Guest columnist/opinion:
Perspective:
Farm Bill

Connie Tipton is president and CEO of the International Dairy Foods Association. She contributes this column exclusively for Cheese Market News®.

As we ring in 2007, we face a new Congress, new ways of thinking about policy and, most importantly, a new Farm Bill. The last Farm Bill, enacted in 2002, is set to expire later in 2007. The Farm Bill can create new programs, reauthorize existing farm programs or toss them out altogether. What should we expect for dairy as the 2007 Farm Bill debate begins? What should our role be?

First of all, expect a lot of activity in Washington. Many interest groups — including food and agricultural, environmental and consumer groups, policy makers and the congressional agriculture committees — already have laid out specific Farm Bill priorities. It is clear that these ideas and priorities will influence overall debate and dairy programs.

Expect the federal dairy programs to be up for debate, including the Dairy Price Support Program, the Dairy Export Incentive Program and — new in the 2002 Farm Bill — the Milk Income Loss Contract (MILC) program. The federal milk marketing order system does not expire like other support programs, but this system, too, has been amended in previous Farm Bills.

I think a key question in this New Year is whether current dairy policies provide an adequate safety net for farmers, position our industry to continue to build on the demand growth seen in 2006 and meet the highest priority needs of the industry in 2007 and beyond.

Keep in mind that in 2006 the marketplace gave us clear indications that demand growth is the key to a prosperous U.S. dairy industry. Total U.S. fluid milk sales rose, cheese demand continued a long-term increasing trend and even sales of butter were up over a percentage point.

That’s just the domestic market — the world’s appetite for dairy products also is growing, and that increasingly means turning to the United States to supply that need. In 2006 we saw increased demand for exports, helped by better market access in some places, by the value of the dollar and by our production capacity. The government is taking a back seat in this growth, unlike some years when the United States subsidized much of its export activity.

It’s great news: Our dairy industry is dynamic; it’s changing to meet marketplace opportunities in spite of outdated dairy policies that can weigh it down.

Against this backdrop, consider the Farm Bill buzz in Washington. The federal budget deficit and pressure to rein in farm spending will make it more difficult to extend programs such as MILC. Meanwhile, economic conditions as well as factors such as energy costs and the impact of bio-energy demand will put new pressures on how the traditional support programs are structured in the Farm Bill. With feed and input costs at all-time highs, supporting revenue rather than price is being proposed by many, because it is with revenue that farmers pay their expenses.

Other issues that must factor into the new Farm Bill are heightened attention to sustainable agricultural practices, food safety and environmental concerns. A number of Farm Bill proposals call for increased funding of popular conservation and green payment programs, as well as federal funding to help farmers transition their operations from conventional to organic.

I find these proposals very appealing for a host of reasons. Green payments, which reward farmers for environmentally sound practices, are increasingly being looked to as a viable method for delivering financial assistance to farmers. Unlike the current production-linked system, these programs assist farmers in a way that does not interfere with the market and will not violate future trade agreements. Such proposals argue that taxpayer dollars are better spent — and farmers would be better served — by federal assistance with real on-farm issues such as environmental compliance and waste management, rather than pouring money into obsolete subsidy programs that distort the market and don’t deliver benefits to all producers fairly.

There is opportunity for positive change in the 2007 Farm Bill debate, but we can’t rely on the government to reach positive conclusions by itself — especially on complex dairy programs! Congressional leaders are asking for our assistance — all of us — and we would be wise to come together and consider better solutions.

I believe it is possible to improve dairy policies and have all stakeholders benefit: producers, cooperatives, processors, consumers, taxpayers — and the environment. I know we can take meaningful steps to relieve the regional divisiveness of current policies, expand risk management practices and maintain a strong safety net for producers that is effective and fair, yet less costly and less market-intrusive.

Over the past few years we have heard criticism of the status quo from veteran agriculture economists, USDA reports, policy analysts, producers and processors — but is anyone listening? Rather than just critiquing each other’s policy positions and programs that we don’t agree with, we need to propose solutions. If we want these solutions enacted, we need to take them to the government together.

There are many recent examples of the dairy industry’s ability, when unified, to bring about meaningful change. Agriculture Secretary Michael Johanns recently said “we must strive to develop farm policy that is equitable, predictable and beyond challenge.”

I believe this goal is attainable for our dairy policies. But we must work together, and lead our government, to move in a positive direction with the 2007 Farm Bill.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.