USDA Uses Red
Tape To Try To Undo Benefits To Farmers Of The New National
Dairy Program
Statement Of Senator Patrick Leahy Hearing
On Implementation Of The 2002 Farm Bill Senate
Agriculture Committee: Agriculture Secretary Veneman
Tuesday, September 17, 2002
I want to thank
the distinguished Chairman, Senator Harkin, and the
distinguished ranking member, Senator Lugar, for holding this
important hearing.
Farmers in
Vermont and across this country are facing difficult times and
counting on the support provided by the new farm bill.
It is vitally important to them that USDA get it right and
implement the new farm bill properly.
I also want to
thank Secretary Veneman and her colleagues for appearing
before the Committee today. I realize it is a tremendous
undertaking to implement this new farm bill, and I want to
thank you, and the countless members of the USDA staff who are
working long and hard to make sure things go as smoothly as
possible.
Mr. Chairman,
today my questions will focus mainly on USDA’s implementation
of the national dairy program. I have concerns regarding
other areas of implementation too, and I plan to submit for
the record a number of questions regarding those areas.
The national
dairy program was designed to provide dairy farmers income
support payments that will be virtually identical to what
Vermont dairy farmers would have received under the Northeast
Interstate Dairy Compact. Payments are to be made
retroactively, covering production and low prices since
December 1, 2001. On that date, prices for Class I fluid
milk fell below the Compact's trigger level ($16.94 per
hundred weight in Boston) -- which is identical to the trigger
level for this new program.
Unfortunately,
prices have been below that trigger level ever since, and they
continue to fall, leaving producers in Vermont and other
states greatly in need of these payments. Farm-level
milk prices are at their lowest levels in over 10 years.
Only 3 times in the last 25 years have prices been this
low. In addition, due to the
flood and drought combination this year, many farms have poor
crops and will have trouble feeding their herds through the
winter. There is no relief in sight other than the national
dairy program. Our dairy farmers need this
assistance and they need it now.
The national
dairy program was designed to be farmer-friendly and easy to
administer. But I believe USDA has made the program
overly burdensome, overly complicated, and overly
restrictive.
Madam Secretary,
you and I have known each other for many years. I
consider you a friend. Friends can be blunt with each
other: During the farm bill, USDA fought us on the
national dairy program every step of the way. That was
your prerogative. But we won and the Department
lost. Now I fear that you are trying to undue
administratively what we accomplished legislatively, and I
find this outrageous.
Congress wrote a farmer-friendly dairy
program. USDA is making it farmer-unfriendly. USDA
needs to maximize the payments, not minimize them. USDA should
encourage participation, not discourage it. Every dollar
will pass through the farmers' hands and have a major impact
on the economies of rural communities.
Unless changes
are made, thousands of Vermont dairy farmers — and tens of
thousands more across the country — will not receive the full
measure of support that Congress intended.
In August, I,
along with my colleagues in the Vermont Congressional
delegation wrote you to express our concerns. I would
like that letter to be included in the record for today’s
hearing. We pointed out that Vermont dairy farmers were
very disappointed that USDA didn’t begin the signup in July as
the law required. We asked you to ensure that the first
payments are made on time — by October 1 — and that there are
no further delays in implementation.
We asked you to
change the rules that relate to the so-called “transition”
payments to address the unfairness that results in
medium-sized dairy operations receiving smaller payments than
both larger operations and smaller
operations. Under your proposed rules, producers are not
allowed to pick the beginning month for the transition period
- all producers will begin receiving payments based on their
eligible production beginning December 2001.
Prices have
fallen every month this year, and as a consequence the payment
rate has gone up each month. The payment rate in
December 2001 was 77 cents while the payment rate in August
2002 was a $1.44 - exactly double. Thus, a producer who
reaches the cap would be better off if he could elect to begin
receiving retroactive payments later in the fiscal year.
But your Department created a special rule that essentially
gives only the largest of producers that choice. You are
allowing producers to forgo the retroactive payments all
together and simply receive the regular payments beginning in
September. This only benefits producers who come close
to the production cap in a single month. The producers
who suffer under this rule are those with between 150 and 600
cows, who reach the production cap earlier in the fiscal year
when payment rates were lowers, and yet don't produce enough
to take advantage of this "September option."
One of the
oddest results is that dairy operations that I would describe
as medium-to-large sized—those with between 150 and 800
cows—receive smaller payments than larger operations—those
with more than 800 cows--and they receive smaller payments
than smaller operations—those with fewer than 150 cows.
I don’t believe this is fair. And it certainly isn’t
what my colleagues and I in Congress intended. I again
urge you to fix this by allowing producers to select the
beginning month for which they receive a transition payment.
We asked you to
make sure that the same rules apply with respect to the
definition of “dairy operation” regardless of where a dairy
farm is located. I understand that each FSA state
executive director was asked to complete a survey describing
how the state FSA office defined a dairy operation for
purposes of previous dairy market loss assistance (DMLA)
programs. I have heard that the survey results reveal
that states did not implement the DMLA program
uniformly. Producers in certain states qualified for
multiple DMLA payments while similarly situated dairy
producers in other states qualified for only one. Do you
intend to lock in these disparities, or will states have the
flexibility to implement the national dairy program in the
same manner as other states? Congress intended this to
be a national program and the same rules should apply
in every state.
Finally, we
asked you to ease the paperwork burden on producers by
allowing dairy cooperatives and other milk handlers to report
monthly milk marketings on behalf of producers. I hope
that you will expedite this to ease the burden on dairy
farmers and USDA staff alike, and to speed payments.
While I have not
received a response to this letter as of yet, do I hope you
will be able to respond to my concerns today. I look
forward to hearing your testimony on these matters.
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