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Dairy Safety Net Should not be Tied to Supply Mgt

20 March 2012

US - Connie Tipton, president and CEO of the International Dairy Foods Association has submitted a statement for the record to the Senate Agriculture Committee, urging the committee to reject supply management proposals.

“Better risk management tools, including margin or other insurance products, for dairy farmers is the correct path forward for our industry,” Ms Tipton wrote, “not direct government intrusion into dairy markets and increased regulatory burdens on food manufacturing businesses.”

Ms Tipton went on to say that "instead of more and better risk management tools, however, some stakeholders believe that the government should intervene in markets to control price volatility. Such programmes, often called supply management, have been tried and have failed in dairy and other sectors of US agriculture.

Similar policies have been rejected and are being eliminated around the world because they simply don’t work. Although policies that involve the government in commercial transactions between buyers and sellers are generally being discarded, a supply management programme for dairy was proposed in the Dairy Security Act, H.R. 3062, introduced by Rep. Collin Peterson (D-MN) and according to many reports was included in the farm bill proposal sent to the Joint Committee on Deficit Reduction a few months ago.

Ms Tipton encouraged the committee to adopt the solution on which the dairy industry agrees.

“There is a clear middle ground in this debate,” Ms Tipton wrote. “Dairy food companies have endorsed the margin insurance programme, provided that it is not attached to a supply management programme. Such a programme could be offered, even within the limited dairy baseline, by charging a small fee for a subsidised base coverage.

"We have supported making the USDA pilot programme, called Livestock Gross Margin – Dairy, permanent and increasing funding beyond the current $20 million per year cap. Dairy savings accounts would also help dairy farmers manage their businesses through the volatility of world dairy prices. There are many dairy producers, as well as at least one of the largest dairy coops in the country, who support these alternative approaches.”

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