We need supply management, group says

By Susan Harlow, editor

Eastern DairyBusiness

Is supply management an idea whose time has come?
Many of the 250 producers and representatives of dairy organizations meeting Friday, March 20, in Burlington, Vt., think so. Agreeing on a precise plan was more difficult.
The summit was organized by Dairy Farmers Working Together, a group of Vermont producers formed several years ago to work on dairy policy. They plan to meet again in four to six weeks.
Meanwhile, they’re urging all producers to voice their opinions on pricing plans and, they hope, come together behind one to bring to Congress.
Rob Vandenheuvel, general manager  of California’s Milk Producers Council (MPC), outlined the Growth Management Plan that his group has developed. Milk needed to meet demand would be calculated. Then producers would each have an annual allowable growth; they would pay a market access fee per hundredweight for any production over that limit.  The pooled fees would be paid to producers who stayed within their limits.
New producers would pay the market access fee on their first year’s production, which would establish their baseline.
 “In dairy, you can make milk and, as long as someone picks it up, you get your share of the pooled resources,” Vandenheuvel  said. “Every incentive is to grow, grow, grow. So we have to change the incentives.”
Holstein Association USA is ready to lead an effort to put a growth management plan in place, said CEO John Myer. He said CWT isn’t doing enough to drive down supply – it’s time for producers to speak with a united voice on a program that can smooth out price volatility on a national level. “But it must be producer-driven,” he said.
Sybrand vander Dussen, president of the Milk Producers Council, said the current pricing system gives producers no incentive to produce less milk. “Because of the ‘magic’ of pooling, when someone produces more milk, the loss is shared by everyone,”  vander Dussen said. A mandatory plan that reduced the milk supply by just 1 to 2% would be effective, he said.
Jim Stewart, an Idaho producer, laid out a plan for producers to enter long-term contracts with processors,  with movers to adjust prices as input costs change. That would take the shocks out of the market, Stewart said.
The base program initiated by California cooperatives, which assesses farmers who produce more than their allocation, has had a “dramatic impact” on production in his state, said Ray Souza, head of Western United Dairymen, by phone from California. He urged people at the meeting to learn about milk pricing and look closely at the growth management plan, but to finally agree on a plan.
Also speaking were Calvin Covington, CEO of Southeast Milk dairy cooperative based in Florida; Bob Naerebout, executive director of Idaho Dairymen’s Association; and  Roger Allbee, Vermont Secretary of Agriculture.
National Milk Producers Federation (NMPF) was invited but did not send a representative to the meeting. CEO Jerry Kozak told the group that NMPF is focusing on its CWT program and doesn’t want to waste energy on policy efforts that will not work.
For more information on the group’s efforts, go to www.dfwt.org website or email Amanda St. Pierre at astpierre@berkshirecowpower.com