Holstein World: Describe for us the “regional dairymen’s” views and feelings regarding the 2007 Farm Bill.
Lee Mielke: Although I don’t believe I have much of a handle on this answer, states with larger dairies are likely opposed to extending the MILC program and states with smaller dairies, farmers likely oppose the reduction in the percentage of MILC payment and question whether the $9.90 support price is high enough.
I think most producers support the price support program and the Federal order program, although there are producer groups who are supporting their termination.
Dave Natzke: While regionalism has always added controversy to U.S. dairy policy, I believe differences more often than not are now defined by the style/size predominant in a region, not necessarily by geography. The West, predominated by fewer but larger herds, therefore would likely oppose any federal policies that have constraints based on herd size. The Midwest and Northeast, predominated by more smaller herds, may favor different policies altogether.
Take the two major U.S. federal dairy polices, for example. Between 2000 and 2005, the Dairy Price Support Program (DPSP) cost about $2.3 billion; the Milk Income Loss Contract (MILC) program about $2 billion. Not a big difference, but how the money was divided makes a big difference.
Under the Dairy Price Support Program, USDA purchases excess dairy products from the market, reducing supply and thus, boosting milk prices. It is not based on milk production per farm. One of the major items purchased by USDA is nonfat dry milk, produced in large quantities in the West, and the major product purchased by the government to boost milk prices. During the period 2000-2005, the West received 92% of DPSP payments; the Midwest, about 1%; and the Northeast, about 3.5%. Look for the West to continue to favor DPSP.
On the other hand, under the MILC program, payments are limited to the first 2.4 million pounds of milk production for each producer. Some smaller herds may not reach that total for the whole year. Other herds may reach that production cap within months, or less. Thus, the larger herds receive the payment on a smaller percentage of their total annual milk production. For the period 2000-2005, producers in the Midwest received 46% of all MILC payments; the Northeast, 24%; and the South, about 15%. The West, with its larger herds, received about 15% of total MILC payments.
In general, by region, the Northeast and Midwest support MILC; the West supports DPS.
Currently, MILC provides full payment to 85% of U.S. herds, but covers only 45% of total U.S. milk production. Due to changes in size distribution of dairies, the amount of milk eligible for MILC payments has decreased by 10% since December of 2001. Increasing the payment eligibility to 4.8 million lbs. per year would increase full coverage to 93% of the herds and 56% of the milk. So, in the upcoming 2007 Farm Bill debate, don’t be surprised if the MILC payment is increased to cover 4.8 million lbs. per year to make it politically palatable for large producers in the West.
Other regional differences may result from federal milk marketing order rules, which are not covered under the Farm Bill.