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The Only Choice

August 1, 2012

Out of the different options for what to do now with farm policy, doing nothing should not be one of those. At least, it’s not an option that benefits taxpayers, farmers, or even our federal legislators on Capitol Hill.

After plowing enormous effort this year into creating a new and better farm program, first in the Senate, then in the House, the path forward for lawmakers is now very murky. Congress made major progress earlier this summer when the House Agriculture Committee approved a bill in July that closely resembles the version of the Farm Bill that passed the full Senate in June.

But the process hit a huge pothole after that, with the House leadership deciding not to bring the Ag Committee’s bill to a vote. Instead, they initially tried to gin up support for a one-year extension of the current farm bill. But after NMPF and other farm groups objected, the House then passed a disaster aid package on Aug. 2nd that does essentially no good for most dairy farmers. This is a completely different approach than that taken by the Senate, and with Congress now in recess for more than a month, farm policy is stuck in limbo.

What’s worse, between the political parties’ two conventions this summer, and pressures to focus on campaigning rather than governing this fall, it’s unclear when the Farm Bill will get the attention to bring it to fruition. We need to make certain that this politically-driven inertia, while not unusual just months before a major election, doesn’t derail the work that’s been accomplished so far.

The new bill, both in the Senate and House, is smart policy and smart politics: both versions save the government money compared to the status quo. Passing a final bill will be a boon to taxpayers, and represents another opportunity to chip away at the federal deficit at a time when budget and economic issues are the big concerns for our nation. And it’s hard to believe that, especially in a year when the Corn Belt is suffering the worst drought in half a century, Congress will ignore farm country issues, and votes, mere months before a pivotal election.

Let me also briefly address why the Dairy Security Act provisions in both bills are also the only choice for farm policy going forward. The Senate has already approved a new safety net for dairy farmers that provides them margin insurance – both a basic program, as well as a supplemental level – that offers better protection than that offered by the current MILC program, and the price support program. Those who want this insurance offering – and it’s an opportunity, not an obligation, to enroll in the program – will be asked to temporarily trim their milk output when conditions are poor as part of the market stabilization element of the measure.

The Senate, both at the Committee level, and in the full body, saw this program as a reasonable approach to improving risk management for dairy farmers, while reducing taxpayer costs – and, critically, reducing the potential risk to taxpayers. The market stabilization element reduces the cost of the program by helping prevent prolonged periods of poor margins that will generate significant USDA insurance payments to those enrolled in it.

In the House, however, a failed attempt was made in the Agriculture Committee by Reps. Bob Goodlatte and David Scott to strip out the market stabilization program. This approach would have gutted the insurance protection of dairy title by putting more risk and more cost onto the backs of farmers. It would have increased their out of pocket costs, reduced the amount of milk they could insure, and perhaps most appallingly, it would have zeroed out any ability to indemnify new milk production during the lifespan of the farm bill.

For those who profess to be concerned about the future growth of the U.S. dairy sector, this last provision alone should be a deal-breaker, so let me repeat it: any farmer who would bring on new milk production during the five-year span of the bill would not be able to insure any of that growth. This to me is really “supply management.” Just as the MILC program doesn’t offer protection to the majority of the current milk supply because of its tight production cap, this watered-down margin insurance program would not offer insurance coverage to a single pound of any expanded milk output beyond a farm’s original base. It’s a de facto quota system that would severely hamper the ability of our industry to be the healthy, growing, future-oriented business that we all say we desire.

This is why any future attempt to fight this battle again needs to be defeated, and why when Congress does turn its focus to the Farm Bill, they need to preserve the version already approved by the House Agriculture Committee. Choosing to do nothing is not leadership, nor a choice that makes sense.