When the “supercommittee” on debt reduction collapsed one of the proposals that collapsed with it was a potential change in the nation’s dairy policy by year’s end. Federal price supports for agriculture, as with everything else, are the obvious targets of budget cutters, then, and now.
It’s a critical time for the dairy industry and for the states (like Vermont) and counties (like Addison and Franklin) that have large dairy interests. We know there will be less and less help coming our way from Congress and the trick will be to reformulate a plan that costs the government less money and offers the dairy farmer more protection.
The collapse of the supercommittee’s efforts does not mean the impetus for change disappears. To the contrary, the House and Senate Ag committees are in the process of rewriting the five-year farm bill that will need to be completed in 2012. What the supercommittee did was to set the stage.
We’ve been through this before. Time and time again. Each time meaningful change is thwarted because of the competing factions. Farmers want more protection. Food groups and consumer advocates want lower costs. Regions that have natural advantages over others want that advantage maintained.
The same forces will clash again as the committees begin their work.
Although the details of the supercommittee’s thinking are sketchy, what it was reportedly considering was the essence of a supply management system. A check from the government would come only when the cost of milk falls to unprofitable levels and to mitigate against that the government would have the power to force farmers to cut their production.
This is not a new thought. It’s been around since the supply of milk has been sufficient to satisfy demand. But it’s always been opposed by farmers who didn’t want the government telling them what to do and by food producers who didn’t want a price floor put beneath their products.
What’s changed?
The last dairy “crisis” in 2009, when dairy farmers were forced to sell a product at about half what it cost to produce.
What’s being proposed, and what’s being seriously considered in Congress is a supply management system that the Congressional Budget Office says would cut government costs by about 20 percent. Support payments to dairy farmers would be pegged to the farmer’s declining margins.
That would do several things: first, it would offer some security to a profession that has none, and is deemed essential; second, it would probably raise prices to consumers, but would eliminate price volatility; third, it would cost the government less.
The push back is predictable. Consumer advocates don’t want prices to rise in the supermarket. There is also the argument that such a system penalizes efficient farmers. But consumers pay one way or the other, either in taxes or in the supermarket. With taxes, they have no choice. With the supermarket, they do. As for efficient farmers, even the best farmers lost money by the bucket load in 2009. And when pressed with such dire markets, farmers lose far more in bad years than they can ever make up in good ones.
Clearly, what we have now doesn’t work.
Any meaningful reform is still a ways off and many lobbyists must be overcome before an enduring change of this magnitude will prevail. (In addition, all dairy farmers would need to be part of the supply management system for it to be successful – a challenge in and of itself.) But the conversation is proceeding in a positive direction and it’s being driven by the twin realities of a dwindling federal treasury and the need of dairy farmers to avoid a repeat of the boom and bust cycle of the existing price support system.
If the supercommittee’s failure can add some impetus to the work being done by the two ag committees, then its failure will have a silver lining for the dairy industry and for Vermont.