Farm Bill Should Not Contain Milk Supply Controls

Dairy Processing and Manufacturing Industry in Northeast needs more farm milk now, not less in the Future!

NO. SYRACUSE, NY (01/16/2014)(readMedia)-- The Farm Bill which contains important law to guide national policies to help bring food to consumer's tables is now one year overdue. Congressional members appointed to the conference to iron out the Bill have one important policy decision left to make involving dairy farmers before the Bill can be passed. This decision has two implications important for future agriculture policy direction and consumer's pocket books.

Proposed in the Senate version is a new agriculture economic subsidy concept designed by the nation's leading dairy farmer lobbying group, the National Milk Producer's Federation that would allow supply controls to be enacted when the price received by their members is lower than expected. They call it market stabilization. They are concerned about marketplace volatility and the impact on their member's prices. If this law is passed in the Farm Bill, dairy farmers will be mandated unnecessarily to artificially control the supply. When one segment of the distribution chain is allowed to artificially manipulate or stabilize the supply it is bad economic policy. House Speaker John Boehner is wisely opposing this new concept for many good sound economic reasons.

Here in the northeast United States there has been a tremendous growth in dairy processing and manufacturing plants. Over one billion dollars has been invested recently in expanding and newly built yogurt, cheese, milk and cultured product dairy plants. There are two main reasons for this investment; consumer demand and there are enough farmers (and cows) here producing the milk supply necessary to fill these plant's current and future pipelines. A great opportunity exists for dairy farms to supply these plants as they come fully on line in the next 12-15 months.

Enacting any new policy that encourages, discourages or limits farm milk supplies is the opposite of what is needed by these new companies not to mention the already robust dairy processing industry already here.

Dairy farmers need continued new sources and customers to sell their farm production to. They need to increase sales through continued new technology, efficiencies and production methods. Decreasing the farm

milk supply will only send the wrong signals to any more new dairy processing companies to look elsewhere to build and invest. Or to those already here, to relocate in areas of the country where there is adequate supply.

Volatility, when it happens because of Mother Nature, changing consumer consumption patterns or when supply and demand is out of balance is to be expected. What would it be like for consumer prices if the

oil industry, beef, wheat and produce and other food groups were allowed by law to control or limit production? Why should supply controls be allowed for milk produced on dairy farms?

Dairy farmers do not need supply controls to enhance the prices they receive. We have the past year's hindsight without Farm Bill approved supply controls to prove the point.

Without supply controls, dairy farmers had a record year of exports, 17% higher than in 2012 representing almost 16% of the total supply. The price of corn used to feed cows has dropped from $7 a bushel to just over $4. The prices received in 2013 by dairy farmers in the northeast were the second highest ever, with 2014 looking bright as well. Prices for consumers remain competitive while product choices are greater than ever on store shelves.

The Farm Bill should contain some type of safety net for all agriculture producers. We all should like the idea of having a secure, safe, quality food supply. This can be achieved with the Senate and House's mutual agreement for proposed margin insurance for dairy producers that will protect them if and when the price they receive due to any natural occurrence causes their price to drop below target levels. Allowing dairy farmers to control and manipulate the supply at the same time is bad for consumer prices, future investment and is a dangerous precedent for all future economic agriculture policy.

Bruce W. Krupke is the Executive Vice President of The Northeast Dairy Foods Association, Inc. located in N. Syracuse, New York which is a full service trade membership group representing dairy product processors, manufacturers and distributors in the northeast United States since 1928.