Dairy pricing key to farm bill
Gillibrand: Unstable farm economics big hurdle in state
CAPITAL REGION As the U.S. Senate gears up to debate the Farm Bill again, Sen. Kirsten Gillibrand has a plan to ensure New York dairy farmers get a fair shake.
New York’s junior senator has advanced bi-partisan legislation designed to inject more transparency, fairer income and accurate dairy pricing into the competitive world of dairy farming. The Dairy Pricing Reform Act is primarily aimed at reforming the way the U.S. Department of Agriculture sets dairy prices, a move the state’s Farm Bureau said would significantly help dairy farmers make up for the state’s high land taxes and the rising price of energy and labor.
“The squeeze facing our dairy farmers is driving them out of business and preventing them from growing to meet demand,” said Gillibrand in a news release issued Tuesday. “We can’t afford any more delay in Congress. We need to take action now to set the environment for our dairy farmers to thrive. These commonsense proposals can give our dairy farmers the certainty and stability they need to grow their businesses, and help strengthen our state’s rural economies.”
Dairy remains New York’s leading agricultural product, with nearly 13 billion pounds at a value of $2.75 billion. And the state’s top political figures have made it clear in just the last year that they would like to see dairy production rise, given the increasing popularity of Greek yogurt. New York is home to two leading brands — Chobani in Norwich, Chenango County, and Fage in Johnstown, Fulton County.
But flawed policy has resulted in a loss of business, said Gillibrand, as dairy farms are forced to cut resources and sell off cows. In the last decade, New York’s dairy farms have lost more than 65,000 cows, according to the USDA. In the Capital Region, the population of cows has dropped from 82,500 in 2002 to 65,300 in 2012 — a loss of 17,200.
Julie Suarez, director of public policy at the New York Farm Bureau, agreed the population loss was the result of diminishing returns on investment for dairy farmers.
“People are selling off their dairy operations and turning to other types of agriculture,” she said. “They’re selling small fruits and vegetables because the return on investment has been better with crops than with dairy.”
For one thing, pricing can vary wildly depending on far-away happenings, like whether California increases its milk production or whether China decides it wants to halt buying milk protein concentrates. The Milk Income Loss Contract (MILC) program helps with these fluctuations, providing a safety net in the form of government payments to farmers when milk prices dip below a certain point. But farmers have said this hasn’t done enough to combat the rising cost of feed prices.
In their dairy package, Gillibrand and Sen. Susan Collins, R-ME, would force the USDA to begin looking at restructuring the pricing system and give farms with 200 cows or fewer a guaranteed $6.50 insurance margin — the cost of milk minus the cost of feed. The bill would also extend the current MILC program for nine months, pegged to inflation, while the USDA establishes a new and more sustainable program for dairy farmers.
“If we’re not able to reform the pricing system, then we need to have a very good risk management tool such as this margin insurance,” said Suarez. “That way you have a lot more stability. Our vegetable and fruit farms have been relatively pleased with insurance progress, so it’s time we move dairy along too.”
The Collins-Gillibrand package would also mandate reporting dairy inventories to the USDA Natural Agricultural Statistics Service. Currently, reporting is done on a voluntary basis, even though inventories have the ability to significantly affect trading activity.
In addition, the package would require dairy cooperatives to provide member farmers with written notices when votes occur and require each milk marketing order to establish an information clearinghouse that provides updates on reforms.
Congress passes a new farm bill every five years or so. The U.S. is still operating under the 2008 bill, however, because Congress never agreed on a new farm bill late last year. Instead, when the American Taxpayer Relief Act of 2012 was signed into law to avert the fiscal cliff, legislators also included within it a temporary Band-Aid to farmers, extending portions of the 2008 bill through Sept. 30 of this year.
Until a full farm bill is passed, however, farmers are unable to make any long-term plans.
“It’s really uncharted territory for us,” said Suarez, of the temporary extension. “Farming itself is just a very, very risky business. You need to make investment plans for your crops and for your cattle a year or two in advance, and so to simply have this pushed down the road until September without giving farmers any certainty is unconscionable.”
To see a county-by-county breakdown of New York’s declining cow population, visit the Capital Region Scene at www.dailygazette.com.