Rep. Larsen co-sponsors dairy price stabilization bill

The Bellingham Business Journal

U.S. Rep. Rick Larsen, D-Everett, along with California Congressman Jim Costa and three other congressmen from Vermont and Connecticut, introduced legislation designed to protect local jobs and strengthen the nation’s dairy industry. The Dairy Price Stabilization Act promotes market stability for farmers and helps family farmers protect jobs and grow their businesses.

Larsen said the Washington state dairy industry is the tenth largest in the nation and the 128 dairy farms in Whatcom County produce the second greatest amount of milk in the state.

“This means many local jobs and hardworking families depend on stability in the dairy industry,” Larsen said in a statement. “Every day, countless farmers and families throughout northwest Washington suffer through the roller coaster that is the dairy market.”

Larsen said Rep. Costa’s bill makes important steps toward stabilizing the price of milk, which is a top priority for dairy farmers. However, he recognizes that this is only a first step in responding to the concerns that dairy farmers have around the country.

In 2009, dairy farms across the nation were devastated by one of the worst price crises of the last 40 years. Last June, prices dropped to an average of more than $6 per hundredweight, dramatically below the cost of production. An inconsistent national support system and the absence of a national supply management plan has exacerbated the price instability and created an unsustainable business cycle for many dairy families. In 2009, America’s roughly 65,000 dairies lost more than $12 billion. Sharp losses forced dairy farmers to lay off workers and, in many cases, shutter their operations.

Jim Werkhoven, chairman of the board at Darigold and the Northwest Dairy Association, said Congressman Larsen has been an active advocate for sound dairy policy.

“We appreciate Mr. Larsen’s continued interest and for his sponsorship of Congressman Costa’s Dairy Price Stabilization Program. We believe this proposal is a positive step in creating the necessary dialogue on dairy policy to bring the entire industry together,” Werkhoven said in a statement.

The Dairy Price Stabilization Act would help stabilize dairy prices by better aligning supply and demand. Under the program, individual dairies would have the choice of either maintaining their current production level (plus an allowable year-over-year growth rate based on market indications) or expanding their production and increasing their share of the market.

Dairies choosing to increase their market share would pay a fee during the first year of expansion which is paid out to their fellow dairy farmers who are maintaining their current share of the market. This creates a rational system that allows the market to absorb increases in production by providing a tangible financial incentive for most dairies to manage their production growth.

Mike Schoneveld, president of the Whatcom Dairy Federation, also supports Larsen’s efforts.

“The dairy industry has worked on this production stabilization plan for three years and we appreciate Rick Larsen’s support now that it is a bill,” Schoneveld said in a statement.

The structure of the bill is based on unbiased economic analysis and modeling conducted in the past 18 months. Both the growth rate and market access fee would be determined based on market indicators including feed costs which are the largest cost factor for producers in states like California. A producer board of directors would be established to advise the Secretary of Agriculture on any necessary adjustments to program operations. The bill empowers farmers by allowing them to vote on whether to enact the program and, three years after it commences, to vote on whether to continue it.

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