Recap of Dairy Policy Testimony Presented to: U.S. House of Representatives – Committee on Agriculture
April 20, 2010 – Harrisburg, PA
by Tammy Graves
Committee on Agriculture Members Present – 7:
Collin Peterson (MN), Chairman
Tim Holden (PA), Vice Chairman
Leonard Boswell (IA)
David Scott (GA), Chairman of Subcommittee of Livestock (handles dairy policy)
Kathleen Dahlkemper (PA)
Randy Neugebauer (TX)
Glenn Thompson (PA)
Purpose: A Field Hearing to review dairy policy for development of Farm Bill 2012
#1 Farm Bill 2012 Action needs to be Price Discovery based on testimony.
Remarks by Collin Peterson, Chairman:
• Current federal programs are not providing appropriate safety net, There is a consumer disconnect and economic/business climate made worse by trade agreements.
• Need risk management for dairy – need something for all agriculture. That’s going to be what’s left for gov’t help
• Price discovery: mandatory price reporting needs to be reauthorized by Sept. 2010. Met with Agricultural Marketing Service (AMS) and they are on the right track for packaging reporting info in a working manner for producers to use. It will roll out in June or July 2010.
• Encouraged by what’s going on in the industry…consensus building. Needing a change is universal in the industry.
Russell Redding, PA Sec. of Agriculture
• Pricing transparency is needed now – can’t wait to next Farm Bill. Implement near term changes and use experiences for debate of next Farm Bill. Thank you for the reporting and feed adjustment of the last Farm Bill. There is a “confidence crisis.”
• Price Discovery – implement Farm Bill 2008 provision for electronic reporting. It is an action item for right now. Use experience for debate during developing Farm Bill 2012.
• Income protection – LGM Dairy program needs to be crop insurance equivalent: meaningful, affordable and workable – need subsidy, need flexibility in sales closing date
• Credit – credit discussion is a bridge to a better year – “Post TARP” environment is a regulatory piece to look at that is causing ag lenders difficulty (ex. 90-day past due item). Operating loans are condidtional or not available because of new regulations “Post TARP”. The regulations are not discretionary to the lending agency. Farms fall into the “troubled assets category.”
Emphasis should be profitablilty over pricing through ensuring and insuring with risk management, trade and credit policies.
Responses to questions: We need more than CME. We don’t know the value/worth of milk in the marketplace. Include fresh and manufactured products, Consumer Price Index. The basket of tools are on the table with Sec. Vilsack.
Jim Dunn, Penn State Professor of Agricultural Economics
• Recapped export from 2008: high exports, high all-milk prices. U.S. dairy industry has historically been 10% imports and 10% exports
• European Union is a heavily subsidized high exporter.
• Running out of collateral and ability to service loan
• Many parties are on thin ice – has same credit concerns as Sec. Redding
• Trade is important.
• Growth in rest of world is not going to be buying high-value dairy products. They will want storable (MPC) products instead. (personal thought: so we want to produce MPCs in the U.S. so we can make store products until the hungry in Africa have money to buy MPC-containing dairy products or until a Hunger Relief Agency buys it. How is this a profitable export market for dairy farmers?)
John Frey, Executive Director, Center for Dairy Excellence
• LGM risk management is good. Having ag economists analyze and compare plans – Dairy Growth Management Plan, Dairy Stabilization Plan, etc.
Farmer: Rod Hissong, Dairy Producer, Mercer Vu Farms, Mercersburg, PA
Speaking on behalf of: Professional Dairy Managers of Pennsylvania (PDMP) – past president
• pricing away from CME needed to be more transparent to reflect what products milk is used for and cost of production
• implement mandatory reporting and import assessment from prior Farm bill
• tear down and start over the milk pricing because we’ve been remodeling for years
Farmer: Lauren Mosemann, Dairy Producer, Misty Mountain Dairy, Warfordsburg, PA
Speaking on behalf of: National Milk Producers Federation and Maryland & Virginia Milk Producers Cooperative Assoc.
• supports Dairy Producer Income Protection Program
Farmer: Kent Heffner, Dairy Producer, Pine Grove, PA
Speaking on behalf of: Farm Bureau, President of the Schuylkill/Carbon County
• encourage domestic MPC, continue MILC
• is the direct marketer of the farm operation – hears that MPC being bad
Farmer: Daniel Brandt, Dairy Producer, Brandt View Farms, Annville, PA
Speaking on behalf of: Dairy Policy Action Coalition (DPAC)
• improve price transparency/discover. Pull away the curtain, make it simple. Take out errors and manipulation
• include more products, more frequent reporting, NAS survey lags (May milk will be determined by March cheese)
• Fund 1510 of Farm Bill – mandatory reporting with auditing (implement, expand to include Italian cheeses, improve inventory reports
• Redirect dairy support money for purchases to put in recourse loan program for processors to reinvest in their facilities and product innovation
• World prices are higher.
• Need 2 classses to remove ability to manipulate (pay farmer for Class IV and sell the milk to Class III)
Processor: Todd Rutter, President, Rutter’s Dairy, York, PA
• dairy farmers need to be planning ahead and risk management
• he pays the mandated price, offers premiums to keep a supply of milk and the raw milk price has to maintain his (processor) competitiveness
• processors need access to credit – processors are not reinvesting