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USDA Supports Forward Contracting and Acknowledges Need to Streamline Federal Order Decisions Secretary of Agriculture Mike Johanns testified in front of the U.S. House Agriculture Committee last week to discuss the administration's 2007 Farm Bill proposal. He and committee members discussed issues important to the dairy industry, including the slow, burdensome Federal Milk Marketing Order (FMMO) regulatory process and the need to reinstitute the Dairy Forward Contracting Program. During his testimony, Johanns voiced support for addressing the cumbersome nature of the FMMO decision-making process. He also agreed that forward contracting was a valuable risk management tool that should be available to everyone in the dairy industry.During his questioning, former Chairman of the House Agriculture Committee and current ranking member Rep. Bob Goodlatte (R-VA) specifically expressed the frustration that dairy producers and processors are having over the federal order decision-making process. Goodlatte argued that the length of the decision-making process placed an onerous burden on the industry, and he said speeding up the process is an issue that needs to be addressed in the 2007 Farm Bill. Rep. Goodlatte (R-VA) also asked the U.S. Department of Agriculture (USDA) about the importance of reinstituting forward contracting in the 2007 Farm Bill. Johanns confirmed the administration's support for the forward contracting program. USDA Chief Economist Keith Collins added that the dairy forward contracting program does not undermine any component of the federal order system. "We applaud Rep. Goodlatte's leadership on these vital dairy issues and commend his commitment to work with the Agriculture Committee to include them in the Farm Bill," said Chip Kunde, IDFA senior vice president. The administration's proposal to significantly reduce support under the Milk Income Loss Contract (MILC) program and the need to consider a new approach to a dairy safety net also came up in questioning from Rep. Tim Holden (D-PA), Kirsten Gillibrand (D-NY) and Steve Kagen (D-WI) during the hearing. Rep. Leonard Boswell (D-IA), the new chairman of the Livestock, Dairy and Poultry Subcommittee, called for USDA to consider revenue insurance for dairy farmers, saying it was the "right direction for dairy." Johanns testified that USDA is considering a new revenue insurance program for dairy producers. Boswell asked USDA to share the details of the program and reiterated his support. IDFA supports a better safety net for dairy producers that would include more risk management tools like revenue insurance, and expressed its support for the revenue insurance program currently being considered in a letter to USDA's Risk Management Agency. "We commend Rep. Boswell for expressing his interest in revenue insurance for farmers," Kunde said. "IDFA supports this type of revenue protection program as a critical component of a safety net for dairy farmers." IDFA has expressed disappointment with the administration's 2007 Farm Bill proposal for missing the opportunity to reform the outdated and conflicting dairy price support and MILC programs. IDFA will announce a recommended "blueprint" for the 2007 Farm Bill soon, calling on congressional leaders to update dairy policies to provide a better safety net. That safety net would include direct payment for farmers that is de-linked from production and price and better access to risk management tools to meet the demands of global markets. For more information, contact Kunde at 202-220-3500.
Posted February 20, 2007
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