US - New dairy legislation is taking place in the US which will provide a 'safety net' for farmers, while not imposing production limits.
Producer associations have, by and large, welcomed the decision of the House of Representatives on dairy legislation as the Agricultural Act of 2014 completes an important phase.
Industry spokesmen have said the farm bill will provide an important tool to manage risk and help secure stable futures for American dairy farming families.
The new reform component, the margin insurance programme, is to replace three measures which were described by the International Diary Federation (IDF) as ‘underperforming’.
The Dairy Product Price Support Programme, the Dairy Export Incentive Programme and the Milk Income Loss Contract (MILC) could all soon be history.
Still to pass through the Senate, the margin insurance programme element of the bill was proposed by both the House of Representatives and the Senate, explained the IDF this week.
He acknowledged the immense effort that has been required and urged the Senate to look at the bill soon.
Elsewhere, the reform has been described as good for both producers and consumers.
In a press release this week, IDFA senior vice president Jerry Smolinksi said the reforms would avoid high prices and ‘hard times’ for producers.
He added that the reforms could capture the benefits of growing exports.
Referring to processors geared for the export market he said: “The conference report rejects a proposed new regulatory burden on dairy food manufacturers and will allow dairy companies to continue to grow and create thousands of new jobs."
But, the story is not straightforward. Some misgivings have arisen about the absence of the Dairy Security Act (DSA).
This absence disappointed producer cooperative Dairy Farmers of America which this week explained the DSA’s potential benefits to farmers and tax payers.
However, the margin insurance programme, DFA said, was similar to the DSA.
Also important was the equality of the bill, both across regions and farm size. However, the changes, according to the IDFA, will give greater subsidized insurance to smaller farms and less to bigger enterprises.
Jim Mulhern, President and CEO of the National Milk Producers Federation said: “Importantly, the programme doesn’t discriminate against farms of differing sizes, or preferentially treat those in differing regions.”
“The mechanism used is not what we would have preferred, but it will be better than just a stand-alone margin insurance programme that lacks any means to disincentivise more milk production during periods of over-supply.”
“By limiting how much future milk production growth can be insured, the measure creates a disincentive to produce excess milk.”