Keeping up on Important Initiatives, Issues

Geoff Vanden Heuvel

Geoffrey Vanden Heuvel
Geoff Vanden Heuvel

Editor’s note: The author, a dairyman in Chino, Calif., is a board member and economics consultant for the Milk Producers Council. This piece appeared in the MPC newsletter dated Sept. 1 and is used here with permission.

As the summer comes to a close and folks begin to engage again, there are a number of issues to keep our eye on that affect the California dairy industry.

Trade

California sells a huge amount of NFDM and Skim milk powder to Mexico. Negotiations have begun to revise the North American Free Trade Agreement. The Mexican and American dairy industries just came out with a joint list of priorities for that negotiation. You can read them here. It is very encouraging to see the cooperation between our dairy leadership and the Mexican dairy leadership. We have a lot riding on a successful resolution to this issue.

Immigration

The House Judiciary Committee and its Republican Chairman, Congressman Bob Goodlatte, are working on a bill which they hope to move through the legislative process soon that would create a new visa category, H-2C designed to boost the agriculture labor market. It would apply both to workers currently in the U.S. and it would allow new workers from outside the US. It would eliminate bureaucratic red tape and be administered by USDA. It requires that anyone currently working in dairy/livestock and agriculture participate in the H2C program within two years. Also, immediately upon enactment, workers in the U.S. would be protected from apprehension and deportation. It would allow H2C workers to obtain a driver’s license. For more information, visit www.americandairycoalitioninc.com

Water

The California Water Fix, designed to create a more reliable plumbing system to move water from Northern California to Central and Southern California, continues to move forward. The loudest opposition to this plan Page 4 of 5 comes from In-Delta interests who have fought for decades to keep any type of direct connection between the Sacramento River, which conveys water for the Central Valley Project and the State Water Project, to the California Aqueduct and the Delta-Mendota Canal from happening. There is a very informative white paper which outlines the plan and its impacts which you can read here.

At present, the major California water districts that will use, and therefore must pay for the construction of, the Water Fix infrastructure are considering approvals. While the price tag of the California Water Fix is big, the agencies that serve urban Southern California and the Silicon Valley will pay a large portion of the cost. What California agriculture has learned the hard way over the past few years is that there is something worse than expensive water – no water. Without a reliable connection between the surface water supply in the North, and the water demand in the Central Valley, our future in California agriculture is at serious risk. Now is the time to address that.

Farm Bill/Safety Net

The Margin Protection Program (MPP) implemented in the last Farm Bill has its critics, and suggestions for improvements have been made, which you can read about here.

In addition to improving the MPP, the American Farm Bureau has developed and submitted to the Federal Crop Insurance Corporation, a Dairy Revenue Insurance Plan. You can find out the details here.

This plan utilizes the Crop Insurance model to enable dairy producers to purchase insurance that will provide protection against unexpected drops in milk prices. The coverage itself can be tailored by each producer to fit your particular market utilization. It operates on a quarter by quarter basis and you can pick whether you want to insure your cwt. milk price or if you have high components, you can insure them as well. Premium subsidies of up to 60% would be provided by USDA. Currently the government provides billions of dollars of subsidies to help farmers purchase crop insurance for other commodities. One policy change that will need to be made is that the Secretary of Agriculture needs to decide that milk is a commodity that would qualify under the commodity Crop Insurance Program. This determination is at the discretion of the Secretary and does not require Congressional action.

The go or no-go decision on the actual Dairy Revenue Insurance Program will be made by the Board of the Federal Crop Insurance Corporation. Since submission by the Farm Bureau, it has undergone review by dairy economics experts who have refined the program. All indications are that the Board of the Crop Insurance Corporation views this proposal favorably so far and what the Farm Bureau is looking for is support from producers and their organizations for this program. This looks like a very promising opportunity to obtain affordable downside milk price protection.