Guest Columnist / Editorial
Forward progress

Dave Kurzawski is an account manager for Chicago-based Downes O’Neill LLC, a brokerage firm specializing in dairy market products. He contributes this column exclusively for Cheese Market News®.

American Sociologist C. Wright Mills once wrote that, “Freedom is, first of all, the chance to formulate the available choices, to argue over them — and then, the opportunity to choose.” Sometimes in this great nation where freedoms are held so dear, it’s nice to be reminded of what freedom means in an eloquent quote by a once semi-famous dead guy. It’s nice to be reminded, because there are — as there will always be ­— challenges we face for freedom.

On Dec. 31, 2004, USDA formally ended the forward contract pricing pilot program. The pilot program, which excused handlers regulated under the federal milk order from paying producers the minimum federal order price for that portion of their milk that was under contract, also accomplished something much grander in scope. The program allowed milk producers who ship to proprietary processing plants the freedom to go from price taker to price maker — a critical ingredient to capitalism. And milk producers weren’t the only party to benefit. During the program, milk handlers enjoyed a steady supply of quality milk at a set price, which reduced their price volatility and exposure.

On the other hand, opponents of private cheese manufacturer forward contracting programs fear that such programs could at times tilt milk buying power unfairly in favor of proprietary plants. As it stands, cheesemakers can pool milk or de-pool milk at will. However, if a proprietary plant decided to pool milk one month it currently is mandated to pay those federal order minimum prices. Under the umbrella of a forward contracting program, a cheesemaker would be exempt from paying the federal order minimums on pooled milk for that milk which was forward contracted. In essence, adversaries see this as potentially short-changing dairy producers.

Ultimately, the best part of the pilot program was that it was voluntary. We had a program that allowed milk producers to have more control over their price and less dependence on the government, all the while providing milk deliveries and some price certainty to processors who deemed the tool useful. Then we threw it away. For those in support of such programs, we can bring it back.

At present, the Bush administration is backing a newer version of the stale Milk Income Loss Contract (MILC) payment program in which payments would be limited to farmers earning less than $200,000 in adjusted gross income. Sure this changes the rules, but it doesn’t change the game. And it also doesn’t change the fact that they’re also in favor of maintaining the current price support system. It appears as though this Farm Bill is a clean slate we’re about to muddy up — never mind the fact that the World Trade Organization describes our support prices as “criminal.”

Additionally, it’s no secret that this country is hemorrhaging money. The Bush administration’s latest budget projections reveal an anticipated budget deficit of $450 billion for the current fiscal year, up another $151 billion since February. In the midst of all the spending going on, the 2008 Farm Bill dairy policy hangs in the balance. And as it quickly approaches, it becomes more evident that the renewal of the forward contracting program needs to be in the mix.

What better time than now to push for a program that will help both sides manage price while potentially averting further deficit spending by way of antiquated price supports? Not to mention that the renewal of such a program will mean that dairymen and processors are free to weigh their options, engage in debate and ultimately choose whether or not it makes business sense to them. It seems un-American not to have that kind of freedom.

CMN

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