June 12, 2023 at 2:20 p.m.
Fighting for the farmer
DBA, Edge Dairy Farmer Cooperative share legislative priorities during policy picnic
Informing farmers about legislative policy priorities was a primary point of discussion May 3 during the Farmer-to-Farmer Policy Picnic held at Farm Wisconsin Discovery Center near Manitowoc. Representatives from the groups discussed 2023 federal policy priorities as well as state budget priorities for 2023-25.
Edge is tackling a hot-button issue for farmers – milk pricing reform. This topic took center stage as Karen Gefvert, director of public affairs, highlighted the ideas Edge is proposing.
“We put together a stakeholder group across the Edge footprint to learn what our member farmers wanted to see in regards to milk pricing reform,” Gefvert said. “We then took a progressive, forward-looking approach of how to make changes to milk pricing.”
Federal Milk Marketing Orders are nearly a century old, and Edge sees a lack of transparency and limited regional flexibility as flaws within the system. Edge is concerned the orders will become irrelevant in the Upper Midwest if provisions to allow updates to the system are not examined during the 2023 farm bill process.
Equal treatment of farmers and processors across the board is at the core of their proposal. Focused on flexibility and fairness, Edge proposes provisions that will strengthen the relationship between farmers and processors in a way that increases transparency, fairness and competition while also providing farms a reasonable amount of price certainty.
Given wide differences in product mixes across the country, Edge believes more regional flexibility in federal orders would benefit everyone. With their proposal, each order would have the authority to operate its milkshed in a way that makes sense for that order. A regional approach would account for geographic differences in population, farmer base and product mix.
Gefvert said there is currently very limited order-to-order flexibility under the law; therefore, a legislative change would be required. Each federal order could then decide whether to seek to amend the pricing structure of its order through an inclusive U.S. Department of Agriculture hearing in their geographic areas.
Avoiding unintended consequences of current uniform price rules, such as frequent switching of pooling status, negative producer price differentials and declining share of total area milk production pooled on the order, is also part of the proposal.
According to Edge, a standard set of contracting principles would provide more transparency while simultaneously building confidence in the system for farmers and processors. The proposed contracting principles would be effective independent of the orders.
Edge recommends contracts and supply arrangements between farmers and processors be constructed in a way that helps processors compete and innovate while strengthening communication and trust between farmers and processors.
According to Edge, some of today’s business transactions between farmers and processors are loosely arranged. Edge is proposing basic contractual expectations that would create structure and certainty. They would like to see all milk supply agreements in writing and timely payments where farmers are paid every two weeks, with no more than a three-week lag. Processors would also be required to give a reasonable notice before terminating contracts.
Transparent pricing formulas are a key part of the legislation Edge is proposing. Milk composition and quality incentive formulas for things like somatic cell count, protein and volume premiums would be clearly spelled out in milk supply agreements, and sufficient notice would be required before changing incentive formulas.
Edge would like to see equal opportunity given to all farmers with no special deals allowed. In their proposal, any incentive offered to one patron must be offered to all current patrons meeting the same criteria set by the processor, including but not limited to differences for farm location, size and quality.
Edge said areas like the Upper Midwest could benefit from the elimination of producer price differentials, replaced by a protein pool premium. In this system, each handler would be required to pay their patrons at least the market-wide commodity value of their product mix plus the protein pool premium. There would not be a uniform price among processors; rather, it would disincentivize depooling and encourage processors to continuously monitor and adjust their product mix as needed to pay competitive milk prices.
Currently, if a farm is located outside of a federal order or its processor is not pooling their milk, there are few guardrails that must be followed. Edge’s contracting principles would ensure those farms have protections such as timely payments, verification of weights and components, and contract termination notices.
Tim Trotter, CEO of Edge, voiced the importance of having programs in place that do not distort the competitive nature of the industry.
“This legislation looks at the Federal Milk Marketing Order program in totality,” Trotter said. “We can’t be held to this legacy program that was developed 80-plus years ago. We need to think about the future of dairy. The marketplace is different now, farming is different, and we need to look at this differently. Edge is making a bold move, but I think it’s the right time.”
Edge also supports the tools farmers can use to manage risk, such as the Dairy Margin Coverage Program. They back equal treatment and full enrollment of all dairy operations and would like to see an increase in the production amount covered under DMC. Edge is against any payment limitations and program participation limits based on farm size.
Chad Zuleger, director of government affairs for DBA and Edge, focused on state budget priorities, touching on programs involving infrastructure and conservation. Zuleger said the Agricultural Road Improvement Program includes $150 million to improve Wisconsin roads.
“The first mile off the farm is critical, and this is a big opportunity to invest in infrastructure,” he said. “We’re really excited about that. It’s getting great response.”
DBA is also working with conservation and environmental partners to advocate for resilient farms and clean drinking water. Expanding eligibility to the Nitrogen Optimization Pilot Pro-gram is one item on the agenda. This program is designed to better utilize nitrogen management techniques that reduce nitrate contamination in drinking water in vulnerable parts of the state. The goal is to increase funding to the program by $900,000.
DBA would also like to maintain the Cover Crop Insurance Premium Rebate Program and increase funding to a total of $1 million per year.
In addition, DBA would like to modernize the Farmland Preservation Program by increasing and simplifying tax credits.
“The preservation program hasn’t been touched in nearly 14 years,” Zuleger said. “There is currently a 15-year enrollment period, and there have been concerns that it ties up the land for too long. We’re asking for that to be reduced to 10 years.”
DBA is also looking to raise the per-acre tax credit to $10 and $12 which would increase program funding by $5.6 million per year and bring support up to a total of $21.6 million per year.
DBA hopes to enhance managed grazing livestock production systems by creating a Transition to Grass Pilot Program. This program would assist farmers intending to strategically transition row crop fields to grass-based grazing or perennial forage production systems for live-stock.
Adding county conservation staff to support and enhance current conservation efforts is another priority, as Zuleger said a number of counties are short staffed. Increasing the program by $9.4 million per year to $18.7 million annually is what DBA is proposing and would bring annual funding up to the statutory requirement.
DBA is working on expanding the Dairy Processor Grant Program. They are also asking for more funds for meat processing and would like to expand the Wisconsin Department of Agriculture, Trade and Consumer Protection Meat Processor Grant Program with a $300,000 per year increase.
“We’re trying to get the baseline moved up to grow our meat processing capacity along-side our dairy processing capacity,” Zuleger said.
Wisconsin agriculture exports continue to rise, and the state’s program has seen tremendous success since its inception last session, Zuleger said. Exports increased over 7% in the first year alone, and the goal is to increase all ag exports by 25% in the next five years.
Reviving the University of Wisconsin Farm and Industry Short Course program is an initiative on DBA’s radar. Gov. Tony Evers has allocated $700,000 for the program to take place at the University of Wisconsin-River Falls with the goal of it being a fully accredited, on-campus, in-person program.
To help ensure the priorities DBA is proposing come to fruition, Zuleger encouraged farmers to invite a lawmaker onto their farm and to stay engaged in local government.
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