The
National Dairy Program
In
The New Farm Bill
Prepared
by the offices of Senator Patrick Leahy, Senator Jim Jeffords and Rep. Bernie
Sanders
Update,
May 2, 2002
Senator
Leahy and his colleagues on the House and Senate Agriculture Committees,
assisted by Senator Jeffords, Congressman Sanders and others, late last week
reached an agreement on the key issues that differed in the separate House‑ and
Senate‑passed versions of the farm bill and completed work on the final bill on
Tuesday night. The new farm bill,
which passed the House of Representatives Thursday (May 2) in a vote of 280 to
141, will assist America’s family farmers, expand economic opportunity in rural
communities, strengthen programs to protect the environment and improve the
nutritional safety net for low‑income Americans.
The
new farm bill, in its final form, still must be approved by the Senate and
signed into law by the President.
The Senate is expected to begin debate on the bill today (Thursday) and
to vote on the bill next Tuesday.
If
enacted, the new farm bill will establish a new national dairy program,
sponsored by the Vermont Congressional delegation, that will provide cash
assistance to dairy farmers comparable to what dairy farmers from Vermont and
other New England States received under the Northeast Dairy Compact. Senator Leahy, Senator Jeffords and
Congressman Sanders originally pressed for an extension and expansion of the
Northeast Interstate Dairy Compact.
After Members of Congress from other regions and the opposition of
President Bush and Vice President Cheney blocked these efforts, the Vermont
Congressional Delegation ‑‑ against great odds, but joined by allies from across
the nation ‑‑ urged creation of a national dairy program as a compromise. Senator Leahy, as a conferee, advanced
the national dairy program in the House‑Senate negotiations on the farm
bill.
If
the farm bill is enacted, dairy farmers across the country will receive monthly
payments – when fluid milk prices fall – nearly identical to what New England
producers received under the Northeast Dairy Compact. All farmers in Vermont will be eligible
for these payments. Like the
Compact, whenever the federal minimum price for fluid milk in Boston falls below
$16.94 per hundred weight, participating dairy farmers will receive a
payment. The national dairy program
will pay producers 45 percent of the difference between $16.94 and the Class I
fluid milk price in Boston. Like
the Compact, payments will be made on a monthly basis and will fluctuate with
milk prices; no payments will be made when the fluid milk price in Boston is
$16.94, or higher. Under this
program, the U.S. Department of Agriculture's Commodity Credit Corporation, not
milk processors, will make the payments.
Producers
should begin receiving payments under this new national dairy program early this
fall. USDA is required to begin
signing up farmers to participate in the program not later than 60 days after
the new farm bill is signed into law.
As under the Compact, all producers will receive payments on a monthly
basis: USDA is required to pay producers not later than 60 days after the end of
each month for which a payment is made.
A
significant feature of the new national dairy program is that it will be
retroactive, covering market losses due to low prices since Dec. 1, 2001. On that date, there was a devastating
drop in the price for Class I fluid milk.
The Vermont Congressional Delegation estimates that the retroactive
payments to Vermont dairy farmers covering losses from December 2001 through
April 2002 could total more than $9 million. Producers should receive these
retroactive payments at the same time they receive their first payments early
this fall.
Whereas
the Compact made payments to producers based on the amount of milk marketed in
the six‑state Compact region, the national dairy program will make payments
based on milk marketed in any of the 50 states. However, each producer will be able to
receive payments on no more than 2.4 million pounds of production per year. Only milk marketed during a month in
which a payment is made will count toward that total. The Compact had no similar production
limit. The 2.4 million‑pound cap is
equal roughly to the annual production of 140 cows. In a new provision added by
the House of Representatives negotiators at the final conference meeting, the
2.4 million‑pound cap will apply to each dairy “operation” as that term is
defined under the Dairy Market Loss Assistance Program guidelines. Each typical farm represents at least
one “operation” and could represent two or more operations. (Note that USDA Notice LD‑505 defines
dairy “operation” as “any person or group of persons who as a single unit
produce and market milk commercially produced from cows and whose production and
facilities are located in the United States.”)
The
national dairy program is authorized through Sept. 30, 2005. The bill also re‑authorizes the milk
price support program under which the government purchases powdered milk, cheese
and butter offered to it at the equivalent of $9.90 per hundredweight. It also re‑authorizes the Dairy Export
Incentives Program (DEIP); requires importers to pay the dairy research and
promotion program assessment; and authorizes a new Johnes disease research
initiative.
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