The Hagstrom Report

Agriculture News As It Happens

National Milk changes dairy reform proposal to offer opt-in for margin safety net

The National Milk Producers Federation’s board of directors voted today to change a key element in the group’s dairy reform proposal, deciding that farmers should be able to decide whether to join its dairy margin protection program, which critics have said would lead to supply management, the group said in a news release.

As originally proposed, National Milk’s “Foundation for the Future” proposal contained a government-subsidized safety net, the dairy producer margin protection program designed to protect against periods of low milk prices, high feed costs, or a combination of the two.

This program offered a basic level of subsidized insurance coverage, plus the option of supplemental fixed-cost coverage partially paid by farmers. The FFTF program also contained the dairy market stabilization program, which was a mandatory means to reduce market volatility by discouraging new milk production during periods of compressed margins.

Under the revised approach backed today by National Milk, the dairy producer margin protection program would continue to be voluntary, but if a producer opts to participate, participation in the dairy market stabilization program would then be mandatory.

If a producer chooses not to participate in the insurance program, then participation in the dairy market stabilization program would not be required. As with the original reform package, the milk income loss contract program would be eliminated, as would the dairy product price support program.

House Agriculture Committee ranking member Collin Peterson, D-Minn., and Rep. Mike Simpson, R-Idaho, have introduced a bill similar to the National Milk proposal, and the group will ask them to make changes in the proposal to reflect the vote.

Randy Mooney, a Rogersville, Mo., dairy farmer who is chairman of National Milk, said the change reflects what leaders heard at events in 12 cities where they listened to 1,300 producers.

“Clearly, a number of farmers are uncomfortable about having a mandatory government program to manage milk production. So we are endorsing a new approach which gives farmers a clear choice,” Mooney said in the news release.

“This new approach of making the market stabilization program optional will appeal to those who philosophically do not want government telling them what to produce,” Mooney said. “At the same time, those who want the benefits of a government safety net must accept some government-led market stabilization as the price of that protection.”

How margin protection and price stabilization would work on a volunteer basis is unclear.

The International Dairy Foods Association, which represents dairy processors, had objected vigorously to the market stabilization program, calling it a supply management proposal that would cause prices for processors to go up and make U.S. exports uncompetitive with those in other countries at certain times. But some advocates for smaller dairy producers said the market stabilization program was the best part of the proposal.