Peterson Looking For New Approach to Federal Support For Dairy

House Agriculture Committee Chairman Collin Peterson (D-Minn.) says he wants to make major changes in the federal support program for the nation's dairy farmers in the next farm bill.

House Agriculture Committee Chairman Collin Peterson (D-Minn.) says he wants to make major changes in the federal support program for the nation's dairy farmers in the next farm bill. Speaking during a recent dairy farmer event in Minnesota , Peterson said, "As chairman of the Agriculture Committee, I was responsible for writing the dairy portion of the current farm bill and I'd be the first to say it isn't working. We need to get away from the price support system."

Peterson did not provide details on how he would modify the current program, but he did indicate that his goals for the industry are not losing current dairy farmers while attracting new young producers into the dairy industry. Accomplishing both of those goals while keeping dairy prices high enough to allow both groups to make a living from dairying will prove challenging.

One dairy policy reform proposal already being circulated by the National Milk Producers Federation includes eliminating the current dairy price support program and milk income loss contract program when the next farm bill is written. MILC makes payments to dairymen when prices fall, but benefits are capped after the first 3 million gallons of milk produced, the annual output of around 200 cows, a figure well below the average herd size in some states.

NMPF President and CEO Jerry Kozak says his group wants to establish a new program called the dairy producer margin protection program, which would support producer margins, a change from the current federal programs that support prices.

The NMPF program would act as form of insurance which pays producers based on the price per hundredweight of milk, minus the cost of feed needed to produce the milk. Unlike current programs, there would be no payment limitations based on herd size. "That's one of the biggest problems we have right now," Kozak said. "We have to get over the small farmer versus the large farmer attitude."

He said that eliminating the current support programs for dairy would provide the funding for the new program, which would be managed by USDA's Farm Service Agency.

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