At the National Dairy Producers Conference this week organized by the National Milk Producers Federation, panelists discussed the expected negotiations of a 2013 Farm Bill and potential inclusion of the Dairy Security Act.
NMPF has been a supporter of the DSA, which eliminates the dairy product price support program and enacts a voluntary program that pays based on the margin between farm milk prices and the national average cost of feed.
The DSA also includes a market stabilization component, which requires producers to reduce the amount of milk they market or produce at the same level but take a milk check deduction, if margins reach "catastrophic levels."
Though the market stabilization component is only applicable to farmers participating in the voluntary margin program, it has become a point of contention for DSA opponents, such as the International Dairy Foods Association.
IDFA, which represents milk processors, fears the DSA would hurt milk exports and limit U.S. trade surpluses. They also note that domestic prices would be higher.
The group supported an amendment put forth during last year's farm bill debates by Rep. Bob Goodlatte, R-Va., and David Scott, D-Ga., which would have retained a similar dairy market stabilization component, but removed supply management. The amendment, however, was defeated by a vote of 29-17.
As discussion begins to heat up about the next round of farm bill talks, IDFA has continued to support the reintroduction of the Goodlatte-Scott amendment, while NMPF remains a staunch supporter of the complete DSA.
"Any proposal featuring margin insurance alone, such as the Goodlatte-Scott amendment, which severely limits the amount of milk that farmers can insure, will hamper the growth of their operations," said NMPF CEO Jerry Kozak. "Beyond that, it's a prescription for lower milk prices and higher government costs, which will scuttle the whole economic basis for margin insurance in the future."
Kozak added that the Goodlatte-Scott amendment would be "overly costly and politically unacceptable."
NMPF brought in specialists that reviewed the DSA for the conference discussion, including University of Minnesota economist Marin Bozic, who performed an analysis on the program.
Bozic said the DSA reduces extreme margin risk by paying farmers the most when they need it the most. He said that farmers will likely view the risk of not enrolling in the program as far greater than being part of it.
His analysis studied how farms of various sizes, under various economic conditions would react to the DSA. The analytical tool he used to review the program has been developed to help farmers determine how best to participate in the DSA, if it becomes law.
NMPF's Kozak said the findings in the study will help the group's case that the measure needs to be included in the next farm bill.
"We've spent the past three years working within the industry, and with members of Congress, developing a program that meets the needs of America's dairy farmers in the 21st century," Kozak said in a statement. "The evidence continues to demonstrate that the DSA is both good policy, and good politics."