WASHINGTON, Nov. 13, 2013 – Margin insurance for dairy farmers without a mechanism to check overproduction risks a repeat of conditions in the early 1980s when USDA spent billions of dollars to support milk prices, says the chairman of the National Milk Producers Federation.

Some in Congress “are forgetting the lessons of the past,” Rogersville, Mo., dairyman Randy Mooney told the NMPF annual meeting today in Phoenix. “The House has adopted a farm bill that creates margin insurance, without the means to signal producers to trim production when margins are poor. The insurance payouts will insulate farmers from those market signals. That means the milk will keep coming and coming. It’ll be cheap milk for processors, with taxpayers on the hook to keep the insurance money flowing.”

Both House and Senate farm bills have margin insurance “to give farmers some protection from either low milk prices, high feed costs, or the combination of both,” he said. But he prefers the Senate version that couples margin insurance with market stabilization. “We need a mechanism baked into the dairy safety net that sends clear signals to farmers that a little less milk may be needed from time to time,” says Mooney, who also chairs Dairy Farmers of America.

“Despite a lot of rhetoric from our dairy processor friends, this type of stabilization is not supply management; it’s not a Canadian quota system; it’s not the government forcing you not to produce. It is a simple, voluntary device to encourage a faster rebound in healthy margins and . . . reduce the cost of this new dairy program.”

Mooney says the history of milk price supports shows the perils of unchecked production. “When I started out in dairying 30 years ago, we had a safety net that was, in hindsight, far too generous. The price support level reached more than $13 per hundredweight in the early 1980s.” Because farmers responded to the then-profitable price level, USDA “ended up spending billions of dollars a year buying up surplus cheese, butter and powder because we were producing milk the market didn’t want. The USDA became the largest single customer that farmers had.”

Dairy farmers also want a comprehensive immigration reform bill, such as that which passed the Senate this year, to “ensure that current workers can remain on farms, and that workers can continue to come here in the future,” he says. “Now, kind of like what’s happened with the farm bill in Congress, the immigration issue has traveled a different path in the House.” He adds that, if reform efforts drag on into 2014, it will be challenging to maintain the momentum needed.

Mooney said NMPF is urging U.S. trade negotiators “to make sure that we don’t end up with unbalanced trade deals” with the Trans-Pacific Partnership or proposed U.S.-EU agreement. “While the European Union wants a trade deal with U.S., they also want such a deal to impose broad new restrictions on common food names, including Greek yogurt, and cheeses like parmesan, romano , feta, muenster, and maybe even mozzarella.” He says “fair- and free- trade agreements” should open markets for U.S. dairy exports in places like Canada and Japan.


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