The Hagstrom Report

Agriculture News As It Happens

Peterson not pushing for dairy reform in debt package

House Agriculture Committee ranking member Collin Peterson, D-Minn., said today he is not planning to try to add his dairy reform proposal to the bill to lift the debt ceiling and curb the federal debt.

Peterson has said that dairy reform should not wait for the 2012 farm bill, and there have been rumors among lobbyists that he was planning to try to get the bill he released last week included in the debt-deficit reduction package.

But Peterson told The Hagstrom Report today, “It’s not me. It’s been mentioned by others. My plan is to move it through the [Agriculture] committee.”

Peterson said there has been some talk in the Senate about attaching it to the debt-deficit bill, but he did not provide details on who might push that.

Whether Peterson can convince House Agriculture Committee Chairman Frank Lucas, R-Okla, to bring the bill up in committee is questionable, however, since Lucas has said he is willing to consider dairy legislation outside the context of the farm bill only if the entire industry, meaning producers and processors, is unified.

Peterson also said he thinks he has struck the right balance in his bill because the National Farmers Union has said it is not strong enough for the producers while the International Dairy Foods Association has said it would hurt its processor members. The National Milk Producers Federation, the dairy farmer and co-op group whose “Foundation for the Future” proposal forms the basis of Peterson’s bill, has defended it.

Dairy industry officials agree that the current dairy policy did not work when prices fell, but they are bitterly divided over how to reform the program. The biggest point of contention is a provision in Peterson’s bill and also in the “Foundation for the Future” plan called the dairy market stabilization program (DMSP) that would discourage farmers from producing more milk when the margin between price and cost of production is out of proportion.

The National Farmers Union had a major internal battle over “Foundation for the Future” at its convention last winter, with New England members favoring it and other members, particularly from California, opposed.

Last Friday NFU announced it was forming a subcommittee to analyze the Peterson proposal, but on Monday NFU President Roger Johnson issued a statement that the board had decided “the proposal in its current form is inadequate.”

“The current proposal would not provide a safety net for all dairy farmers, particularly family-sized operators,” Johnson said. “A fundamental problem with this proposal is that it appears that the largest farmers will reap the greatest benefits at the expense of smaller family farms.”

IDFA President Connie Tipton, who issued a lengthy and detailed critique of the bill when Peterson released it, submitted testimony to the Senate Agriculture Committee on July 14 that the bill would decrease dairy exports, causing job losses in rural America because the supply control mechanism would cause U.S. milk prices to rise above world levels and therefore make exports uncompetitive.

“Congress should reject any effort to impose government limits on milk production,” Tipton said in the submission.

“Instead of new mandatory programs that would have our government manipulate farm milk prices, IDFA has proposed the expansion of popular and voluntary programs … that will assist producers in managing business risk,” she noted.

National Milk President Jerry Kozak said in a July 14 statement that Tipton’s criticism of the bill had included “several misleading claims.”

Kozak said the U.S. farm-level prices would not become distorted or out of alignment with world prices because the triggers in the dairy market stabilization program are tied to margins, not price, and because the proposal contains an explicit clause that prevents the dairy market stabilization program from kicking in if U.S. prices are 20 percent or more above world prices for cheddar cheese and skim milk powder.