April 05, 2001
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email:CGalen@nmpf.org
The House committee has been holding a series of hearings this year on the direction of the 2002 Farm Bill. NMPF, as the only national policy organization for dairy farmers, was asked to present the perspective of the dairy sector in this phase of the development of the next Farm Bill.
In testimony before the Agriculture panel, NMPF Chief Executive Officer Jerry Kozak told members of Congress that “economic policies alone do not hold the key to the future of U.S. dairy producers.” As a result, while the initial portion of the NMPF Farm Bill testimony focused on economic issues, the testimony also addressed several other areas – including animal health, environment, trade and taxes – important to the economic bottom line of the domestic dairy producer community.
Kozak said most of the recommendations contained in the NMPF testimony reflected the input of dairy farmers from across the country, obtained last year as part of NMPF's Dairy Producer Conclave process. That outreach effort also obtained input from members of other national farm groups, including the American Farm Bureau Federation, the National Council of Farmer Cooperatives, the National Farmers Organization, the National Farmers Union, and the National Grange. Only by listening to dairy producers across the country could NMPF “truly develop a comprehensive policy framework” for the 2002 Farm Bill, he said, adding that a clear consensus emerged on many items featured in the congressional testimony.
With respect to economic policy, NMPF is advocating the maintenance of a dairy safety net in the form of the current price support program, under which the USDA purchases surplus dairy products at a farm-level price of $9.90 per hundredweight. That program, which is set to expire at the end of this year, should be extended not only through 2002, but also through the duration of the next Farm Bill. The price support system “represents a modest investment by the federal government in a program that will return tangible benefits to dairy farmers at a low cost to taxpayers,” Kozak said.
As part of the extension, Kozak asked Congress to oppose any adjustment in the price support purchase levels for butter and skim milk powder products, out of concern that “tilting” the $9.90/cwt. purchase price away from powder would greatly reduce the income-protecting features of the program.
Kozak also advocated the creation of a supplemental income program for dairy farmers tied to the price level of Class III and IV dairy products (which are based on the market prices of cheese and butter/powder products, respectively). NMPF has proposed that Congress fund a target price program whereby producers would receive supplemental monthly income if the Class III and IV prices drop below $11.08/cwt. The payments would be based on the amount of Class III and IV milk production in each of the eleven Federal Order regions, and also state order and non-pooled regions.
The combination of the price support program, and the supplemental payments, “represents the establishment of a modest yet effective safety net to help dairy farmers as they are buffeted by increasingly volatile prices.” Dairy prices in 1999 briefly reached record highs, only to plunge later that year by more than 40% to lows not seen since the late 1970s.
NMPF also asked the Agriculture Committee not to make additional changes in the Federal Milk Marketing Order program, which was reformed as part of the 1996 Farm Bill. Those changes are still being implemented, Kozak said, so “no further changes” are necessary at this time.
Although economic policies are critical to the dairy sector, Kozak also focused the NMPF testimony on other issues that are of concern to farmers, including animal health. While Foot and Mouth Disease and Bovine Spongiform Encephalopathy are currently making the headlines, and NMPF supports USDA programs to keep those diseases out of America, Kozak also expressed NMPF's support for a national program to address Johne's disease, an infectious disease of cattle and other ruminant livestock.
NMPF is asking the House to fund a seven-year, $1.3 billion program to help dairy and beef cattle producers voluntarily test their animals for the Johne's bacterium. The funding would be administered through state veterinary offices, and would help defray the cost of the tests, and also pay for part of the economic loss of animals that have to be culled if they test positive. Kozak said the Johne's program “was developed in consultation with leading animal agriculture and veterinary groups, and represents our best opportunity to provide voluntary incentives to control this livestock disorder.”
He also expressed support for continued funding to eradicate bovine tuberculosis, and additional funding to improve USDA research labs, and the development of a national animal health emergency management system to help contain the effects of contagious animal diseases in this country.
In the area of the environment, Kozak asked the House panel to consider providing economic assistance to farmers of all types, including dairy producers, as they deal with the new federal animal waste strategy to manage the environmental impact of livestock operations.
“It is our belief that everyone on the community is a beneficiary of these initiatives, and as such we see an appropriate role for the government to provide both financial and technical assistance in helping farmers implement the regulations,” Kozak said. Specifically, he asked for additional funding of USDA's Environmental Quality Incentives Program (EQIP), which was authorized by the 1996 Farm Bill. He said that EQIP was underfunded, and its assistance of limited value to many larger livestock operators.
With respect to trade policy, NMPF expressed support for continued U.S. government efforts to open new markets to farm exports, but opposed the creation of trade agreements that would place U.S. farm programs at a disadvantage to similar programs operated by other nations. Kozak said the world playing field in dairy trade is “not level or equitable,” and he expressed concern that the U.S. not make further concessions until other nations adjust their policies.
He did testify to NMPF's support for further restrictions on the importation of Milk Protein Concentrate (MPC), which he said was flowing unabated into the U.S. and undermining the economic health of the domestic dairy sector. He said Congress should reexamine the fact that virtually no tariffs currently exist on MPC imports, although the U.S. does maintain tariff-rate quotas on other dairy imports, including nonfat dry milk and cheese. Kozak said that a 600 percent increase in MPC imports since 1995 has displaced domestically-produced dairy proteins, leading to increased costs for the U.S. price support program as it purchases excess skim milk powder.
“Congress should enact legislation to prevent the circumvention of dairy tariff-rate quotas, at a cost savings of nearly $900 million to the U.S. taxpayer,” Kozak said. He also expressed support for a mandatory checkoff assessment on dairy imports, similar to the promotional assessment on many other imported farm commodities. Kozak also advocated the continued funding of the Dairy Export Incentive Program (DEIP) and the Market Access Program (MAP) to help the U.S. develop foreign export markets for dairy products. NMPF also supports U.S. food assistance programs that channel U.S. farm commodities to hungry people around the world.
Finally, in the area of taxation, NMPF expressed support for a variety of tax relief proposals that would reduce the financial burden on dairy farmers, including lower capital gains, self-employment and estate taxes, and the creation of Farm and Ranch Risk Management Accounts.
Kozak concluded his testimony by pointing out to the House Agriculture Committee that the NMPF recommendations will not negatively effect other farm commodities, and would not increase consumer prices. The panel is expected to devise the commodity title portion of the 2002 Farm Bill by the end of this summer.
The NMPF testimony is available in the Legislative Update section of the NMPF website at www.nmpf.org/govIssues/index.cfm .