Possible dairy policy changes could mean tough choices for farmers
The high cost of production coupled with low milk prices have made it difficult for dairy farmers to turn a profit in recent years. New policies that could soon be up for a vote in Congress may offer relief, but could also require more difficult decisions. Our Sarah Blazonis has more on the Dairy Security Act, what it could mean for farmers, and what it could cost taxpayers.
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ONEIDA COUNTY, N.Y. -- Running a dairy farm recently has meant watching the cost of everything go up while the cost of milk can't quite catch up.
"Energy, feed, fuel, insurance, even though the milk price is higher, that doesn't seem to be more than enough to compensate for all the other increases," said Bill Paddock of Groeslon Farm in Remsen.
"We saw significantly low prices in 2009, and that really sealed the coffin for many dairy producers, unfortunately," said Mary Lynn Collins, the dairy and livestock community educator for Cornell Cooperative Extension.
The Dairy Security Act means to change that.
Cornell Cooperative Extension in Oriskany held an information session to educate farmers about that and other measures Congress is expected to consider to ease the financial burden on farmers.
The plan would replace current ineffective safety nets with a type of insurance system. When the margin between the price of production and the price of milk reached a certain level, the government would reimburse farmers for part of the money lost. Farms could opt for coverage to kick in at different margin levels, but once their level is hit, the government would mandate they temporarily cut back production.
While the new policy is expected to make the price of milk produced by these guys more manageable for farmers, experts said it might not be right for all farms.
Agriculture experts say although figures suggest the country could save $131 million over ten years, all farms could lose a significant amount of net income over five years. Dairies with 250-600 cows would be most vulnerable. It could also pose a risk to taxpayers to the tune of $3 billion.
"Instead of crop insurance where you have private insurers assuming most of the risk, the government would assume all of the risk with this insurance program," said Sherry Bunting, a longtime agriculture writer.
The act could be voted on as early as next month.
To learn more about the new policies that could be passed as early as next month, visit: www.dpac.net and cliwww.futurefordairy.com.