Dairy Price Stabilization Act Introduced
Posted: May 12, 2010
The Dairy Price Stabilization Act was introduced on the House floor today by Congressman Jim Costa (D-Fresno) and co-sponsors Peter Welch (D-VT), Joe Courtney (D-CT), Rick Larsen (D-WA), and John B. Larson (D-CT).
Costa says the bill promotes market stability and individual dairy farmers’ ability to grow their own business. “While periods of boom and bust are not new to the dairy industry, our dairy families cannot afford another year of low milk checks that don’t even cover the cost of production,” said Costa. “The dairy price crisis is devastating our local economy and ability to create and sustain jobs. This bill will help the dairy industry get back on track and curb the milk price volatility that is driving dairy farmers in the Valley and our nation out of business”
Watch Costa introduce the bill here via YouTube:
The Dairy Price Stabilization Act would help stabilize dairy prices by better aligning supply and demand. Under the program, individual dairies would have the choice of either maintaining their current production level (plus an allowable year-over-year growth rate based on market indications) or expanding their production and increasing their share of the market.
Dairies choosing to increase their market share would pay a fee during the first year of expansion which is paid out to their fellow dairy farmers who are maintaining their current share of the market. This creates a rational system that allows the market to absorb increases in production by providing a tangible financial incentive for most dairies to manage their production growth.
The structure of the bill is based on unbiased economic analysis and modeling conducted in the past 18 months. Both the growth rate and market access fee would be determined based on market indicators including feed costs which are the largest cost factor for producers in states like California. A producer board of directors would be established to advise the Secretary of Agriculture on any necessary adjustments to program operations. The bill empowers farmers by allowing them to vote on whether to enact the program and, three years after it commences, to vote on whether to continue it.
MikeC Said,
May 13, 2010 @ 5:48 am
This looks a lot like communism to me. Is Courtney trying to take a page out of the Mao Tze Tung’s Chinese playbook?
Bill Fligge Said,
May 13, 2010 @ 1:34 pm
The biggest problem in the dairy industry is GOVERNMENT control and overregulation . The real solution is……..failure, yes that is correct , I said failure. Let the market prevail. If another local business, [and yes having a dairy farm is a business , be it FAMILY or not] fail, we call it poor business practice. If a dairy fails we cry to everyone who will listen and DEMAND a check. It may hurt a little bit at first , but the good operators and stewards of our land will prevail. I know I will take a little flak for being correct , but so be it.
Jake Claro Said,
July 15, 2010 @ 3:14 pm
But Bill, many farms fail as you put it because large-scale industrial farms inflate supply beyond demand and drive prices down, making it unaffordable for small dairies to stay in business because their margins are so slim. This volatility is actually the result of a market failure itself–the incentives for individuals in essence hurt the overall health of the industry. You are suggesting, implicitly, that the good operators and stewards of the land are the ones who are unnecessarily adding cows/produciton and push more supply into the market than is needed. Survival does not necessarily equate to better stewardship or “good” operators. You’ll have to provide more logical connections than merely stating it as so to make your argument plausible.
best,
Jake Claro