7 February 2007

2 minute read

North America

For nearly every commodity program except dairy, the administration's budget and recently released farm bill proposal increased funding and took bold steps to modernize commodity programs to make them more trade compliant and less market distorting. In contrast, the proposed spending on dairy simply maintains funding for the Dairy Price Support Program, the Milk Income Loss Contract program and the Dairy Export Incentive Program instead of including similar forward-looking reforms.

"This budget does not move dairy policy forward in any meaningful way," said Connie Tipton, IDFA president and CEO. "The administration has missed two opportunities to construct a better dairy safety net in its farm bill proposal released last week and in the budget released yesterday. As a result, dairy producers and processors will continue to be saddled with outdated and ineffective programs."

The administration's budget continues funding for the Dairy Price Support Program and a reduced MILC program, even though the USDA reported that these programs conflict in the marketplace and have negligible impact on farm revenue. In addition, USDA's Inspector General recently reported mishandling of government dairy products under the price support program, which disrupted commercial markets. The International Trade Commission found that the price support program stifles the development of innovative, higher-valued products, even though they are in demand.

"Over five decades of new technologies, transportation efficiencies and global trading prospects have greatly improved opportunities for today's dairy industry," said Tipton. "However, the government still thinks it needs to manage this modern industry's surplus inventory with the Dairy Price Support Program."

Source: Ag Professional