House Discusses Milk Prices

As part of the ongoing congressional field hearings address to discuss the 2012 Farm Bill, representatives met in New York to discuss dairy farming and milk pricing.
Milk pricing has been an important issue in New York, where the dairy sector constitutes a major part of its agricultural economy. Over the past decade, milk prices have fluctuated wildly, leading to significant financial hardships for many New York dairy farmers. According to New York Representative Bill Owens, “Farmers are telling me they’ve had a horrible swing in milk prices over the last 10 years, and right now they’re trying to get more stability with pricing. Everyone knows that milk prices are going to move, so this ensures their profit margin stays stable.”
Current milk pricing policy consists of the Milk Income Loss Contract, which pays farmers if milk prices drop below $16.94 per 100 pounds of milk. However, that program is being sized up for elimination in the upcoming farm bill.
A proposed solution floated at the field hearing would be a margin insurance program, which would help guarantee dairy farmers a stable income by comparing national milk prices and feed costs. Farmers who opt into the program would receive federal aid when feed costs rise or when milk prices drop, preventing wild price fluctuation. In addition, the program would attempt to control production, in order to better manage prices, and would fine participating farmers whose production exceeds a preset amount.
The House of Representatives is planning future farm bill field hearings in Arkansas, Illinois, and Kansas.
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Written by: Justin Ellison / Farm Plus Staff Writer