Senators Push For Dairy Price Stabilization Plan

Vermont Senators Bernie Sanders and Patrick Leahy recently announced the introduction of the Dairy Market Stabilization bill. Under the legislation, farms would have “allowable milk marketings” based on production during the same quarter from the previous year. These allowable marketings, the amount of milk a dairy farmer could produce without a penalty, would be set by the Secretary of Agriculture with advice from a dairy producers board.

Farmers who exceeded their allowable milk marketings would be required to pay a market excess fee for their milk. The fee would be distributed among the farmers who remained within their allowed marketings.

The allowed marketings would be set based on the ratio of milk prices to feed prices. If that ratio, to be calculated by the USDA, was below $1.74, allowed marketings would be reduced. If the ratio were above $3, the allowed marketings would be increased. The ratio would be calculated based upon prices during the three most recent months.

Similarly, the access fee will increase when the milk-to-feed ratio falls and decrease when it increases, allowing for more production when rising prices would appear to signal an increase in demand and a decrease in production when prices began to fall.

The bill parallels a bill previously introduced in the House of Representatives by Rep. Peter Welch (D-VT). Both bills include provisions for a producer referendum on the bill to be held once the program has been in effect for three-years.