Dairy support package slows ag spending bill

Oct 9, 2009
by DTN
Dairy support package slows ag spending bill

The U.S. dairy industry is really several related industries, with high levels of specialization by area of the country. The traditional northeastern and midwestern producers frequently focus on fluid milk production—the cartons seen in supermarkets. For many of these firms, dairy products like cheese are byproducts—very important, but not their central focus.

For many producers in the West and Intermountain West, dairy products are the primary products. And, for many of these firms, direct payment programs with low payment limits based on retail milk prices have limited interest.

This split in interests is not new, but it has emerged now to delay the fiscal year 2010 ag spending bill. The fight is over a tiny part of the total package—some $290 million in “direct aid” to producers.

Sen. Barbara Boxer, D-CA, placed a hold on the conference report last week because she has “serious concerns that the emergency spending included to assist dairy producers will be used in a way that discriminates against dairies in western states.” Eastern lawmakers, especially New York’s two senators, have argued the aid should be allocated in ways focusing on help to small producers.

The dairy provisions were originally included in a Senate amendment by Sen.

Bernie Sanders, I-VT. The effort was to support a $350 million increase in USDA spending, but the details of the additional support were kept “generic” to meet Senate rules on legislating via the appropriations bills—even as Sanders worked with lawmakers in the House and Senate to define how the funds would be used.

House and Senate negotiators agreed to allow the special dairy spending as defined—vaguely—in the Senate’s version, which called for two efforts, a $290 million increase in “direct support” and $60 million

in purchases of cheese and other dairy products for food banks and nutrition programs. Political support for that approach appeared solid, and Sen. Diane Feinstein, D-CA, and Rep. Sam Farr, D-CA, both signed the conference report.

But, tensions are never far below the surface in dairy policy and the Congressional Dairy Farmers Caucus went to USDA to lobby Secretary Vilsack to manage the new spending in a way that would favor small producers—an effort which apparently upset western producers. However, because the spending bill was so far advanced—and since the conference report cannot be amended—Boxer’s main recourse was to put a hold on the package.

She has also requested a meeting with Vilsack to press her case that the aid needs to be distributed in a way that does not discriminate against large producers.

Once Boxer meets with the secretary, she is expected to allow the bill to go forward— assuming some horse trading on dairy policy can be worked out to satisfy currently unhappy western dairy producers.

For some reason, the western producers got active in this squabble very late in the game—so any effort to cut a different deal must be based on a handshake with Vilsack or an amendment to a different legislative vehicle, a messy legislative process, but one that is used all the time.

And, it is one that raises serious questions about the management of the agricultural policy framework. It is one thing to attempt to define legislation and/or programs based on the need for assistance of an important group. It is quite another to allow a system where benefits for one group provide the basis for ratcheting up benefits for another group in the name of equality—a system that has no real boundaries, and which never can be equitable, Washington Insider believes. — DTN