Reformed dairy policy gives producers flexibility

After nearly five years of tireless effort by dairy leaders, cooperatives, producer organizations and others, the 2014 Farm Bill is complete and brings with it major reforms to dairy policy.

The goal of a coalition of diverse dairy groups, which was assembled in late 2009, was to develop policy that would provide a measure of protection against the catastrophic loss experienced in the low price cycle that began impacting farmers earlier that year.

Although the final package of policy included in the Farm Bill did not include everything DFA was advocating, it does include the Margin Protection Program (MPP), which grew from the producer-led effort. A program developed by dairy farmers, for dairy farmers, the MPP allows operations to decide for themselves how much volume they want protected and at what margin. The MPP is a new, voluntary safety net program that will provide dairy producers with indemnity payments when actual dairy margins are below the margin coverage levels the producer chooses on an annual basis.

Under the MPP, producers will pay a $100 administration fee and annually select their preferred coverage percentage (between 25 percent and 90 percent of their prior established production history) and margin threshold (in 50-cent increments between $4 and $8). A $4 margin level will be provided at no cost when a producer signs up for the program, and premiums for additional coverage are fixed through 2018.

The dairy title also includes the new Dairy Product Donation Program, which will be administered by the U.S. Department of Agriculture. The program will require the U.S. Department of Agriculture to purchase a variety of dairy products for donation to food banks and other non-profit organizations when dairy margins are less than $4 for two consecutive months. Lastly, the Farm Bill repeals the Milk Income Loss Contract Program (MILC), once the MPP is implemented, and repeals the Dairy Export Incentive Program (DEIP) and the Dairy Product Price Support Program (DPPSP).

Never before have dairy producers had such a flexible tool. DFA and others are preparing educational materials for members to better understand the opportunities associated with enrollment in this program. A summary of the bill, specifically the dairy title, can be found by logging in to myDFA at dfamilk.com. In addition, a spreadsheet allowing members to assess the costs and benefits under the MPP if it were in effect from 2008-2013, as well as a guide to the Farm Bill provisions are also available on myDFA.

This Farm Bill was hard fought. It would not have been passed without the cooperative effort of all in agriculture. The producer community voice was especially important as this Farm Bill negotiation brought new faces — consumer and taxpayer groups — to the negotiating table. Thank you to all DFA members who participated in the advocacy of these policy changes.

The importance of agriculture to this country cannot be overstated. This bill — which eliminated direct payments for program crops, overhauled conservation programs, continued support for rural America and reformed federal dairy policy — provides cost savings to taxpayers. It also introduced programs that provide a safety net for the nation’s food producers.

Other important programs
Passage of the Farm Bill also means reauthorization of other important programs.