Indiana Republicans Adopt Dairy Security Act as Marker for Dairy Portion of Farm Bill

ARLINGTON, VA – Senior Senate Agriculture Committee member Dick Lugar (R-IN) has introduced a farm bill proposal that includes the dairy policy reforms advocated by the National Milk Producers Federation (NMPF), a development that NMPF welcomed today “as a major step forward in improving dairy policy.”

Lugar, a former chair of the Senate Ag Committee, and Rep. Marlin Stutzman (R-IN), a freshman member of the House Agriculture Committee, have jointly introduced a bill they call the Rural Economic Farm and Ranch Sustainability and Hunger Act (REFRESH). This bill would reduce farm program spending by $16 billion, and save a total of $40 billion compared to current policy. A complete bill summary and legislative draft of REFRESH may be found at www.stutzman.house.gov.

For the dairy title of the Farm Bill, the REFRESH legislation includes the key elements of the Dairy Security Act (DSA) of 2011, which previously was introduced in the House as HR 3062 by Reps. Collin Peterson (D-MN) and Mike Simpson (R-ID). The DSA is modeled after the extensive dairy reforms first proposed by NMPF. The DSA itself represents a 20 percent savings compared to the current dairy program budget, amounting to $131 million over ten years, according to the Congressional Budget Office.

“We appreciate Sen. Lugar and Rep. Stutzman recognizing the value of including the principles of NMPF’s Foundation for the Future in their Farm Bill proposal,” said Jerry Kozak, President and CEO of NMPF. “The REFRESH bill, along with the Dairy Security Act in the House, now gives us the opportunity in both chambers of Congress to push for dairy reforms that will give farmers protection, stability and growth.”

The key dairy policy changes in the REFRESH bill include: replacing the dairy price support (DPPSP) and milk income loss contract (MILC) programs with a voluntary margin protection program that covers 80 percent of the producers’ production history when margins fall below $4 per hundred-weight; giving producers the option of whether to enroll in a market stabilization program; and reforming the Federal Milk Marketing Order system by moving to a competitive pay price.

The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF’s 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.

Dairy Group Pushes for Guest Worker Program, Opposes Enforcement-Only Approach

ARLINGTON, VA – In written testimony provided today to the Senate Judiciary Committee, the National Milk Producers Federation (NMPF) said that current labor and immigration policies put the U.S. dairy farm sector at a disadvantage, and that a change in laws is necessary in order to address the realities of dairy production in America.

In testimony presented to the Senate Judiciary Subcommittee on Immigration, which held a hearing Tuesday on the agricultural labor crisis, NMPF wrote that there remains a persistent shortage of native-born workers interested in employment on dairy farms, which is why farmers cannot find enough American workers to milk cows and perform other critical job functions on dairies.

“Even in this time of high unemployment, our dairy farmers universally report an inability to find enough American workers…even if they offer better pay than other jobs,” said Jerry Kozak, President and CEO of NMPF. “Sufficient numbers of local workers are simply not available or not interested in working on dairy farms.”

The challenge of hiring workers in 2011 is no different than in 2008, when NMPF conducted a survey to quantify the workforce hiring practices of dairy farms. That survey found that U.S. dairies employed 138,000 full-time equivalent workers, of which an estimated 57,000, or 41%, were foreigners.

Some other sectors in agriculture facing the same problem may be able to use the H-2A visa program to hire seasonal immigrant workers despite the significant flaws in the program, but the dairy sector cannot, a situation that is “fundamentally unfair. America’s dairy farmers need and deserve to have the access to legal foreign workers as other sectors of the agricultural industry,” Kozak said.

Most current proposals to provide agriculture with a labor fix are designed to address the seasonal hiring needs of other portions of agriculture, but not the labor needs of dairy farmers every day of the year, NMPF’s position is that the domestic dairy sector needs a year-round guest worker program.

Among other key criteria, such a program must feature no seasonality requirement, as does the H-2A program currently, along with most agricultural labor proposals in Congress; allow immigrants to work for at least three years; and make the process of applying for work simpler and quicker, NMPF said.

NMPF’s testimony also highlighted concerns the organization has with an enforcement-only approach to immigration policy, such as shifting to the mandatory use of the E-Verify database system for verifying the immigration status of prospective workers.

