The Hagstrom Report

Agriculture News As It Happens

House dairy policy panel frustrated by USDA silence

Members of a House Agriculture subcommittee expressed frustration at a hearing today that Agriculture Department officials were unwilling to make their views known on the future of U.S. dairy policy.

The House Agriculture Livestock, Dairy and Poultry Subcommittee held a hearing on the functioning of USDA dairy programs as part of the Agriculture committee’s audit of all USDA programs in advance of the 2012 farm bill.

Mid-level USDA officials explained the functioning of the programs, but when committee members asked them to comment on the dairy reform proposal of House Agriculture Committee ranking member Collin Peterson, D-Minn., and other proposals, they declined.

A clearly frustrated Rep. Joe Courtney, D-Conn., said, “I hope you’ll be more engaged.” He also noted that Agriculture Secretary Tom Vilsack had appointed a dairy advisory committee and signaled that the administration must have gotten some ideas from that.

“I’m not trying to be a wise guy up here, but the purpose is to have dialogue,” Courtney said.

Dana Cole, deputy administrator for dairy programs at USDA’s Agricultural Marketing Service, said USDA has attempted to implement some of the advisory committee’s recommendations, but that Vilsack had not put any “budget constraints” on the committee and that more than half of them required either new money or new authority.

On the latter recommendations, Cole said, USDA cannot implement them, but is providing information to members of Congress and is willing to work with the committee in analyzing the implications of the proposals.

“The events of 2009 exposed what many have long held to be an inadequacy of some of our current dairy programs,” said subcommittee chairman Rep. Tom Rooney, R-Fla., during the hearing. “While some observers may argue that additional funding may improve the overall effectiveness of our dairy safety net, our current budgetary outlook makes this option a non-starter.”

Larry Slathe, an economist, told the subcommittee that Vilsack “wants to have a dialogue but is not interested in putting out another proposal.”

Cole also testified that she does not believe the current four-class pricing system has stopped new and innovative products from coming to market.

The officials said USDA had distributed about $940 million under the Milk Income Loss Contract program in 2009 dairy crisis. Juan Garcia, acting deputy administrator for farm programs at the Farm Service Agency, said that only 3 percent of dairy producers nationwide had gone out of business during that crisis.

While dairy producers in the Midwest and New England have defended the MILC program, Rep. Jim Costa, D-Calif., said that it was an “ineffective” safety net because larger producers do not get the same level of benefits as smaller producers.

Costa said in an interview after the hearing that California had 1,600 dairy farms before the crisis and that 200 to 300 had gone out of business. He told the USDA officials that according to dairy cycles, “the next bad cycle could be next year.” After the loss of equity in the last cycle, he said, “I’m not sure we can survive.”

National Milk Producers Federation lobbyist Jerry Kozak said in a news release that "the general tone of the questions at today's hearing from the committee members indicates a concern that current dairy programs are not up to the task of providing a meaningful farm-level safety net.”

Kozak said he believes National Milk’s “Foundation for the Future” plan on which Peterson’s proposal is based is “the best answer to the bottom-line question of what should come next for dairy policy.”

But some dairy farmers have said that the proposal is too complicated, and the International Dairy Foods Association opposes it, saying that it contains a supply management component that would transfer costs from the government to processors and sometimes make U.S. dairy products uncompetitive in world markets.