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We May Have a Farm Bill

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We May Have a Farm Bill
The House Committee on Agriculture advanced H.R. 1947, the Federal Agriculture Reform and Risk Management Act (FARRM) of 2013, on May 15, 2013 by a vote of 36-10. The House and Senate Agriculture Conference Committee filed a new Farm Bill late Monday and may be considered on the House floor as early as tomorrow.
   The International Dairy Foods Association and National Milk Producers Federation issued releases yesterday commending the bipartisan compromise.
   High Ground Dairy’s Eric Meyer summarized the specifics of the Dairy Title:

  • USDA will establish a Margin Protection Program for dairy producers no later than Sep 1, 2014.  The current MILC program will be in place until the new program is launched
  • Producers will have the option to select margin insurance coverage between $4 and $8/cwt of the milk feed price margin.
  • Premiums for the insurance will be tiered; with cheaper levels on the first 4 million pounds and more expensive above that level.  Pricing will be tiered; less expensive for the first 4 million pounds of milk and costlier on anything above that amount.
  • $4.00/cwt base protection will be included with no cost to producers other than a nominal administration fee ($100).
  • Producers will still have the option to participate in the Livestock Gross Margin (LGM) for Dairy program but would then be opting out of the new Margin Protection Program.
  • USDA must establish a "dairy production donation program" to address low margin periods.  After sub-$4.00 milk feed margins are recorded for 2 consecutive months, USDA will purchase dairy products from the market for a maximum of 3 consecutive months or when the margin returns above $4.00/cwt.
  • If US prices are 5% above world prices, USDA purchases would cease in order to protect export markets.
  • The legacy Dairy Product Price Support Program, Dairy Export Incentive Program and the Federal Milk Marketing Order Review Commission will cease to exist in the new legislation but the Dairy Forward Pricing Program, the Dairy Indemnity Program and Dairy Promotion and Research Board will remain in place.
       In a press release yesterday, the National Milk Producers Federation stated that “Over the past week, NMPF has worked with agriculture leaders in the House and Senate to develop a margin insurance program that will offer dairy farmers an effective safety net in the absence of the market stabilization component featured in our original program.”
       “That process is now complete. Despite its limitations, we believe the revised program will help address the volatility in farmers’ milk prices, as well as feed costs, and provide appropriate signals to help address supply and demand.”
       The dairy title “establishes a reasonable and responsible national risk management tool that will give farmers the opportunity to insure against catastrophic economic conditions, when milk prices drop, feed prices soar, or the combination” NMPF stated. “By limiting how much future milk production growth can be insured, the measure creates a disincentive to produce excess milk. The mechanism used is not what we would have preferred, but it will be better than just a stand-alone margin insurance program that lacks any means to disincentivize more milk production during periods of over-supply.”
       Furthermore, NMPF says the program “doesn’t discriminate against farms of differing sizes, or preferentially treat those in differing regions.
       “The revised bill also establishes a system for USDA to purchase consumer-packaged dairy products during low-margin periods, which will stimulate demand and help dairy farmers when they need it most, and only then.”
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