Milking for Good Dairy Policy in New England
August on the Taylor Farm in Meriden, N.H., is like most dairy farms in New England - no vacation from milking or cheese making, but more kids at home to help with chores and getting ready for the county fair 4-H show. Steve Taylor and his three sons, Jim, Bill and Rob, farm thin New Hampshire soil to perfection. "We are that rare breed," Rob Taylor said. "We are a true small family farm trying to make it by diversifying our farm so it can support our three families."
Three years ago they bought cheese-making equipment from Holland and started making Dutch Gouda, Monterey Jack and Colby cheeses. They sell wholesale to stores and farmstands within a 25-mile radius, and this summer they added fresh cheese curd for the farmers' market. Maple syrup makes up the balance of their income, and this winter's production was only 40 percent of usual due to the weather. "Farming is never easy," Taylor continued, "but we are used to riding out the storms."
About federal dairy policy, he shook his head. "It's way too complicated," he said. "All you have to do is look at Canada where they have beautiful farms and successful farmers. We need a quota system so we don't have to deal with these drastic fluctuations in price. What we have is low milk prices, [and] high feed and high fuel prices - a recipe for disaster. We miss the regional compact that we had for awhile."
Aside from its complexity, the only other constant in U.S. dairy policy is change. The Northeast Dairy Compact is long gone, replaced in 2002 by the Milk Income Loss Contract Program (MILC). The MILC provided modest income protection for small and midsized dairy farms. The 2012 farm bill is on course to eliminate the MILC program and replace it with a voluntary margin insurance program.
In April, the Senate Agriculture Committee passed a farm bill that included a Dairy Production Margin Insurance Program that will provide margin protection payments when the margin between milk price and average feed costs falls below a threshold level of $4 per hundredweight for a consecutive two-month period. Basic coverage would be provided on production history of the highest annual marketing during any one of three years preceding sign up. Once determined, the production base will not change. Supplemental coverage for a higher level of protection for margins of up to $8 per hundredweight will also be available for purchase with a premium subsidy provided on the first 5 million pounds of milk.
Participating dairy farms must agree to participate in a Dairy Market Stabilization Program (DMSP) intended to balance the supply of milk with demand. When margins drop below $6 for two consecutive months, or $4 for one month, payments are reduced to a specified percentage of either an average of the last three months of production or of the production from the same month the previous year.
At the time of this writing, the Agriculture Committee of the U.S. House of Representatives is just starting to debate the farm bill, and we know a lot can happen before a farm bill is signed. It appears, however, that the 2012 farm bill will include a margin insurance program with a market stabilization component.
The Dairy Margin Insurance Program in general, and the Dairy Market Stabilization Program in particular, are complex and especially difficult to explain. Despite this, many dairy policy leaders in the Northeast, as well as the dairy state members in the New England Congressional delegation, are hopeful that this new program will serve our region well.
At the New England Farmers Union, we're pleased to see that this program provides a premium subsidy on the first 5 million pounds of milk. The benefits of the federal farm safety net programs should be concentrated on small and midsized producers. We are also pleased to see a market stabilization component to the program and will oppose any effort to strip it from the program as the farm bill moves forward.
We would prefer to see a market stabilization program that asks the largest producers to bear the greatest share of the burden in bringing supply back in line with demand. We also support a proposal offered by Senator Robert Casey (D-PA) that would ask the USDA to evaluate the effectiveness of the market stabilization program after two years of operation. Overall, however, we would prefer a farm bill that overhauls the rickety, complicated and ineffective federal milk marketing orders system in a manner that recognizes regional costs of production.
As summer in New England winds down, think about all the dairy farmers in New England who keep their farms going by making cheese, tapping maple trees, selling raw milk, marketing direct to consumers, doing whatever they can to remain viable. When you see members of Congress at home during this month's recess, let them know how important it is to maintain strong regional dairy production. These dairies anchor our working landscape and our local economies. Their farmstands feature dairy products, maple syrup, eggs and bread made from New England grain. "Live free or die" is the New Hampshire motto. Let's keep the Taylor Farm boys and their families farming, and refuse to accept the demise of dairy farming in New England.
Annette Higby is the policy director for the New England Farmers Union and the New England Farmers Union Education Foundation. For more information about how you can be part of NEFU's policy discussions, contact NEFU at info@NewEnglandFarmersUnion.org. NEFU is a membership organization. To join go to www.newenglandfarmersunion.org/membership/join/