Earlier this month, the USDA Dairy Industry Advisory Committee ("DIAC") held its final meeting to approve the Committee's report. The recommendations in the final report includes several which should be greeted with enthusiasm by producers. My expectation, as an attorney working with dairy businesses on issues of policy and regulation, is that these recommendations will foster good discussions as the next Farm Bill is developed.
I have summarized just a few of those proposals that point toward real improvement for producers:
• STRONGLY CONSIDER THE ELIMINATION OF END PRODUCT PRICING. Explore alternative measures to the current end product pricing system, such as competitive pricing and mandatory price reporting.
• COLLECT AND PUBLISH PRICE DATA. Collect and publish data on alternative measures of a competitive pay price, considering but not limited to the proposals of the National Milk Producers Federation and Maine Dairy Industry Association.
• ADOPT TAX-DEFERRED FARM SAVINGS ACCOUNTS. Federal tax law should be amended to allow dairy farm operators to create special tax-deferred savings accounts. These accounts should not be subject to matching government contributions and should not have a limit on dollars deferred per year. To be eligible, contributions must remain in the account for a minimum of six months; the account-holder can withdraw their funds at their own discretion thereafter. Payment of income taxes on contributions and interest would occur in the tax year in which the funds are withdrawn.
• SUPPORT REDUCTION OF SOMATIC CELL COUNT STANDARD. Recommend that the Secretary support the adoption of a maximum somatic cell count of Grade A milk in the amount of 400,000 cells per milliliter at the farm level at the Interstate Milk Shippers Conference. The implementation should occur over a period of time not to exceed 48 months.
• PHASE OUT ETHANOL SUBSIDIES. Support the rapid phase out of the blender's credit and tariff on imported ethanol.
• DAIRY LABOR. The Secretary should use his influence with other agencies and Congress to provide a legal means for dairy farms to employ year-around long-term immigrant labor. Provide assurance that existing farm laborers have the opportunity to obtain permanent resident status.
There are certain other recommendations which may not be so universally accepted. Such proposals include modifying the MILC program to trigger based on farm margins and utilize margin insurance to compensate producers who exceed the annual MILC production limitations and adopting a growth management program that allows new producers to enter and allows producers to expand production.
On balance, the DIAC has produced a very thoughtful report at a very stressful time for the industry. Its recommendations should provide meaningful opportunities for discussions about improving and protecting the climate for dairy producers as we move the next Farm Bill.