U.S. Sen. Bernie Sanders (Vermont) introduced S. 3531, the “Dairy Price Stabilization Act of 2010.” Joining Sanders in co-sponsoring the legislation were Senators Patty Murray (Washington) and Patrick Leahy (Vermont).
S. 3531 is virtually identical to the legislation introduced last month in the U.S. House of Representatives by Reps. Jim Costa (California), Peter Welch (Vermont), Rick Larsen (Washington), Joe Courtney (Connecticut), and John Larson (Connecticut). That bill, H.R. 5288, is also titled the “Dairy Price Stabilization Act of 2010.”
“The introduction of this legislation in the U.S. Senate is a huge step forward for the dairymen and organizations who have been working on the ‘Dairy Price Stabilization Program’ for more than a year,” said Rob Vandenheuvel, general manager of California’s Milk Producers Council. “After almost two years of devastating losses by our nation’s dairy farmers, the industry greatly appreciates the leadership of these three Senators in introducing S. 3531 and bringing this much-needed industry dialogue to the halls of the U.S. Senate.
“S. 3531 and H.R. 5288 are specifically designed to send economic signals directly to individual dairy farmers, which will better equip our nation’s dairies in balancing our milk production with the market demand for our dairy products,” added Vandenheuvel. “This rational concept is something that has been painfully missing in our industry and has resulted in chronic imbalances of supply and demand, and a devastating boom-bust nature to our milk price that has cost our nation’s dairy farmers decades-worth of hard earned equity over the course of the past two years.”
Earlier this month, the National Milk Producers Federation, representing many of our nation’s cooperatives, outlined their “Foundation for the Future,” a package of policy proposals intended to provide the U.S. dairy industry with long-term stability. Included in that package is a “Dairy Market Stabilization Program,” which is a proposal aimed at giving the industry a tool to better align supply and demand.
“As we can see with S. 3531, H.R. 5288 and National Milk Producers Federation’s ‘Foundation for the Future,’ there is broad support amongst dairy farmers that long-term stability in the industry starts with equipping ourselves with a tool to better align milk production with demand. The ‘Dairy Price Stabilization Act of 2010,’ which is based on economic analysis and industry discussions conducted over the past three years, will play a key role in shaping that important piece of our industry strategy for reducing milk price volatility and giving our dairy farmers hopes for long-term sustainability.
“Having virtually identical legislation introduced in both the House and the Senate, with co-sponsors from coast-to-coast, is a clear indication that our industry is closer than ever to taking the steps necessary to ensure our nation’s dairy farmers more stability and sustainability for the generations to come,” concluded Vandenheuvel.
In short, S. 3531 would do the following:
1. Each quarter, USDA will announce – based on a set of “triggers” clearly outlined in the legislation – two numbers: (1) an allowable year-over-year growth rate and (2) a market access fee.
2. The allowable year-over-year growth rate is the amount that any farmer is allowed to increase production from the same quarter of the previous year without being considered an “expansion” (under the bill, this will normally be 3% year-over-year growth in milk production).
3. The “market access fee” is a fee that dairies wishing to expand beyond the allowable year-over-year growth rate would pay for the first year after an expansion. The fees outlined in the legislation are identical to the fees outlined in H.R. 5288.
4. The market access fees paid by expanding dairies each quarter would be distributed as a dividend among those farmers who kept their growth within the allowable growth rate, serving as an incentive for those dairies to manage their production.
5. Three years after this program is established, there will be a dairy farmer referendum vote on whether to continue it. This ensures that dairymen – not the government – decide whether or not the program is working.
6. The program will be overseen by a 15-member industry board. This board will include 12 dairy farmers, elected by their fellow farmers, and 3 representatives from the consumer and processor sectors. Only in cases where the board can find broad support (a two-thirds majority) will they be able to make adjustments to the parameters laid out in the legislation.
While both S. 3531 and H.R. 5288 are based on economic analysis and modeling conducted over the past three years, additional modeling is currently in the works. Dr. Mark Stephenson (currently at Cornell University, but soon to be at University of Wisconsin-Madison) and Dr. Chuck Nicholson (California State Polytechnic University in San Luis Obispo) have been contracted by a broad coalition of dairy farmer groups and cooperatives to conduct additional economic modeling on this proposal, as well as other major proposals (like pieces of the National Milk Producers Federation’s “Foundation for the Future”). Their modeling and analysis is expected to be available next month. The sponsors of both S. 3531 and H.R. 5288 are anxiously awaiting those results to determine what, if any, adjustments need to be made to make these proposals as effective as possible.
More details on S. 3531 and H.R. 5288 are available at www.stabledairies.com. Milk Producers Council will also continue to examine these bills in upcoming issues of its weekly newsletter.