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Farm Bill on Hold Until after Elections

October 5, 2012

Members of the House and Senate left Washington last month without completing work on the 2012 Farm Bill, leaving unresolved the fate of a new safety net for dairy farmers. Although Congress is expected to return to Capitol Hill after the Nov. 6th elections to tackle a number of old business items, NMPF continues to raise concerns about the ramifications of Congress’s inaction on farm policy.

“Dairy is among the first sectors in agriculture to feel the impact of Congress’s inability to reach accord on most anything, including a new Farm Bill,” said Jerry Kozak, President and CEO of NMPF. “Had the House leadership brought the bipartisan farm bill to the floor, I believe we could have passed a bill containing the Dairy Security Act. Instead, we are in uncharted waters, and one of our life rafts has disappeared.”

Given that feed prices continue to drive margins below sustainable levels for many producers, NMPF and its members must continue to push Congress to pass the Dairy Security Act, which instead of focusing simply on milk prices, takes into account the margin between farm-level milk prices and feed costs, he said.

“We strongly encourage our dairy farmer members to visit with their members of Congress during the pre-election recess to determine a path forward for the 2012 Farm Bill soon after the elections,” Kozak said. “We need a full, five-year bill to be passed in the House, sent to a conference committee, and approved before the end of the year.”

Recent news stories have speculated on what might happen to farm prices – and ultimately, retail prices and dairy demand – if a new farm bill isn’t passed by the end of the year, and the dairy price support program reverts back to 75% of parity levels, as specified in permanent farm law. Kozak said in his recent monthly column that the threat of marketplace disruptions may be what it takes for Congress to feel the urgency to act on a new bill.

Meanwhile, a new analysis issued last month by the Congressional Research Service (CRS) points out the advantages of the margin insurance and market stabilization-based approach to reforming dairy policy.

The CRS report was released Sept. 18th in order to help members of Congress and their staffs better understand the details of current dairy policy, and potential changes to those programs. More importantly, the CRS report provides an impartial view of the specific programs contained in the Dairy Security Act of the pending Farm Bill.

Kozak said that the CRS report “should greatly clarify and simplify the decision-making process on Capitol Hill. It dispels the scare-mongering distortions offered by opponents of the Dairy Security Act, highlights the benefits of a new, voluntary approach to providing a safety net to farmers, and reinforces the need to include the Dairy Security Act in a new farm bill.”

In reviewing other empirical studies of the provisions of the Dairy Security Act, CRS highlighted several major improvements compared to current programs:

  • The combination of the margin insurance and market stabilization programs “appears to substantially mitigate the dairy operating margin volatility.”
  • The DSA “will provide a stronger safety net in extremely low margin events.”
  • An analysis by agricultural economist Mark Stephenson found that net milk exports actually expand under the DSA.