Wide Range of Dairy Issues Aired

May 23, 2001

If U.S. dairy producers are to be successful, the American Farm Bureau Federation told lawmakers that future dairy policy needs to address issues ranging from the continuation of the dairy price support program and reviewing dairy import/export concerns, to animal health protections and proposed environmental regulations.

"We believe that the dairy sector provides unique situations compared to other sectors of agriculture, and therefore requires unique solutions," said AFBF board member John Lincoln. "Since milk is highly perishable, does not store easily, and requires special handling, farmers must market their product virtually every day of the year, regardless of the market price at that moment. This has, generally speaking, required more government intervention than required of most other commodities."

Lincoln, a New York dairy producer and president of the New York Farm Bureau, told members of a House Agriculture subcommittee that the government has supported milk prices since the enactment of the Agricultural Act of 1949, and that "it is imperative that the dairy price support be reauthorized at $9.90 per hundredweight prior to October 2001. This would make the dairy program consistent with other commodity programs and maintain a safety net for dairy producers."

He added that Farm Bureau is also "extremely concerned" about new proposals to increase federal regulations on water quality rules pertaining to animal feeding operations. According to the Environmental Protection Agency, the proposed rules are aimed at correcting problems on less than 2 % of America's waters. "Farm Bureau is very concerned that these regulations will exact a heavy cost from U.S. dairy and livestock producers while having an extremely small benefit to the rest of society," Lincoln said.

Constance E. Tipton, senior group vice president, International Dairy Foods Association, said future dairy policy "should attempt to eliminate or at least lessen the market intervention and regional distortions created by current dairy programs while providing a reasonable safety net for dairy producers."

IDFA also favors "enhanced risk management tools for milk buyers and sellers (that) are needed to allow producers and processors to better manage their business. Working together, dairy producers and processors can create more opportunities for growth throughout the industry," she said.

Tipton added, "Our member companies are anxious to work with Congress to develop dairy policy that will improve market conditions for producers without artificially increasing prices to consumers. We believe this is possible while at the same time lessening the milk price distortions that currently exist from one dairy producing region to another. The multiple, complex dairy programs that are currently in place continue to be a very disruptive force within the dairy industry. To measure various policy options, our boards of directors have recommended four criteria against which all dairy policy proposals should be evaluated."

Jim Tillison, CEO, Alliance of Western Milk Producers, told the House Livestock & Horticulture Subcommittee that dairy is "a single crop industry requiring a large investment in facilities and equipment for which there are no short-term alternatives. That is, unlike many annual crops, the dairy man or woman cannot simply plant something else the next year." In addition, the crop produced is highly perishable and it must be processed almost immediately into a form in which it can be stored.

The alliance wants an extension of the dairy price support program as part of the next farm bill. "The current support price level of $9.90 and the current purchase price levels for block and barrel cheese, bulk butter and nonfat dry milk powder should be maintained," Tillison said.

Alliance members also oppose establishing a mechanism to adjust USDA commodity purchase prices. "They are concerned that America's dairy farmers are balancing the world market for dairy products now. Lowering the domestic nonfat powder price will do nothing to address the underlying cause of higher levels of (USDA) purchases – imported milk protein concentrate," Tillison said

Environmental issues have become more and more important to the dairy industry. "The challenge milk producers face is the uncertainty of how to comply with what seem to be an ever changing collage of requirements. This is detrimental to the well-being and growth of the dairy industry," he said. The Alliance urged Congress to ensure that environmental regulations are science-based and not detrimental to maintaining a viable dairy industry and provide assistance to milk producers in order to comply with environmental regulations and requirements."