Dairy Policy Experts Share Perspective with Dairy Farmers Caucus

Dairy producers want tools that will limit risk, that are easy to navigate, and which are not tied to supply management. That was the message from Dr. Eric Erba, Chief Strategy Officer at California Dairies, Inc. (CDI), the nation's second largest dairy cooperative, referring to members of his organization. Erba joined Dr. Mark Stephenson, Director of Dairy Policy Analysis at the University of Wisconsin's College of Agricultural and Life Sciences at a briefing attended by dairy farmer and DPAC member Alan Kozak, owner operator of Clover Patch Dairy in Millersburg, Ohio, along with nearly 50 House and Ag Committee staffers.

Rep. Tom Petri (R-WI), Rep. Devin Nunes (R-CA) and Rep. Ron Kind (D-WI), members of the U.S. House of Representatives Dairy Farmers Caucus, sponsored today's briefing which was offered to present an alternative view point to that presented at a session last week on the Dairy Security Act.

The conversation centered on the Dairy Market Stabilization Program, a controversial new dairy program designed to periodically limit milk production that is included in the Dairy Security Act, part of the House Agriculture Committee's version of the Farm Bill.

Dr. Stephenson's presentation "Dairy Options for the Farm Bill" called attention to the "Unintended Consequences" of the Dairy Market Stabilization Program, including the speed at which circumstances change in the dairy industry, and the fact that the current drought situation has moved the dairy industry into concern about not having enough milk.

"If the stabilization program were law, the supply management program would be in effect now and would be reducing already lower milk production by 4%," noted Dr. Stephenson.

"A dairy farm is a biological system with significant variations in monthly production depending on weather, feed quality, calving patterns and many other factors," said Kozak. "If a period of reduced production becomes the base for future margin insurance, what is meant to be a call to reduce production by, say 4%, could become a requirement to reduce production by a much greater percentage. For this and other reasons very few producers will participate in the program as currently written. There will be no means to effectively regulate production and no safety net."

"Supply management has been tried before, and did not work at all" said CDI's Dr. Erba. "Good intentions, but horrific results."

Dr. Stephenson offered his opinion on the bipartisan amendment offered by Reps. Bob Goodlatte (R-VA) and David Scott (D-GA) that would remove the program and offer a stand-alone Margin Insurance Program similar, but not identical, to the margin insurance portion of the Senate Farm Bill, noting that it would have a moderating effect on price volatility, without affecting markets too much.

"I have been working with dairy producers for more than 30 years," said Dr. Stephenson, "and in my opinion, not more than 40% will sign on to the stabilization program. And, those who register for the basic level of margin protection, will be carrying all of the obligations of supply management, but receiving few of the benefits of the insurance indemnities."

"The Goodlatte Scott amendment would give me the solution I need," concluded Kozak, "risk management protection without supply management."