Senator Patrick Leahy has been actively involved in the drafting of this year’s farm bill and he says the proposal marks a major change in dairy policy.
First, it’s a voluntary program and the primary goal is to stabilize prices. Leahy says it’s very hard for farmers to do any long term planning when milk prices fluctuate too much. "You can’t have a dairy farmer say ‘okay, gee everything is going great this month’, and then all of sudden they have ten months of near bankruptcy. You’ve got to stop this rollercoaster," Leahy says.
Under the bill, dairy farmers would able to purchase an insurance policy that would supplement their income when milk prices drop below the cost of production. Vermont Agriculture Secretary Chuck Ross thinks the approach will help most dairy farmers in the state. "They have the ability to then buy more insurance for more milk and they can protect themselves and their exposure to a down market," Ross says.
There’s a second key part to the bill – one that helps control the overall supply of milk. Ross says it will lower milk prices for farmers, for amounts beyond their base production levels, when there’s too much milk on the market. "That will incent them to produce less milk if we were in significant over supply for a period of time and that will by reducing supply using the basic economics of supply and demand with a steady demand you will see the price go up as the supply comes down," Ross says.
Amanda St. Pierre operates two dairy farms in Franklin County with a total of 2,000 cows. She’s also a member of "Dairy Farmers Working Together." She generally supports the new approach. "So it changes your way of thinking like you buy fire insurance so this should be no different from fire insurance you may or may not need it but it’s a way of thinking," says St. Pierre. "I think what’s really stressing Vermont farmers is cash flow and so that $60,000 say that could be in cash flow that now isn’t because we’re buying another insurance."
The new plan also allows farmers to choose their level of price insurance protection. St. Pierre says it means that farmers will have to decide how much stabilization they need and how much they can afford. "You have to try and figure out where the margins are going to be and that’s a risk you know so once every five years you may use it but you may have spent all this money," St. Pierre says. "It’s a whole philosophy change so it’s hard for us to change like that."
The proposed Farm bill also cuts spending for the food stamp program but Senator Leahy says he’s hopeful that an effort to restore those cuts will be successful. It’s one of more than 80 amendments that the Senate will consider to the bill this week.