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Gillibrand Seeks Review Of Milk Pricing System

U.S. Sen. Kirsten Gillibrand is calling on the U.S. Government Accountability Office to reevaluate the milk pricing system for small farms.

In a virtual press conference Thursday morning, Gillibrand — chair of the Senate Agriculture Subcommittee on Livestock, Dairy, Poultry, Local Food Systems, and Food Safety and Security — asked for a review of the system as a followup to her legislation, the Dairy Pricing Opportunity Act, that seeks to reform and modernize the federal milk pricing system.

Gillibrand requested that with the report, the GAO would provide information to help modernize the Federal Milk Marketing Order system and make it so that it is working in the best interests of all dairy farms, but with a focus on small and mid-size farmers.

The Dairy Pricing Opportunity Act introduced a bill requiring the U.S. Department of Agriculture to initiate hearings that review the federal milk pricing system. The bill was introduced in the Senate in December 2021.

The current system is almost a century old, Gillibrand said, and does not take into account today’s problems such as COVID –which wreaked havoc on the price of milk in 2020 — and climate change.

“New York state is the fifth largest dairy producing state in the country,” Gillibrand said Thursday, “and yet, we see our small farmers filing for bankruptcy, and sadly committing suicide. Our current milk pricing system is wholly inadequate and nearly a century out of date. Volatile milk pricing and industry consolidation, among other factors, have left thousands of family farmers with no choice but to leave the dairy industry entirely.

“It is time for comprehensive reform. We need a system that fairly compensates our dairy farmers, reflects the modern marketplace, and puts power back in farmers’ hands. I urge the GAO to rapidly provide the requested information so that we can begin to create a system that works for New York’s small farmers.”

Currently, it also takes more money to produce a gallon of milk than what the small farmer gets paid for it, which Gillibrand said is based on the price of cheese in Chicago — one more reason why the system needs reevaluated.

“We have seen a decline of 20% in small dairy farms in recent years,” Gillibrand said. “It’s time to reevaluate the system and include the voices of the small farmers.”

She said the U.S. has lost nearly 60% of its overall dairy operations since 2003.

In this review, Gillibrand is asking that the GAO answer six questions: can the FMMO Program be administered under its current statutory authorization to maintain operation of smaller-scale farms, or must the enabling legislation be amended in order to achieve this objective? If needed, how should the FMMO Program’s enabling language be revised to best assure the sustainability of small and mid-size dairy farm operations while still accounting for the importance of larger scale farms? Should the enabling language replace the uniform national Class II-IV pricing series with differing pricing formulas and pooling provisions that reflect the distinct marketing conditions among the nation’s regional dairy markets? Is a tiered producer payment structure reflecting the different costs of production for different-sized operations a viable method of achieving the policy objective?Is incorporation of cooperative base excess plans into the FMMO Program, or some other form of governmental regulation of milk production, together with pooling and price regulation, necessary to achieve the policy objective? Would such revision to the FMMO program also reduce the costs for states that have implemented programs to maintain operation of small and mid-size dairy farms?

“We have to do what is in the best interest for the small farmers,” Gillibrand said. “We need a system that compensates fairly. We need to make it a system that will work for everyone.”

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