June 22

The National Milk Producers Federation "strongly disagrees" with an analysis of USDA's final rule on federal milk marketing order reform that finds little or no negative financial impact on dairy farmers. NMPF believes dairy farm income declines will be almost twice what the analysis found.

At issue is a report from the University of Missouri's Food and Agriculture Policy Research Institute (FAPRI) that analyzed the USDA reform plan and found it would reduce dairy farmer income by no more than $100 million a year.

NMPF, however, which was one of several organizations participating in the study, conducted its own analysis and found dairy farmers could lose an average of $200 million a year if the USDA final rule goes into effect.

"Although the result of this analytical process has been painted as a consensus within the industry, we don't concur with the official `feel good' FAPRI line that producers have nothing to worry about from the USDA proposal," said Jerry Kozak, NMPF CEO. Because farmers will lose an average of $200 million a year, he added, Congress "must intervene to rectify the major flaws within the USDA proposal."

The FAPRI analysis says farmers would be able to recapture lost revenue by successfully bargaining for higher than minimum price over-order premiums for their milk. That "doesn't reflect the reality of the marketing conditions that dairy farmers have to deal with on a daily basis," said Kozak. "It assumes that processors will willingly hand over additional piles of money to dairy farmers to make up for these lower minimum prices if only the farmers ask for it."

Kozak said when dairy farm prices dropped $6 per hundredweight in one month earlier this year, dairy farmers could not make up for that revenue reduction by bargaining with processing companies for additional premiums for their milk.

"FAPRI is trying to sooth producer fears about lost revenue by promising that somehow they'll miraculously come into additional money when USDA reduces minimum prices. NMPF cannot buy into that perspective, and members of Congress also should not be swayed by assurances that everything will be all right," said Kozak.