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Farm Bill Improves Dairy Safety Net, Says NMPF


Published: Friday, January 11, 2019

The following is from Jim Mulhern is the President and CEO of National Milk Producers Federation.

Last year was extremely challenging for dairy. But as the year drew to a close, it ended on a very positive note. On Dec. 20, with NMPF Chairman Randy Mooney in attendance, President Donald Trump signed the new farm bill into law—with dairy the biggest winner. This key moment represented nearly two years of critically important work by congressional agriculture leaders and dairy champions.

The bill enhances protections against low prices and offers greater flexibility for producers of all size operations to choose the programs that are best for their needs. It caps several years of consistent effort by NMPF and dairy farmers throughout the country to impress upon Congress the unique challenges our sector has faced in recent years and the need to tailor legislation to meet those challenges.

It shows just how powerful a voice dairy can have in Washington—and not just because the president introduced our chairman by name when he welcomed farm leaders to the White House for the bill-signing. It shows how, when we unite toward common goals that improve the health of our industry, and when we work with the optimism that's just as necessary in crafting policy in Washington as it is in sustaining a dairy operation, we can help build an environment in which dairy farmers' needs for an economic safety net to offset milk price volatility can be met.

We've provided extensive information about this bill since Congress passed it on Dec. 12, and we will provide even more once the federal government re-opens and USDA can begin implementing the improved program in the weeks to come. Our website already features numerous resources where members can learn more about the bill and begin planning for its implementation next year. At the center of the law's dairy provisions is an improved safety net, now renamed the Dairy Margin Coverage program, that gives both smaller and larger producers new incentives to enroll and greater protection when they participate. These changes benefit all producers and build upon the gains we made last February in the Bipartisan Budget Act. Some highlights of the new safety net:

• Affordable higher coverage levels that will permit all dairy producers to insure margins above $8 on their Tier 1 (first 5 million pounds) production history, the previous limit under the Margin Protection Program. By going up to $9.50 per hundredweight, producers will have greater opportunities for assistance during difficult price environments like the one we are currently living through.

• Affordable $5 coverage that lowers premium costs by roughly 88 percent. This aids larger producers, creating a baseline for meaningful catastrophic coverage at a reasonable cost without distorting the market signals needed to balance supply with demand.

• Greater flexibility to participate in a suite of USDA programs, including the DMC, the Livestock Gross Margin insurance program and the Dairy Revenue Protection program. That helps producers of all sizes choose programs that best fit their needs, allowing them to effectively manage their risk and plan their business for the next five years.

The farm bill includes an agreement on risk management that will help producers, cooperatives and processors to better hedge price risk. The bill will change the Class I fluid milk price mover from the previous higher of Class III or Class IV to the average of Class III and Class IV, plus a 74 cents adjustor. The so-called "Class I mover" provision aids the entire supply chain, showing how all can benefit when we work in unity to accomplish a common effort.

That momentum will continue into the new year.

Now that Congress has passed the law and the president has signed it, the U.S. Department of Agriculture is committed to making sure dairy is at the front of the line when it writes the rules and implements the law. Even before the farm bill was signed, Agriculture Secretary Sonny Perdue said the department is "looking forward to prioritizing" dairy-program implementation. NMPF will work closely with the USDA, answering questions, providing analysis and advocating for our members to make sure the law's good intentions become a fruitful reality.

This is not to say the new law alone turned 2018 into a positive year. It didn't. Congress's attention arose from the unfortunate reality that dairy farmers needed help—and that need doesn't vanish with a new law. A new farm bill doesn't bring back strong prices. It doesn't restore access to foreign markets that farmers need to flourish. It doesn't solve supply gluts, and it alone won't keep every dairy afloat. These are hard realities—and they don't go away with the stroke of a pen.

But an improved safety net can relieve some of the financial pressure that's kept hard-working families awake at night. It can give producers renewed reason for hope. And it's a motivation to keep working—we didn't give up simply because the farm bill looked too difficult to pass or the budget environment was too difficult to navigate. That was true at the beginning of 2018—but by year's end, we got a bill in which even observers outside our sector acknowledged that dairy was a big winner.

We at NMPF don't have a crystal ball for 2019. We know we have fights ahead —on trade, on immigration and on labeling, just to name a few. And we know that 2018 wasn't easy. We do know that, heading into this year, dairy's safety net is stronger than it was a year ago—and, more importantly, so is our unity. That first fact will provide comfort in the new year. The second will help bring us continued success.

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