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A Call for Fair Milk Pricing
Dairy forward-contracting bill introduced in the Senate.
In a move strongly supported by the International Dairy Foods
Association (IDFA) and an alliance of dairy producer organizations, U.S. Sens.
Mike Crapo (R-Idaho) and Ron Wyden (D-Ore.) last month introduced a bill that
would make permanent the authority for forward contracting.
Supporters say a pilot program, which expires at the
end of 2004, has allowed both buyers and sellers to achieve stable, fair
and reliable milk prices. Without this program, only dairy cooperatives
would be able to offer forward contracts to their members.
“We applaud the leadership of Senators Crapo and
Wyden for recognizing how important this common sense risk management tool
is for all milk buyers and sellers,” says Connie Tipton, IDFA
president and chief executive officer. “We will continue to work with
the U.S. Department of Agriculture and Congress to ensure that the program
is made permanent.”
Language of the Senate bill (S2565) is identical to a
House bill (H.R. 3308), introduced last October by U.S. Reps. Gil Gutknecht
(R-Minn.) and Cal Dooley (D-Calif.), which now has 40 bipartisan
co-sponsors.
The alliance of forward-contracting supporters
includes dairy producer organizations from around the country, among them
the Idaho Dairymen’s Association, which represents the 760 dairy
producers in Idaho, and the Tillamook County Creamery Association in
Oregon, comprising 150 member dairy farmers.
“Today’s dairy producer is a
businessperson who deals with a number of variables, the most frustrating
of these is the ever-changing milk price,” says Bob Naerebout, Idaho
Dairymen’s Association’s executive director. “Forward
contracting helps secure stable prices for milk and we want to be able to
continue using this tool.”
Forward contracting also provides a more predictable
basis for business planning, by providing stability for producers to anchor
bank loans for land, make capital improvements, purchase equipment and
secure other supply arrangements.
“Forward cash contracts have directly helped us
remain viable in today’s marketplace,” says Jim McMullen,
Tillamook’s president and chief executive officer. “The pilot
program was the fundamental reason that our new dairies survived through
hostile market conditions.”
Specifically, the bill would amend the Agricultural
Marketing Agreements Act of 1937 in order to allow dairy producers and
processors to enter into a voluntary agreement for the delivery of a
specific amount of milk (for all classes except Class I) for a set price
over a defined period of time.
Original co-sponsors include Sens. Gordon Smith (R-Ore.), Larry
Craig (R-Idaho), Pat Roberts (R-Kan.), Richard Lugar (R-Ind.) and Peter Fitzgerald
(R-Ill.).
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