Dairy price stabilization introduced to Congress

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WOOSTER, Ohio — A bill designed to stabilize dairy prices and control the growth of dairy farms that want to expand has officially been introduced to Congress.

Known as the Dairy Price Stabilization Act — the legislation is a hybridization of plans by Holstein Association USA, Milk Producers Council of California, and many others concerned about the future of dairy.

Responding to poor year

The past year saw dairy farmers across the nation experience one of the worst price crises of the past 40 years, with prices in June dropping to less than $7 per hundred pounds of milk, two-three times below their normal June values.

Dairy price stabilization seeks to do just that — stabilize an otherwise volatile market by setting prices paid to farmers according to the growth and decrease in market demand, and charging a market access fee if they choose to expand beyond current production.

The legislation was introduced May 12 by Congressmen Jim Costa, D-Calif.; Peter Welch, D-Vt.; Joe Courtney, D-Conn.; Rick Larsen, D-Wash., and John B. Larson, D-Conn.

Costly conditions

“While periods of boom and bust are not new to the dairy industry, our dairy families cannot afford another year of low milk checks that don’t even cover the cost of production,” Costa said in a released statement. “The dairy price crisis is devastating our local economy and ability to create and sustain jobs. This bill will help the dairy industry get back on track and curb the milk price volatility that is driving dairy farmers in the Valley and our nation out of business”

A dairy price stabilization plan has been in the works for at least the past two years, as its leaders traveled the country promoting the concept. California dairyman Doug Maddox made multiple trips to Ohio to speak on the issue. He is past president of Holstein Association USA.

Rep. Welch said by way of a release, the nation has responded to the dairy crisis with short-term support measures, and must now seek long-term reform.

“This bill sets an important marker as we find consensus within the industry about how to ensure the survival and prosperity of dairy,” he said.
Opposition. But finding a “consensus” could be a challenge. The biggest dairy organization in the country — National Milk Producers Federation — is against dairy price stabilization policy.

“We’re pursuing a different direction for the future of dairy policy,” said Chris Galen, spokesman for NMPF. “Our organization has not endorsed the Holstein Plan and would not support any bill that is in essence, the Holstein Plan.”

NMPF is pushing its own plans to help dairy farmers, called the Foundation for the Future Program, and Dairy Price Producer Income Protection Program.

DPIPP focuses on margins (all-milk price minus feed costs), providing a margin safety net on a fixed percentage of a farm’s historic average. Farmers participate for five-year terms.

Offering support

In a letter he wrote May 14, Rob Vandenheuvel, general manager of Milk Producers Council of California, called the dairy stabilization act “a production management program” that allows producers to continue growing to meet the increasing demand for dairy products, “while at the same time creating a financial incentive that will help ensure that not all 65,000 producers expand their production at the same time.”

Now is the time

Vandenheuvel participated in a panel discussion in Wooster, Ohio in April, where he debated stabilization policy with National Milk’s Jim Tillison.

Vandenhuevel said the market access fee “creates incentives where they (producers) have to manage their growth.”

Tillison said reform isn’t likely until the 2012 farm bill, but Vandenheuvel said producers need answers now.

“You need to have a call to action,” Vandenhuevel said. “Now is the time to educate yourselves and rally behind this proposal,” he told producers following the bill’s introduction to Congress.

About the Author

Chris Kick lives in Wooster, Ohio. An American FFA Degree recipient, he holds a bachelor’s in creative writing from Ashland University. He spends his free time on his grandparents’ farms in Wayne and Holmes counties. More Stories by Chris Kick

8 Comments

  1. bob aman says:

    how does a dairyman find out if we are members of NMPF. If i am a member i want to withdraw my support.

  2. NMPF is a farm commodity organization representing most of the dairy marketing cooperatives serving this nation. If you ship to a co-op, you can check this list of co-ops, and see if yours is an NMPF member: http://www.nmpf.org/about-nmpf/member-cooperatives

  3. Brad K says:

    I am a young dairyman (30) with a great pregnancy rate (26% annually) setting me up for growth in the future. That is where I’ve spent a lot of time and money over the past two years. How will the dairy price stabilization act affect me and my plans to increase my net worth and efficiency through expanding my herd?

  4. pete says:

    National milks proposal is just another complicated hedging scheme that that does nothing to discourage production,hence price.National milk please quit slowing down the process and support the Dairy Price Stabilization Act.

  5. jack says:

    the large coops are no more than the procurment arm of the processers and there plan is a trogan horse no plan without a new price discovery system and production to meet demand will benefit the dairy producers

  6. Don says:

    The Cooperative I sel milk thru had a record profit year while I work for nothing. I’m all for a production base program of some sort, No insurance schemes please.

  7. Andy Schaap says:

    Paying Dairy farmers to produce milk that the market does not want will only make things worse. The NMPF plan sounds like a mess!

  8. Karl Wedemeyer says:

    This bill will ruin the dairy industry. It will keep younger farmers like myself from ever getting into the industry while also locking in millions in profits for all of the large dairy farmers in the western united states. If I had a 2000 cow dairy I would love to lock everybody else out from ever taking any of my millions in profits. The industry changed and now the farmers who grow there own forage, don’t farm in a desert, and have ample water have the competetive advantge. I would hate to see western dairy producers continue to lock the midwest out of future growth when it was they who have expanded beyond the markets means for the last thirty years. Doug maddox milks 15000 cows he would love supply management so he can continue to roll in the money. I have no problem with that I just want the same chance he got to expand my wealth. This plan says that producers will allow 2 to 3 percent growth per year. This will allow large dairies to gain more and more market share futher pushing out the small dairy. Whats 2 to 3 percent of 20000? Whats 2 to 3 percent of 200? Who is gonna continue to expand? The large dairymen. Everyone needs to look at what this bill is really gonna do.

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