A devastating collapse in milk prices is prompting dairymen to push for a massive overhaul of U.S. dairy policy.
More than 200 dairymen and representatives of allied industries in Idaho and neighboring states met Wednesday at the Canyon Crest Dining and Event Center in Twin Falls for the Idaho Dairymen’s Association summer meeting to hear about the ambitious plan.
Being labeled the “Foundation for the Future,” the proposed overhaul has the backing of many dairy cooperatives across the U.S.
Some of the changes include shutting down the Dairy Product Price Support Program and the Milk Income Loss Contract, or MILC, in the next Farm Bill. Both programs have funneled billions of dollars into the coffers of struggling dairies, but the federation argues that it has been largely ineffective.
MILC makes payments to dairymen when prices fall, but benefits are capped after the first 3 million gallons of milk produced, the annual output of perhaps 200 cows.
The average herd size in south-central Idaho in 2008 was more than 1,100 cows, according to the Idaho Dairymen’s Association.
“These prices are not relevant to farmers in 2010,”said Jerry Kozak, president and CEO of the National Milk Producers Federation, “and it only works when producers sell to the government and get the product off the market.”
The federation also proposes to establish a new program called the Dairy Producer Margin Protection Program, which would support producer margins — unlike current federal programs that support prices. The program would act as form of insurance which pays producers based on the price per hundredweight of milk, minus the cost of feed needed to produce the milk.
Unlike current programs, there would be no payment limitations based on herd size.
“That’s one of the biggest problems we have right now,”Kozak said. “We have to get over the small farmer versus the large farmer attitude.”
He said the program would be paid for with money from the current Dairy Product Price Support Program, which the federation wants to eliminate. The program would be managed by the Farm Service Agency — a branch of the U.S. Department of Agriculture.
Kozak also said the plan includes other mechanisms that would stave off even more drastic fluctuations in milk prices.
The proposal has met some resistance among dairymen who say the revisions would make the system less responsive and more costly. But Kozak said the overhaul would do just the opposite.
“There are producers who are receiving checks when they don’t need them,” he said. “With the way that agriculture is going, we have got to make it so producers don’t get a check when they don’t need it.”
Joshua Palmer may be reached at email@example.com or 735-3231.