presentspresents

Law and Order must be established Law and Order must be established to the Dairy Industry’s to the Dairy Industry’s

““Wild, Wild West Market Chaos” Wild, Wild West Market Chaos”

by Bryan by Bryan GothamGotham

Hermon, N.Y., Hermon, N.Y., Dairy FarmerDairy Farmer

http://128.122.253.144/T-Shirts/nanmv/wildwest.JPG

My Search for Law and My Search for Law and Order Order

• Unchecked markets have created high Unchecked markets have created high levels of unfair lawless market Chaos. levels of unfair lawless market Chaos.

• To survive globally we must adapt and To survive globally we must adapt and reduce chaos by becoming better reduce chaos by becoming better organized supply managers.organized supply managers.

• Milk Market Improvement Act of 2009 Milk Market Improvement Act of 2009 (S.889) provides solutions for Law and (S.889) provides solutions for Law and Order. It is not another band aid and it Order. It is not another band aid and it eliminates excuses.eliminates excuses.

ImportImportChaos Chaos

• Globalization - American dairy farms have a Globalization - American dairy farms have a resource disadvantage compared to New resource disadvantage compared to New Zealand and Australia. We cannot compete. Zealand and Australia. We cannot compete.

• The effects of Globalization must be The effects of Globalization must be managed because it is not going away. managed because it is not going away. Today Globalization is dominating our Today Globalization is dominating our market and history has proven it adds to market and history has proven it adds to volatility and mostly negative Market volatility and mostly negative Market direction. direction.

• Imports of food should be driven by need Imports of food should be driven by need not by greed. not by greed.

Imports Imports Need Law and Order Need Law and Order

• In jeopardy for consumers: food Sovereignty, In jeopardy for consumers: food Sovereignty, food safety and food quality. food safety and food quality.

• American Dairy farmers can not be American Dairy farmers can not be responsible for the worlds oversupply Burdon responsible for the worlds oversupply Burdon caused by imports. With order, we will be caused by imports. With order, we will be responsible for our own domestic oversupply.responsible for our own domestic oversupply.

• Dairy imports have grown at a rate faster Dairy imports have grown at a rate faster than domestic production past two decades. than domestic production past two decades. $3 billion today. $3 billion today.

(source: Jerry Kozak of National Milk Producers Federation)(source: Jerry Kozak of National Milk Producers Federation)

• Concentrated Imports have a higher milk Concentrated Imports have a higher milk equivalent than exports dollar for dollar.equivalent than exports dollar for dollar.

Today we don’t have a Today we don’t have a Supply & Demand Challenge Supply & Demand Challenge

We have an Import Export We have an Import Export ChallengeChallenge

““Asymmetric pricing" Asymmetric pricing" Needs Law and OrderNeeds Law and Order

Wanted Symmetrical Pricing from Farm to RetailWanted Symmetrical Pricing from Farm to Retail

The Sheriff is in TownThe Sheriff is in TownS.889 – Shoots DownS.889 – Shoots Down

Asymmetric/Apex Pricing Asymmetric/Apex Pricing

S.889 provides a stable price Based on National S.889 provides a stable price Based on National Average Cost of Production.Average Cost of Production.

S.889 provides simple price discovery calculated S.889 provides simple price discovery calculated by the Economic Research Service on 23 statesby the Economic Research Service on 23 states Note: research is already conducted, no expanded Note: research is already conducted, no expanded

governmentgovernment The price is not set by the Secretary of Agriculture it is The price is not set by the Secretary of Agriculture it is

adjusted according to changing market data compiled adjusted according to changing market data compiled by ERSby ERS

• S.889 would raise on farm receipts annually from S.889 would raise on farm receipts annually from est. 28 billion to 42 billion if it was in place today.est. 28 billion to 42 billion if it was in place today.

• ALL Manufactured Milk Price ALL Manufactured Milk Price Class II Class II State & Federal orders and Class I Differentials State & Federal orders and Class I Differentials

remain intactremain intact

S.889 Rebalances Profit S.889 Rebalances Profit

S.889 provides new growth and economic S.889 provides new growth and economic policy for Rural America. policy for Rural America.

S.889 is the Young Dairyman’s bill. S.889 is the Young Dairyman’s bill. S.889 supports the trend towards promoting S.889 supports the trend towards promoting

local food.local food. It secures the Homegrown food supply for It secures the Homegrown food supply for

National Security, food sovereignty and National Security, food sovereignty and sustainability . sustainability .

Farmers will have a chance to pay income Farmers will have a chance to pay income taxes and contribute to this economy.taxes and contribute to this economy.

S.889 rebalances the profit back to small S.889 rebalances the profit back to small business from “Big Food”. business from “Big Food”.

