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0309 PD: Nationwide groups call on Congress for dairy crisis help

Karen Lee Published on 06 February 2009

In response to declining milk prices, dairy cooperatives and organizations are seeking congressional support for relief in a federal economic stimulus package. Letters have also been sent to the U.S. Department of Agriculture to reignite some of its economic support programs.

An East Coast delegation, representing the northeast cooperatives and state departments of agriculture, traveled to Washington, D.C., in early January touting a proposal to create jobs and support dairy businesses.

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“The purpose was to inform members of the Northeast congressional delegation of the status of the dairy industry and the turn in milk prices, and to suggest remedies and initiatives,” says Leon Graves with Dairy Marketing Services, the milk marketing limited liability company for some of the Northeast’s largest cooperatives and representing 8,000 producers.

They met with members or key staff from 15 offices, all of whom took a great deal of interest in what they had to say as they were unaware of the current situation in the dairy industry, Graves reports. “We were successful in alerting of the plight in the Northeast. We made them aware of the 2009 forecast and shared the impact it will have on farmers.”

In addition, initiatives were shared and President Obama’s economic stimulus package was suggested as a good opportunity for finding relief.

“We are sensitive to congressional spending,” Graves says, “but if it’s $800 billion to a trillion that’s to be spent, then the dairy industry in the Northeast is worthy of consideration.”

The highest priorities were proposals designed to offer short-term milk price relief in 2009 and to increase resources for existing federal USDA loan programs. Cooperative representatives specifically requested adjustments to Class I prices and the MILC trigger price, fully reflecting the feed cost index.

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These changes would improve market prices and enhance MILC payments for 2009.

A federal loan guarantee was requested for Cooperatives Working Together (CWT) to allow the program to remove a large number of herds, reducing milk supplies in the short-term.

Another proposal was to increase credit availability to farms from the Farm Service Agency to allow producers to gain access to lines of credit and loans when necessary. Additional funding for the Environmental Quality Incentive Program (EQIP) would provide tax credits and low-interest loans for dairy modernization and renewable energy technologies to improve efficiencies and “green jobs” in rural areas.

Several other proposals were offered for consideration as well. Resources were requested to support facility and infrastructure improvement in the Northeast, both at the farm and for processors. Suggestions were also designed to support risk management programs, including improvements to the new LGM for Dairy insurance program. Other longer-term proposals were offered, including support for programs designed to increase dairy product demand both in domestic and international marketplaces.

According to Graves, these proposals did not become a part of the economic stimulus package passed by the House on Jan. 28. However, at the time of this writing, he says they will continue to work with the Northeast delegation in the Senate to have all or a portion included in that package.

Graves mentions that although these efforts began in the Northeast, the group also met with leaders from the National Milk Producers Federation (NMPF) and plans to talk with other cooperatives from across the country to build nationwide support in Congress.

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In California, Western United Dairymen (WUD) recognized the need to replenish some of the dried-up demand and wrote to the USDA, urging the secretary to make full use of an important element of the federal government’s economic safety net – the Dairy Export Incentive Program (DEIP). It provides bonuses for limited quantities of cheese, nonfat dry milk (NFDM) and butterfat to assist in their export. DEIP is fully WTO-legal. It has been authorized and funded by Congress and signed into law by the president.

WUD CEO Michael Marsh wrote that, “Issuing DEIP allocations for cheese, butter, and nonfat dry milk will increase dairy farmer income at a time when it is unquestionably needed, decrease CCC purchases of dairy products, reduce the cost of MILC to the federal treasury, and help build and sustain foreign markets for U.S. dairy products.”

Next, WUD turned its focus on Congress. On Jan. 16, the board adopted a proposal for the California congressional delegation to take immediate action for emergency realignment of U.S. milk supply and demand.

The proposal calls for additional funds for the herd retirement program already in place through the CWT program. CWT funds could be leveraged by either a loan guarantee or matching funds offered by the federal government. WUD estimated that the additional funds could be used for the immediate removal of approximately 300,000 milk cows.

WUD President Ray Souza says, “We hope other national dairy groups will support this effort to bring immediate, near-term relief to dairy producers who are faced with an economic crisis that is more severe than we have ever seen. California dairy families need action by Congress in weeks, not years.”

This trade organization is working with members of the Western States Dairy Producers Trade Association (WSDPTA) to build a larger industry consensus on the CWT program funding. WSDPTA membership includes WUD, California Dairy Campaign, Dairy Producers of New Mexico, Dairy Producers of Utah, Idaho Dairymen’s Association, Milk Producers Council, Oregon Dairy Farmers Association and Washington State Dairy Federation.

Also calling on Congress is the National Milk Producers Federation (NMPF). With a new leadership team in the White House, and the U.S. Department of Agriculture, NMPF is urging that they turn immediate attention to helping dairy farmers weather the crushing collapse in dairy prices.

Contrary to rumors that NMPF has been seeking some sort of government dairy cow buyout in the pending stimulus package, NMPF President and CEO Jerry Kozak says that NMPF remains focused on utilizing its six-year-old Cooperatives Working Together program as the primary means to manage the dairy supply. He adds that CWT is in the process of obtaining a line of credit with a major agricultural lender to help it augment its efforts in 2009, making a government loan guarantee unnecessary.

NMPF has already taken a series of steps to focus the attention of policymakers on the dairy crisis. These include:

• Offering the USDA a list of actions it can take immediately to help producer prices, such as making it easier for cheese makers to sell products to the USDA under the dairy product price support program, using more dairy foods in government feeding programs, and resurrecting the dormant DEIP to boost overseas sales of U.S. products. That letter was sent Jan. 8 to outgoing U.S. Agriculture Secretary Ed Schafer. Kozak says newly approved U.S. Agriculture Secretary Tom Vilsack should consider the letter’s recommendations, especially since the proposals are ones that USDA should be able to implement quickly.

• Urging the USDA to ensure the maximum flexibility for dairy producers to choose the months they wish to receive their Milk Income Loss Contract payments. NMPF believed the USDA was sending confusing, arbitrary and overly restrictive information to farmers about the parameters of choosing direct payments, and in a letter earlier in January, urged the department to reconsider its approach. The USDA has subsequently sent clarifying instructions to its state and county offices to ensure that farmers are afforded more flexibility in signing up for the MILC program. Kozak says that the MILC program will begin issuing payments to producers on their February milk production, and thus getting the program operating correctly is of critical importance.

• Preventing the agency from selling nonfat dry milk powder at prices lower than specified in the dairy product price support program. NMPF initiated legal action in December to stop the USDA from using a third-party auction service to sell the powder. The USDA has dropped those plans, ending the need for further litigation by NMPF.

“The new Administration has some unenviable challenges awaiting it, as does Secretary Vilsack at the Department of Agriculture. We are prepared to roll up our sleeves and get to work immediately with the new team at the USDA, and with members of the House and Senate, on any and all possible programs that will help see farmers through this emergency,” Kozak says. PD

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