Hearing Highlights Need for Domestic Dairy Policy ReformHearing Highlights Need for Domestic Dairy Policy Reform

September 8, 2011

STATEMENT

Dairy Farmers of America, Inc. (DFA) is submitting comments to the House Committee on Agriculture in regard to its hearing on current dairy programs and their ability to support the domestic dairy sector. We appreciate the Committee’s commitment to reviewing current dairy policies and exploring reform.

In the comments, John Wilson, senior vice president, stated:

While dairy prices have recovered from the historic lows experienced in 2009 and 2010, most producers have not. The recent low-price cycle devastated dairy families, drained generations worth of equity, and drove many out of the business entirely. Those dairy producers who survived the cycle are still struggling because of shrinking margins, due in great part to increasing feed costs.

Now, more than ever, we are a global industry, and factors in the world market have a great impact on domestic prices. Domestic dairy programs are outdated and inflexible, stifling much needed innovation. They do not and cannot offer producers the tools necessary to manage global market changes or the tight margins that result from either low milk prices, high feed prices or a combination of both.

It is evident current programs are flawed. They are insufficient in times of extreme volatility, which seems to be the norm rather than the exception, and do not provide an adequate safety net when margins are tight.

We urge Congress to review and consider the policy proposal authored by Reps. Collin Peterson, D-Minn., and Mike Simpson, R-Idaho, which consists of three main components — a margin protection program, a Dairy Market Stabilization Program and reforms to the Federal Milk Marketing Order system — and would alleviate some of the anxiety livestock producers face.

These policies take into account not only milk prices, but also recognize feed prices and, ultimately, margins. The proposal is sound, affordable and will be instrumental in strengthening the domestic dairy industry.