The following comments were made in hearings on July 14 and 21 before the U.S. House of Representatives Subcommittee on Livestock, Dairy and Poultry.

“Though volatility in milk prices has long plagued our farmers, today we face a crisis like we’ve never seen before. Prices have fallen to record lows even as the cost of production continues to rise, pushing scores of farms out of business. In the past five years alone, Vermont has lost over 250 dairy farms, leaving us with only 1,046 today. Thirty-two of those farms have been shuttered since the start of this year alone. The depth of this crisis cannot be understated. Vermont’s farmers, government leaders and agricultural experts agree that our state’s dairy industry is on the brink of total collapse. With dairy representing 70 percent of Vermont’s agricultural economy, we could very well see a wholesale failure of our entire agricultural infrastructure, forcing out of business feed dealers, equipment suppliers, processing plants, farm creditors and many more.”

Peter Welch
Member of Congress, Representative, Vermont

“As we ponder things for the future it is important that after two decades of milk diversion programs, whole-herd buyouts, the milk assessment with refund, MILC, price supports and the industry-funded CWT program, we still find ourselves with $9 milk. Over time, the laws of supply and demand will always win as markets seek efficient pricing. This is true in free markets and controlled markets. Free markets adjust relatively quickly in finding price equilibrium. History shows that markets that have been controlled, by government for example, eventually self-destruct, generally because prices were set too high or low and oversupply or shortages accordingly ensue. And markets, such as dairy in the United States, that are regulated are not immune from this economic force.”

Donald DeJong
Northland Farms, Hartley, Texas

“There are many factors contributing to lower demand and the decline in farm-level milk prices. Drought in New Zealand and Australia contributed to record-high international prices for dairy products in 2007 and 2008, boosting U.S. dairy product exports. More normal weather has returned to both of those countries, leading to increased milk production globally. The global recession, the melamine scare in China, European Union export subsidies and increases in the value of the dollar have also lowered the demand for U.S. dairy products in world markets. At home, the economic crisis and, until recently, record-high retail dairy product prices have curtailed domestic demand for dairy products.”

James Miller
Undersecretary of Agriculture, Farm and Foreign Agricultural Services, Washington, D.C.

“The policies being considered by this subcommittee have a profound influence on the future of our dairy industry. If you choose to limit supply and guarantee high farm milk prices, our dairy industry will likely stop growing and slowly decline as domestic and world markets are captured by our competitors. On the other hand, if you choose to review and reform the current outdated dairy programs, you can provide the environment for a healthy and expanding dairy industry for both dairy farmers and processors.

“With the right policies and programs in place, the dairy industry will be able to retain and gain customers, both here and abroad, by providing traditional and innovative products that address nutritional needs, meet changing consumer lifestyles and plumb new purchasing power.”

Paul Kruse
CEO and President, Blue Bell Creameries L.P., on behalf of International Dairy Foods Association

“The dairy farmers and industry leaders of the upper Midwest have long voiced concerns about the discriminatory pricing policies inherent to the federal milk marketing order system. It is widely documented that the bias of the current system toward Class I (fluid) milk has a downward effect on the value of milk used for manufacturing. For regions like the upper Midwest, where 85 to 90 percent of the milk is used for manufactured dairy products, this discrimination is of great concern. In addition, as Class I utilization percentages nationwide continue to decline, the outdated Class I bias of the federal milk market order (FMMO) system must be revisited.”

Ed Welch
President and CEO, Associated Milk Producers, on behalf of Midwest Dairy Coalition

“This is a crisis that affects all of us, not just dairy farmers. While they feel the brunt of the sharp decline in dairy prices, our constituents from all walks of life are not immune to its effects.”

Joe Courtney
Member of Congress, Representative, Connecticut

“The dairy economic safety net is stretched flat on the ground. The Dairy Product Price Support Program (DPSP) is a long-standing program that is intended to benefit both producers when prices are declining and consumers when prices are rising. It also benefits all producers in the country equally without regard to herd size or farm location. Yet at its current product purchase price levels, the program is wholly inadequate considering the dramatic rise in input costs for farmers in the past three years. Prices have also fallen below support due to lack of flexibility in the program. USDA must be provided the authority to increase prices at least temporarily to cover the initial costs associated with processing to Commodity Credit Corporation (CCC) standards.”

Ray Souza
President, Western United Dairymen, Turlock, California

“Some have claimed that the problems we face are a result of a surge in unrestricted imports, particularly milk protein concentrates (MPCs) and casein products, two tariff loophole avenues that importers have made strong use of in recent years. [The National Milk Producers Federation] has long called for establishing tariff-rate quotas on MPC and casein, in keeping with our WTO rights and obligations.

“The truth is that we have not seen a significant surge in imported dairy products into the U.S. By the official import data, imports of caseins are actually down somewhat from the same period in 2008. Imports of other notable dairy products, such as butterfat (up 40 percent from a relatively small 2008 volume) and cheeses (down 7 percent) face limitations due to existing tariff-rate quotas. Stepping blindly back from active engagement in trade and from the global market would do more to harm the future prospects for our industry than to help them.”

Tom Wakefield
Board of Directors, National Milk Producers Federation, Bedford, Pennsylvania

“America has historically been the world’s source of high-quality, affordable, accessible food. If we are to maintain this position we must do the following things: We must create incentives for our farmers, large and small, through performance- based tax incentives to develop and implement the technologies to create energy on-farm. These include capturing methane gas that powers generators that create the electricity for the farm or nearby communities, converting excess methane to CNG to power farm machinery and transportation of milk, implementing wind and solar power options. Good old American ingenuity will create the most sustainable and competitive dairy industry in the world if we put our ag dollars to work in the right areas.

“We must overhaul our pricing and safety net systems to allow our industry to compete on the world stage.

“We must let market forces work. Less, not more, government involvement is needed to make the dairy industry the best in the world.”

Brad Bouma
President, Select Milk Producers, Inc., Plainview, Texas