The recent in-depth economic analysis by Mark Stephenson of National Milk’s “Dairy Security Act,” which was introduced by Rep. Collin Peterson (D-Minn.), brings to light several unintended consequences that will harm the future of the U.S. dairy industry.
Stephenson’s analysis shows only a modest reduction in the volatility of milk prices, but a significant decrease in dairy farmers’ revenue. This proposal also has a huge price tag for the taxpaying public, yet is being considered by the “Super Committee” as saving taxpayer dollars.
Congress has a history of making changes to dairy policy that have unintended consequences, such as the dairy price support and product price formulas with make allowances.
These programs were well intended, but they remove competition from manufactured product classes and send a signal to our international customers that we will only sell products to them when prices are high. This approach decreases dairy farmers’ revenue.
I think Sen. Robert Casey’s (D-Pa.) “Dairy Advancement Act” (S. 1682) is a better option for the dairy industry. It cleans up existing policy by removing the dairy product price support program and product price formulas with make allowances and replaces them with a true two-class system, which puts competition back into the marketplace.
It sends a clear signal to our trading partners that we will be a reliable supplier of dairy products, while giving farmers the option to use MILC or LGM-Dairy insurance as a safety net.
Dairy farms are an important part of the local economy, and federal dairy policy needs to align with the real needs and opportunities of the dairy industry.
Clifford L. Hawbaker
Hamilton Heights Dairy
(The author is also chairman of the Dairy Policy Action Coalition.)