Potential change to dairy program in farm bill gets industry's attention

Written by Ben Allen, General Assignment Reporter | Nov 4, 2013 2:27 PM

(State College) -- The US House and Senate are trying to work out their differences on a new farm bill. One of the key divisions centers on dairy. 

Cow milk

The Senate version has split the dairy industry in Pennsylvania.

It could sporadically affect government insurance reimbursement rates for milk produced by dairy farmers.

The Senate's farm bill would essentially set a ceiling for the milk supply, and offer lower rates for the milk dairy farmers produce above it.

Some farmers see it as government trying to control the market, and Penn State agricultural economics professor Jim Dunn acknowledges their point.

"Especially dairy farmers having a real difficulty in adjusting their milk production to changing conditions. A cow will give milk for an extended period of time, and you can't just turn the milk off like you can turn off a faucet."

But in the end, Dunn says it's a prudent move for the future.

"That's an important issue because the consumption of dairy products per capita is not growing, and the population is growing very slowly. So, unless we export a lot of milk, what happens is the industry can easily produce more milk than the market can easily absorb."

The dairy industry itself is split. Some groups in the state and some of the largest food makers in the world like Kraft and Nestle oppose the change, saying it would discourage future investment. Others see it as a chance to stabilize the market.

Negotiations between the House and Senate on the farm bill are ongoing.

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