Dairy policy changes sluggish

WASHINGTON — Efforts to rush dairy policy changes through Congress this year, before the 2012 rewrite of farm programs, are not dead but have yet to show much promise.

Groups pushing for quick reform received good news in the past few weeks when the chairman of the House Agriculture Committee, Rep. Frank Lucas, R-Okla., said he was open to the idea of making changes this year. But he conditioned that on dairy farmer and processor groups reaching agreement on major points, which appears less likely in recent weeks.

A spokeswoman for Mr. Lucas stressed this week that he wants the groups to be in agreement before heading into the issues.

Dairy farm groups are pushing for changes that will help farmers' bottom lines, either by boosting prices or compensating for high feed costs or both.

But the biggest group representing farmers, the National Milk Producers Federation, and the big lobbying group for processors, the International Dairy Foods Association, have sharply disagreed on a key proposal.

The NMPF has proposed a government program to discourage rapid expansions on farms at certain times in the milk price cycle, which economists say can contribute to tumbling milk prices. The federation also proposes a government margin insurance program, to pay farmers when high feed costs or low milk prices, or both, undercut profits.

The IDFA has said part of the program amounts to a government supply management system, an idea processors have generally opposed as interfering with markets.

Each group has produced competing studies claiming how the NMPF proposal would affect farmers — the NMPF saying it will boost farm income, and the IDFA saying it will actually hurt farmers.

Not all farm groups are pushing the committee to act so fast. The National Farmers Union, which tends to lean Democratic, urged quick action at its annual convention this week but did not explicitly say it wants dairy policy rewritten separate from the 2012 farm bill.

The NFU also called on Congress to maintain the Milk Income Loss Contract program, a subsidy paid to farmers when milk prices fall below a federal target, and to continue the dairy price support program which buys excess dairy products. But the NMPF has called for changes, including discontinuing the MILC program in order to pay for the margin insurance program.

"These are critical safety net mechanisms for all dairy farmers. The proposed, untested insurance program should not be used as a replacement for a fully-funded MILC and enhanced DPPSP, both of which are mandatory programs," said NFU President Roger Johnson in a news release from the group's convention.

Another sticking point could be the cost to the government, which lawmakers do not yet know. The Congressional Budget Office will make an estimate which will go a long way toward determining which proposals have any chance, said Robert Gray, executive director of the Council of Northeast Dairy Cooperatives.