk processors over the bill.
First introduced by Rep. Collin C. Peterson, D-Minn., the bill
would create a voluntary margin insurance program that protects farmers from
low milk prices or high feed costs. Farmers who sign up for margin insurance
would be subject to a “market stabilization” mechanism designed to discourage
excessive production. It also would repeal the existing dairy product price
support system, the Milk Income Loss Contract program and the Dairy Export
Incentive Program. Similar language is in the bill approved Thursday by the
Senate Agriculture Committee.
His family's business has put expansion plans on hold until the “supply management” issue is resolved, he said. “While supply management legislation is being debated, most if not all of the next wave of dairy processing investment is on hold. We simply can't afford to commit capital when we don't know if we will have the milk supply to operate those potential new investments.”
National Milk Producers Federation CEO Jerry Kozak disputed IDFA’s contention. “Using the term ‘supply management’ is a total misnomer,” he said. “This is a market stabilization program. It’s not a supply management program. It sends timely signals so that farmers have almost 90 days to take behavioral action on the farm. It triggers in and out quite easily. . . . This is not a Canadian-style quota system. It does not insulate our farmers from the world.”
Peterson argued that the mechanism was essential to meet budget-cutting goals. “I think it would cost us $250 million if we didn’t have market stabilization,” he said. “If you take stabilization out, you’re not going to have a bill.” He also challenged assertions that the bill would harm exports. “What mystifies me about IDFA is that we have made this more market-oriented, more export-oriented; 75 80 percent of what they have been asking for is in this bill.”
Scott Brown, a
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