Goodlatte to Va. Dairymen: Supply Management Hurts Dairy Industry

3/2/2013 7:00 AM
By Jennifer Merritt Virginia Correspondent

ROANOKE, Va. — Last year’s Virginia State Dairymen’s Convention closed with a warning from Charlie Garrison of the South East Dairy Farmers Association.

“If we don’t get a Farm Bill for 2012 and we end up going for a one-year extension of the existing policy, dairy has got a problem,” Garrison said.

Unfortunately, with the uncertainty of the “fiscal cliff” negotiations, that is exactly what farmers got. Congress extended parts of the Farm Bill that expired in October 2012 until September 2013, reverting back to a safety net that many believe is outdated for dairy farmers.

It’s no surprise that discussion of the Farm Bill featured prominently at this year’s Virginia State Dairymen’s Convention. What was perhaps surprising was the visit during the annual meeting and luncheon from U.S. Rep. Bob Goodlatte, R-Va., and his explanation for why he doesn’t support the Farm Bill as it is being proposed.

Goodlatte represents the Shenandoah Valley, one of the largest agricultural areas in the state and home to most of Virginia’s dairy production. While he said agriculture is important to him, he warned the same is not necessarily true for his counterparts in the House of Representatives, many of whom represent urban and suburban areas.

“There is sort of an unholy alliance that was developed many years ago to get votes from urban and suburban members by having the nutrition portion of the (Farm) Bill,” Goodlatte said.

The nutrition portion of the Farm Bill was projected to rise from 77 percent of the bill to 79 percent, he said.

“Today, we clearly have the tail wagging the dog and food stamps, which cost close to $80 billion a year, have grown by 270 percent the last 10 years.”

The entitlement programs and their contribution to the deficit are what bother Goodlatte. Reforms to the bill had a small budgetary impact, he said.

“Out of the $800 billion that will be spent over the next 10 years, they are going to cut $16 billion, but that isn’t even really a cut; the program is just going to increase by $16 billion less,” Goodlatte said. “That is not enough reform of a program that has all kinds of problems and all kinds of abuses.”

While he cited that as his primary reason for not supporting the Farm Bill, Goodlatte said he has other concerns about the dairy program. He said he is satisfied with 80 percent of the dairy portion of the bill; his problems are with the supply measure part of the program.

“If we’re going to do what your job is, which is to grow dairy sales, I don’t think a supply management program where you tell farmers that you can either reduce the size of your herd or not receive federal government funds that your competitors will receive is the way to do it,” he said.

Goodlatte assured farmers that his stance wasn’t the result of a deep-seated dislike of dairy programs.

“My concern is, knowing how markets work, I think a supply measure program like the one designed by my friend, Colin Peterson from Minnesota, and supported by National Milk will have the effect of making it very difficult to grow the dairy markets, because when supply goes up as you know price goes down,” Goodlatte said. “That’s the crux of your problem because your costs are very much fixed.

“When supply goes up and a government bureaucrat steps in and says now supply is too high, you must reduce the size of your herds in order to reduce overall production and therefore manage price, the attractiveness of opening new markets with that lower cost milk or of encouraging consumers to buy more of it because it is a little less expensive or sometimes even a lot less expensive means that that opportunity gets lost.”

Goodlatte said he could support a bill that included 80 percent of the reforms proposed by National Milk along with an insurance policy that adds a payment from the federal government if milk prices drop too low.

“It’s a more free market approach, but it’s not a completely free market approach,” he said. “It’s one that recognizes that there are great risks and almost an impossibility of staying in business for some when prices fall too low.”

With the Farm Bill in stasis, the future is uncertain for all farmers, including dairy farmers. In a statement on behalf of the Virginia State Dairymen’s Association, Eric Paulson expressed disappointment that a comprehensive Farm Bill did not pass in 2012.

“The dairy specific components of the proposed Farm Bill would have been a positive step forward for the dairy industry,” Paulson stated.

He called the Farm Bill extension “a band-aid approach that doesn’t solve the underlying issues that dairy farmers face on a daily basis.”

The state dairymen’s association cited “increased volatility and increasingly lower margins” that are continuing to put pressure on dairy farmers. The association wants a system that allows dairy farmers “to receive a fair price for their milk without the need for additional government involvement.”

Goodlatte left the luncheon joking with farmers by saying, “I’m from the government and I’m here to help.”

The Virginia State Dairymen’s Association is counting on it.

“We are committed to working with Congressman Goodlatte and the rest of the Virginia congressional delegation on the passage of a Farm Bill in the months ahead,” Paulson stated.


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10/25/2014 | Last Updated: 11:16 AM