Farm bill could bring “Soviet-style” price plan for milk

WASHINGTON (AP) — Approval of a massive farm bill — and the cost of a gallon of milk — could hinge on a proposed new dairy program the House is expected to vote on this week.

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An overhaul of dairy policy and a new insurance program for dairy farmers included in the farm bill have passionately divided farm-state lawmakers. Most importantly, it has caused a rift between House Speaker John Boehner, R-Ohio, and the top Democrat on the House Agriculture Committee, Rep. Collin Peterson of Minnesota.

The bill sets policy for farm and nutrition programs, including food stamps. And House Agriculture Chairman Frank Lucas, R-Okla., will need Boehner and Peterson to bring in votes from the moderate wing of each party if the bill is to pass. Many conservative Republicans and liberal Democrats, especially those from districts with little agriculture, are expected to vote against it due to concerns over cuts to food stamps.

The proposed dairy program would do away with current price supports and allow farmers to purchase a new kind of insurance that pays out when the gap between the price they receive for milk and their feed costs narrows. The program is voluntary, but farmers who participate also would have to sign up for a so-called market stabilization program that could dictate production cuts when oversupply drives down prices.

The idea is to break the cycle in which milk prices drop and farmers produce more to pay their bills, flooding the market and forcing prices down further.

Peterson wrote the proposed dairy policy, which Boehner last year compared to communism. Boehner is backing an amendment by the chairman of the House Judiciary Committee, Virginia Republican Robert Goodlatte, which would scale it back.

“I’m caught between two raging bulls in a pasture,” Lucas joked as he lobbied colleagues to vote for his farm bill last week.

Peterson said the stabilization program would prevent a recurrence of what happened in 2009, when many dairy producers went out of business after they were hit hard by a combination of low milk prices and high feed costs. He says the market partially stabilized because the shuttered dairies meant less supply, but they don’t want to see that happen again.

The National Milk Producers Federation, the largest U.S. dairy producer organization, worked with Peterson on the amendment and has lobbied members to back it. But throwing equal weight against the measure is the International Dairy Foods Association, which represents the milk, cheese and ice cream industries and other food processors and manufacturers that use dairy products.

Those dairy processors say the stabilization program would drive up the prices they pay for dairy products and those costs would be passed on to consumers. Supporters of the new program argue that their own studies show it would not significantly raise the price of milk since there are multiple factors that determine price levels.

The processors are backing the Goodlatte amendment, which would keep the insurance program but eliminate the stabilization program.

Those pushing the amendment are hoping the weight of Boehner’s support will help it win. Boehner, a former senior member of the agriculture panel who has fought to roll back dairy supports for more than a decade, said last year that the market stabilization idea is “Soviet-style.”

Lobbying has been intense on both sides. Peterson and Goodlatte, both former chairmen of the agriculture panel, have been aggressively making their case to colleagues individually and speaking at caucus meetings.

Rep. Peter Welch, a Democrat from the dairy state of Vermont, is part of a team Peterson has assembled to lobby colleagues in support of his insurance and stabilization program. He said Boehner’s opposition is a significant hurdle but he believes they have a shot at winning. He said a loss could upset the delicate balance of the farm bill in which lawmakers support each other’s regional interests to get the bill passed.

“If you take this out because of the might of the speaker, it’s going to create some resentment among dairy-state legislators as to why that was targeted,” Welch said. “You lose some votes if you lose dairy.”

Peterson has conditioned his support of the farm bill on the dairy program in the past, but appeared to be still deciding whether he would vote against it if his dairy program is removed. He said in an interview that he’d have to see how the rest of the bill looks on a final vote.

Boehner said last week he will vote for the farm bill even though he has concerns about farm supports and has opposed it in the past. But he may be less enthusiastic if the dairy program he feels so strongly about survives.

Lucas says he has extracted promises from both men that they won’t turn on the bill if they lose the vote.

One thing in Peterson’s favor is the Senate version of the farm bill, which includes a similar dairy provision. That chamber passed its farm legislation last week after no debate on the dairy issue. If Peterson loses on the House floor, he could still fight for it in House-Senate conference.

All involved in lobbying on the amendment say it has been a tough issue to explain to members, primarily because most don’t know much about dairy policy. The House has around 200 new members since the last farm bill was passed in 2008, and many urban and suburban lawmakers don’t have much interest in dairy beyond the price of a gallon of milk.

Both sides have used that lack of knowledge to make their case in simple terms. Opponents say that because the stabilization program is designed to help dairy farmers sell their product to companies at higher prices, consumers would be paying more for dairy products in the grocery store. The bill’s supporters say the new program would have little effect on grocery store prices but would keep taxpayers from having to shell out more in dairy insurance.

Peterson says the issue has been “almost impossible to explain.”

“Everyone’s kind of playing on everyone’s lack of understanding on this,” he said.


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Copyright 2013 The Associated Press.

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