On July 15, Sen. Kirsten Gillibrand, D-N.Y., released a letter drafted to U.S. Secretary of Agriculture Thomas Vilsack. Therein, Gillibrand strongly advocated that the U.S. Department of Agriculture refund the unused portion of the $73 million collected from the dairy farmers who participated in the USDA’s Dairy Margin Protection Program (DMPP) for the 2015 calendar year.
The DMPP was initiated in the 2014 Farm Bill. It was supposed to serve as an improved milk price safety net for dairy farmers. To date, even for a government program, it has been wildly unsuccessful.
Noting the dire straits New York dairy farmers find themselves in and alluding to the ineffectiveness of the DMPP to come to their relief, Gillibrand – the first New Yorker to serve on the Senate Agriculture Committee in 40 years – came right to the point: “Our dairy farmers are struggling. Some dairy farmers are unable to meet their debt obligations, and families are forced to sell off their herds, or are faced with the dilemma of having to make the decision between buying grain or groceries.” She suggested that “returning a significant portion of these [DMPP] premiums and fees originally paid by dairy producers would ease some of their financial strain.”
The DMPP came into favor when the concept of “risk management” was a buzzword on the lips of every politician in Washington, D.C. The DMPP was included in the Farm Bill with much fanfare and great expectation. It was supposed to replace the anemic and discredited Milk Income Loss Contract program, which had underserved as a price safety net for U.S. milk producers.
Since its inception, the DMPP has been a dismal failure. In fiscal year 2015, U.S. dairy farmers paid over $73 million to the USDA to participate in the program. Their return on this “investment”? Approximately $700,000 – less than 0.1 percent of their subscription cost. The remaining $72.3 million was surrendered to the U.S. Treasury, making the DMPP a veritable “cash cow” for the federal government. Its value as a milk price safety net to U.S. dairy farmers? Worthless.
This year, only 48 percent of New York dairy producers have even bothered signing up for the DMPP at any price level, and only .6 percent, or 14 farms, have received any resulting payment.
The DMPP risk management scheme was the brainchild of the National Milk Producers Federation. At the time of DMPP adoption, the federation was quick to claim paternity; now the blame for this epic failure should be laid at its feet.
The federation promotes itself as the spokesman for U.S. dairy farmers, but many dairy farmers do not subscribe to this. It should be noted that, among other controversial corporate members of the federation is Fonterra, the national dairy monopoly of New Zealand, a ferocious competitor of U.S. dairy farm interests.
Given the stingy DMPP payout record to date and the fact that the USDA uses a price calculation figure approximately $2 per hundredweight higher than the actual price received by dairy farmers, any risk of future depleted DMPP funding seems far beyond unlikely.
Nate Wilson, of Sinclairville, is retired after a 40-year career as a dairy farmer in Chautauqua County. He currently is an associate editor of the national dairy industry monthly, The Milkweed.