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Letters to the Editor: The supply management debate

Joe Borgerding and Dan Stoltzfus Published on 19 March 2012

Dear Editor,

The “unrealistic expectation” of making supply management work in this country, sadly, is very divisive because most states east of the Rockies are producing below processor capacity and would be hurt by production cutbacks, unlike California, which is flooded with milk most of the time.

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The use of the Dairy Security Act as a starting point in upcoming Farm Bill discussions will only serve to divide regions and distract from the real solution that would help all producers, regardless of farm size or location, and that is market reform and price discovery.

The Dairy Security Act, by design, is a reactive program that will only engage months after market conditions have been identified and will disengage after conditions have changed back to a predetermined level. Europe, which is expected to discard its supply management restrictions, and Oceania, that already has strong export experience, would be all too happy to fill in any void that may be expected if we impose supply reduction triggers, effectively making the U.S. the balancer of the world milk supply.

Only the threat of free markets – making all global producers share the pain of oversupply – can keep expansion in check. Free markets, by nature, are more predictive of events that may influence future supply and demand. Market analysts study a multitude of factors that would present a far more accurate picture of where prices should be headed, as opposed to a government agency reacting to NASS reports based on thinly traded CME prices.

How can anyone impose a one-size-fits-all margin insurance and supply management plan in a country that does not restrict imports, has diverse sizes and styles of farms and base the plan’s trigger mechanism on pricing derived from markets influenced by cold storage reports that are not audited and by products that are produced to earn “make allowances,” which do not reflect market demand?

We should not wait until the Farm Bill floor debate to reject this idea. Rather we should use this time instead to rally support for more sensible market reforms.

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Joe Borgerding
Dairy producer
Belgrade, Minnesota

Dear Editor,

I was present at one of the meetings where the idea for DPAC, or the Dairy Policy Action Coalition, was first born. I know firsthand how it was formed, and I have seen the work, personal sacrifice and progress by the people involved in this grassroots effort for the past two years.

DPAC has been described as just an Eastern organization, but the board now includes dairy producers from nine states in the East and Upper Midwest. Producers in these regions are most cautious about the supply management included in Rep. Collin Peterson’s Dairy Security Act and National Milk’s Foundation for the Future.

If it were in effect today, we would have to cut production, even though our areas are short on milk. This means we would lose market share at an even faster rate.

That’s one reason why DPAC – from day one – focused on the reporting and pricing issues to clean up the system before even considering a national supply management program. We do not want to see a centralized, nationalized program that covers up the underlying problems by giving government more control of us.

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We need government to do what itwas originally designed to do.

As in 1 Peter 2:14: “Or unto governors, as unto them that are sent by him for the punishment of evildoers, and for the praise of them that do well.”

If we want to get anywhere on future dairy policy and have God’s blessing, we must work in a spirit of peace and not tear each other down, but work together. PD

Dan Z. Stoltzfus
Dairy producer
Honey Brook, Pennsylvania

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