Dairy Industry Reaches Near Accord on Farm Bill

April 30, 2002

After months of sometimes tense discussions between leaders of the House and Senate, negotiators completed work last Friday on the final outline of the 2002 farm bill that may not satisfy everyone in the dairy industry, producers and processors, but comes as close to a meeting of the minds as could be expected. The measure will be reviewed this week by the Congressional Budget Office to ensure that it adheres to long-term federal budget spending limitations.

The final version agreed to by House and Senate agriculture conferees contains a broad portfolio of dairy-related items including maintenance of the dairy price support program through 2008. The $73.5 billion, six-year measure also includes a new counter cyclical payment program that will provide direct monies to dairy farmers when prices decline below a set target price level of $16.94/hundredweight.

When the Class I price in Boston drops below that level, all dairy farmers across the country (regardless of their Class I utilization) will receive 45% of the difference between $16.94 and the monthly Boston Class I price. Payments will be made only on 2.4 million pounds of production per year. The new program will be funded through fiscal year 2005. The program will be retroactive to Dec. 1, 2001, meaning the past five months' production will be eligible under the program.

Other dairy items included in the final Farm Bill include:

--Extending the dairy price support program at the current $9.90/cwt. level (through a period of six years);

--Authorizing a new national Johne's disease control program;

--Requiring dairy importers to pay their fair share into the National Dairy Board for promotion and research projects;

--Extending the Dairy Export Incentive Program (DEIP);

--Increased authorization for Market Access Program (MAP) funds, and

--Fixing the statutory mandatory inventory and price reporting language to prevent further costly reporting errors by the USDA.

The International Dairy Foods Association went so far as to "applaud the efforts of House-Senate farm bill conferees to bring the farm bill to a close without including onerous milk pricing policies in the dairy title."

"While not perfect, we believe the new and temporary federal dairy compromise reached by conferees is a far cry from mandating a national milk pricing floor or reinstating regional dairy cartels," said IDFA Senior Group Vice President Connie Tipton. "We have always advocated policies that enable America's dairy industry to grow and compete in today's dynamic marketplace. Progress still needs to be made in simplifying federal dairy regulations so that market distortions are minimized and farmers, processors and consumers all benefit."