NMPF Officer Tells Congress: Dairy Safety Net Must be Improved in Next Farm Bill

Congress must revise the dairy safety net program first established in the 2014 Farm Bill to provide farmers with more reliable, effective risk management protection, said Ken Nobis, NMPF first vice chairman, at a Senate hearing last month on the future of the Farm Bill.

Nobis laid out the dairy industry’s concerns with the Margin Protection Program (MPP) at a Washington hearing held by the Senate Agriculture Committee, overseen by Chairman Pat Roberts (R-KS) and Ranking Member Debbie Stabenow (D-MI). Nobis told members of the committee that he believes the MPP is the right tool, but improvements must be made in the next Farm Bill to ensure it works effectively when farmers need it most. A more effective program will lead to increased participation in the MPP, and better overall risk management for the dairy sector.

In addition to his role on the NMPF Board of Directors, Nobis leads the Michigan Milk Producers Association, a milk marketing cooperative serving over 1,700 dairy farmers in Michigan, Indiana, Ohio and Wisconsin. He testified on behalf of his cooperative and NMPF. His full testimony can be found here.

In making the case for improving the MPP, Nobis highlighted proposed changes NMPF and its members have developed to improve it. The MPP is designed to help farmers insure against either low milk prices or high feed costs, Nobis said, but the determination of the feed price used in the margin calculation currently understates the true cost of purchasing dairy cattle feed. During the Farm Bill negotiation process in 2014, NMPF’s original proposal for the feed formula was cut by 10 percent to address budget concerns. Given that the government has profited from the program in years since, the fiscal concerns that led to the 10-percent cut were misplaced, explained Nobis.

“I guarantee, if Congress alters the MPP so that it more accurately reflects the actual costs of production for businesses like mine, participation in the program will increase,” Nobis testified. “Making the program more attractive for dairy farmers is vital to ensuring participation in the program, and the safety of America’s dairy industry.”

Nobis said it is also important to expand dairy farmers’ access to additional risk management tools like the Livestock Gross Margin for Dairy Cattle (LGM) program and similar programs that could be offered by USDA.

Nobis also expressed appreciation to Roberts and Stabenow, as leaders of the Agriculture Committee, for working with Senate Appropriations Committee leaders, including Sens. Thad Cochran and Pat Leahy, to include important changes to the MPP in the agriculture appropriations bill for fiscal year 2018.

The proposed improvements to the MPP would reduce premiums paid by dairy farmers for the first 5 million pounds of milk covered by the program, and change the U.S. Department of Agriculture’s calculation of the actual margin from a two-month average margin to monthly. NMPF believes these developments – which reflect recommendations adopted by the NMPF Board earlier this year –  will strengthen the program and help pave the way for additional necessary improvements in the upcoming farm bill.

Nobis’s testimony also touched on several other policy challenges also affecting U.S. dairy farmers, including immigration and labor shortages, the vitality of U.S. dairy trade, child nutrition and environmental sustainability.