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House Ag Ranking Member Releases Discussion Draft on Dairy Reform

Jul 13, 2011

IDFA Says Proposal Includes New Taxes and Policies that Will Negatively Impact Job Growth

U.S. House Agriculture Committee Ranking Member Collin Peterson (D-MN) released today a discussion draft for dairy reform based on the National Milk Producers Federation's proposal, "Foundation for the Future."

IDFA President and CEO Connie Tipton said in a statement also released today, "We are disappointed that Rep. Collin Peterson today circulated draft legislation that clearly would take the dairy industry in the wrong direction. Instead of encouraging job growth and reducing regulation on an already overregulated industry, the discussion draft would impose new and intrusive government mandates into dairy markets at the cost of a growing dairy export business and the jobs that have come with it."

The discussion draft is divided into three titles. Title I outlines a dairy producer margin- protection program that would provide a government-funded catastrophic-loss safety net for all dairy producers.

Title II establishes a new government program called the Dairy Market Stabilization Program. This program would require the U.S. Department of Agriculture to calculate a dairy margin per hundredweight of farm milk, defined as the difference between the farm milk price and a representative feed cost. When this dairy margin falls below $6.00, a government-mandated, supply-control program to limit milk production would be activated.

"The Dairy Market Stabilization Program is designed to limit U.S. milk production by collecting taxes from dairy farmers when farm milk prices are low," Tipton said. "Our estimates show that nearly $400 million would have been assessed against dairy farmers had this program been in effect in 2009. According to Rep. Peterson's bill, half of this new dairy farmer assessment will be retained by the federal government to offset general spending or reduce the deficit."

Title III covers Federal Milk Marketing Order reform. Currently, milk is priced based on a four-class system depending on the end product. The explanation that accompanies the draft bill suggests that milk would be grouped into a two-class system. Class I would remain as fluid or bottled milk and Class II would include all other processed and manufactured dairy products subdivided into four sections depending on the product made.

"The discussion draft suggests changes to the Federal Milk Marketing Order system that actually make an overly complicated system even more complex," Tipton said. "While the explanatory text claims that the new system reduces the classes of milk from four to two -- in reality it effectively retains the current four classes of milk."

Because this is a discussion draft and does not contain a H.R. bill number, other members of Congress, constituents and stakeholders have the opportunity to view the language in bill form before it is officially introduced to the House of Representatives.

IDFA is actively working to inform and educate members of Congress and their staffs on ways to reform dairy policy that will give dairy farmers the tools to manage risk without adding more government regulation.

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