House Agriculture Committee Ranking Member Collin Peterson, D-Minn., and Representative Mike Simpson, R-Idaho, have introduced The Dairy Security Act of 2011. The legislation consists of three main components, a Dairy Producer Margin Protection Program, a Dairy Market Stabilization Program and reforms to the Federal Milk Marketing Order system. It will replace current, outdated dairy programs with new risk management tools addressing the realities of today's dairy industry.
"If we have another crisis like we had in 2009, when milk prices dropped and input costs skyrocketed, I fear we could lose half our dairies," Peterson said. "The dairy safety net did not work then and it won't work if similar events occur now."
Peterson noted that feedback from all sectors of the diverse dairy industry has been instrumental in drafting this bill. Changes to the previously released discussion draft include: participation in the stabilization program is optional; the basic margin program payment rate is increased to 80%; funds collected when the stabilization program is in effect would be remitted to the Commodity Credit Corporation for the stabilization program board; it provides for reforms to the Federal Milk Marketing Order; the Dairy Export Incentive Program is repealed; and annual administrative fees will be required for all basic margin protection program participants.
The National Milk Producers Federation is giving its full support for the act. The bill is modeled on the dairy reforms developed and promoted by NMPF, and would revamp and improve the farm-level safety net for dairy producers. Jerry Kozak, President and CEO of NMPF, says introduction of the Dairy Security Act is a huge step towards ending an ineffective program, and replacing it with something much better.
Dairy Farmers of America says the introduction of the Dairy Security Act of 2011 is a significant development, calling it a critical step forward for the dairy industry. According to DFA, with the bipartisan bill now before Congress, it is vitally important that the momentum for dairy policy reform does not waver.
The Congressional Budget Office has evaluated the legislative draft and finds it will reduce federal spending by $167 million during the next five years, and $131 million during the next ten.