Dairy processors and producers called for changes to current national dairy policies last month during the first dairy-specific congressional field forum on the 2007 Farm Bill. Representative Gil Gutknecht (R-Minn.), chairman of the U.S. House of Representatives subcommittee with oversight for dairy, called for the review of the state of the upper Midwest dairy industry.

Also testifying at the forum were officials from the U.S. Department of Agriculture (USDA), a dairy economist, Minnesota and Wisconsin dairy producers and dairy cooperative representatives. More than 90 people attended the forum, which was held at Winona State University in Winona, Minn.

“This forum showed that the time has come for dairy policies to get in step with markets,” says Connie Tipton, IDFA president and chief executive officer. “We are grateful to Representative Gutknecht for hosting this inclusive discussion as the first step to modernizing U.S. dairy policies.”

Gutknecht noted the dramatic changes that have occurred in the dairy industry in recent years. “It can no longer be looked at from a regional perspective or even a domestic one,” Gutknecht said.

IDFA chairman Jim Green, president and chief executive officer of Kemps LLC, the Minnesota-based unit of HP Hood, urged the committee to strip away outdated farm policies that include two countervailing subsidy programs and replace them with a progressive plan that would promote industry innovation and growth. These points were also stressed during processors’ visits to legislators during the recent IDFA Washington Conference.

Also testifying at the Farm Bill forum was Mark Davis, chief executive officer of LeSueur, Minn.-based Davisco Foods International Inc. and a board member of the National Cheese Institute. Davis stressed the need for more tools to better manage market fluctuations and urged the committee to bring back and make permanent forward contracting for proprietary processors.

Gordon Crow, director of government and community affairs for The Schwan Food Co., Marshall, Minn., encouraged the committee to avoid policy obstacles, such as assessments or tariffs on imported dairy proteins, that would hinder the industry’s global market position.

Lloyd Day, administrator of USDA’s Agricultural Marketing Service (AMS), cited the strength of the U.S. dairy industry. “The demand for milk continues to be strong domestically and for exports of skim milk powders,” Day said, offering a healthy industry forecast. “Milk production continues to increase in response to near record milk prices in 2004 and 2005. Milk production is forecast to be up nearly 3 percent in 2006, following a 3.3 percent increase in 2005.”

The committee also heard from upper Midwest producers who gave a mixed review of current dairy policy. While some urged Congress to maintain the Milk Income Loss Contract (MILC) program, others criticized the current programs as ineffective.

Bob Cropp, professor emeritus at the University of Wisconsin, questioned the effectiveness of MILC and the Dairy Price Support Program (DPSP).

“Some type of counter-cyclical program can be effective in providing dairy farmers with an appropriate safety net and at a reasonable federal budget exposure level,” he said.