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Farm bill promises relief for dairy businesses

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Posted on February 3, 2014 |
By Zach Despart



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REP. PETER WELCH gives a television interview in the Capitol last week just before voting for the farm bill. Independent photo/Zach Despart

WASHINGTON, D.C. — After years of wrangling, delays and setbacks, Congress appears to be on the precipice of completing a new farm bill, which Addison County dairy farmers say will protect their thin profit margins.

“Thanks to our Congressional delegation, particularly Sen. Leahy, we managed to get something that wasn’t a disaster for dairy,” said Bob Foster of Foster Brothers Farm in Middlebury. “It’s not all that we would have liked, but it’s better than we have now.”

The House of Representatives on Wednesday voted to adopt a bill that came out of the farm bill conference committee. The legislation now heads to the Senate, which could approve the bill this week.

Vermont’s lone member of the U.S. House, Democrat Peter Welch, cast his vote in favor of the measure, which passed 251-166. The vote was a bipartisan one — members who voted “no” included conservative Republicans who believed the bill did not cut enough funding from the federal food stamp program, and liberal Democrats who felt it cut too much.

Shortly before the vote was ordered, Welch spoke from the floor of the chamber and urged his colleagues to vote for the bill.

“A five-year farm bill is absolutely crucial to America, and it is crucial to Vermont dairy farmers,” Welch said. “With its faults and imperfections, America does need a new farm bill.”

The farm bill sets the nation’s food and nutrition policy. First created by Congress in 1933, the farm bill is traditionally passed every five years. Its most recent incarnation, known as the Food, Conservation and Energy Act of 2008, was set to expire at the end of 2012. Congress extended the legislation through September of 2013, but allowed it to expire this past Sept. 30.

The new bill, which is 959 pages long, costs $956 billion — about 80 percent of which funds the nation’s food assistance and nutrition programs, such as the Supplemental Nutrition Assistance Program and the Women, Infants and Children program.

About $45 billion would fund commodity programs, such as the new dairy program that Vermont farmers had long sought.

The conference committee, a bipartisan group selected from both chambers tasked with reconciling the House and Senate versions of the farm bill, left out some aspects of earlier legislation.

The Dairy Security Act, a proposed dairy program that was supported by all three members of the Vermont delegation, would have created a market stabilization program, and also a margin protection program that would have paid farmers when the price of feed rose close to the price farmers were paid for milk.

Despite having been approved by the House and Senate agriculture committees last year, the conference committee cut them from the ultimate farm bill.

When the possibility arose that the farm bill would clear the committee without a new dairy program, committee member Leahy threatened to withdraw his support for the legislation. He was able to negotiate a compromise to create the Dairy Margin Protection Program, which retains much of the language of the Dairy Security Act. It replaces the Milk Income Loss Contract (MILC), which expired with the old farm bill in September.

For farmers in Vermont and across the country, the new bill could not come fast enough. It has now been nearly 500 days since the 2008 farm bill originally expired.

LOCAL FARMERS RESPOND

Addison County dairy farmers welcomed the new legislation. Jon Rooney of Monument Farms in Weybridge on Thursday was still navigating the mammoth bill, but said he has been pleased with what he has seen.

“It is encouraging,” Rooney said. “There needs to be some rules to operate under — rules from the USDA and standards for the USDA to follow.”

Rooney said he was grateful that Vermont’s members of Congress have advocated for the interests of small dairies, as large, well-funded food processors have fought them every step of the way.

“There are a lot of very powerful forces at play, with the processor associations like the International Dairy Foods Association in particular,” Rooney said. “The IDFA has lobbied very hard against the price stabilization program — my feeling is that it’s the processors that benefit from the cyclical rises and falls in prices.

According to the Senate’s lobbying disclosure database, the IDFA has spent $5.6 million lobbying on the farm bill and related legislation since 2011.

Foster said the new dairy program wasn’t the best-case outcome, but is better than no program at all.

“It’s better than what we looked at when (Speaker John) Boehner said the Dairy Security Act was dead,” Foster said. “In that case it would have been a real disaster.”

What is perhaps most important about the new bill is that it provides long-term policy for farmers and the Department of Agriculture to navigate. This, in turn, gives farmers the ability to make educated business decisions without the uncertainty around farm policy that has plagued the industry for two years.

Foster said he is more confident about the future of his farm and for dairies across the state.

“Our planning horizon is fairly long in dairy,” Foster said. “When you build your herd, you’re raising replacements and the planning takes a long time.”

Foster lauded the bill for giving farmers a framework of programs to work with.

“What was included in the final bill is quite acceptable,” Foster said. “This does provide a safety net, and gives us something to work around.”

For the past year, the price of milk has remained steady — a blessing in a volatile market in which a decrease in demand of 5 percent could send the price farmers get paid for their milk plummeting by half. Currently, the wholesale price per hundredweight is about $22.

Foster said he believes this new safety net will prevent a catastrophic collapse of the dairy industry like in 2009, when milk prices fell to the floor and forced many dairy farms out of business.

Rooney said despite that he has come to expect that no matter what government structure may be in place, the price of milk will fluctuate.

“I have a hard time picturing losing the cyclical nature of price rises and falls,” Rooney said. “I don’t know that they’re avoidable to some extent.”

Rooney noted the U.S. has increased its milk production over the last year, which has been absorbed by a corresponding increase in exports. Should that foreign demand fall off, he cautioned, milk prices could tumble.

Still, both Rooney and Foster expressed optimism for the new legislation, and said they were grateful for the work of Leahy, Welch and Sen. Bernie Sanders, the third Vermonter in Congress.

“I’m absolutely satisfied with the Vermont delegation,” Rooney said.

The Senate is scheduled to take up the bill Monday, with passage expected in the coming days.

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