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Critics unhappy with dairy program

They say it will encourage overproduction

By Janet Kubat Willette

jkubat@agrinews.com

ROCHESTER, Minn. -- Payments under the National Dairy Program haven't even been mailed yet, but critics are already blasting the program.

They say it will lower milk prices by influencing some producers to add cows will encourage others to stay in business to collect payments rather than quit.

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Gary Wertish, Sen. Mark Dayton's director of agricultural research, shrugged off the criticism during a meeting last week in the Heintz Center, Rochester.

"Maybe it will keep some of the small ones (dairy farms) in business,'' he said.

Program payments are expected to begin this fall, said Brian Baenig, Sen. Paul Wellstone's legislative aide for agriculture. Payments will be retroactive to December 2001 and will continue until mid-2005. Payments are counter-cyclical and are only paid when the Boston Class I prices falls below $16.94.

Payments will fluctuate based on market prices.

Minnesota producers will receive 77 cents per hundredweight for December milk, said Robert Cropp, University of Wisconsin Extension dairy marketing specialist. The expected payment continued to climb through the winter and spring as milk prices dropped. The payment is expected to be $1.20 per hundredweight for June milk.

The payments don't provide a floor, but they are quite significant, Cropp said. He encourages producers to use the direct payments to position themselves because the dairy market will continue to be volatile.

Robert Tigner, Iowa State University farm management specialist, said the average payment for milk produced from December 2001 to May 2002 is 89 cents per hundredweight. Maximum payment amounts will be reached with a 130-cow herd that has average Iowa milk production, he said.

The dairy provisions in the 2002 farm bill provide three years of price protection, which will offer start-up operations stability.

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It hasn't been determined whether payments will go through 2.4 million pounds of production and then stop or if payments will be split throughout the year for dairy producers who exceed the cap. For producers who meet the requirement in a month or two, rules haven't been written to say in which month they must take the payment.

The program is administered through the Farm Service Agency.

"There's a lot to be done now we've got the bill passed,'' Baenig said.

Agri News senior staff writer Jean Caspers-Simmet contributed to this report.

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