06.10.13

Leahy And Sanders Herald New Dairy Program In Senate-Passed Farm Bill

WASHINGTON – Senator Patrick Leahy (D-Vt.) and Senator Bernie Sanders (I-Vt.) said a farm bill that the Senate approved Monday includes dairy safety net provisions that would help Vermont's family farms. The Farm Bill was approved in a final passage vote of 66 to 27.

The new dairy program would replace the existing price supports and direct payments under the Milk Income Loss Contract (MILC) program with a voluntary insurance program that will help protect farm income when profit margins shrink to unsustainable levels.  One provision in the new farm bill would provide insurance to farmers, at modest rates, that would pay them if the price of producing milk falls to $4 dollars above the price of selling milk.  Farmers could buy supplemental insurance for a price differential of up to $8.  To assist small farmers, the price for this supplemental insurance for the first 4 million pounds -- about the annual production of 200-250 cows -- would be lower than the price for larger dairies.  Another provision builds on legislation introduced two years ago when Leahy and Sanders proposed a ‘supply management' system for dairy farms.

Leahy said, “The ideas for this new dairy safety net first took root in Vermont.  It offers new hope for minimizing the rollercoaster price swings that have made dairy farming so precarious for so long and will do so at a lower cost than the current program.”  Leahy is the most senior member of the Senate Agriculture Committee.

Sanders said, “Vermont dairy farmers played an important role in the development of this voluntary insurance program that will help protect farm income when profit margins shrink to unsustainable levels. It will keep farm milk prices from being too low for too long.”

Dairy prices are subject to wild price swings.  When prices drop severely, farmers often milk more cows, making the oversupply worse and driving prices even lower.  The new farm bill provisions would require that participants in the insurance program -- which is optional -- make small cuts in production of 2 percent to 3 percent when there is an oversupply of milk and prices drop.

The change should significantly reduce milk oversupply and the large price swings which have been the major cause of the decline in family dairy farms.

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