Milking It: What is up with the Farm Bill?

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After years of debate, drama, fighting, and occasional compromise, the future of the Farm Bill could hinge on a tall glass of milk.

Since the new year dawned, we’ve been treated to near daily updates on the bill, promising progress and maybe even passage sometime this January. In fact, as recently as last week, House and Senate lead negotiators were said to be nearing a compromise, having finally come to an agreement on SNAP cuts (more on that later).

But now things have ground to a halt, thanks mostly to a disagreement over dairy.

“Udder” Stalemate

If history is any guide, it’s not unusual for dairy policy to be one of the last issues settled in Farm Bill negotiations. But in the past, the conflict has generally been between dairy producers in different regions; this time, the debate is raging between farmers, processors, and political parties. Specifically House Speaker John Boehner, R-Ohio, and the top Democrat on the House Agriculture Committee, Rep. Collin Peterson of Minnesota.

Peterson and the National Milk Producers Federation are pushing for a policy allowing farmers to purchase insurance that would pay out when the gap between the price farmers receive for milk and their feed costs narrows. It also includes a stabilization program that could dictate production cuts when oversupply drives down prices.

According to NSAC, “the idea is to break the cycle in which milk prices drop and farmers produce more to pay their bills, flooding the market and forcing prices down further.”

On the other side, championing the cause of the processors, is House Speaker John Boehner. Boehner strongly opposes supply management, fearing it will cause spikes in prices and supply shortages. The Speaker has gone so far as to call market stabilization a “Soviet-style” government bureaucracy that distorts the market.

Instead, he and others support an amendment introduced by Reps. Bob Goodlatte and David Scott, which keeps the insurance program but eliminates the stabilization program.

Critics of that amendment fear that without managing supply, there could be a repeat of  the dairy crisis of 2009,  when many producers went out of business after they were hit by a combination of low milk prices and high feed costs.

Gone Sour

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So, how will things move forward? It’s unclear, but tensions are running deep and not everyone is interested in compromise.

Boehner has announced that if the conference bill contained the supply management provision, then he would block the bill from coming to the House floor for the final vote.

Supporters of supply management are accusing the Speaker of being swayed by industry processors looking for the cheapest price on milk. Kroger, a member of the International Dairy Foods Association, is located in Boehner’s district, and Dannon has a large facility in his state.

Just this past Monday, Agriculture Secretary Tom Vilsack suggested that one option for helping resolve the dairy conflict might be to allow USDA to buy some excess milk to stabilize prices for producers. Details on this option are still being worked out, so stay tuned.

While the path to approval of a five-year Farm Bill is unclear, all agree that passage is long overdue. We’ll certainly be watching.

Photo credits (top to bottom): Matt Northam; www.bluewaikiki.com

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