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Milk Fees Would Skyrocket under Proposed Farm Bill

12 September 2012

US - The International Dairy Foods Association has responded to Montana Governor Brian Schweitzer’s concern that the Republican nominee for President, Mitt Romney, raised milk fees. IDFA shares concerns about industry fees and cautioned that a new Farm Bill proposal, recently endorsed by Agriculture Secretary Tom Vilsack, would both raise fees and increase domestic milk prices.

Most states collect safety-inspection or licensing fees from dairy food manufacturers to maintain the state government capacity to insure the public health of dairy products. Dairy products have exceptionally high standards for food safety, and state agencies play a critical role in this process. As Governor, Mitt Romney raised several licensing and permitting fees on dairy food manufacturers.

The federal government also imposes fees on milk manufacturing plants, collecting more than $50 million annually to pay for the costs of federal milk price regulations. According to the US Department of Agriculture, fees from 341 regulated milk plants are needed to pay for 362 full-time government employees who run the program. The fees have been increasing, while sales of fluid milk have been declining in recent years.

Under legislation proposed by Representative Collin Peterson and endorsed by the secretary, two new types of milk fees would be imposed on the dairy industry. First, dairy farmers would be required to pay new administrative fees in order to get basic, catastrophic insurance from USDA. These fees would range from $100 to $2,500 annually depending on the size of the dairy farm. No other farmers are required to pay administrative fees for similar insurance. These fees are estimated to collect more than $8 million annually.

In addition to the new administrative milk fees, Representative Peterson’s bill includes a milk supply management programme that would require milk processors to withhold commercial payments to farmers and send these funds to USDA. Penalties and fees would be imposed upon dairy producers, already under financial stress from high feed costs, in order to allow them to participate in a programme designed to raise prices of dairy products for consumers.

The Congressional Budget Office estimates that the program would raise as much as $100 million annually from the private sector. Consumer and taxpayer groups have opposed the new Farm Bill program because of the increased costs that would be imposed on consumers and the industry.

IDFA opposes the new fees and milk supply regulations that are proposed in the 2012 Farm Bill. When the Farm Bill is considered by the House of Representatives, Representatives Bob Goodlatte and David Scott will propose an amendment that would give dairy farmers access to USDA insurance with no new additional fees and strike the new regulations on the milk supply that would impose penalties on dairy farmers, as well as raise prices on dairy products. IDFA also supports legislation, H.R. 3372, that would reduce regulations, and the fees needed to enforce them, for the dairy industry.



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