The Hagstrom Report

Agriculture News As It Happens

Dairy groups disagree on Peterson's draft reform language

House Agriculture Committee ranking member Collin Peterson, D-Minn., today released the draft legislative language of the dairy reform bill on which he has been working for more than a year.

The proposal won praise from the National Milk Producers Federation, the nation’s largest organization of dairy farmers and co-ops, and a negative reaction from the International Dairy Foods Association, which represents the processors.

House Agriculture Committee Chairman Frank Lucas, R-Okla., took a neutral stance, but said both sides must continue the discussion.

Peterson said in a news release that he believes Congress needs to change the dairy program before the next farm bill.

“If we have another dairy crisis like we had in 2009, we could lose half our dairies,” Peterson said. “Current dairy programs aren’t working; they’re not keeping up with the challenges facing today’s dairy industry. This proposal addresses these challenges. The proposal creates a strong safety net that will provide the support all sectors of the diverse industry need during tough times. “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 noted that the proposal consists of three main components — “a margin protection program, a dairy market stabilization program and reforms to the federal milk marketing order system.”

He also noted that the proposals would provide a safety net based on margin protection, rather than price, and replace both the dairy product price support program and the milk income loss contract program. The Congressional Budget Office has reviewed the discussion draft and determined it shows savings of $80 million over 10 years compared with a continuation of the current diary program, he said.

National Milk Producers Federation President and CEO Jerry Kozak praised Peterson for including elements of his group’s “Foundation for the Future” program in the bill.

“This is a long-anticipated and very welcome next step in the process of upgrading dairy policy to better provide farmers with protection, stability, and the opportunity for growth," Kozak said in a news release. "We appreciate the attention that Congressman Peterson has brought to this issue, and we will be working with him and his colleagues on Capitol Hill to help advance and implement the concepts of Foundation for the Future."

IDFA CEO Connie Tipton blasted the proposal, saying her members “are disappointed that Rep. Collin Peterson is circulating draft legislation that clearly would take the dairy industry in the wrong direction.”

She called the dairy market stabilization program “the centerpiece” of the proposal and said it is “designed to limit U.S. milk production by collecting taxes from dairy farmers when farm milk prices are low.”

The program would manipulate milk prices to be above world market prices, which would “negatively impact the U.S. dairy industry’s ability to compete for new and emerging markets,” she said.

Tipton also contended that the draft section of the changes to the federal milk marketing order system does not match the explanation of the draft.

“The explanatory text also claims that the new system will remove ‘formula pricing’ and reduces the classes of milk from four to two — yet it keeps formula pricing for plants that are owned primarily by co-ops and effectively retains the current four classes of milk,” Tipton said.

Lucas has said he will not bring up a dairy reform bill before the farm bill debate unless all segments of the industry including the processors support it. In a statement to The Hagstrom Report today, Lucas said, “It is important for the entire dairy industry to continue discussions regarding possible dairy legislation. Rep. Peterson’s discussion draft is a step in the process.”