Family farm group backs senate bill for dairy's future

By Heather Thorstensen
hthorstensen@agrinews.com

Date Modified: 03/25/2010 9:17 AM

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The National Family Farm Coalition says a bill proposed in the U.S. Senate is the best option for the dairy industry's future.

The Federal Milk Marketing Improvement Act of 2009, S. 1645, would simplify the milk pricing system and base prices off the national average cost of production. It's sponsored by Sen. Arlen Specter, D-Pa.

All milk used for manufacturing purposes would be grouped into Class II. The minimum Class II price would be determined using data from USDA's Economic ResearchService on the 48 contiguous states' national average operating cost and an allocated overhead cost of producing all milk.

The secretary of agriculture would announce by Nov. 1 of each year the Class II price for the next calendar year. This price may be adjusted in April, July and October. Existing differentials would be added to the Class II price to determine the Class I, fluid milk price.

If this legislation went into effect today, Class II would be approximately $22-$23 per hundredweight, according to Arden Tewksbury, a retired dairy farmer and manager of Progressive Agriculture Organization. Pro-Ag is a Pennsylvania-based group dedicated to preserving family farms. Tewksbury was one of several dairy industry members who supported S.1645 during a NFFC-hosted conference call March 2 with reporters. NFFC also sent a letter to a secretary Vilsack that day to ask that he support the bill.

S. 1645 includes a supply management program that farmers would fund without taxpayers' support. No more than once every two months, the secretary could reduce milk prices if the maximum amount of dairy purchases have been made through the Commodity Credit Corporation and the secretary determines there is a surplus. Prices on 5 percent or less of all milk produced and marketed can be reduced. For the other 95 percent of milk, prices would remain at normal levels. Additionally, the price can't drop more than half of the minimum Class IIprice.

A price reduction can only be made when the secretary can show the country isn't importing more dairy products than it is exporting. Money cut from milk prices would be used to purchase dairy products through the CCC.

If the secretary finds more supply management is needed, any producer who increased milk production over the previous year may get another price cut. This reduction would apply only to the extra amount of milk produced. Anyone subject to this second phase of price cuts may appeal, and the process will take into consideration those with different production levels due to fire, severe weather or disease outbreaks. Beginning farmers are exempt from the supply management program up to their first 3 million pounds or when they enter their second year of production.

The bill eliminates make allowances and it allows a vote to reject an amendment to a federal order without losing the order itself.

Tewksbury said an estimated retail milk price under S. 1645 would be $3.90 per gallon in northeastern Pennsylvania.

"I believe consumers are willing to pay a higher price for milk if they know it's going to go to the dairy farmers," he said.

The strength of this bill, he said, is that it reforms milk marketing while other plans fail to change the current pricing formula. Any plan will falter without a new price program and supply management, he said. He added NFFC doesn't think farmers should have to pay into an insurance plan to get a good milk price.

The bill has been referred to the U.S. Senate Committee on Agriculture, Nutrition and Forestry. Versions of the legislation have existed since 2007. Some refer to to it as the Specter-Casey bill because Sen. Robert Casey, D-Pa., was a previous co-sponsor. No similar bill is in the House.

Dairy producers on the NFFC conference call said politicians in Washington, D.C., may not be supporting the bill because of America's policies to promote cheap food and free trade.

"Washington doesn't want to rock the global free trade policy," said Brenda Cochran, a Pennsylvania dairy farmer.

The National Farmers Organization supports S.1645. The National Farmers Union Board of Directors voted at their June 2009 meeting to support the concept, according to board member and Pennsylvania Farmers Union President Larry Breech. They don't endorse the specific bill to avoid associations with any unrelated amendment that may get added in the legislative process.

"The concept of it was unanimously agreed on," Breech said.