The dairy subsidy created in the 2014 farm law, the insurance-like Margin Protection Program, “is not working” but it can be retooled into an effective safety net, the head of the National Milk Producers Federation told the House Agriculture Committee. The changes would provide more assistance to producers during tough times, like the past couple of years, and potentially drive up costs to the government.
The dairy program is one of a handful of areas, including cotton subsidies and county-to-county variations in payments under the Agriculture Risk Coverage subsidy, where lawmakers say the 2014 farm law needs revision.
Under the MPP, dairy farmers receive payments when the gap narrows between the cost of livestock feed and the price that farmers receive for milk. A basic level of coverage, triggered when the gap, or margin, is below $4 per 100 pounds of milk, is available for $100 a year. Producers pay an ever-higher premium for increased levels of coverage.
MNPF chief executive Jim Mulhern said the formula for feed costs should be raised by 10 percent, back to the levels that Congress originally considered but cut in order to meet budget targets. “Using the true feed costs calculation,” said Mulhern, would provide more help to a larger group of producers than the current formula allows. NMPF said in May and June 2016, the gap between feed costs and milk prices would have been $1 narrower than the $5.76 per 100 pounds of milk reported by USDA if the original formula was used.
Mulhern said that premium rates for MPP should be adjusted to encourage producers to participate in the program. “That will require affordable premium rates that offer adequate levels of needed coverage for producers without stimulating additional milk production,” he said.
If premium rates are lowered, more USDA money might be needed to operate the program. Mulhern said NMPF would work with USDA to determine rates “in a manner that balances producer needs and program costs.”
At least half of dairy-farm workers are immigrants, said Mulhern and, “Our current immigration system is failing America’s dairy farmers.” The industry needs a stable and legal workforce, he said, yet the H-2A guest worker program is geared toward seasonal workers. Dairy farmers need “a workable guest worker program to meet our future needs and a means to allow those who are currently working in undocumented status to be eligible for such a guest worker program,” he said
To read written testimony by Mulhern and Michael Dykes of the International Dairy Foods Association or statements by committee leaders or to watch a video of the hearing, click here.