To Reduce Import Chaos To Reduce Import Chaos S.889 uses a S.889 uses a

Carrot Carrot S.889 balances the responsibility for the S.889 balances the responsibility for the

over supply from Globalization between over supply from Globalization between the farmer and manufacturer. the farmer and manufacturer. To take To take advantage of the advantage of the guaranteed market funded guaranteed market funded by farmers imports must be by farmers imports must be less than exportsless than exports.. This puts This puts responsibility on manufactures for over responsibility on manufactures for over production caused by excessive imports. production caused by excessive imports.

S.889 provides Farmer S.889 provides Farmer Funded Supply ControlFunded Supply Control

When needed, the Supply Management is two tiered. When needed, the Supply Management is two tiered. The first tier is funded by all farms on up to 5% of milk The first tier is funded by all farms on up to 5% of milk on up to 50% of the class II price. The overproduction on up to 50% of the class II price. The overproduction base on the second tier and it is a base on the second tier and it is a Temporarily Temporarily Active Base.Active Base. I personally am not in favor of a I personally am not in favor of a permanently active base.permanently active base.

The S.889 oversupply production base is only used as a The S.889 oversupply production base is only used as a last resort to control supply. You can produce all the last resort to control supply. You can produce all the milk you want but only get paid for what the market milk you want but only get paid for what the market needs when there is an extreme oversupply. needs when there is an extreme oversupply.

Each tier has the potential of generating a Billion dollars Each tier has the potential of generating a Billion dollars to rebalance supply. to rebalance supply.

S.889 treats all farms sizes equally on both tiers.S.889 treats all farms sizes equally on both tiers. Food pantries, School lunch and other food programs Food pantries, School lunch and other food programs

benefit from the Dairy Farmers Abundance.benefit from the Dairy Farmers Abundance.

Less Government, Less Government, Taxpayer $avingsTaxpayer $avings

• The cost of S889 would be minimal since it would use The cost of S889 would be minimal since it would use existing entities such as ERS, Market Administrators, existing entities such as ERS, Market Administrators, FSA and FAS. Much of the required data collection is FSA and FAS. Much of the required data collection is already being done or could be done with little already being done or could be done with little additional expense. additional expense.

• Support Program will be obsolete. Products are Support Program will be obsolete. Products are purchased at the market not support. purchased at the market not support.

• MILC Program eliminated.MILC Program eliminated.• All current Government food program obligations All current Government food program obligations

remain in effect like WIC.remain in effect like WIC.• S.889 was written by farmers and not Government. S.889 was written by farmers and not Government. Our Government’s role changes and finally brings Law Our Government’s role changes and finally brings Law

and Order to the greed and corruption that has and Order to the greed and corruption that has wiggled into our market.wiggled into our market.

Adapting to Globalization to Adapting to Globalization to SurviveSurvive

We need a new Business Attitude. We need a new Business Attitude. Common sense, law and order is needed to Common sense, law and order is needed to

prevent the damage for everyone involved. prevent the damage for everyone involved. We must think like other small business We must think like other small business (retail stores) managing their inventory (retail stores) managing their inventory surpluses.surpluses.

I Argue we can still be American Dairymen I Argue we can still be American Dairymen that strives to be above average.that strives to be above average.

To compete globally, we must become To compete globally, we must become organized supply managers rather than organized supply managers rather than chaotic supply managers. We must swim chaotic supply managers. We must swim together or we all will sink together. together or we all will sink together.

Trade Issues?Trade Issues?

• Is S889 consistent with the U.S.’ WTO Is S889 consistent with the U.S.’ WTO obligations?obligations?Since the supply management is farmer funded, Since the supply management is farmer funded, the main target is domestic supply and demand. the main target is domestic supply and demand. Therefore, the legislation does not rely on Therefore, the legislation does not rely on government subsidies allowing us to believe it is government subsidies allowing us to believe it is consistent with the US’ WTO obligationsconsistent with the US’ WTO obligations..

• Will S889 require changes to the current Will S889 require changes to the current tariffs and quotas pertaining to imports of tariffs and quotas pertaining to imports of dairy products into the U.S.?dairy products into the U.S.?No changes in current tariffs and quotas would No changes in current tariffs and quotas would be required under this legislation.be required under this legislation.

S.889 In Summary S.889 In Summary

• New Non corrupt Price DiscoveryNew Non corrupt Price Discovery• Processors have incentive to Curb Processors have incentive to Curb

Imports when there is oversupplyImports when there is oversupply• Farmers have new signals to Farmers have new signals to

reduce supply instead of having reduce supply instead of having milk price disastersmilk price disasters