Sen. Gillibrand proposes dairy reforms aimed at smaller farms

Published on: Apr 2, 2013

As the Senate gears up for its farm bill debate, Sen. Kirsten Gillibrand (D. N.Y.) reintroduced several dairy reform bills she first sought in last year's debate such as new measures to help provide a greater safety net for smaller producers as well as improving inventory reporting and transparency.

It's no secret House Speaker John Boehner (R., Ohio) remains opposed to the dairy production supply management component proposed during last year's farm bill debate. And Gillibrand said she shares some of those same concerns about supply management, but wants to ensure that consolidation doesn't push smaller dairies out of business because of the way the program is written.

Gillibrand introduced the Dairy Income Fairness Act, which would give farms with 200 cows or less a guaranteed $6.50 margin – the cost of milk minus the cost of feed – and exempts the first 200 cows from supply management. She explained that it is 200 cows, no matter what the size of operation.

Another piece of the bill extends the current Milk Income Loss Contract (MILC) program for nine months, pegged to inflation, while the U.S. Department of Agriculture establishes a new and more sustainable program for dairy farmers. She said during roundtable discussions with dairy producers in New York, she heard that farmers felt it was important to have a safety net as new programs were put into place.

A new component that goes beyond last year's work includes a bipartisan bill from Gillibrand and Sen. Susan Collins (R., Me.) to force the USDA to begin the hearing process to restructure the pricing system and direct the Secretary of Agriculture to release the Department's recommendations to Congress. The Dairy Pricing Reform Act builds on language Gillibrand secured in the Senate farm bill that requires the USDA to study different methods of determining prices, including competitive pay pricing or shifting from a 4 class system to a 2 class system. 

"A lot of our advocates in the industry don't want to see changes. But that doesn't work for small dairies, and that's why we need to change it," Gillibrand said of how current dairy pricing works.

She said people want to know why milk pricing doesn't accurately reflect the cost of production and fuel. "Until there is new pricing, the hardest and first hit will be smaller dairies," she said.

Gillibrand led the effort on a provision in the Senate farm bill that would make reporting to the USDA Natural Agricultural Statistics Service (NASS) Cold Storage Report mandatory, and give the USDA the authority to audit warehouse inventories to help bring more stability to dairy trading prices. Gillibrand said she will continue to press this measure as the Senate considers the farm bill again this spring

Inventories of certain types of classified cheeses have the ability to significantly influence trading activity on the Chicago Mercantile Exchange. However, NASS cold storage facilities are currently not required to report their inventories of dairy products to the, and only do so on a voluntary basis, creating an environment of volatility and uncertainty for dairy trading. In fact, by February of 2009, the low point of the dairy crisis, NASS reported that Cold Storage Inventories had been inflated by approximately 9%. 

To provide more transparency into dairy cooperatives and equip dairy farmers with more of the information they need, Gillibrand secured language based on her bill, the Democracy for Dairy Producers Act, in the Senate farm bill. The legislation would require dairy cooperatives that engage in bloc voting to provide their member farmers with written notices when votes occur and requires each milk marketing order to establish an information clearinghouse to provide information regarding any proposed milk marketing order reforms. This information is required to be published on a website and distributed to producers.