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Senator Gillibrand Introduces Dairy Proposal that Limits Supply Management
March 23, 2013

Senator Kirsten Gillibrand (D-NY) introduced a new bill, the “Dairy Income Fairness Act,” that would modify the terms of the margin insurance and the supply management programs that were proposed in the Farm Bill passed in the Senate last year. IDFA opposes the bill because included exemptions wouldn’t change the fundamental drawbacks of a government-run supply management program.

The bill, S. 605, would replace current dairy programs with a version of the Dairy Producer Margin Protection Program and the Dairy Market Stabilization Program (DMSP) found in the Dairy Security Act (DSA). The Milk Income Loss Contract (MILC) program payment rate would be raised from $16.94 to $18.85 and phased out nine months after enactment of the bill

Unlike the DSA, which offers producers free margin insurance at $4.00, S. 605 would offer free margin protection at $6.50 for all production up to four million pounds and would exempt the first four million pounds from the base quota calculation under the DMSP. According to the latest statistics from the U.S. Department of Agriculture, approximately 88 percent of dairy farmers produce less than four million pounds annually.

The bill would require handlers to reduce dairy payments to farmers when directed to do so by USDA under the supply management program or DMSP. The portion of farm payments withheld from farmers would be remitted to USDA by handlers, and the bill would include new government audit requirements and enforcement penalties.

“IDFA opposes S. 605 because it establishes virtually the same supply management program as under the DSA, albeit with exemptions for small farmers. The end result would still raise consumer milk prices and establish complex new regulations on dairy manufacturers,” said Ruth Saunders, IDFA vice president of policy and legislative affairs. “IDFA does not oppose margin insurance, as proposed in S. 605, if it is entirely decoupled from supply management, which it is not.”

The bill also calls for additional dairy product mandatory reporting and various provisions to review the Federal Milk Marketing Order system. These provisions were included in the dairy title of the Farm Bill passed by the Senate in the last Congress. S. 605 has been referred to the Senate Agriculture Committee. It is unlikely the bill will be taken up until the Farm Bill process begins again in April.

Source: International Dairy Foods Association



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