“If Congress is going to enact a nationwide E-Verify requirement, then it also needs to provide agriculture with a workable guestworker program to meet our future needs and a means to allow those who are currently working in undocumented status to be eligible for that guestworker program.”

“A failure to do so risks severely damaging the economic vitality of the nation’s entire agriculture sector,” NMPF wrote.

The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF’s 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.

The National Milk Producers Federation (NMPF) is working to build support for H.R. 3062, the Dairy Security Act of 2011, which was formally introduced in the House of Representatives last month. The bill closely follows the concepts of NMPF’s Foundation for the Future proposal to reform and improve federal dairy policy, but contains several improvements compared to the original concept, changes that were endorsed last month by NMPF.

These changes include making voluntary the Dairy Market Stabilization Program (DMSP), which will help reduce milk output during times of low margins. While farmers will not be required to participate in efforts to stabilize markets, if they wish to enroll in the subsidized margin insurance program through the U.S. Department of Agriculture, they will automatically be enrolled in the DMSP so that they are promptly alerted when additional production may affect their overall margins.

The new legislation is also an improvement over the earlier version because it extends the Basic level of margin insurance coverage to 80 percent of a producer’s production history, up from 75 percent as initially proposed. The Supplemental margin coverage option is also improved, as it will now allow producers to purchase insurance for growth in their milk production history.

Other changes to the final version of the legislation include a refined provision in the Dairy Market Stabilization Program to ensure that it does not activate during times when signals for farmers to reduce production may impinge on the ability of the U.S. to export dairy products. Also, all of the money collected by USDA through the DMSP will go to dairy product purchases.

Lastly, the Dairy Security Act of 2011 simplifies the Federal Milk Marketing Order pricing system through a formal hearing process conducted by USDA. The proposal directs changes in the way milk used to manufacture cheese (Class III) is priced, from a complicated end-product formula, to a more market-oriented competitive pricing system.

The Congressional Budget Office has scored the legislative draft to assess its budget impact, and finds that the DSA will reduce federal spending by $167 million during the next five years, and $131 million during the next ten. That level of savings “represents one of the major benefits of this approach, since it will not only provide farmers better security, but also save the government money when the main topic of conversation in Washington is on reducing the deficit,” said Jerry Kozak, President and CEO of NMPF.

In the photo: Members of the House Agriculture Subcommittee on Livestock and Dairy expressed their misgivings with current dairy policies during a hearing in September. The Subcommittee is chaired by Rep. Tom Rooney (R-FL), seen at right, discussing policy options with NMPF President Jerry Kozak.

Last month, the House Judiciary committee approved the controversial E-Verify bill. Adopted along a party line vote, 22-13, Committee Chairman Lamar Smith’s bill would require all U.S. employers to use E-Verify, an online worker verification system that matches job applications with data from the Social Security Administration and the Department of Homeland Security.

Under the bill, agriculture employers would be given 36 months from the date of enactment to comply with its provisions. During the mark up of the bill, Representative Dan Lungren unsuccessfully offered an agriculture-specific amendment that would have issued 10 month visas for agriculture workers. As it stands, Smith still is considering an agriculture-specific workforce act, H.R. 2847, but has yet to move it out of Committee. While the full House of Representatives may soon vote on the E-Verify legislation, the bill is not expected to be considered by the Senate.

NMPF continues to reinforce that it will not support enforcement-only legislation. Without a viable answer for the future workforce of the agriculture industry, NMPF cannot endorse any legislation that will increase the burden of America’s farmers.

Toward that end, in written testimony provided today to the Senate Judiciary Committee, NMPF said that current labor and immigration policies put the U.S. dairy farm sector at a disadvantage, and that a change in laws is necessary in order to address the realities of dairy production in America.

In testimony presented to the Senate Judiciary Subcommittee on Immigration, which held a hearing on the agricultural labor crisis, NMPF wrote that there remains a persistent shortage of native-born workers interested in employment on dairy farms, which is why farmers cannot find enough American workers to milk cows and perform other critical job functions on dairies.

The full news release on the Senate hearing is available on the NMPF website.

