We applaud Gov. Andrew Cuomos efforts to ensure the growth of yogurt manufacturing in New York, unfettered by unnecessary laws or regulations (Dairy farmers discuss meeting demand for yogurt, 8/16/2012). We are compelled to point out, however, that the farm bill as currently written would have imposed a national program to reduce milk production at the very same time that New York is attempting to grow its dairy industry and to increase milk supplies. Hard to believe, but true.
The dairy title in the farm bill includes a program called Dairy Market Stabilization, which is designed to periodically reduce milk production. It is projected to be in effect anywhere from 7 percent to more than 40 percent of the time. Under the program, dairy processors will be required to withhold from 2 percent to 8 percent of payments to their milk suppliers and give the money to the U.S. Department of Agriculture instead. Dairy farmers will be given the choice of either reducing production to minimize losses or to not be paid for a portion of their milk.
If this program was already the law of the land, New York dairy farmers who signed up for subsidized federal revenue insurance would have had their milk checks reduced anywhere from 2 percent to 6 percent starting in May of this year. New Yorks dairy farmers would be facing the choice of either having their milk checks reduced by about $5 million per month or to reduce milk production by more than 20 million pounds per month.
New Yorks dairy industry is poised for growth and job creation. Yet at the same time, Washington is working to stymie that growth. This is a good example of why our federal government should stay out of the business of managing milk supplies and should instead allow markets to work.
A bipartisan alternative has been offered by Reps. Bob Goodlatte (R-VA) and David Scott (D-GA) that will create a revenue insurance program for dairy farmers without also imposing a national program to manage milk supplies. It helps smaller farmers by offering them lower premium rates. Mark Stephenson, director of dairy policy analysis at the University of Wisconsin, Madison, has confirmed that this alternative will help dairy farmers turn a profit without also limiting New Yorks opportunity to grow its dairy industry.
The Goodlatte-Scott amendment is a bipartisan, compromise approach to dairy policy, and one that New Yorks congressional delegation is urged to support.
The writer is senior vice president of legislative affairs and economic policy, International Dairy Foods Association.