The milk price wars are just beginning

2011 is a huge year politically for agriculture. The federal Farm Bill will be passed in 2012, and every conceivable interest group is jockeying to get a better deal than the last time around.

It’s an especially important year for dairy.  It’s widely considered necessary to reform the way farmers are paid for their milk, following the 2009 crisis when dairy hemorrhaged billions of dollars in income and equity.

But if you think there’s broad agreement on how to reform the system, read this article published last week in AgWeek.

Two titans of the dairy industry, the International Dairy Foods Association (big processors/milk buyers) and the National Milk Producers Federation (big coops/milk sellers) basically lock antlers on how to change the system.

The big debate is over “supply management” – in other words, making sure farmers don’t produce too much milk and drive down the price.  The Big Coops (NMPF) want it; the Big Manufacturers (IDFA) don’t.

IDFA goes on the offensive, with a new study it funded, which concludes traditional dairy farming areas in the upper Midwest and Northeast would actually lose millions under supply management.  Check this back and forth in the article, with Connie Tipton representing Big Manufacturers and Jerry Kozak representing Big Coops:

“This report shows that (National Milk’s) growth management plan will take money out of dairy farmers’ pockets when they need it most,” Tipton said in a release accompanying the report. “Margin insurance and other proposals where processors and producers agree should be part of that plan. Programs to limit milk supply or impose penalties on producers should not even be on the table in our industry discussion.”

Kozak said in a statement the proposal “has been carefully designed to offer protection for their hard-earned equity.” In his statement, Kozak added, “Dairy farmers in every state saw their collective milk income drop more than ten billion dollars in 2009, which doesn’t even include billions more in lost equity. This catastrophe was the result of current dairy policy that doesn’t offer farmers of any size, in any state, the protections they need against catastrophic financial losses.

Doesn’t sound like they’re too close to compromise, does it?

On Vermont Public Radio, Congressman Peter Welch said he believed Congress would take up dairy reform before other aspects of the Farm Bill. “There’s some hope here,” Welch told VPR:

That we want to take up the dairy issue this year and the Farm Bill is going to be done in 2012. So they’re separating this out, seeing it as a significant but separate challenge for us.

Vermont and New York have solid influences on the Agriculture committees in Washington.  Welch, fellow Democrat Bill Owens, and Republican Chris Gibson bring bipartisan representation in the House.  And Democrats Patrick Leahy and Kirsten Gillibrand offer senior and emerging power in the Senate.

But they’re far outnumbered by lawmakers from the Midwest, South, and Southwest/California, regions that have significantly different issues from ours.

The past is littered with attempts at reform: the Northeast Dairy Compact, the current Milk Income Loss Contract (MILC) payments.  Finding a new system that garners broad support, and actually works, is a tall order.


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8 Comments on “The milk price wars are just beginning”

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  1. Pete Klein says:

    Milk price wars?
    When are we going to have gas and heating oil price wars?

  2. PNElba says:

    Let supply and demand set the price.

  3. knuckleheadedliberal says:

    PNElba, supply and demand, funny!

    When consumers demand to know where their food is grown/raised, or want to know if their milk comes from cows with Bst, or want to buy food that isn’t from genetically modified plants or animals, the corporate farmers, giant agribusinesses and the politicians beholden to them say that the food supply is safe and consumers don’t deserve to know any of those things.
    So much for a free market.

    So since the market is demonstrably not free we should be doing everything possible to protect small producers and family farms.

  4. Bret4207 says:

    I am not a supporter of subsidies of any kind for anyone. What I expect will come out of this is more subsidies, less income for the farmers and more control of the market by the big agribusiness companies. I really think at this point the system is too corrupted to fix. Another case of atrificial price supports and limits ruining the little guy.

  5. Pete Klein says:

    Want to help the farmers? Drink more milk. Drink real milk.
    All milk and other food products should be labeled with the state or country of origin.

  6. PNElba says:

    KHL, I’m trying to be a good capitalist.

  7. Mervel says:

    We have good milk producers up here and we have a unique environment to produce milk that makes great cheese.

    The issue is to increase demand for milk which has fallen off and the more we know about calcium the more milk has a place along with good cheese.

    It is so complex now I am not sure what the real impact of simply getting rid of subsidies would be?

  8. Bret4207 says:

    Capitalism and supply and demand require a natural set of circumstances. We don’t have that in agriculture where subsidies and price limits have been in play for over 100 years. And milk isn’t like grain, you can’t put in a bin and wait for better prices. The more Gov’t sticks it’s fingers in this mess the worse it gets. –

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