The situation calls on Congress and the next presidential administration to work on improvements to the federal dairy program for its renewal in a new farm bill to be debated in 2018.
What the administration and Congress should avoid is throwing more federal money at the dairy economy in an election-year, knee-jerk reaction advocated by some politicians.
At stake is the health of one of the chief engines of the economy in Wisconsin, known as America’s Dairyland. Wisconsin is home to 9,900 dairy farms raising nearly 1.3 million cows and producing about 14 percent of the nation’s milk. The state also is home to more than 200 plants that make dairy products. That includes nearly 140 cheese plants, which produce 26 percent of U.S. cheese.
The dairy industry contributes $43 billion a year to Wisconsin’s economy.
The problem is the price farmers receive for their milk has dropped about 40 percent in the past two years as too much production and too little demand turned the market down. The nation was supposed to cushion such a collapse with a plan called the Dairy Margin Protection Program, adopted as part of the 2014 federal farm bill.
Governments worldwide commonly try to provide stable, affordable food for their populations by protecting farmers from boom and bust cycles. The current U.S. dairy program allows farmers to buy subsidized insurance that pays if the difference between the price for milk and the cost of feeding cows drops too low.
But the program has paid out only a trickle even though farmers are near the break-even point or below it. A chief complaint is the formula used to determine the protected margin for farmers is inadequate.
In fact, only an estimated 80 percent of milk production is enrolled in the program — much of it in only minimum coverage — in part because of farmers’ concerns about the program.
Nonetheless, patience is warranted. The signup for 2017 has begun, and the program has been tweaked to be more farmer-friendly. The coming year’s data should indicate what further changes to make when the program expires in 2018.
But patience might be in short supply. Last month more than 60 lawmakers, including U.S. Sen. Tammy Baldwin, D-Madison, and U.S. Rep. Ron Kind, D-La Crosse, asked Agriculture Secretary Tom Vilsack to “take any and all actions available … to make an immediate market injection and offer financial assistance” to farmers. The intent was to pressure the Agriculture Department to take extraordinary measures.
Dairy farmers are in a financial squeeze. But the Agriculture Department’s experts should be allowed to make the decisions they see as cost-effective for taxpayers. The underlying problem lies with a Dairy Margin Protection Program that deserves scrutiny, aimed at improving it in the next farm bill.
