Feed and production costs balloon, but milk prices stay low because of the way they are calculated. Its an irksome trend for dairy farmers in the north country and statewide that continues squeezing their profits.
But its a problem that Kirsten E. Gillibrand, D-N.Y., has taken head on as a member of the U.S. Senate Agriculture Committee by introducing new dairy reforms she hopes will be included in the five-year federal farm bill that the agriculture industry hopes Congress will approve by the fall. The Dairy Income Fairness Act and Dairy Pricing Reform Act, to be introduced when the Senate returns to session next week, aim to restructure the milk pricing system proposed in the farm bill giving dairy farmers a well-deserved boost. Mrs. Gillibrand spoke to reporters about the legislation Tuesday during a conference call.
The law would help small dairy farms with 200 or fewer cattle adjust to the launch of a new margin-insurance program in the proposed farm bill, which is set to replace the current Milk Income Loss Contract program. Established when the farm bill was first proposed in Congress last year, the voluntary program is designed to help dairy farmers combat low milk prices and high feed costs. It would reimburse farmers when the difference between their costs and milk prices exceeds a certain threshold.
The act proposed by Mrs. Gillibrand would alter the supply management part of that program, which affects farmers who have margin insurance by restricting the amount of milk they can produce each year. The act would exempt dairy farms with 200 or fewer cattle from participating in that supply program, which penalizes farmers who produce more milk than planned during the year as a means to control the national milk supply. The proposal also would guarantee a minimum profit margin of $6.50 between the cost of national milk prices and feed costs for farms with 200 or fewer cattle. About 89 percent of farms statewide fall under that category. And to delay the onset of the margin insurance program, the act would extend the MILC program for nine months after the farm bill is approved.
Small producers shouldnt have to abide by the rules of production, Mrs. Gillibrand said. We want to give them more flexibility and help them maintain dairy production. And when you control the supply of dairy production, the likelihood of outsourcing increases, and we dont want to buy milk from outside the country. We want to keep the dairy production we have and allow it to grow naturally.
Mrs. Gillibrand also helped establish the Pricing Reform Act, a bipartisan bill that would require the U.S. Department of Agriculture to start a public hearing process as a catalyst to overhaul the federal milk pricing system. It would force the USDA to study various methods for determining milk prices, such as competitive-pay pricing or shifting from a four-class to two-class system.
Mrs. Gillibrand contended that New Yorks dairy industry continues to suffer from what she describes as a severely flawed milk pricing system. Statistics show New York dairy farms have lost about 65,000 cows from 2002 to 2012, according to the USDA. The north country lost 18,200 cows over that period, as the cattle count dropped from 138,600 to 120,400.
The north country has lost a lot of dairies because of (poor) market protection, and people are wondering why farmers continue to be paid such a low amount for milk, she said. We need to come up with a new pricing system that accurately reflects todays prices of feed and production.
Mrs. Gillibrand is also spearheading the following reforms:
■ The Democracy for Dairy Producers Act (included in the 2012 farm bill that passed the Senate last year but not the House of Representatives): would hold dairy cooperatives accountable by requiring them to provide notices to members when they engage in bloc voting. It would also require them to make proposed milk-marketing-order reforms public by distributing it to members and posting it on a website.
■ Cold Storage Inventory Reporting: Cold storage facilities are not required to report dairy products to the USDA Natural Agricultural Statistics Service and only do so voluntarily. This has created a volatile environment for dairy trading on cheeses in the Chicago Mercantile Exchange. In February 2009, for example, the USDA reported that cold storage inventories were inflated by about 9 percent.