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Published September 30, 2013, 10:01 AM

Don’t believe criticism of farm bill’s dairy title

Washington is bracing for another bruising battle this fall when the House and Senate meet in conference to hash out the details of the 2013 farm bill.

By: Angie and Mark Qual, Agweek

Washington is bracing for another bruising battle this fall when the House and Senate meet in conference to hash out the details of the 2013 farm bill.

In preparation, the processors’ lobbying group has been throwing around scary-sounding numbers about the dairy provisions in the Senate bill. Numbers like retail milk prices spiking as much as 35 cents per gallon.

Don’t believe them. The dairy title in the Senate bill will not harm consumers. But the processor-supported House bill will.

Respected economists at the University of Missouri looked at what both bills would have done had they been in effect in the past four years. They found that the Senate plan would have increased farm milk prices an average of just one-half cent per gallon over 48 months. That’s not enough to affect consumer prices. In fact, the total impact on the average American family works out to less than 25 cents per year.

The House bill, on the other hand, creates a new, open-ended dairy subsidy that would have increased taxpayer costs by $1 billion in the same time period.

Also, by encouraging the same boom-and-bust cycles that have devastated dairy farmers in the past, it’s the House provisions — rather than the Senate bill — that will hit consumers with damaging milk price spikes. Unfortunately, while consumers rarely get the full benefit when farm milk prices fall, they usually feel something close to the full impact when they rise.

And remember this: For every dollar consumers spend on milk and other dairy products, farmers receive only 30 cents. Others in the marketing chain receive the rest. So, if there is a concern over retail milk prices, it is the markup charged by processors and retailers, not the price received by farmers.

Dairy farming is big business in North Dakota but not as big as it used to be. Milk production here dropped by 50 percent between 2000 and 2011. Still, we produce more milk per capita than 33 other states. And total annual receipts from dairy farming in North Dakota are more than $60 million.

If North Dakota is to remain a major milk-producing state, dairy farmers are going to need some help. The Senate farm bill makes the federal dairy program relevant again. It repeals most of the current program and offers federal support only when profit margins shrink to specified levels.

To prevent more serious problems, a standby plan could temporarily reduce how much milk each farmer can produce. That will keep a lid on program costs. Together, the two programs will moderate the boom-and-bust cycle of the recent past.

Congress must pass a farm bill that includes the Senate’s dairy title. It provides an effective dairy safety net at low cost, while the House bill does not. Sen. John Hoeven, R-N.D., Sen. Heidi Heitkamp, D-N.D., and Rep. Kevin Cramer, R-N.D., should all support the Senate plan.

Editor’s note: The Quals are members of the Minnesota-based Associated Milk Producers Inc. and are active in the National Milk Producers Federation in Washington.

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