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Somebody in DC notes the plight of U.S. dairy farmers

By Nate Wilson
July 27, 2016

On Friday, July 15, U.S. Senator for New York Kirsten Gillibrand released a letter to U.S. Secretary of Agriculture Thomas Vilsack. Therein, Sen. Gillibrand strongly advocated that USDA refund the unused portion of the approximately $73,000,000 collected from the U.S. dairy farmers that participated in USDA’s Dairy Margin Protection Program (DMPP) for the 2015 calendar year. The DMPP was initiated in the 2014 Farm Bill; it was supposed to serve as an improved milk-price safety net for U.S. dairy farmers. To date, even for a government program, it has been wildly unsuccessful.

Noting the dire straits New York dairymen find themselves in and alluding to the ineffectiveness of the DMPP, Gillibrand, the first New Yorker to serve on the Senate Agriculture Committee in 40 years, came right to the point: “Our dairy farmers are struggling. Some dairy farmers are unable to meet their debt obligations, and families are forced to sell off their herds, or are faced with the dilemma of having to make the decision between buying grain or groceries.” Her suggestion: “...returning a significant portion of these, (DMPP) premiums and fees originally paid by dairy producers would ease some of their financial strain. We must not hesitate to take swift action to aid the troubled dairy farmers of New York.”

The DMPP came into favor when the concept of “risk management” was a buzzword on the lips of every politician in Washington. As such, the DMPP was included in the 2014 Farm Bill with much fanfare and great expectation. It was supposed to replace the anemic and discredited Milk Income Loss Contract, (MILC) Program that had under-served as a price safety net for U.S. milk producers. Since its inception, the DMPP has been a dismal failure. In fiscal year 2015, U.S. dairy farmers paid over $73,000,000 to USDA to participate in the DMPP. Their return on this “investment”? Approximately $700,000—less 0.1 percent of their subscription cost. The remaining $72,000,000-plus was surrendered to the U.S. Treasury, making the DMPP a veritable cash cow for the Federal government. Gillibrand’s letter notes that this year only 48% of New York dairymen have even bothered signing up for the DMPP at any price level, and only .6%, or 14 farms, have received any resulting payment.