Last month, America’s farmers and ranchers – in an effort to lead a conversation and answer those questions – kicked off The Food Dialogues, the launch of a new effort to bring together different viewpoints on farming and ranching and the future of food. The effort was sponsored by the U.S. Farmers and Ranchers Alliance, of which NMPF is a member.

Four panels across the country, including Washington, D.C.; New York City; Fair Oaks, Indiana; and Davis, California, featured leaders and voices across the food spectrum, addressing American’s stated concerns about how their food is grown and raised.

While the discussion started on Sept. 22, it’s just the beginning a long-term effort and will continue at the website www.fooddialogues.com. Those who want to see the entire discussion or share comments can go there to join the conversation.

NMPF’s 2010 Young Cooperator (YC) Chairman Marty Burken, a dairy producer with Swiss Valley Farms cooperative, has been named the National Progressive Dairy Producer for 2011 in the large herd division. The award was announced by the National Dairy Shrine, an organization of over 18,000 members that brings together dairy producers, scientists, students, educators, marketers, and others who share a desire to preserve dairy’s heritage and keep the dairy industry strong.

Burken’s award includes a $2,000 travel stipend to attend a conference or seminar to learn new techniques to improve his dairy business. He and his wife Lisa, along with their family, operate Blue Hyll Dairy LLC, a 774-cow dairy in Clinton, IA. Burken will be recognized for his achievement at the Dairy Shrine banquet at the World Dairy Expo in Madison, WI on Thursday, October 6.

Participants wishing to attend NMPF’s joint annual meeting with the National Dairy Promotion and Research Board (NDB) and the United Dairy Industry Association (UDIA) have until Monday, October 24 to register and make hotel reservations. Both may be done online by visiting www.dairyevents.com.

The meeting will be held November 14 – 16 at the Town and Country Resort & Convention Center in San Diego, CA and center around the theme “Navigating a New Course.” Dairy producers, cooperative staff, Young Cooperators (YCs), industry suppliers, trade press, and others from within the dairy sector are all invited to attend.

For complete information about the meeting, visit www.nmpf.org/nmpf-joint-annual-meeting.

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) applaud the submission to Congress by President Obama of the legislation to implement the three pending free trade agreements (FTAs) with South Korea, Panama and Colombia. The dairy industry is also supportive of the bipartisan compromise on the Trade Adjustment Assistance (TAA) legislation.

These FTAs have the potential to expand U.S. exports and create thousands of export-supporting jobs in the U.S. dairy industry, in particular. NMPF and USDEC “thank members of Congress for their diligent work in supporting the drafting of this legislation,” said Jerry Kozak, president and CEO of NMPF.

The U.S. dairy sector will see significant gains from each of the agreements, but particularly from the agreement with South Korea. “We are pleased that achieving these benefits is finally within sight,” said Kozak. “These agreements will not only expand export sales for such products as cheese, whey, skim milk powder, and other dairy products, they will also prevent our competitors from taking market shares that we currently have in those countries.”

Tom Suber, president of USDEC, agreed, pointing out that the industry estimates that as many as 10,000 additional U.S. jobs, both on and off the farm could be created by the Korea agreement alone. “The growth in exports of dairy products from these agreements will not only help bolster milk prices for America’s dairy farms, it will also expand jobs in the dairy processing and transportation sectors,” he said. “The FTAs represent a big win-win for all elements of the U.S. dairy industry.”

The dairy organizations noted that the export benefit from the Korea FTA to the U.S. dairy industry in the first few years after implementation will be approximately $380 million per year, on average, and the gains from the Colombia and Panama FTAs will add another $50 million annually. NMPF and USDEC highlighted the growing importance of export sales to dairy producers’ bottom lines and the need to continue to open and develop new markets regardless of their size. In international trade, “unless we continue to move forward, we risk falling behind our competitors,” Suber said.

“We urge members of Congress to approve the implementing bills for all three FTAs, and support the economy of thousands of America’s dairy farmers,” said Kozak. “Our producers are pleased that after four years, a breakthrough has been achieved, and Congress will finally have an opportunity to act on the FTAs. Now, we just need a “yes” vote.”

