Senate Farm Bill Has Dairy Provisions

February 14, 2002

The Senate Wednesday approved a five-year farm bill containing a new $2 billion counter cyclical payment program for dairy farmers, along with a package of other dairy policy provisions backed by dairy producers. Several dairy-related items in the Senate bill mirror those in the House bill passed last October.

The matching items include extending the dairy price support program at the current $9.90/cwt. level; authorizing a new national Johne's disease control program; extending the Dairy Export Incentive Program (DEIP); increasing Market Access Program (MAP) funds; fixing the statutory mandatory inventory and price reporting language to prevent further costly reporting errors by the USDA, and requiring dairy importers to pay an assessment into the National Dairy Board for promotion and research projects.

"Our organization has worked very hard for more than a year to develop this portfolio of dairy provisions for the upcoming farm bill," said Jerry Kozak, president and CEO of the National Milk Producers Federation. "The fact that these items were passed by both the House, and now the Senate, means we will have a solid platform for dairy policy in the next few years."

There are some differences between the House and Senate versions, including the counter cyclical dairy program. The new program would provide government payments totaling up to $500 million to dairy farmers in 12 northeastern states. Producers in those states would receive government payments whenever the monthly Class I price dropped below $16.94/cwt., based on a Class I utilization rate of 45%. In the rest of the country, farmers would receive a payment representing 40% of the difference between the previous quarter's all-milk price, and the five-year average all-milk price for that same quarter (when the second figure is higher than the first).

Up to $1.5 billion is authorized by the Senate for payments made using this formula in the remaining 38 states. Under both programs, payments would be made on up to eight million pounds of annual production (primarily affecting herds with approximately 400-plus cows), with no payments for milk produced beyond that amount. Both programs would run through fiscal year 2005.