DairyLine Broadcast: Import Assessment in Farm Bill Could Hamper U.S. Dairy Growth

April 4, 2007

In the last Farm Bill, the big dairy battle was over the creation of Milk Income Loss Contract program, but Congress also included a small provision requiring imported dairy products to pay into the U.S. dairy producer-funded promotions program.

Farmers may be hearing about it, because the new assessment was never implemented since it ran afoul of global trade rules.

And, it's a good thing, too, because the environment today is very different than it was five years ago and the assessment no longer makes sense.

It could become a distraction in the next Farm Bill, however, unless we stay focused on things that really matter — namely, building a stronger dairy safety net and gaining greater market access abroad.

Today, the U.S. dairy industry is a major exporter of non-subsidized dairy products. In fact, U.S. dairy exports have nearly doubled in just five years.

For example, exports of U.S.-produced whey, lactose and other milk solids have exploded — growing from 814 million pounds in 2001 to over 1.4 billion pounds in 2006. In addition, we now export more dairy protein than we import.

The U.S. Dairy Export Council estimates that the global demand for dairy products will increase by more than 20% in the next few years. The United States is well-positioned to take advantage of this opportunity. That is, unless we enact laws, like the import assessment, that may cause other countries to react unfavorably.

The small amount of money generated by the assessment won't help farmers directly and could hurt our ability to capitalize on growing global demand. Our trading partners, particularly the European Union, run generic promotions programs, but they don't levy an assessment on imported products. Imposing a new fee on dairy imports could provoke them to assess our products and stifle access to their markets.

The better, long-term strategy would be to work together to build a stronger, more sustainable safety net and repeal the assessment, so we can focus our energies on growing sales instead of giving other countries reasons to shun our products.

DairyLine is heard on more than 90 radio stations, and Kunde provides listeners with a processor perspective on industry issues during his broadcasts twice a month.

Posted April 16, 2007