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News & Media: Staff Columns

Dairy fares well in the farm bill

Thursday, December 13, 2018   (0 Comments)
Posted by: John Holevoet, director of government affairs
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Historically, dairy farmers were either at the heart of the most contentious parts of a farm bill or they were largely overlooked by the drafters. This time, dairy farmers are not stuck at either of those unlucky extremes. Instead, dairy was largely under the radar in securing improvements that will hopefully help farmers navigate this period of low prices while building demand and markets for our milk.

The Margin Protection Program (MPP), the risk management tool created in the last farm bill, was a failure. Despite a sustained period of low prices, the program made very few payments and did practically nothing to provide economic stability. Farmers ended up paying far more in premiums than the program ever payed out.

Under the new farm bill, farmers that lost out with MPP will be eligible for a partial refund of the premiums they paid above any payments they received. The refund rate is 50 percent for those taking it as a cash payment and 75 percent for those taking it as a credit for future enrollment in a risk management product.

Dairy Margin Coverage (DMC), the replacement for MPP in the farm bill, is still based on the framework created for the former program. However, it broadens potential coverage levels and allows more flexibility on how much of a farm’s production needs to be enrolled, while also lowering premiums for some. Most importantly from Edge’s perspective, it allows farmers to participate in both DMC and Livestock Gross Margin (LGM) Dairy. Our goal was to give farmers more risk management options so they could choose the protections best for them.

The farm bill is also a tool for market development. This year’s legislation fully funds both the Market Access Program and Foreign Market Development to help develop demand for U.S. dairy and other agricultural products around the world. Robust funding for our trade development programs has been one of Edge’s top farm bill priorities.

The bill also helps to boost demand within the United States. For example, there is a program that incentivizes the donation of fluid milk to food pantries. Also, the nutrition title contains a program that would incentivize the purchase of fluid milk by people enrolled in the Supplemental Nutrition Assistance Program (SNAP). The creation of this $20 million program was also a big priority for Edge. We knew other programs existed to incentivize the purchase of fruits and vegetables and we wanted the same for dairy. 

Finally, the bill funds Dairy Business Innovation Initiatives. This concept was championed by Wisconsin Senator Tammy Baldwin. Edge supported this idea when it was stand-alone legislation and was glad to see it in the farm bill. It would create at least three regional dairy business innovation initiatives to help diversify dairy product markets, develop new uses for dairy products and promote business development that diversifies farmer income through innovation. It seems likely that one or more of these initiatives will be funded at a university in one of the eight states where Edge members farm.

The hard work of legislating is over, but implementation of much of the bill’s language will be something that Edge will monitor and provide input on.

We are glad to see a bill that benefits our dairy farmers and avoids the dairy-related political pitfalls of the past.   

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