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Farm Bill Negotiations Continue with New Look at MILC-Insurance Proposal

Jan 08, 2014

The negotiators for the Farm Bill have been particularly active over the past several days, and it now appears that nearly all issues have been successfully resolved. No one in the dairy industry, however, will be surprised to hear that dairy policy is one of the few remaining issues not yet on that list.

Although Representative Collin Peterson (D-MN), one of the four principal negotiators, has continued his efforts to include a new program that will periodically impose government limits on milk supplies, the Speaker of the House John Boehner (R-OH) recently informed the conferees that he will not allow a Farm Bill that includes such a policy to pass the House of Representatives. The conferees had targeted the second week of January to finish their negotiations, but chances are now good that a conference report will not be filed until later this month.

With the so-called stabilization program seemingly off the table, news reports are saying that the conferees are seriously considering a compromise proposal that would provide dairy farmers with the option of participating in either the existing Milk Income Loss Contract (MILC) program or the new margin insurance program that was included in both the Senate dairy title and the Goodlatte-Scott amendment that is now the House dairy title. This proposal was revealed several weeks ago by two economics professors, John Newton and Cam Thraen, of Ohio State University’s department of Agricultural, Environmental and Development Economics.

In The Dairy Safety Net Debate of 2013 Part II, Questions and Answers, the professors say combining a modified MILC program with a revised margin insurance program would hold down taxpayer costs and provide a better way forward for dairy than proposals offered by the House and the Senate.

“A combination of MILC and margin insurance offers more choices to accommodate the assortment of U.S. dairy farm operations,” the authors said. “By limiting both the amount of income support and adverse gaming incentives, our independent analysis reveals MILC-Insurance could cost significantly less than the currently debated margin insurance programs.”

In Part I of the series, the authors said the Dairy Market Stabilization Program (DMSP), approved by the Senate but opposed by the House, would cause implementation inequities, create regional disparities and hurt efficient, well-managed farms the most. They also concluded that producer response to the DMSP would arguably limit its effectiveness and potentially prolong the duration of low margins.

Read the reports:

For more information, contact Jerry Slominski, IDFA senior vice president of legislative affairs and economic policy, at jslominski@idfa.org.

 
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