Guest Commentary: U.S. Farm Bill – Dairy’s Dilemma

Joe Borgerding, Borgerding Dairy

The elections are finally over and we can now see if the lame-duck session can get some things done that could not seem to get done during the politically charged months when legislators feared taking sides on anything. There is a tremendous amount of backlogged work to do in a very short time, with the nearly expired farm bill just a small part of the pile.

There is growing pressure being applied at this time to bring it to a vote in the House, since it is nearly complete, and food stamp funding being the main holdup.

What most people don’t realize is that, buried in the farm bill is a major dairy reform piece that will dramatically change how we do dairy policy in this country. Since the 51,000 remaining dairy producers don’t have a national dairy board to represent their best interests, instead of the interests of the processors, they have not had much of a say in the way this legislation was written.  Almost anyone who has tried to figure out how we price dairy products in this country will soon admit that it is the most archaic, complicated, outdated, and cumbersome system ever patched together, and it needs to be brought into the 21st century  to be relevant, fair, and more transparent.

There seems to be a lot of faith in Rep. Collin Peterson to fix the problem since he has experience with farm issues, and he is putting a lot of faith in recommendations put out by the directors of major dairy co-ops in how to fix the dairy safety-net. With very little input from independent dairy farmers in all parts of the country, a desire for expediency, and to get buy-in of processors, the plan took shape.

Why would we create another layer of government control, based on the same mixed up market signals and faulty production figures that have created the volatile pricing in the past? Why would we create a supply-management program in a country that promotes free market ideology, while the rest of the world is abandoning theirs to compete globally?

Since no-one understood milk pricing before, it is hard to ask intelligent questions about how this new plan can be any better, so the hard questions have still not been addressed. Who, on the House Agriculture Committee, would realize that the hearing participants were hand-picked by the same people who wrote the plan?

Since I have been involved in a grass-roots dairy producer group, “DPAC”, I have become aware that there are many areas of the country that do not have surplus production since they have restrained expansion, many retired local farmers, and have great regional demand for more milk. Other areas have expanded herds rapidly and have not found markets for the flood of milk they created, thus the need for the safety net.

We now have reached the point where 3% of our producers crank out 50% of all the milk. The old safety net, “MILC”, supported the first 2.4 million lbs. of milk annually on each dairy when prices were too low.  The new plan, “DSA”, calls for margins to be insured to minimize losses on unlimited production up to “base” of historical sales.

If there is too low of a margin, on average in the US, then all producers who are in the proposed dairy program would have to cut production, even if your region was critically short of milk. If a farmer recently expanded production, and chose not to cut back delivery’s , there would be penalties deducted from the milk check to help fund the subsidies to insure the margin for those who don’t need to expand any more.

Since the new plan is based on historical sales base’s,  the 3% of producers with the largest bases, would collect 50% of any subsidies paid, while the small farmers that need to upgrade and expand, would be penalized to fund the program. This unfair policy will surely accelerate the consolidation of our dairy industry.

With so little time for real discussion, it seems the least we can do to protect what is left is to tell our Representatives in Congress to support the Goodlatte/Scott amendment that was proposed to the House Agriculture Committee, to remove the disastrous supply management part of the bill. In the case of dairy, there is a need to rebuild the system that was designed for the 1930’s, and not add more to it that makes it even worse.

Joe Borgerding milks 165 cows on the family dairy farm in Stearns County Minnesota.  He has been a director of the Dairy Policy Action Committee for the past year.

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