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Tuesday, June 5, 2012

Jerry Meissner: U.S. Farm Bill "poison pill" provision threatens Wisconsin's $26.5 billion dairy industry


By Jerry Meissner
The debate over federal dairy policy, and the Dairy Security Act (DSA) contained within the more comprehensive U.S. farm bill legislation, is far from over. While the DSA portion of the Senate farm bill does contain several positive components, including eliminating antiquated dairy programs; creating a new risk management program (margin insurance); establishing an information clearinghouse for Federal milk marketing orders; and extending dairy forward pricing on Class II, III and IV milk, these legislative initiatives are derived at the expense of the Wisconsin dairy industry in the form of a "poison pill" known as "supply management."

Wisconsin's dairy industry and related businesses, including cheese makers, milk processors and other dairy food manufacturers, are among the top economic drivers of Wisconsin's economy. In fact, Wisconsin's dairy industry accounts for $26.5 billion in revenue to Wisconsin. Additionally, Wisconsin leads the nation in cheese production and yields the second-highest milk production.

The DSA, and its Supply Management provision, would result in the unprecedented consequence of introducing a new government program designed to limit milk production. With Wisconsin's dairy industry poised for solid growth and job creation, adopting a federal policy that curtails milk production is counterintuitive and would negatively impact Wisconsin's growing dairy and cheese-making industries.

A government-dictated limit on production/supply is completely contrary to America's free-market system and is a direct government intrusion into dairy farmers' businesses and their wallets. Although the supply management program is allegedly voluntary, it most certainly is not. Under the proposed DSA legislation, farmers participating in the risk management or margin insurance portion of the program will be forced to participate in the supply management Program. As a result, Wisconsin farmers will be required to limit their milk production, thereby reducing revenues and causing cheese-makers, dairy processors and related industries to reconsider investing in and expanding their Wisconsin operations out of concern over a consistent milk supply. The binding supply management with margin insurance, places the USDA and the federal government directly between processors and producers, an even more problematic issue.

This economically dangerous concept is not new and previous attempts by Congress to implement similar programs in the 1980s ended in failure despite their intended purpose.

Governor Scott Walker and the Wisconsin Department of Agriculture recognized the positive financial impact the Wisconsin dairy industry has and further recognized the importance of expanding Wisconsin's milk production and milk exports through their unveiling of the Grow Wisconsin Dairy 30x20 initiative. Wisconsin must continue to have an ample and guaranteed supply of milk in order to achieve the state and dairy industry's collective goal of expanding our industry at home and abroad.

-- Meissner is president of the Wisconsin Dairy Business Association.

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