ROCHESTER, Minn.- Members of USDA's Dairy Industry Advisory Committee presented their recommendations to bolster farm profits and reduce milk price volatility to approximately 60 dairy cooperative leaders on April 5 in Rochester.
Andy Novakovic of Cornell University, Ed Welch of Associated Milk Producers, Inc., former Wisconsin ag secretary Randy Romanski and Wisconsin cheese maker Bob Wills discussed their experiences on the 17-member committee during Cooperative Network's Dairy Policy Conference.
In March, the committee submitted a report with 23 recommendations to U.S. Secretary of Agriculture Tom Vilsack.
"The report is a fleet of programs that can be used by policymakers for the future," said Romanski.
The recommendation to adopt a growth management program spurred the most debate within the committee. In the end, it passed with a vote of nine members in favor and eight opposed.
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Growth management would allow for new producers, expansion and growth in domestic and export markets, they said. It's purpose is to reduce milk price volatility.
Reducing volatility, especially in cheese, would allow the dairy industry to have steadier sales by being a more reliable supplier, said Ed Welch, president and CEO of AMPI.
The committee spent a lot of time discussing whether their recommendations should support milk production or farms. In the end, they chose to support farms, said Welch.
"This isn't a quota system," he said."...There's no reason we couldn't increase dairy sales by 10 percent under a growth management plan."
The committee also asked Vilsack to explore elimination of the Dairy Product Price Support Program and the Dairy Export Incentive Program.They believe the industry could get more bang for their buck if dollars for these programs were put into a modified Milk Income Loss Contract program.
MILC would continue to have a production cap, but instead of using the feed cost adjusted Boston Federal Milk Marketing Order Class I price as a trigger to start payments, the committee recommends using a margin trigger. The margin would be the difference between the all-milk price and feed costs.
MILC would also include an insurance program for milk production that's above the cap to provide protection to larger farms.
A margin trigger and an insurance program are similar to concepts in National Milk Producers Federation's dairy policy proposal, but the committee didn't specifically endorse NMPF's plan, said Novakovic, the committee's chairman.
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Another recommendation asks the secretary to appoint a committee to review Federal Milk Marketing Orders. Their review would include how end-product pricing affects milk price volatility.
Wills was the only committee member who voted against the recommendations.
"I think we came up with programs that I would say are more bandages to help farmers survive in markets that are a mess," he said.
He fears the recommendations take away price signals that tell farmers when to produce more or less milk, creating a need for more government intervention.
"It's just not going to be sustainable," he said.
Using MILC to help all producers is unconscionable because larger farms don't need the program's money, he said.
Other recommendations include phasing out ethanol subsidies, providing a legal way for dairy farmers to hire year-round, long-term immigrant labor and restricting the use of dairy descriptions on product labels.
Novakovic said many of their recommendations don't involve federal expenditures, so they shouldn't get hung up on budget debates.
