Kristine Spadgenske, Published May 26 2012
Dairy farmers deserve plan to end constant ups, downsCongress is off to a surprisingly good start in writing a new farm bill. The House has held extensive hearings on agriculture issues and the Senate might pass a bill after Memorial Day. It can’t come soon enough for Minnesota dairy farmers.
This year is shaping up as another tough year for milk producers, after the Great Dairy Depression in 2008 that saw debts pile up and many of us lose money on every gallon of milk we produced. Nationwide, dairy farmers saw their net worth drop by $20 billion between 2007 and 2009.
Some farmers didn’t make it, although most of us who survived thought we were the lucky ones. But storm clouds are again brewing this year, as prices are down and costs are up.
What became all too clear in the recession is that the current federal dairy program, focused on propping up prices and making direct payments to farmers, isn’t much of a safety net anymore. It didn’t protect us from the periodic low milk prices we saw over the past two decades. And it didn’t save us from the destructively low profit margins we saw in 2009, when milk prices crashed just as feed and other input costs soared.
That’s hardly surprising. Much of the current dairy program was designed in the 1930s, and doesn’t reflect the economics of milk production in the 21st century.
To our credit, dairy farmers have used the pain of the recent past to come up with our own solution. It was introduced by Rep. Collin Peterson, D-Minn., last fall as the Dairy Security Act. Peterson consulted with dairy farmers across the country, as well as in Minnesota, on the most economically sensible and politically acceptable way to reformulate dairy policy.
The plan has two parts: an insurance program that will guard against the type of margin squeeze dairy farmers saw in 2009, and a market stabilization program that will prevent steep and prolonged price declines by encouraging farmers to occasionally trim their milk output.
For those who object to being told how much milk they can produce, the entire program is voluntary. Only those farmers who opt for margin protection insurance will have to reduce their milk output.
And here’s the best news. Because it scraps three costly but outmoded programs, the new plan saves millions of dollars a year over the current dairy program.
The Senate Agriculture Committee endorsed the dairy plan last month, with some additional changes suggested by Peterson, to make it more attractive to Minnesota family farmers.
Now it’s up to the Senate and the House to finish the job. Failing to rewrite federal dairy programs this year means our state’s dairy producers will continue the roller coaster ride of boom- and-bust years for the foreseeable future.
Spadgenske and her husband, Mark, milk 250 cows and farm 1,000 acres in Menahga, Minn. She serves on the board of the Minnesota Milk Producers’ Association and is also on the Minnesota Dairy Promotion Council and the Minnesota Division of the Midwest Dairy Association.
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