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Dairy Processors Urge Congress to Update Dairy Policy to Ensure Health of Industry; IDFA Releases 2007 Farm Bill Proposals

Apr 24, 2007

NEWS RELEASE

For Immediate Release

Media Contact: Marti Pupillo202-220-3535

Dairy Processors Urge Congress to Update Dairy Policy to Ensure Health of Industry; IDFA Releases 2007 Farm Bill Proposals

(Washington, D.C. — April 24, 2007) Executives of five major dairy companies and the head of the International Dairy Foods Association (IDFA) testified today before congressional agriculture committees on the need to change current dairy policies, and announced the release of IDFA's 2007 Farm Bill proposals in a report titled, "Ensuring a Healthy U.S. Dairy Industry: A Blueprint for the 2007 Farm Bill." In tandem with its report, IDFA unveiled a new website, www.healthydairyindustry.org, dedicated to providing information on the growing consensus to improve dairy policies.

The dairy executives stressed in their testimony today that now is the time for dairy policy reform. The five leaders testifying before the U.S. House Agriculture Subcommittee on Dairy, Poultry and Livestock were Mike Reidy (IDFA chairman), Leprino Foods Company, Denver, Colo.; William Ahlem, Hilmar Cheese Company, Hilmar, Calif.; Warren Erickson, Anderson Erickson Dairy Company, Des Moines, Iowa; John Hitchell, The Kroger Company, Cincinnati, Ohio; and Doug Wells, Wells' Dairy, Inc., Le Mars, Iowa.

Connie Tipton, IDFA president and CEO, testified before the U.S. Senate Agriculture, Nutrition and Forestry Committee.

"The 2007 Farm Bill presents an unprecedented opportunity to reposition dairy policies to take advantage of growing global and domestic demand for U.S. dairy products," she told the committee.

Tipton emphasized that now is the time to transition away from the Dairy Price Support Program and Milk Income Loss Contract (MILC) program and to build a better safety net for the nation's dairy farmers.

"Dairy processors support putting in place an effective safety net for dairy farmers, and it is important to us that we have programs that give dairy producers and processors the opportunity to succeed," she said.

Tipton described IDFA's policy proposals as outlined in IDFA's Farm Bill Blueprint as sound alternatives to the current ineffective price support program and regionally divisive MILC program. The alternatives include a new direct payment for dairy producers that would not be tied to price or current production, a revenue insurance program and permanent access to forward contracting.

She emphasized that dairy processors are committed to working with farmers and Congress on these new policies to ensure a healthy dairy industry into the future.

Addressing the House agriculture committee, IDFA Chairman Reidy focused on the need to improve the Federal Milk Marketing Order system.

"There is a tremendous strain on the aging Federal Order system and mounting tension between regions of the country, between manufacturers of different dairy products, and among producers and cooperatives," Reidy said.

He recommended the establishment of a Blue Ribbon Commission of industry stakeholders to tackle the problems with the nation's milk pricing system.

Erickson of Anderson Erickson Dairy agreed.

"I believe Congress can rise above the regionalism and divisiveness, and use a commission to recommend ways to simplify the Federal Milk Marketing Order system and ensure that it still serves the interests of the industry and consumers," Erickson said.

During the House hearing, the witnesses described how dairy is at a disadvantage compared to other agricultural commodities, because standard financial risk management tools are lacking. They recommended making forward contracting a permanent option for all milk buyers and sellers of Class II, III and IV dairy products.

Wells of Wells' Dairy told the House committee, "We participated with local farmers in the U.S. Department of Agriculture's dairy forward contracting pilot program until it expired in 2004. The program was successful in helping farmers go into business in western Iowa. We need to get this basic risk management tool back."

In addition, the processors voiced their concerns that current Federal Order regulations and dairy policies interrupt market signals.

"We should be focused on expanding markets for our valuable dairy sector, not distorting it with out-of-date and ineffective government purchase programs that discourage innovation and prolong low prices," said Ahlem of Hilmar Cheese. "The more seamless and more market-driven the relationship between producers and dairy processors, the more prosperous the entire dairy sector will be."

Reminding the committee that all dairy programs, including the Federal Order system, were created to ensure that consumers have an adequate supply of fresh fluid milk, Hitchell from Kroger said, "Consumers are the engine driving this train. If we make this system too complicated or costly to meet consumer demands, then they may go elsewhere."

On global dairy issues, both Reidy and Tipton urged committee members to ensure that dairy policies are trade compliant. Eliminating the Dairy Price Support Program and repealing the dairy import assessment would help to secure long-term trade prospects and avoid the risk of trade retaliation against U.S. dairy products, they concluded.

The IDFA Farm Bill Blueprint report and other information on the growing consensus to improve dairy policies, as well as background on the industry and current federal programs, are available at www.healthydairyindustry.org.

# # #

The International Dairy Foods Association (IDFA), Washington, DC, represents the nation's dairy manufacturing and marketing industries and their suppliers, with a membership of 530 companies representing a $90-billion a year industry. IDFA is composed of three constituent organizations: the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA). IDFA's 220 dairy processing members run more than 600 plant operations, and range from large multi-national organizations to single-plant companies. Together they represent more than 85% of the milk, cultured products, cheese and frozen desserts produced and marketed in the United States. IDFA can be found online at www.idfa.org

 
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