New Dairy Proposal Floated during Farm Bill Conference

The House and Senate farm bill conferees have met several times since returning from the congressional spring recess on April 9. There are a number of major issues that still have to be resolved, including what to do with the $2 billion direct payment program for dairy that was included in the Senate bill; No similar program was in the House-passed version.

The Senate bill sets forth one program with two separate payment plans: one that would apply to 12 states in the Northeast and another that would apply to the rest of the nation. The 12 states are Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, Pennsylvania, New Jersey, Delaware, Maryland and West Virginia. If adopted, more money would be paid out to producers in the 12 northeastern states, creating more regional divisiveness. The more progressive, larger producers in the western states would be limited in participation by payment limitations. Senator Patrick Leahy (D-VT), who is a farm bill conferee, is insisting that a payment plan be included. Several House conferees -- including Rep. Richard Pombo (R-CA), who is the Dairy Subcommittee Chairman, Reps. John Boehner (R-OH), Bob Goodlatte (R-VA), and Cal Dooley (D-CA) -- have been outspoken against a payment plan.

In an attempt to reach a compromise, Rep. Collin Peterson (D-MN), the ranking Democrat on the Dairy Subcommittee, recently offered an alternate plan for consideration by conferees that would be nationwide in its application, but would rely on setting up production bases. Payments would be made only on the historical production base, not on any new production, creating a disincentive for growth. No agreement has yet been reached, but this plan could be part of a final agreement if there is not vocal opposition.

IDFA staff continues to work to avoid new programs that are discriminatory and that would further disrupt and distort markets. In addition, IDFA has expressed strong opposition to any program with production bases. Such bases, set up to limit production response to government payments, will give greater value to the base than to new production. There are many examples where government has bestowed such value on production by providing better benefits for bases or quotas, purportedly for a short time period, but then is politically unable to ever take that value away. This makes the establishment of a production base particularly dangerous for the long term best interests of a growing and efficient dairy industry.

Meetings on Capitol Hill are expected to take place throughout this week to try to resolve differences. Members: You are urged to contact the offices of farm bill conferees again to express your company's interests and concerns. Let conferees know that any proposals that favor one region over another, that disrupt markets or that work off production bases are inherently bad dairy policy and restrict growth of the industry. (Faxes or phone calls would be the most effective ways to communicate to Capitol Hill.) For a list of farm bill conferees, click here. For assistance how to reach them, contact Meaghan Killion at 202-220-3534, mkillion@idfa.org. ###

Posted April 12, 2002