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If You Can’t Stand the Heat…

August 1, 2011

The last two weeks of July have been brutally hot across much of the nation, including the nation’s capital. It’s been hot in Washington not just because of the weather, but also from the friction of the high-stakes negotiations between Congress and the White House, Democrats and Republicans, special interests and NGOs…all of whom are fixated on efforts to rein in spending, reduce the deficit, and prevent a default on the national debt.

This same process has also affected what has happened recently with dairy policy. By now, most are aware that the ideas of NMPF’s Foundation for the Future dairy policy package, which we’ve developed during the past two years, have been written into legislative language and introduced as a discussion draft by Congressman Collin Peterson of Minnesota. This is a huge, and welcome, next step in our ongoing efforts to overhauling dairy policy.

But it also signifies that the temperature on this issue is going to rise, along with expectations about what comes next. This draft means that our program has gone from conceptual to real. It’s in black and white for anyone to download and review. We no longer are the exclusive owners of the process – legislators are. The draft also reflects the real world, in that it contains compromises necessary to keep the process going.

In order to have Foundation for the Future achieve a budget savings, compared to our current dairy programs, it adjusts the basic level of margin insurance protection to 75% of a farm’s milk production. The legislative draft also earmarks half of the money that may be collected from farmers under the Market Stabilization Program to help defray the overall cost of the program to the government.

Unquestionably, both developments are a direct reflection of the current effort to reduce the federal budget deficit. Although dairy policy is currently in the spotlight as a result of the producer community recognizing the need to lead in this important fight, all farm programs, as well as other government expenditures, are facing a new outlook calling for smaller budget outlays. This is why writing new dairy policy is a microcosm of the larger summertime reality show consisting of the many negotiating sessions between President Obama and congressional leaders.

Every decision being considered right now portends less money for some program. Ag payments are always on the short list of where to cut, but everyone knows that many other, much larger government expenditures will have to be curtailed to achieve any meaningful savings. To the extent that any new revenue will be raised, this also means less money for some individual or business entity. The cold truth that someone’s ox will be gored is why the heat is on right now, as is the fact that just sitting back and doing nothing is not an option.

The same dynamic applies to dairy policy. Even if we wanted the status quo to prevail, and wanted to keep the Dairy Product Price Support Program, and/or the MILC program, a blithe assumption that nothing needs to change isn’t realistic. In fact, the MILC payment rate and production base will significantly shrink in September 2012, just prior to the end of the program, precisely because Congress, in writing the current farm bill, had to tinker with the program’s parameters so it would fit within the 2007 Farm Bill budget.

We know full well that current ag programs are going to be cut, and we can either take the heat now for pushing for something different in the future – while influencing that process and directing its outcome – or we can just have things done to us. The latter course is not smart, and it’s not leadership. We also know that the current draft language is the first step in a long legislative process, and we will continue to work for an end product that most closely mirrors the parameters of our original program.

I wrote in this space two months ago that the federal budget situation is going to make changing any federal policy, including dairy programs, a real challenge. Upon reflection, perhaps that assertion was backwards. The budget situation now is so bad, that preventing any change is unrealistic. Making tough decisions today to provide better outcomes tomorrow is what we expect our elected officials to do, and it’s also what we in the dairy sector have to do. The heat in the kitchen right now is necessary to cook up a better policy menu for tomorrow.