The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the export trade interest of U.S. milk producers, proprietary processors, dairy cooperatives, and export traders. Its mission is to enhance international demand for U.S. dairy products and assist the industry to increase the volume and value of exports. USDEC accomplishes this through market development programs that build overseas demand for U.S. dairy products, resolving market access barriers and advancing the industry’s trade policy goals. USDEC activities are supported by staff in Mexico, Japan, South Korea, China, Taiwan, Hong Kong, Southeast Asia, South America, Middle East and Europe. Website: www.usdec.org.

The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF’s 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.

 

In the development of any new concept or product, there comes a time when the pursuit of perfection ultimately shifts toward the exploration of what’s possible. We’ve now reached that point in the development of new federal dairy policy.

From the summer of 2009 – when the brutality of the Great Dairy Depression first manifested itself – to this past summer, NMPF solicited and then synthesized a variety of viewpoints in the development of a radical reassessment of the best safety net for dairy farmers. We called it Foundation for the Future, and a great deal of spadework was done by a full cross-section of the dairy industry in providing unique, and sometimes opposing, perspectives on how best to form that foundation.

We took the resulting product this summer and road-tested it. At 13 meetings in 12 towns across the country, we walked through the detailed elements of Foundation for the Future in front of 1,300 dairy producers, and others involved in our business. It’s fair to say that no other dairy program has received the same degree of scrutiny or self- assessment, either within the industry, or by Congress. Even the safety net policy we have today, featuring the MILC and the price support programs, hasn’t received nearly the thorough examination that Foundation for the Future was subject to this year.

What we heard during our summer grassroots tour was a uniform agreement that the status quo is not acceptable, because it didn’t prevent the loss of billions of dollars in equity two years ago, and it leaves farmers equally vulnerable when the next market downturn arrives. Most farmers clearly see the value in a margin-based safety net, since our current price-centered programs were designed in the 20th century, for milk price targets that are no longer relevant in the new era of much higher feed costs. Thus, a margin insurance program was well received.

Many producers also see the value in having a means of managing the market during periods of low margins, in order to hasten a recovery. The current approach where individual farms make decisions to keep putting out more milk when margins are bad, even if the collective impact of those specific choices is bad for every farmer, is less than desirable. Hence, Foundation for the Future initially contained a mandatory Market Stabilization program to put the brakes on milk output when dire conditions imperil every farm’s bottom line.

But a compulsory approach to stabilizing the market in such a fashion proved to be a daunting goal. In essence, it was the potentially perfect solution that, for a variety of reasons, was not going to be politically possible to achieve.

So now, we’ve engaged in a course correction. No longer is the Dairy Market Stabilization Program going to be mandatory. In fact, the approach we have endorsed, which is now embodied in the new “Dairy Security Act of 2011,” introduced last week in the House of Representatives, offers farmers a clear choice.

Those who wish to have government-subsidized margin insurance, at both a basic and supplemental level, can opt for that safety net…but they must also then agree to participate in the market stabilization program, so they are expected be part of the solution when the problem of poor margins appears. On the other hand, those who for whatever reason don’t want the government to tell them what to produce will not be asked to help stabilize the market…but they don’t receive any help from the government if and when market conditions are poor.

The beauty of this approach is that it preserves a safety net for those who want it, and yet it also offers others a complete free-market approach. And just as the federal government is being forced to cut back spending and entitlements in other areas, there is no more free lunch with this new dairy program: there is no free government money without a corresponding obligation to help the greater good of the industry. We are past the point as a country where people can expect something for nothing from Uncle Sam.

In addition to the safety net components, the Dairy Security Act requires the U.S. Department of Agriculture to reform the way the Class III price is determined, doing away with end product pricing formulas and make allowances, and going to a competitive pay price.

Is this pivot toward a compromise approach a perfect solution? Of course not, and there will remain those who either feel it does too much, or doesn’t go far enough. But it’s a sound foundation, economically and politically. Compared to current program, the DSA saves taxpayers $131 million over ten years, which is good politics and good policy. Beyond being a necessary course correction, it’s the correct course for America’s dairy producers.

Key Farm Programs Among First To End

ARLINGTON, VA – Dairy farmers have lost a safety net because the 2008 farm bill expired Sunday and Congress has yet to pass a new Farm Bill, according to the National Milk Producers Federation (NMPF), which said today that farmers need to continue to voice their dissatisfaction with the lack of action in Washington on farm policy.

