March 22 2017 07:32 AM

Committee on Agriculture Hearing: The Next Farm Bill: Dairy Policy

The information below has been supplied by dairy marketers and other industry organizations. It has not been edited, verified or endorsed by Hoard’s Dairyman.

Remarks as prepared for delivery:

Good morning and welcome to today’s hearing. This hearing continues our marathon series of hearings examining all aspects of the next farm bill.

The focus of today’s hearing is on dairy policy. Dairy is a unique industry. It is present in all 50 states. Harvest occurs 7 days a week and 365 days a year. Milk is highly perishable. And, it’s processed into a range of products. These factors—combined with the fact that dairy markets are increasingly globally integrated—make crafting an effective dairy policy particularly challenging.

While the entire agricultural industry has been experiencing low prices—leading to a 50% drop in net farm income over the past 4 years—the dairy industry has been in an unenviable position. After hitting $24 per hundredweight in 2014, milk prices fell to around $16 per hundredweight in 2016.

While we often say that the farm safety net is designed for times like these, the Margin Protection Program in the 2014 Farm Bill has provided virtually no assistance. Underperformance of MPP has resulted in very few producers purchasing buy-up coverage levels in 2017, leaving producers even more exposed to market volatility. While the industry is to be commended for making the fundamental shift away from price support to margin protection, that will only be sustainable if MPP actually provides sufficient risk management going forward.

In addition to an inadequate safety net, the dairy industry is facing other headwinds here and abroad. While many of our customers are now overseas—with Mexico being the most significant outlet for U.S. dairy exports—the industry has been consistently hampered by barriers to entry in the Canadian market, including the latest example designed to keep U.S. ultra-filtered milk out of Canadian processing facilities. And that’s just scratching the surface.

While our nation works to tackle nearly $20 trillion in debt, we must remind folks that America’s farmers and ranchers have repeatedly answered the call for deficit reduction. In fact, latest estimates put 2014 Farm Bill savings at just over $100 billion—4 times the savings estimated at passage. While we don’t yet know the resources that we will have available to craft the next farm bill, we do know that America’s farmers and ranchers feel like they have given at the office. As we work through the tough decisions of how to allocate available resources, it is important that we have a very clear picture of what is and isn’t working.

To that end, I look forward to hearing from our witnesses today about their vision for the next farm bill and discussing other issues of importance to the dairy industry.

With that, I turn to Mr. Peterson for any comments he would like to make.