Ag Policy Blog
Jerry Hagstrom DTN Political Correspondent

Thursday 01/16/14

No Definitive Answers on Possible Dairy Deal

Aides to House Speaker John Boehner and House Agriculture Committee ranking member Collin Peterson declined late Wednesday to confirm media reports that the two had reached agreement on dairy, the biggest remaining impasse in the farm bill, but industry sources said they believe a deal is in the works.

Michael Steel, a Boehner spokesman, said he could not confirm the deal. A Peterson spokeswoman said there was “nothing definitive.”

Another House aide said that committee staff have been forbidden from discussing any aspect of the bill, but added, “I’m hopeful we are on a path to finish this thing!”

One dairy industry source also reported he heard there is a deal without the market stabilization/supply management that Boehner, a Republican from Ohio, has called “Soviet-style” economics, but had not seen any language.

Another dairy industry source said “a compromise is in the works and has been for the last few days.” The only thing certain about the deal, that source said, is that “The safety net will not give the folks in the West a license to over-produce.” That statement would appear to reflect the insistence of Sen. Patrick Leahy, D-Vt., that a dairy deal not disadvantage the northeastern state producers in comparison with the growing Western state dairies.

The Hill reported Wednesday that House Agriculture Committee Chairman Frank Lucas, R-Okla., had said, “We’ve got a good idea and there’s lots of folks looking at it. Let’s just say that nobody said ‘no’ so far, and the world I operate in, it’s a miracle.”

Also Wednesday, with the backing of Republican leaders, Lucas pledged on the House floor that savings from the farm bill could be used to continue a nearly 35-year-old Interior Department program that makes payments in lieu of taxes to local governments surrounded by tax-exempt federal lands, Politico reported. Interior now distributes about $400 million to about 1,900 local governments, but the funding authorization has expired.

“It is my intention to provide funding for PILT in the final conference agreement on the farm bill,” Lucas promised in an exchange on the floor with Rep. Rob Bishop, R-Utah. Lucas also noted that he was acting with the backing of party leaders, Politico said.

If the farm leaders figure out a way for the government to deal with excess production rather than raising costs to dairy processors, that would follow the resolution of previous dairy debates. Dairy processors reacted bitterly to the old Northeast dairy compact that raised their prices, but were neutral on the Milk Income Loss Contract program that made government payments on a limited amount of production when prices were low.

There were reports last week that farm bill conferees and Boehner were considering a proposal that would give producers a choice between a continuation of the MILC program, on the theory it would appeal to smaller producers, and margin insurance without the market stabilization/supply management element, which would appeal to larger producers.

In an editorial critical of the dairy efforts, The Washington Post today noted that the per capita consumption of fluid milk has declined, and a dairy industry source said the reason processors are so opposed to supply management is that they do not want any program that will raise milk prices. A USDA report from 2012 noted that consumption of some other dairy products has increased in recent years.

Both the House and Senate are scheduled to leave for a one-week break surrounding the Martin Luther King Day holiday on Monday. The House is scheduled to go out of session today after votes between 11:30 a.m. and 12:15 p.m. The Senate is scheduled to leave Friday after approving the omnibus appropriations bill to fund the government until the end of the fiscal year on Sept. 30.

Resolution of the dairy deal would ready the farm bill for further consideration when Congress returns the week of January 27. That will be a short week, however. President Barack Obama is scheduled to deliver the State of the Union address on Tuesday, January 28, and the House is scheduled to go out of session the next day for the Republican retreat.

Meanwhile, Sen. Charles Grassley, R-Iowa, has continued his campaign for strict payment limits on farm programs and rules on who can be considered “actively engaged” in farming, arguing that it is unconscionable to cut food stamps without strict farm program payment limits.

But southerners have pointed out that Iowa and other northern states get more benefit from crop insurance, and Agriculture Secretary Tom Vilsack, a former Iowa governor, has said the farm bill has to work in all regions of the country.

Rep. Jeff Fortenberry, R-Neb., a supporter of Grassley’s effort, told The Omaha World-Herald “I'm worried about it. I think it’s, sadly, in trouble.”

Posted at 9:19AM CST 01/16/14 by Jerry Hagstrom
Comments (1)
Hopefully these family farm destroyers will soon realize that providing the largest and most profitable with the largest subsidies and investment/profit guarantees destroys the financial viability of those not receiving the massive financial benefits the government is targeting the most financially viable.
Posted by W Kuster at 10:36AM CST 01/16/14
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