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Dairy Support Letter
August 29, 2007
By Pete Sepp
The Honorable Tom Harkin, Chairman
Dear Chairman Harkin and Ranking Member Chambliss:
We strongly urge you to oppose any efforts to expand the Dairy Price Support program during the authorization of the 2007 Farm Bill, and instead request that you allow this counter-productive scheme to expire. Creating a larger dairy price support scheme in the 2007 Farm Bill would be an inexcusable taxpayer-funded corporate subsidy of an ineffective and mismanaged USDA program.
Under a Congressionally mandated study in the 2002 Farm Bill, the USDA reported to this Committee that dairy programs raise consumer costs and government expenditures but offer minimal support to producers. On average, during the 2002 Farm Bill period this support raised average milk prices by only 1 percent for producers, but cost taxpayers an average of $866 million annually. This is an intolerable waste that should not be perpetuated in the 2007 Farm Bill.
The House rejected efforts by the National Milk Producers Federation (NMPF) to raise the Dairy Price Support program, but it accepted other onerous aspects of the NMPF's proposal to remove authority for USDA to mitigate program costs. In addition, the House-passed Farm Bill sets separate support prices in law for butter, nonfat dry milk, and cheese. This effectively puts a price floor under all milk because dairy commodities are used in USDA's classified pricing system to set minimum fluid milk prices.
We strongly oppose these changes because they would raise taxpayer and consumer costs, while increasing the incentive for plants to make products for the government rather than for the marketplace. The Senate should eliminate a number of anti-taxpayer and anti-consumer provisions in the 2007 Farm Bill, and dairy price policies should be at the top of that list. We stand ready to assist you with this and other vital agricultural policy reforms.
Vice President for Strategy
David E. Williams
Against Government Waste
J. William Lauderback