Welch Optimistic About Dairy Pricing Reform

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(Host) Congressman Peter Welch says he’s optimistic that Congress will consider a dairy pricing reform bill this year.

Welch says his plan would create a supply management system that would stabilize milk prices for dairy farmers.

VPR’s Bob Kinzel has more:

(Kinzel) Welch says the current dairy pricing system no longer works because it’s based on a convoluted formula that very few people completely understand.

Speaking on VPR’s Vermont Edition, Welch said it’s a system where prices experience dramatic peaks and valleys in a relatively short period of time. And he says this wild fluctuation of pricing encourages farmers to increase production levels in good times and bad:

(Welch) "What happens in the current dairy pricing support system is that when the price of milk goes up farmers start adding more cows to try to take advantage of the higher price. That drives the price down – you have a 2 or 3 percent increase in production, you might have a 20 or 30 percent reduction in price – and then when the price goes down farmers try to compensate by again adding production and it’s not a sustainable model."

(Kinzel) Instead, Welch is backing a supply management approach. Under this model, farmers would be paid a fair price for a specific amount of milk and they would be paid a lower price for all milk produced above this level:

(Welch) "It will require some restraint in good times by farmers but it would give them some break in the bad times as well. The goal here is to have a bill that’s going to be helpful to Vermont sized farms and really mitigate this wide price volatility that is squeezing our farms and putting them out of business."

(Kinzel) Welch is a member of the House Agriculture committee.  He says he’s encouraged that Republicans leaders on the panel want to address this issue this year.

(Welch) "There’s some hope here. That we want to take up the dairy issue this year and the Farm Bill is going to be done in 2012. So they’re separating this out, seeing it as a significant but separate challenge for us."

(Kinzel) Welch says he’s pleased that a large number of dairy farmers in Vermont have expressed support for the supply management approach and he says it will be very difficult to pass a reform bill without this kind of support.

For VPR News I’m Bob Kinzel in Montpelier.

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