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NMPF Strategic Planning Task Force Moves Forward on Proposals to Make Major Changes in U.S. Milk-Pricing System

October 5, 2009


NMPF Strategic Planning Task Force Moves Forward on Proposals to Make Major Changes in U.S. Milk-Pricing System

The National Milk Producers Federation’s Strategic Planning Task Force agreed last month to pursue a four-part approach to implementing sweeping changes as to how federal dairy policies protect producers and how farm-level milk prices are established.

The Task Force agreed at a September meeting in Chicago to take action on the further development of a multi-pronged approach that, if fully implemented, would assist in maintaining the on-going viability of the nation’s dairy farms and revise some of the more perplexing and less popular aspects of the national milk pricing system.

The four features of NMPF’s plan include: revamping the safety nets of the Dairy Product Price Support and Milk Income Loss Contract programs; creating a new dairy producer income insurance program; addressing the need to improve participation in the producer self-help program, Cooperatives Working Together, while allowing it to better address periodic imbalances in the milk supply; and reforming the Federal Milk Marketing Order program.

“These four tracks are the foundation for a new future direction for milk pricing in the U.S.,” said Jerry Kozak, President and CEO of NMPF. “We will move quickly, but responsibly, to fashion a dairy safety net and milk pricing system that work in tandem, leveraging the outcome of one program to the benefit of another, whenever possible. For example, we believe a producer income insurance program can be structured to achieve a measure of production control now advocated by a segment of our industry.”

The Task Force is pursuing how an income insurance program would be designed in such a way as to provide a better safety net to protect the net profit margins of farmers, which the current price support program and the MILC don’t always do during times of high production costs. In addition, the Task Force is exploring not only improving price discovery mechanisms and how changing the Federal Milk Marketing Order program would improve the pricing signals sent to farmers, but also the elimination of unpopular aspects of the current system, such as make allowances.

Rounding out its assignment from the NMPF Board of Directors, the Task Force is also seeking new ways to address the free-rider issue associated with participation in the Cooperatives Working Together (CWT) program and how the program itself can become even more effective in the future.