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Perspective:
Industry Issues

‘Stop fighting, start fixing’

Connie Tipton

Connie Tipton is president and CEO of the International Dairy Foods Association. She contributes this column exclusively for Cheese Market News®.

A growing grassroots group called “No Labels” is using the tag line “stop fighting, start fixing.” The group’s mission is to get Washington working toward real bipartisan solutions for our country — a tall order but very important. I’m borrowing that tag line for this column, because I think it’s a good rallying cry for the dairy industry as we approach a new year.

We can all see that we are not getting good, long-term solutions from Washington. Instead, we have a jumble of laws and regulations that inflate costs and impede advancements and innovation. Many of our dairy laws have been on the books for 70 years or more; some are more recent, but almost none of them fit in today’s marketplace, which offers abundant opportunities for growing the U.S. dairy industry at home and around the world.

For the dairy industry, the federal government has made going to market unwieldy and, in some cases, unaffordable. Whether it’s inflating corn prices through legislation and regulations that put fuel before feed or food; immigration policies that don’t allow access to legal, willing workers; inflexible standards of identity that stifle product innovation; or long-term pricing regulations at both state and federal levels that interfere with markets working, we have a problem.

But our dairy industry cannot expect Congress and the White House to start fixing these things unless we can find our own areas of consensus. We must adopt an approach for U.S. dairy to stop fighting and start fixing.

A good example is that nearly everyone in the U.S. dairy industry and supply chain, from producers to processors to consumers to taxpayers, wants to end outdated farm safety net programs. And there seems to be broad consensus that the centerpiece of a new dairy safety net policy should be a margin insurance program that protects dairy producers from catastrophic drops in profitability, yet doesn’t greatly inflate milk and dairy costs for consumers or taxpayers.

Yet, the transition to a margin-based safety net still is pending in Congress because some dairy producer groups want to restrict access to the insurance program to those who also agree to allow the federal government to restrict farm milk supply at times. Under the program, producers will periodically be subjected to production limits and will be forced to pay a portion of their income to USDA. Instead of accepting the compromise approach offered by House Representatives Bob Goodlatte, R-Va., and David Scott, D-Ga., our industry has been fighting over a highly controversial proposal that would increase government control of the U.S. dairy industry.

Just as with Washington, we have internal differences in the industry, but I believe it is time for us to move toward the market and away from government. It’s an approach that the cattle industry has long embraced and used with success. Let’s at least give it a try, because what we’re doing now sure isn’t working.

Let’s look at some of the facts.

• Dairies in some parts of the United States are going bankrupt or just giving up because high feed costs are taking all potential profits. This is exacerbated by policies that inflate the price of corn by diverting supplies to make fuel instead of having those supplies available for feed.

• Milk pricing regulations in California that differ from the federal system are creating competitive challenges for some dairy products and producers.

• New yogurt facilities in New York are raising demand for milk above levels locally available, and this supply shortage will start reverberating through nearby regions. Adding to the problem, classified pricing often keeps milk from moving to its highest value use based on market competition.

• Per capita consumption of fluid milk continues its steady decline, eroding overall fluid milk sales. And while the market for fluid milk is weak, the regulated pricing system continues to charge the highest premium to Class I users for their milk supplies.

The Bain & Co. study of dairy supply and demand around the globe, which was conducted on behalf of producers, highlighted the importance of increased trade for our industry. It also emphasized the need for pricing policy reform, beneficial trade treaties, tools to manage volatility and various paths to better meet the needs of global customers.

Whether in the dairy industry or Congress, we all need to start the new year with an attitude that will allow us to stop fighting and start fixing.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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