Farmers happy with no milk price hike

Posted: Jan. 2, 2013

Two prominent Lake Country dairymen are relieved that Congress has passed a temporary extension of the farm bill and avoided the possibility of milk prices more than doubling.

The eight-month extension was included in the legislative package approved by the Senate on Monday and the House on Tuesday, which enabled Congress to avoid the "fiscal cliff" of tax increases and spending cuts.

Without the farm bill extension, the federal government would have been required to purchase milk commodities at about $48 per hundredweight, the price established by a 1949 formula, rather than the approximately 2012 price of approximately $18 per hundredweight. Dairy commodity prices are established by the hundredweight because the federal government purchases cheese, butter and powered milk together.

Consumer milk prices could have more that doubled, with a gallon a milk selling somewhere between $7 and $9.

It was a potential financial windfall that Tom Oberhaus of Cozy Nook Farm in the Town of Delafield and Dave Morris of Dave Morris Farms in the City of Delafield did not welcome

"First, it is my federal tax dollars that are going to be spent on unrealistic prices for dairy products. Second, the price the federal government pays is going to drive up consumer prices, which means consumers are going to purchase less dairy products. And third, it is going to make consumers so angry that when prices come back down they are going to be reluctant to buy dairy products in the future," Oberhaus said in an interview Monday, Dec. 31, before the agreement was reached

"I agree with him completely," added Morris, also speaking before the agreement.

Morris and Oberhaus said they would rather the federal government purchase milk commodities at prices established by market conditions rather than federal price support program formula.

"There are a very few people who understand how the formula works. Those who do are real geniuses. I think they make it very, very complicated so one can understand it," Morris observed.

Traditionally, Congress adopts a comprehensive farm bill once every five years, which provides funding for a wide range of agricultural and rural programs as well as funding the federal food stamp program.

However, one of the reasons the adoption of new farm bill had stalled in Congress was because of the so-called Dairy Security Act, according to Politico.com and the Associated Press.

The new program would scrap most of the current price support system in favor of one that tries to guarantee a farmer a $4 margin between average feed costs and milk prices per hundredweight, according to Politico. The program is intended to help protect dairy farmers against sharp decreases in milk prices.

The proposal is supported by large dairy producers but opposed by large food processing companies, according to local dairy farmers and media reports.

Morris said that large food-processing companies have opposed the legislation because it places a limit on the annual production of dairy products on a producer who is covered by the insurance.

"Some of those big food processors produce within a month, the limit they talk about it in the bill," Morris added.

Oberhaus added that some individual dairy farmers also oppose the plan because they can be required to participate in the program and be forced to reduce their annual production if they receive insurance payments as a result of drops in prices created by an over supply of milk.

House Speaker John Boehner (R- Ohio) had refused to call for a vote a version of the bill that apparently had the support of key agricultural committees in the House and Senate.

Boehner, according to media reports, said he did not believe there was enough support in the House to pass the legislation, partly because of the costs of a food stamp appropriation included in the bill.

However, other media sources said Boehner was also siding with giant food processors who opposed the bill.

Once the farm bill was incorporated with the "fiscal cliff" legislation, there were enough votes in the House to approve it.