U.S. House Ag Committee Ranking Member Collin Peterson (D-Minn.) today made the following statement after releasing a dairy reform discussion draft. "I released this discussion draft now because we need to act before the next Farm Bill. If we have another dairy crisis like we had in 2009, we could lose half our dairies. The discussion draft allows us to keep the ball moving while continuing to have a dialogue with the dairy industry." Peterson also stated in the news release: “I’ve never seen the industry as united as it is now and I appreciate their efforts to work together and find a solution that will ensure Americans continue to have access to a safe and abundant supply of fresh milk,” Peterson said. Peterson’s proposal consists of three main components – a margin protection program, a Dairy Market Stabilization Program and reforms to the Federal Milk Marketing Order system. These proposals would provide a safety net based on margin protection, rather than price; and replace both the Dairy Product Price Support Program (DPPSP) and the Milk Income Loss Contract (MILC) Program.
But buried in Collin Peterson's "discussion draft" of the future bill released today (Foundation for the Future - FFTF) is a new twist to the supply management program: 50% of the penalties collected from dairy farmers, when the FFTF supply management program triggers, would be given to the U.S. Treasury for deficit reduction! Sounds Un-American and unbelievable, really.
Also, the "free" base insurance that replaces the MILC and Dairy Product Price Support Programs is cut back to 75% of a farmer's production history base (instead of 90%) at the beginning of the Farm Bill (that base remains til the next Farm Bill - 5 years).
This is what they have done to get FFTF to CBO-score as a savings to the government?
The Sec of Ag will make 50% of that money available to the "board" to spend on "demand enhancing" activities and the other 50% will go to the U.S. Treasury to no longer be available to the Sec of Ag.
The supply management part of FFTF would also be suspended "whenever the price in the U.S. for either cheddar cheese or skim milk powder (nonfat dry milk) is more than 20% above the world price for that same commodity for two consecutive months." Thus it would have triggered in March and April of this year because the world price is HIGHER than the U.S. price for both commodities.
But that subsection on suspending the program "shall not apply if the Secretary determines that the actual dairy producer margin during the same two consecutive months is below $4.00 per hundredweight of milk."
Check back for more information as this develops. Congressman Peterson expects to give fellow Congressmen and dairy stakeholders a few weeks to comment and make suggestions before he introduces this bill and pushes to get it passed this year before the 2012 Farm Bill.
It is imperative that you contact your members of Congress on this matter. As Plato said: "Your Silence Gives Consent."