U.S. Dairy Security Act would increase government spending over long term, tax dairy farmers by US$500M over 10 years, decrease exports and encourage imports, International Dairy Assn. says
November 18, 2011
– Joint Select Committee on Deficit Reduction Should Reject Dairy Security Act
"I have been in Washington a long time now, and I am very concerned about the direction our nation is taking. Our government's deficit spending is not sustainable, and I commend Congress for its hard work in addressing this problem. But the way the super committee process is being used to enact the next farm bill is wrong. The Budget Control Act directed the authorizing committees to submit their "recommendations and legislative language" to the Joint Select Committee on Deficit Reduction by October 15. We now are a month past that deadline and only a week away from the deadline for completing the deficit reduction bill, and this farm bill has yet to see the light of day.
"Making matters even worse, the leaders of the Agriculture Committees have indicated that portions of the Dairy Security Act of 2011, as introduced by Representative Collin Peterson (D-MN), will be part of this still-secret farm bill recommendation. If so, the super committee is on the verge of making major changes to the dairy industry that will impact millions of our citizens. Representative Peterson said this week that the dairy bill negotiations were completed several days ago. If so, then why are these decisions being hidden from the American public until the last minute and why is the Budget Control Act being ignored?
"Don't get me wrong. The International Dairy Foods Association strongly supports efforts by Congress to get our nation's fiscal house in order. Yet, it has become increasingly clear that including the Dairy Security Act in the deficit reduction bill has nothing to do with controlling spending and everything to do with taking advantage of a truncated and undemocratic legislative process to pass a controversial policy that would benefit a special interest at the expense of taxpayers and consumers. The proposed dairy legislation does not 'significantly improve the short-term and long-term fiscal imbalance' of our government's budget, as specified by the Budget Control Act, and I can't believe legislation like this is what Congress had in mind in passing the act.
"Using the fast-track process to pass the dairy bill as allowed by the budget act makes a mockery of the work of the Joint Select Committee on Deficit Reduction whose purpose is to get our country's fiscal house in order. The Dairy Security Act is bad policy and a bad deal for the American public. It would increase deficit spending over the long term, harm our nation's economy by limiting the dairy industry's ability to grow and to create jobs, and increase dairy producers' dependency on government programs instead of moving them toward open markets.
"The Dairy Security Act would actually increase government spending over the long haul. It proposes to save money by using the same old budgetary tricks that have been used over and over to get our government into this fiscal mess. According to the Congressional Budget Office, the dairy bill would only save money in the first five years. Over the next five years and likely thereafter, spending for new programs would be greater than savings from the ones that would be eliminated. Only in Washington can this be seen as improving long-term fiscal problems.
"The Dairy Security Act would tax dairy farmers by one-half of a billion dollars over 10 years and then spend those funds to interfere in dairy markets and raise milk prices. The bill's sponsors have hidden this gross intrusion into dairy markets by providing only a net total for costs of the Dairy Market Stabilization Program. According to additional details provided by the Congressional Budget Office, that program will collect $493 million and spend $485 million, netting out only $8 million in revenue increases that are used to pad the already minimal 'savings' of the bill.
"The Dairy Security Act would significantly increase federal entitlement spending on nutrition assistance programs and place additional budgetary pressure on programs to help those most in need. Because the bill would significantly increase consumer prices for dairy products, the government nutrition assistance programs that purchase a significant amount of milk and other dairy products would end up spending more or serving fewer people. The bill's nominal savings of around $100 million over 10 years would be exceeded many times over by the additional systemic costs incurred by nutrition assistance programs due to higher dairy prices.
"The Dairy Security Act would impose new and costly regulations on the nation's dairy processors. Although the bill would eliminate two existing dairy programs administered entirely by the U.S. Department of Agriculture, the new Dairy Market Stabilization Program would require its own bureaucracy that would impose a new regulatory burden on dairy processors. Among other requirements, processors would be forced to keep extensive production records for each dairy farmer, to withhold payments from those farmers when the program kicks in and to remit the revenues to USDA.
"The Dairy Security Act would cause exports to decline and encourage imports. Instead of taking advantage of new and growing export markets, the dairy industry would lose them to global competitors. The chief economist at the USDA recently warned that the bill may be scored as trade-distorting amber box under World Trade Organization (WTO) protocol. Several of our nation's largest dairy exporting companies have written to Congress to explain that the bill would impact their investment and expansion decisions in the future.
"The Dairy Security Act has not been fully considered by Congress or even the Agriculture Committees. The bill was introduced in mid-September in the House of Representatives and has fewer than 10 co-sponsors. There is no companion bill in the Senate. There have been no hearings, no debates and no amendments to the bill, nor will there be if the super committee process is used to pass this dairy bill into law.
"I urge the Joint Select Committee on Deficit Reduction to reject a recommendation that the Dairy Security Act be included in its deficit reduction bill."
The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation's dairy manufacturing and marketing industries and their suppliers, with a membership of 550 companies representing a $110-billion a year industry. IDFA is composed of three constituent organizations: the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA). IDFA's 220 dairy processing members run more than 600 plant operations, and range from large multi-national organizations to single-plant companies. Together they represent more than 85 percent of the milk, cultured products, cheese and frozen desserts produced and marketed in the United States.