Minnesota-Wisconsin Minnesota-Wisconsin Dairy Policy ConferenceDairy Policy Conference

Eau Claire, WIEau Claire, WIApril 3, 2012April 3, 2012

Steve EtkaSteve EtkaMidwest Dairy CoalitionMidwest Dairy Coalition

Perspectives and Progress on Perspectives and Progress on 2012 Farm Bill 2012 Farm Bill

ReauthorizationReauthorization

Role of Role of Midwest Dairy CoalitionMidwest Dairy Coalition

Since creation in 1990, role of the Midwest Since creation in 1990, role of the Midwest Dairy Coalition has been to advocate for Dairy Coalition has been to advocate for the unique perspective of Upper Midwest the unique perspective of Upper Midwest Dairy, and particularly dairy farmers, in Dairy, and particularly dairy farmers, in Washington DC. Washington DC. Coalition’s membership includes nearly Coalition’s membership includes nearly 11,000 dairy farms, roughly 20% of 11,000 dairy farms, roughly 20% of nation’s dairy farms. 56% of all WI dairy nation’s dairy farms. 56% of all WI dairy farms, and 65% of all MN dairy farms. farms, and 65% of all MN dairy farms.

What makes the “Upper Midwest” What makes the “Upper Midwest” Dairy Perspective So Unique?Dairy Perspective So Unique?

Predominantly focused on manufactured Predominantly focused on manufactured dairy products. Over 90 percent of the dairy products. Over 90 percent of the milk we produce in the UMW goes in the milk we produce in the UMW goes in the cheese, butter and powder. cheese, butter and powder.

Policies that degrade the value of Policies that degrade the value of manufacturing milk hurt our farmers and manufacturing milk hurt our farmers and our manufacturers. our manufacturers.

Dairy Policy Must Address Needs Dairy Policy Must Address Needs of Majority of UMW Dairy Farmersof Majority of UMW Dairy Farmers

Consistently, Midwest Dairy Coalition has Consistently, Midwest Dairy Coalition has underscored the point that for dairy policy underscored the point that for dairy policy to make sense, it must address the needs to make sense, it must address the needs of the family dairy farmers. of the family dairy farmers.

Nationally, and even within the Upper Nationally, and even within the Upper Midwest, dairy farms come in all shapes Midwest, dairy farms come in all shapes and sizes. and sizes.

Policy Should Focus on Needs of Policy Should Focus on Needs of Farmers, Not Volume of ProductionFarmers, Not Volume of Production

Must respect needs of all scales of Must respect needs of all scales of operations. operations. But we also must not lose sight of the fact But we also must not lose sight of the fact that about 88% of all dairy farms in the that about 88% of all dairy farms in the nation milk 200 cows or fewer. nation milk 200 cows or fewer. 3% of dairy farms have herds over 1000 3% of dairy farms have herds over 1000 cows, but produce 50% of the nation’s cows, but produce 50% of the nation’s milk. milk. Need to Focus on Farmers First, and Need to Focus on Farmers First, and Volume SecondVolume Second

What’s Going on With Current What’s Going on With Current Farm Bill?Farm Bill?

So that brings us to the current Farm Bill So that brings us to the current Farm Bill debate debate

Current Farm Bill expires at the end of Current Farm Bill expires at the end of September of this yearSeptember of this year

Late last year, there was a trial run at Late last year, there was a trial run at doing a Farm Bill, as part of the ill-fated doing a Farm Bill, as part of the ill-fated deficit reduction “Super Committee” deficit reduction “Super Committee” processprocess

Super Committee Process was a Super Committee Process was a “Trial Run” at the Farm Bill“Trial Run” at the Farm Bill

Even though the “Super Committee” Even though the “Super Committee” process fell apart last year, the Farm Bill process fell apart last year, the Farm Bill package is reported to have included a package is reported to have included a fully negotiated dairy package, which has fully negotiated dairy package, which has still not been made public.still not been made public.The Peterson bill, based on the National The Peterson bill, based on the National Milk Producers Federation “Foundation for Milk Producers Federation “Foundation for the Future” plan, has been the starting the Future” plan, has been the starting point of the dairy negotiations.point of the dairy negotiations.

Peterson Bill Good Peterson Bill Good Starting Point…Starting Point…

Some good aspects to the NMPF/ Some good aspects to the NMPF/ Peterson plan Peterson plan The dairy reforms proposed are in reaction The dairy reforms proposed are in reaction to the extremely low margins for dairy to the extremely low margins for dairy farmers in 2009. farmers in 2009. Widespread view that existing dairy safety Widespread view that existing dairy safety net programs (price support and MILC) net programs (price support and MILC) were not sufficient to deal with severity of were not sufficient to deal with severity of 2009 situation. 2009 situation.

