February 27, 2017 Senators Hear Dairy Issues At First Farm Bill Reauthorization Hearing
On Thursday, the first Senate Farm Bill Reauthorization hearing webinar was hosted in at the Sioux county Extension office. Those attending heard testimony and questions from a wide range of producers and industry representatives.
A consistent theme heard from the presenters was the continuation of the crop insurance, conservation programs (especially EQIP) and a need for more transparency in price determination for the beef industry.
Lynda Foster from Foster Dairy in Fort Scott Kansas voiced her concerns for the upcoming farm bill discussion focusing on three issues.
She noted, in 2014, Congress passed legislation establishing a new safety net under Title I for dairy farmers. During the legislative process, changes were made to the original dairy program designed by NMPF and other dairy leaders around the country. Unfortunately, the safety net, known as the Margin Protection Program for Dairy Producers (MPP), has failed to provide the level of protection envisioned in the original program.
She pointed out that in the first year, there farm signed up for the program and purchased supplemental coverage at the $6.00 level. And like others, since that first year they have only enrolled at the minimal $4 margin level. “…to be perfectly honest, Senator, is meaningless. MPP remains the right model for the future of our industry, but changes are needed if Congress wants to provide relevant tools to our sector…” she stated. She continued noting that many dairy farmers participating in the MPP have become disenchanted with the program. In calendar year 2015, dairy farmers paid $70 million into the MPP program and received $730 thousand. In 2016, those figures were $20 million and $13 million, in a year where more program support was needed.
During the lead-up to the 2014 Farm Bill, she explained the process to develop a model for average feed costs for dairy cows. This process took nearly a year and included industry experts who understand the real cost of feeding cows. When it was presented to Congress, the formula, while respected as being accurate, was cut by 10 percent. This cut resulted in a skewed margin program, a flawed calculation for MPP and a much less useful program.
As a result of this change, a number of farmers who purchased higher coverage levels in 2015 did not opt to do so in 2016 because of the likelihood of no payment during times of need.
Since its inception, she pointed out that MPP has actually made the government a profit, equal to $66 million in fiscal year 2015 and $37 million in fiscal year 2016, according to the Congressional Budget Office.
She continued by pointing out that unlike other sectors in agriculture, Congress arbitrarily limited the ability of dairy producers to use Risk Management Agency (RMA) products as well as Title I programs. Although all other commodities can use both RMA and Title I programs without any restrictions, dairy farmers cannot use the Livestock Gross Margin for Dairy Cattle (LGM) program, which remains a popular tool for producers. Due to restrictions in MPP, a producer must decide at the beginning of the Farm Bill cycle whether to cover their milk under LGM or the MPP. This restriction leaves dairy farmers without the tools that other farmers have at their disposal regarding federal support for their operations.
Foster also stressed the importance of a dependable labor force to the dairy industry. She quoted a Texas A&M report stating 51 percent of all dairy farm workers are foreign born, and the farms that employ them account for 79 percent of the milk produced in the United States. She then asked, “How are dairies like mine, or any others, supposed to operate if we do not have access to a reliable workforce? In dairy, we cannot turn the cows off when there are not enough employees to do the job, we have to milk them.” She urged the Senators to act immediately to reform our immigration system in a manner that addresses agriculture’s needs for a legal and stable workforce.
One of her final points was how the dairy industry has come a long way on trade in the past several years. Our nation has gone from exporting dairy products valued at less than $1 billion in 2000 to exporting a record $7.1 billion in 2014, an increase of 625 percent. Fifteen years ago the USA was exporting roughly five percent of its milk production, now we are at three times that level, even as overall U.S. milk production has continued to grow. That means the equivalent of one day’s milk production each week from the entire U.S. dairy industry ultimately ends up overseas, making exports integral to the health of my farm and our dairy industry at large. It is critical that Congress protects the progress we have made as the Administration updates trade agreements like the North American Free Trade Agreement.
The complete testimony of each presented is available at: