Dairy Processors Deeply Disappointed With Administration's Farm Bill Proposal

US - The International Dairy Foods Association (IDFA) expressed deep disappointment with the Bush administration's 2007 Farm Bill proposal that was unveiled today. The proposal continues to maintain the Dairy Price Support Program, and embraces the Milk Income Loss Contract (MILC) program, a poorly conceived, regionally divisive payment program linked to price and production.
calendar icon 1 February 2007
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"The administration's proposal keeps dairy policies stuck in the 1930s and '40s," said Chip Kunde, IDFA senior vice president. "While boldly suggesting a new, healthier direction for other commodities, the administration's plan fails to do so for dairy."

Perhaps most disappointing, according to Kunde, is the administration's failure to address current flaws in the Dairy Price Support Program. Calling it a glaring omission, Kunde explained that this program constitutes 30% of the most trade-distorting expenditures, known as amber box allowances, that the United States reports under global trading rules.

"The administration is calling for tough changes to nearly every other commodity to move them out of the trade-distorting amber box, but has neglected to do so for dairy," Kunde said. "As a result, USDA is essentially leaving reform of our dairy programs to the world trade negotiators."

The administration proposes shifting MILC payments away from current production, which is partially consistent with IDFA's call for programs de- coupled from price and production; however, the proposal does not go far enough to help ensure a healthy dairy industry for the future or provide an adequate dairy farmer safety net.

"The administration lacks the courage of its own convictions as it relates to dairy," said Kunde.

IDFA has called for direct payments to farmers that would be linked with farm sustainability improvements, and for more risk management tools through revenue insurance programs and use of forward contracting. The U.S. Department of Agriculture (USDA) has consistently embraced risk management tools for dairy, such as forward contracting.

"USDA is firmly on the record supporting permanent forward contracting authority for all dairy buyers and sellers, but it is not included in today's proposal," Kunde said. "We look forward to working with USDA to re-establish this important risk management program in the next farm bill."

Equally surprising, the administration is calling for an import tax on dairy products. The proposal seems to allow for implementation of a 2002 Farm Bill provision that would force dairy farmers in Alaska and Hawaii to pay an assessment for the generic promotion program. This reverses a long-standing practice of exempting these producers, who receive no benefit from the program. It also will result in importers of certain dairy products having to pay an assessment into the domestic promotion program. IDFA has called for the elimination of the 2002 import assessment provision.

"IDFA is also disappointed that the administration is proposing no steps to fix the broken Federal Milk Marketing Order system. While USDA has made attempts at triage, more immediate attention and fundamental surgery is needed to make the program operate more efficiently," Kunde said. "We urge USDA to join us in streamlining the decision-making process and create a commission to bring stakeholders and experts together to evaluate and recommend more effective reforms."

Noting that the time is ripe for change, IDFA has called on congressional leaders to update current U.S. dairy policy to fit the times and meet the demands of global markets. IDFA looks forward to working with Congress as it begins writing the new farm bill, and soon will announce its recommended "blueprint" for the 2007 Farm Bill.

Recent comments of IDFA's President and CEO Connie Tipton regarding the 2007 Farm Bill are posted at http://www.idfa.org .

The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation's dairy manufacturing and marketing industries and their suppliers, with a membership of 530 companies representing a $90-billion a year industry. IDFA is composed of three constituent organizations: the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA). IDFA's 220 dairy processing members run more than 600 plant operations, and range from large multi- national organizations to single-plant companies. Together they represent more than 85% of the milk, cultured products, cheese and frozen desserts produced and marketed in the United States. IDFA can be found online at http://www.idfa.org.

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