The International Dairy Foods Association on Thursday sent a letter to Secretary of Agriculture Tom Vilsack urging him to avoid or delay the impact of a 1949 law that could drastically raise milk prices, while other dairy groups say the return to 1949 policy could be a blessing.
The law may soon return to effect if Congress does not act on a five-year Farm Bill before it expires Dec. 31. Though groups agree that 1949 may not reflect current market conditions or international trade in dairy products, the groups disagree on its overall effect.
1949 policy would 'impose long-term damage'
In its letter, IDFA described the authority the Secretary has to avoid affecting milk markets, which would give Congress additional time to finish a new farm bill in the new year. IDFA maintains that because the USDA does not have regulations on the books to implement the old law, the agency will need to develop new ones using a process that could take several weeks or months.
"Although a sudden and unpredictable increase in milk prices may result in a short-term financial windfall to dairy producers, the immediate implementation of the 1949 Act would dramatically increase government spending, would force consumers to pay significantly more for dairy products and would impose long-term damage to the dairy industry," IDFA stated in the letter.
IDFA supports policies that would give dairy farmers access to USDA-subsidized insurance, similar to what is available to grain farmers and other agriculture sectors. IDFA opposes any new policies that would require the government to artificially raise milk prices—like implementation of the 1949 Act and those in the Dairy Market Stabilization Program included in the proposed farm bill.
As an alternative, IDFA supports the bipartisan measure offered by Reps. Bob Goodlatte, R-Va., and David Scott, D-Ga., that would provide subsidized revenue protection for dairy farmers without government management of milk prices.
NMPF sees policy change as catalyst
IDFA opposition to the DMSP has long been a sticking point for the National Milk Producers Federation, which supports the measure. Conversely, NMPF says in lieu of a new farm bill, 1949 policy may serve as a short-term catalyst for continued progress on a five-year bill.
"Along with Secretary Vilsack, our organization wants a new farm bill, and not an extension of current programs that don't really serve dairy farmers. A one-year extension only gives new life to programs that we are seeking to replace with the new Dairy Security Act," NMPF President and CEO Jerry Kozak said in an early December newsletter.
"We do not support doing anything that relieves the pressure on Congress to pass the new bill. A much higher milk price support level in the short-term is the threat of dramatic change that is needed to force Congress's hand," Kozak added. "Otherwise, there is no impetus for completing work on the farm bill, in the same way that the pressure of a fiscal cliff deadline is what Congress imposed on itself last year in order to reach a long-term budget deficit deal. Washington needs deadlines to prompt action, and it has two big ones at the end of this month."
Click here to read the full IDFA letter.