Milk producers seek to replace federal price supports

The most powerful dairy industry organization in the United States wants to change agricultural safety nets that have been in place for decades.

The National Milk Producers Federation’s board of directors said it would move forward with major changes in federal dairy policies, which it said have failed to protect producers against market volatility.

The board voted last week to support a plan called Foundation for the Future, which could change the direction of federal price support programs, said federation President and Chief Executive Jerry Kozak.

The plan proposes to transition federal financial safety nets into a new Dairy Producer Margin Protection Program, which would guard against a collapse in producer prices. It would also establish a Dairy Market Stabilization Program to prevent imbalances in milk production and demand.

Kozak said the proposals were the result of 12 months of deliberations.

“It’s clear we need a new safety net that focuses on margins, not just milk prices,” Kozak said. “It’s also clear we need a system that sends timely, unmistakable signals to farmers that less milk is needed during periods of relative imbalance.”

The federation’s proposal to overhaul the federal safety net involves creating a sort of insurance program against fluctuating prices.

If farmers chose to enroll in the program, they would receive indemnity payments during periods when their margins are “compressed,” as they were in 2009. In addition, farmers would have the option of buying supplemental coverage to protect a higher margin level between feed costs and milk prices.

Kozak said the proposed program allows for growth in U.S. production, doesn’t encourage imports or hinder exports and keeps government intervention at a minimum.

He said the federation would begin an education effort to inform producers and lawmakers. Bob Naerebout, executive director of the Idaho Dairymen’s Assn., said Idaho dairy producers would meet in August to discuss the federation’s proposed changes.

Palmer writes for the Times-News/McClatchy.