The Trouble With Milk Part 3

The Trouble With Milk Part 3. I'm Greg Martin with today's Line On Agriculture. We've been talking with Rob Vandenheuvel, General Manager, Milk Producers Council about how the milk and dairy industry has gotten to this point. Price spikes and ebbs have created an uncertain market for producers. Now legislation has been introduced that the Council believes would help eliminate those drastic changes. VANDENHEUVEL: This program that we've talking about, it's called the Dairy Price Stabilization Act, it's actually been introduced into the Congress – HR 5288. What it would do is for dairies that want to plan their expansion as part of their business model, they're going to go right ahead and do it. We want them to do it; we want to continue to grow as an industry. We're going to continue to find new markets both domestically and internationally and we want U.S. farmers to be in a prime position to be able to meet those market demands. Producers that are looking to remain pretty much the same will have an incentive to maintain their level of production. But for the growing producers, they will face a fee to help offset that growth. VANDENHEUVEL: It gives us an incentive to manage supply and so when the price os going up we're not going to have every dairy rushing out and trying to pump a little more milk through the pipeline and so we'll avoid the big crash. We're going to have continued ups and downs in the industry but it won't be like - I like your description of the rope snap – it won't be the rope snap because we won't be constantly over-reacting to everything. He says this bill is not just about adding more government to a difficult issue and he says that the industry will be allowed to monitor itself. VANDENHEUVEL: There is an oversight group, industry group, that if necessary can make changes and so it's really industry regulating ourselves but we need the government to make sure that everybody across the country is on the same playing field playing by the same rules because we've been trying to do a supply management program for the last 5 or 6 years on a voluntary basis and you end up only getting 60 or 70% of the producers actually participating. But even though this sounds good there is a vast difference of opinion in the industry. VANDENHEUVEL: The Dairy Farmers recognize that if we go to a deregulated industry we would probably get rid of this rope snapping volatility. The downside is they recognize that we get back to that original problem of well if the government is not involved as a referee in this negotiation; we're at the mercy of the processors. On the flipside you've got the processors and their message is clear. A: the volatility isn't that bad and B: their point is well we need to get less government regulation. They certainly want to see us go more toward the poultry and pork industry, more toward that scenario where there's vertical integration. That's today's Line On Agriculture. I'm Greg Martin on the Ag Information Network.