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2012 farm bill needed to shore up dairy industry

By Jean Caspers-Simmet

Date Modified: 11/21/2012 1:14 PM

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MADISON, Wis. —U.S. Secretary of Agriculture Tom Vilsack said the worst drought since 1988 is creating difficulty for dairy producers who face short crops and skyrocketing feed costs.

Speaking to dairy leaders at last week's World Dairy Expo in Madison, Vilsack said crop producers have insurance for risk management, but the tool dairy producers used during low prices, the Milk Income Loss Contract program, ended when the 2008 farm bill expired Sept. 30.

"You all know that a bill passed in the Senate that included margin insurance protection for dairy," Vilsack said. "While it's controversial, there is a recognition that dairy can't continue to have the instability and volatility that we've experienced the past 10 to 15 years."

USDA tried to help producers in 2009, also a difficult year.

"We didn't have enough time before we hit another period of depressed prices," Vilsack said. "Prices have rebounded a bit, but we're still confronted with high feed costs."

USDA would like to provide more assistance to dairy farmers, Vilsack said. It opened haying and grazing, asked crop insurance companies to offer a grace period on premium payments, opened emergency loans, worked with credit unions, and encouraged cover crops for additional feed.

"But what we really need is a five-year farm bill," Vilsack said.

The Senate farm bill triggers government payments when the differential between milk price and feed cost falls below $4 for a couple months. The bill includes a mechanism to control supply.

"There's a recognition that we have to have a different system," Vilsack said. "As I travel around the country, I've noticed that dairy producers have a hard time agreeing and that's made it difficult to get a price stability and income protection program."

The country lost 50 percent of its dairy producers in the past decade and something needs to be done, Vilsack said.

The Senate version of the farm bill passed with strong bipartisan support in July. The House Agriculture Committee approved its bill with plenty of time for the House to take it up, but leadership refused.

The House scheduled just eight working days in September.

"Last time I checked, September had 30 days, and House members left before they had even worked eight days," Vilsack said.

Leadership also said there weren't enough votes to pass a farm bill.

"But they never counted the votes," Vilsack said. "Democrats and Republicans outside of leadership did a count, and they concluded that there were 230 to 240 votes, well above the 218 votes needed to pass the bill."

House Republican leaders refused to take up the bill because they didn't want to have a conversation about the depth of reductions that are coming, Vilsack said. The Senate's farm bill would cost $23 billion less than the 2008 bill. The House's bill cuts $34 billion. The House budget bill, which passed several times, cuts $184 billion from agriculture programs —$134 billion in nutrition assistance and $50 billion from crop insurance, commodity and conservation titles.

"It's a conversation they just didn't want to have at this time," Vilsack said. "So there's no MILC and no export assistance programs. If Congress doesn't pass a farm bill in the next few months, we go to 1949 farm policy, and milk price will be $38 to $50 per hundredweight."

While that may sound like good news, it will have a ripple effect throughout the farm community, impacting consumer choice and causing manufacturers to reformulate products, Vilsack said.

It will be far more difficult for the House to pass a farm bill this fall because Congress has to deal with sequestration, deficit reduction and renewing tax cuts that are set to expire, Vilsack said.