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Dairy Subcommittee Digs Deep on Risk Management Tools

Sep 14, 2011

The U.S. House Agriculture Subcommittee on Livestock, Dairy and Poultry held an audit hearing last Thursday to review current dairy policies and programs that fall under the 2008 Farm Bill. Two U.S. Department of Agriculture officials offered testimony covering the Federal Milk Marketing Orders (FMMO), the Milk Income Loss Contract (MILC) program and other price support programs, while fielding a variety of questions, many on risk management options for dairy producers. It was the tenth hearing in a series on farm policy.

Demonstrating a high level of interest in dairy policy, several members of the House Agriculture Committee who are not subcommittee members also attended the hearing and requested permission to participate. The subcommittee focused on the shortcomings of the current support programs and asked why risk management programs for producers were so limited.

Representative David Scott (D-GA) specifically asked about options to improve the Livestock Gross Margin Insurance program for dairy and the benefits of farm savings accounts if available to producers.

According to Dana Coale, USDA deputy administrator for dairy programs, a limited number of producers have taken advantage of voluntary forward contracting to lock into a stable price. Dairy cooperatives can offer their producers unlimited forward contracts for all milk, but because of the FMMO price regulations, forward contracting with proprietary plants must be authorized by Congress.

The 2008 Farm Bill included a temporary forward contracting program for Class II, III and IV milk, which expires September 30, 2012. Coale said that more than 300 dairy producers have participated in forward contracting, and that 200 producers currently have active forward contracts. Read Coale's testimony here.

Coale also commented on the proposals submitted last year by the Dairy Industry Advisory Committee. Over half of the 23 recommendations require new or increased funding or new legislative authority, she said, and USDA continues to review and analyze the remaining suggestions.

Juan Garcia, acting deputy for farm programs for USDA's Farm Service Agency, also testified. Read his testimony here.

For more information, contact Ruth Saunders, IDFA vice president of policy and legislative affairs, at rsaunders@idfa.org or Chelsee Woodey, IDFA director of legislative affairs, at cwoodey@idfa.org.

 

 
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