Members of the House left Washington last month without completing work on the 2012 Farm Bill. Although Congress is expected to return to Capitol Hill after the November elections, the status of many farm and food programs is in limbo until then, along with the rest of the pending farm bill that contains a new and better safety net for dairy farmers.

“Dairy is among the first sectors in agriculture to feel the impact of Congress’s inability to reach accord on most anything, including a new Farm Bill,” said Jerry Kozak, President and CEO of NMPF. “Had the House leadership brought the bipartisan farm bill to the floor, I believe we could have passed a bill containing the Dairy Security Act. Instead, we are in uncharted waters, and one of our life rafts has disappeared.”

Dairy farmers continue to suffer from high feed costs, and the other program intended to serve as a safety net – the dairy product price support program – was created years before feed costs started to escalate, Kozak said.

That’s why NMPF has been urging Congress to pass the Dairy Security Act, which instead of focusing simply on milk prices, takes into account the margin between farm-level milk prices and feed costs.

“We strongly encourage our dairy farmer members to visit with their members of Congress during the pre-election recess to determine a path forward for the 2012 Farm Bill soon after the elections,” Kozak said. “We need a full, five-year bill to be passed in the House, sent to a conference committee, and approved before the end of the year.”

The National Milk Producers Federation (NMPF), based in Arlington, VA, develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF’s 30 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 32,000 dairy producers on Capitol Hill and with government agencies.

House Bill Embodies Improved Version of Foundation for the Future Package

ARLINGTON, VA – The National Milk Producers Federation (NMPF) is giving its full support for a new bill introduced today in the House of Representatives that would make broad improvements in dairy policy.

The bipartisan “Dairy Security Act of 2011” was formally introduced today by the House Agriculture Committee’s Ranking Member Collin Peterson (D-MN), along with senior House Republican Mike Simpson (R-ID). The bill is modeled on the dairy reforms developed and promoted by NMPF, and would revamp and improve the farm-level safety net for dairy producers.

“It’s been a long journey of reforming dairy policy following the difficult days of 2009, when America’s dairy producers lost billions of dollars in equity, but the introduction of the Dairy Security Act is a huge step towards ending an ineffective program, and replacing it with something much better,” said Jerry Kozak, President and CEO of NMPF.

“We are thankful for Congressman Peterson’s diligent attention this issue, as well as his commitment to real reform, and we look forward to working with him and Congressman Simpson to get this bill passed,” Kozak added. The bill reflects the changes endorsed this week by NMPF to its initial “Foundation for the Future” proposal to reform dairy policy.

The Dairy Security Act (DSA) bill is somewhat different from the legislative discussion draft introduced by Peterson this summer, in that it now makes voluntary the Dairy Market Stabilization Program (DMSP), which will help reduce milk output during times of low margins. However, if dairy producers wish to elect to enroll in the subsidized margin insurance program through the U.S. Department of Agriculture, they will automatically be enrolled in the Dairy Market Stabilization Program so that they are promptly alerted when additional production may affect their overall margins.

The new legislation is also an improvement over the earlier version, according to NMPF, because extends the Basic level of margin insurance coverage to 80 percent of a producer’s production history, from 75 percent as initially proposed. The Supplemental margin coverage option is also improved, as it will now allow producers to purchase insurance for growth in their milk production history.

Other changes to the final version of the legislation include a refined provision in the Dairy Market Stabilization Program to ensure that it does not activate during times when signals for farmers to reduce production may impinge on the ability of the U.S. to export dairy products.

Lastly, the Dairy Security Act of 2011 simplifies the Federal Milk Marketing Order pricing system through a formal hearing process conducted by USDA. The proposal directs changes in the way milk used to manufacture cheese (Class III) is priced, from a complicated end-product formula, to a more market-oriented competitive pricing system.

The Congressional Budget Office has evaluated, or scored, the legislative draft to assess its budget impact, and finds that the DSA will reduce federal spending by $167 million during the next five years, and $131 million during the next ten. That level of savings “represents one of the major benefits of this approach, since it will not only provide farmers better security, but also save the government money when the main topic of conversation in Washington is on reducing the deficit,” Kozak said.

The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF’s 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.