April 05, 2020

Market stressed in USDA milk plan

WASHINGTON — Agriculture Secretary Dan Glickman unveiled a proposal Friday intended to make the nation’s Depression-era system of pricing milk more market-oriented, but critics said it retains too much government control.

For consumers, the effect would be minimal: Officials estimate retail milk prices nationally would fall 3 cents a gallon over a six-year period. But for farmers and dairy processors, the changes would be profound.

The complex rules would consolidate the existing 31 federal milk marketing orders — which determine the prices paid by processors to farmers — into just 11. The differential paid for fluid milk would no longer be based on distance from Eau Claire, Wis., traditionally the top dairy region.

Instead, the new orders would attempt to set prices based more on regional market and transportation conditions. The main impact would be to reduce milk prices that have been artificially inflated in some parts of the country such as the Southeast, where farmers could see prices fall as much as 40 cents per 100 pounds.

Farmers in the Upper Midwest have been the most vocal critics of the 60-year-old system, which they say pays unfairly higher prices to producers elsewhere.

“We were looking for more decisive action from the USDA that would result in immediate changes to make the current system more equitable,” said Sen. Herb Kohl, D-Wis. “We did not get that today.”

But in New England, where the proposal would sharply reduce prices, Sens. Jim Jeffords, R-Vt., and Patrick Leahy, D-Vt., and Rep. Bernard Sanders, I-Vt., issued statements condemning the plan and promising to seek changes in Congress.

“These rules would be a body blow to small dairy farms in New England and across the country,” Leahy said.

“By trying to phase out the basic formula price and move toward a free-market system, USDA is waging war against smaller family farmers in Vermont and throughout the country,” Sanders said.

Consumer advocates who contend the current system inflates retail dairy prices in some regions — consumers in Texas and New York pay about 30 cents more a gallon than those in Minnesota — say the new proposal is far too meek.

“Just changing the formulas is not any kind of reform,” said John Frydenlund, food and agricultural analyst for Citizens Against Government Waste. “It’s different, but it’s not reform.”

Glickman, however, said the sheer complexity of the system and the “politically explosive” regional fights over who benefits mean some government control is essential to ensure “a regular, reliable supply of milk across the country.”

As part of the 1996 farm law, Congress directed the Agriculture Department to make the dairy program more market-oriented by April 1999.

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