Wis. Farm Bureau Federation: Requests temporary change to dairy payments

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Contact: Casey Langan, Director of Public Relations, 608-828-5711

WEST SALEM – In response to disastrous milk prices, the Wisconsin Farm Bureau Federation is seeking a temporary change to the federal Milk Income Loss Contract program to give temporary assistance to dairy farmers.

WFBF President Bill Bruins made the request during his meeting with U.S. Secretary Tom Vilsack on Thursday. The meeting in West Salem was one of the stops on the Obama Administration’s Rural Tour.

“The extremely depressed dairy prices place an additional burden on a state like Wisconsin, where nearly half of cash receipts that agriculture generates comes from the dairy industry,” Bruins said. “This situation places an incredible strain on not just agriculture, but our entire state’s economy.”

During January through April of 2009, the U.S. all-milk price has averaged $4.80 per cwt. below the U.S. average cash cost of production. In the months since, dairy farmers have lost significant equity.

It is estimated that Wisconsin dairy farmers are now losing at least $100 per month for every cow on their farms. This also equates to a loss of $3 to $4 per cow every day. With Wisconsin being home to approximately 1.25 million cows, this means the state’s dairy industry is losing close to $4 million per day.

There are things the government can and should do in the short term. Farm Bureau proposes temporarily and retroactively increasing the Milk Income Loss Contract program’s counter-cyclical payment. The base amount of milk eligible from a producer would be increased from nearly 3 million to 6 million pounds, and the payment rate calculation would be increased from 45 to 60 percent.

Funded with federal stimulus dollars, this revamped program would run for a three month period, retroactively for the months of July through September.

“While this does not solve the problem, but it does lessen some of the immediate pain,” read Farm Bureau’s position paper to the U.S. Ag Secretary.

Bruins also said dairy farmers need access to credit in the form of guaranteed loans.

“There are long term solutions that our government should undertake that will take time,” he added. “One solution to soften the blows of low milk prices would be to revamp the Milk Income Loss Contracts to a target price deficiency payment that would cover all milk.”

Farm Bureau was very pleased to hear Secretary Vilsack’s comments that support a panel to review the federal milk market order system, because as it stands right now, it doesn’t work.

“Specifically, it has to be modified to acknowledge dairy products for the export market,” read the position paper. “Instead it actually encourages the import of Milk Protein Concentrates. This had led to a situation where in the first quarter of 2009 the United States imported $100 million dollars worth of dairy products more than it exported. This certainly has been a factor in the depressed prices our dairy farmers have received in 2009. We need to address this dairy import/export imbalance. As is the case with many ag sectors, we believe our economy recovery depends on access to more markets.”