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Annie Cheatham
Sunday, August 14, 2011

Dairy rules would hurt local farmers

Guest Commentary

Last month, the board of the National Farmers Union passed a resolution in support of dairy farmers and in opposition to a congressional proposal to change existing dairy pricing regulations.

Rep. Collin Peterson, D-Minn., the ranking member of the House Committee on Agriculture, has released a proposal to resolve a number of critical issues facing dairy farmers. While NFU and the New England Farmers Union agree that Peterson’s proposal was offered in an attempt to help dairy farmers, we find it wholly inadequate.

The biggest reason why Peterson’s proposal is bad for New England dairy farmers is that it is not truly size-neutral. Instead, it rewards the largest dairies and the largest processors.

The current Milk Income Loss Contract program caps payments made to farmers. Peterson’s proposed margin protection program does not include a similar cap, which means the largest dairies stand to reap the most financial benefit.

In addition, Peterson’s plan includes a supply-management provision with a floating base, meaning farmers can choose to use as their base either their last three months’ production or their production from the same month of the previous year. As production grows, the base continually adjusts to reflect the new higher volume.

Smaller dairies like we have in New England would have no choice but to add production volume to remain competitive, which would encourage consolidation of dairy operations.

Finally, Peterson would fund his proposed margin protection program through a producer assessment, but the assessment would only be collected when margins fall below a certain trigger price. Farmers would pay into the program only in times when prices are already depressed, when they are most economically vulnerable.

The current program is working for New England dairy farmers. It is a fiscally responsible way to manage risk, paying out only when margins drop below a trigger price.

If the federal government would create a fully functioning supply-management program, the Milk Income Loss Contract program would rarely, if ever, pay out, saving taxpayers valuable dollars.

Dairy is an important agricultural product for New England, and we have lost too many dairy farms in the last decade. The New England Farmers Union and the National Farmers Union are working hard to protect the safety net for New England dairy farmers. For more information, visit our Web site: www.newenglandfarmersunion.org.

Annie Cheatham is president of the New England Farmers Union.