House Committe on Agriculture hears proposals from dairy industry coalition

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WASHINGTON, D.C. — The Dairy Policy Action Coalition, a nationwide, farmer-led grassroots voice, met Jan. 25 with leadership and professional staff of the House Committee on Agriculture. The five dairy farmers who traveled to Washington D.C. from Pennsylvania, North Carolina, Indiana, and Minnesota, learned that the Committee is “keeping their minds and doors open,” and is hearing the proposals as the dairy industry develops a consensus, according to John Goldberg, senior professional staff member of the House Committee on Agriculture.

DPAC also met with House Livestock, Dairy and Poultry Subcommittee Chairman Tom Rooney, R-Fla., who indicated there would be “an opportunity and environment for to be part of this process.”

Message

DPAC’s key message was rank-and-file dairy farmers should be united in recognizing the need to have functioning and transparent markets, a better dairy price discovery process and future dairy policies that foster competition and innovation.

The day began with a brief meeting with Rep. Joe Pitts, R-Pa, who had attended the pasture meeting of 500 dairy farmers in Lancaster County, Pa. in Aug. 2009. That was one of several grassroots meetings that led to the formation of DPAC, which has spread in one year to include board and ad hoc members from 18 states.

“Until we have fundamental change in price discovery, we’re not interested in a centralized government-run supply management plan,” said DPAC vice-chair Rob Barley, of Star Rock Farms, Conestoga, Pa.

“As producers, we don’t want to add another layer of government control within a system that is not working. We want to peel back the layers, not put more layers onto it. Daily electronic reporting is the transparency piece. Today, our milk price is figured off the Chicago Mercantile Exchange, which sells a tiny fraction of surplus products,” said DPAC vice-chair Daniel Brandt, of Brandt-view Farms, Annville, Pa.

“There’s a make allowance and an advantage to pile more into that surplus and drive down the cost of milk for every other product moving out there. It’s no wonder the farmer’s share of the consumer’s dairy dollar has gone from 42 percent down to 27 percent.”

“Dairy farmers do not have a functioning market that discovers the price of milk,” said DPAC board member and chairman of the affiliated Southeast Dairy Coalition Ben Shelton, of Rocky Creek Dairy and Veterinary Service, Olin, N.C.

“The quarterly auditing of price and volume reports — as well as auditing of inventory reports — are also needed because producers have lost trust in the system. Section 1510 of the current Farm Bill already authorizes this, but it has not been implemented.”

Another change

Elimination of the Dairy Product Price Support Program is another policy change that has consensus among dairy farmers because it is insufficient as a safety net and at the same time positions the U.S. as the balancer of the world supply to the detriment of U.S. producers.

“But we also need to address the pricing system. Current pricing policies date back to the time when global marketing was not an issue,” said Dave Forgey, a DPAC board member and dairy producer from Logansport, Ind.

“The continual process of patching and re-patching is not a satisfactory solution. We need a two-class system, not a four-class system. No other U.S. agricultural commodity still has these constraints when dealing with global markets. As a result, the U.S. lags behind other nations when it comes to making — and marketing — the products that foreign and domestic buyers want.”

Not a solution

While the national margin insurance plan, contained in NMPF’s Foundation for the Future, is viewed as size-neutral and “scalable” so the government can level it up or down based on funds available, DPAC pointed out that such insurance should not be viewed as a solution to the pricing and marketing issues that have severely eroded the farmer’s share of dairy value in the marketplace.

“What producers need are tools. We already have LGM Dairy. That’s a margin protection tool that’s already available to dairy farmers,” said Forgey. “But for those tools to work, we need a functioning market and good price discovery.”

DPAC stressed that milk marketing is global, national, and regional; so a national one-size-fits-all answer to supply and demand imbalances, would create new issues, and still not solve the core problems.

“This notion of repairing the system is not enough. Our milk pricing system is broken. We now have the ability to move milk anywhere in the country. We need a system that is designed for the 21st century,” said DPAC ad hoc member Joe Borgerding, of Borgerding Family Dairy, Belgrade Minn.

Earlier in January, DPAC published a paper entitled Cornerstones for Change: A preliminary report about U.S. dairy policy and the global realities of the 21st century. This “working draft” is posted at DPAC’s website and is being circulated for input. It was also presented Jan. 25 to the House Ag Committee and the main points were previously presented to USDA’s Dairy Industry Advisory Committee in June 2010.

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