Three well-known dairy economists, Scott Brown with the Food and Agricultural Policy Research Institute; Cal-Poly Dairy Economist Charles Nicholson; and Mark Stephenson, from the University of Wisconsin at Madison, presented their economic analysis at the World Dairy Expo, as well as to the USDA Dairy Industry Advisory Committee last month.

According to their analysis, three proposals getting the most attention, the Dairy Price Stabilization Plan, also known as the Costa-Sanders bill; the Marginal Milk Pricing program proposed by Agri-Mark and National Milk Producers Federation’s Foundation for the Future program, would all reduce market volatility to some extent, Natzke said. Their analysis also compares potential impacts on milk prices and milk price variability, the amount of milk produced, federal government dairy program expenditures and dairy exports.

Other ideas not receiving as much attention so far would be amending current tax laws to allow dairy farmers to establish farm savings accounts, with no limits of the dollars deferred from year to year; and establishment of lines of credit that would allow cooperatives and others to offer margin protection tools to their dairy farmer milk suppliers. “Most controversial of all the proposals, of course, is implementation of supply management programs,” Natzke said.

USDA’s Dairy Industry Advisory Committee meets in Washington Oct. 12-13 to further discuss dairy policy options, according to Natzke, “But with Congress home campaigning for Nov. 2 elections and a full slate of other issues facing the “lame duck” session of Congress when it returns in mid-November, any dairy policy changes probably won’t happen until the 2012 Farm Bill.”

U.S. dairy farmers will be able to use a federal visa program to access immigrant workers if legislation introduced last week in the senate ever becomes law. National Milk’s Chris Galen reported Thursday that having an adequate workforce “has been one of the big issues for us in the dairy industry, and yet the whole issue of immigration reform has been a real hot potato and will probably decide some elections in November.”

Legislation will help migrant workers
National Milk supports anything that will help insure an adequate workforce so it was pleased to see this bill, which expands the H-2A visa program to dairy employers. The existing program is really meant to bring in migrant workers to work in the fruit and vegetable industries, however it’s also open to goat and sheep herders so National Milk is trying to extend it to include dairy employers. Dairy doesn’t employ seasonal workers, he said, because it’s all year round, but they would be able to use the H-2A visa program under this legislation.

“This is not comprehensive reform of immigration laws, Galen admitted, it’s not the Ag Jobs bill which we still support but it is a rifle shot designed to address at least part of the workforce challenge that dairy farmers have.”

There is no comparable legislation in the House yet and lawmakers have left Capitol Hill to campaign at home but Galen hopes it can be dealt with when they return and there’s even some talk of broader, comprehensive immigration reform being tackled by the lame duck session of Congress in November, he said.

Dairy processors, as in the past, oppose legislation that would mandate the addition of higher milk solids in U.S. fluid milk. IDFA submitted a letter outlining its position at the most recent meeting of the Dairy Industry Advisory Committee, which was established to advise the department on farm milk price volatility.

IDFA’s Peggy Armstrong gave the “Processor’s Perspective” in Wednesday’s DairyLine, reporting that, in August, the Food and Agricultural Policy Research Institute issued research findings on the proposal to require national adoption of higher nonfat-solids standards for fluid milks, which have been required under California state law for decades.

According to the report, the added milk solids limits consumer choices, raises milk prices, and unnecessarily increases costs for government-run programs. Armstrong added that “Contrary to encouraging low-calorie options in the marketplace, the added solids will increase the calories per serving of milk.”

One key conclusion of the report, she said, is that such a policy change would result in an average increase of 17 cents per gallon in the retail price of fluid milk due to the added cost of the additional nonfat solids. The report notes that “fluid milk processors will have additional capital costs for storage tanks and other equipment that will be necessary to handle the increased need for nonfat solids.”

“Higher standards for nonfat solids in milk have not increased consumption in California,” Armstrong argued, “In fact per capita fluid milk sales are lower in California than in the rest of the nation.”

“IDFA believes that dairy policy proposals that could reduce milk consumption and limit exports are not good for the future of the U.S. dairy industry,” she concluded. “Instead we need proposals that focus on ways to make our industry more competitive with other beverage choices in our domestic markets and ways to promote exports in the growing world market for dairy products.”

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Lee Mielke may write to him in care of this publication.