… … But Changes Needed to Address But Changes Needed to Address Our Farmers’ ConcernsOur Farmers’ Concerns

Midwest Dairy Coalition members had a Midwest Dairy Coalition members had a number of concerns about Peterson bill:number of concerns about Peterson bill:– Federal Order Reform Provisions Expanded Federal Order Reform Provisions Expanded

Current Bias Against Manufacturing MilkCurrent Bias Against Manufacturing Milk– Safety Net was not sufficient to Address Safety Net was not sufficient to Address

Needs of Most Midwest Dairy produceNeeds of Most Midwest Dairy produce

Held two Member fly-ins to DC (2010 and Held two Member fly-ins to DC (2010 and 2011) to urge changes to bill to address 2011) to urge changes to bill to address concernsconcerns

MILC Has Been Important Safety MILC Has Been Important Safety Net for Upper MidwestNet for Upper Midwest

Without the MILC program, 2009 would Without the MILC program, 2009 would have been far worse. have been far worse.

Provided nearly $800 million in assistance Provided nearly $800 million in assistance in FY 2009 alone nationwide. in FY 2009 alone nationwide.

And for WI alone, MILC has provided $670 And for WI alone, MILC has provided $670 million in assistance to our dairy farmers million in assistance to our dairy farmers since its inception in 2002. since its inception in 2002.

The Peterson bill would eliminate:The Peterson bill would eliminate:– price support and MILC programs, price support and MILC programs,

Replace with Margin Protection ProgramReplace with Margin Protection Program– focus on margin between milk price and feed focus on margin between milk price and feed

costs. costs. – Requires participating farmers to also agree Requires participating farmers to also agree

to growth management provisions when to growth management provisions when margins fall below $6 margins fall below $6

Unlike MILC, new program requires Unlike MILC, new program requires producers to pay premiums to get producers to pay premiums to get sufficient coverage. sufficient coverage. – Stephenson analysis shows that over 2-year Stephenson analysis shows that over 2-year

period (2011-12), would not make sense for period (2011-12), would not make sense for farmers to participate unless they bought up farmers to participate unless they bought up to $6.50 margin coverage level. to $6.50 margin coverage level.

This is a significant shift in the concept of This is a significant shift in the concept of a dairy safety net. Will take time for folks a dairy safety net. Will take time for folks to adjust to new approach. to adjust to new approach.

MDC Proposed Lower Premiums to MDC Proposed Lower Premiums to Encourage Producers to Buy UpEncourage Producers to Buy UpMidwest Dairy Coalition has argued for Midwest Dairy Coalition has argued for lower premiums for the first 4 million lower premiums for the first 4 million pounds of productionpounds of productionWould be more affordable for all farmers Would be more affordable for all farmers to buy adequate coverage, but particularly to buy adequate coverage, but particularly for small and medium scale dairy farms, for small and medium scale dairy farms, transitioning from MILC.transitioning from MILC.The 2-tier premium concept has strong The 2-tier premium concept has strong support from UMW and NE delegationssupport from UMW and NE delegations

Dairy Package Includes Changes Dairy Package Includes Changes Requested by MDCRequested by MDC

Congressman Peterson and Senator Congressman Peterson and Senator Stabenow have indicated support for our Stabenow have indicated support for our 2-tier premium proposal.2-tier premium proposal.

2-Tier concept is reported to be part of 2-Tier concept is reported to be part of dairy package that has been negotiated so dairy package that has been negotiated so far. far.

Troublesome Federal Order provisions Troublesome Federal Order provisions from original Peterson bill are also out. from original Peterson bill are also out.

Farm Bill Process in High Gear for Farm Bill Process in High Gear for Rest of 2012Rest of 2012

Senate planning Committee mark up of Farm Bill Senate planning Committee mark up of Farm Bill by end of April and Senate floor action before by end of April and Senate floor action before Memorial Day. Will cut $23 billion from ag and Memorial Day. Will cut $23 billion from ag and nutrition programs over 10 yrs.nutrition programs over 10 yrs.

House to take action by April 27House to take action by April 27 thth to meet House to meet House budget mandate of $33 billion in ag. and nutrition budget mandate of $33 billion in ag. and nutrition program cuts. But process will be for show, program cuts. But process will be for show, since Senate will oppose cut levels. since Senate will oppose cut levels.

House likely to follow Senate lead on Farm BillHouse likely to follow Senate lead on Farm Bill

If Farm Bill process bogs down, If Farm Bill process bogs down, Dairy in Vulnerable PositionDairy in Vulnerable Position

The current Farm Bill expires on Sept 30thThe current Farm Bill expires on Sept 30thBut the MILC will revert to a lower level of But the MILC will revert to a lower level of support starting on Sept 1support starting on Sept 1stst. . If Congress fails to pass new Farm Bill in time, If Congress fails to pass new Farm Bill in time, there may be push for one-year extension.there may be push for one-year extension.But 1-year extension of reduced dairy safety net But 1-year extension of reduced dairy safety net not acceptable. Milk prices and margins will not acceptable. Milk prices and margins will come down, and we must be prepared.come down, and we must be prepared.Dairy package can and should be passed, even Dairy package can and should be passed, even if the rest of Farm bill is not ready. if the rest of Farm bill is not ready.