Policy Markets Processing

Producers Call House Vote 'Fiscally Reckless'

US/EU - Heated exchanges over the issue of dairy market amendments have taken place this week as senators and commissioners began to finalise agriculture bills, both in the US and Europe.

21 June 2013

2 minute read

Recent global price volatility over the past year and rising costs have sparked producer organisation into life, striving to create secure platforms from which to expand businesses and tap into emerging global markets.

The importance of government market regulation has been emphasised on both sides of the Atlantic. In Europe, producers are wishing for an Intervention Purchasing System to provide security producers by placing a floor in the market.

The cost of such a measure has been proven to be neutral to the EU budget and can be rigged to allow flexibility in support.

This is the basis for the European Dairy Association (EDA) backing intervention purchasing in favour of supply management which they say puts farmers at a disadvantage as global milk consumption rises, said Joop Kleibeuker, EDA Secretary-General.

“We feel that supporting and strengthening the safety net will equip the EU with a cost effective instrument for addressing price volatility whilst still giving all stakeholders confidence to expand and take advantage of the growing global demand for high quality dairy products,” stated Mr Kleibeuker.

A similar discourse progressed in the United States this week culminating in the decision to reject the Dairy Security Act in favour of the Dairy Freedom Act (Goodlatte-Scott).

National Milk Producers Federation President and CEO, Jerry Kozak described the vote as ‘fiscally reckless’ and likely to bring negative repercussions to the dairy sector.

The lack of margin insurance and market stabilisation measures are core reasons for producer opposition to the Dairy Freedom Act. No cost control mechanism means government and taxpayer exposure to market risk, explained the NMPF.

This comes despite backing from the Agriculture Committee which declared two official approvals of the Dairy Security Act. Mr Kozak admitted that challenges were expected in the much more urban/suburban dominated House but is still hopeful of some form of compromise in the future.

He added that the Goodlatte-Scott amendment could jeopardise the Farm Bill as whole.

Furthermore, he said the decision undoes four years of hard work aimed at developing a cost-effective support strategy for America’s dairy farmers.

“Congress needs to side with farmers and their families, not corporate processors, in the debate about the future of farm policy,” concluded Mr Kozak.