Rep. Costa Introduces Legislation to Strengthen Dairy Industry

Bill will curb milk price volatility and promote industry growth

WASHINGTON, DC - Congressman Jim Costa (D-Fresno) today introduced legislation to protect American jobs and strengthen our nation's dairy industry. The Dairy Price Stabilization Act promotes market stability and individual dairy farmers' ability to grow their own business.

"While periods of boom and bust are notnew to the dairy industry, our dairy families cannot afford another year of lowmilk checks that don't even cover the cost of production," said Costa."The dairy price crisis is devastating our local economy and ability to createand sustain jobs. This bill will help the dairy industry get back on track andcurb the milk price volatility that is driving dairy farmers in the Valley andour nation out of business"

In2009, dairy farms throughout the country experienced one of the worst pricecrises of the last 40 years. Last June, prices dropped to an average of over$6.00 per hundredweight, dramatically below the cost of production. Aninconsistent national support system and the absence of a national supplymanagement plan has exacerbated the price instability and created anunsustainable business cycle for many dairy families. In 2009, America'sroughly 65,000 dairies lost over $12 billion. Sharp losses forced dairy farmersto lay off workers and, in many cases, shutter their operations.

"Wehave a real opportunity to make meaningful changes to prevent future dairycrashes like the one we're in now," added Costa. "Protecting thelivelihoods of our dairy families is critical to promoting a full economicrecovery and the nation's access to healthy dairy products."

The Dairy Price Stabilization Act wouldhelp stabilize dairy prices by better aligning supply and demand. Under theprogram, individual dairies would have the choice of either maintaining theircurrent production level (plus an allowable year-over-year growth rate based onmarket indications) or expanding their production and increasing their share ofthe market.

Dairies choosing to increase theirmarket share would pay a fee during the first year of expansion which is paidout to their fellow dairy farmers who are maintaining their current share ofthe market. This creates a rational system that allows the market to absorbincreases in production by providing a tangible financial incentive for mostdairies to manage their production growth.

The structure of the bill is based onunbiased economic analysis and modeling conducted in the past 18 months. Boththe growth rate and market access fee would be determined based on marketindicators including feed costs which are the largest cost factor for producersin states like California. A producer board of directors would be establishedto advise the Secretary of Agriculture on any necessary adjustments to programoperations. The bill empowers farmers by allowing them to vote on whether toenact the program and, three years after it commences, to vote on whether tocontinue it.

Video of Congressman Costa speaking onthe floor of the House of Representatives today in support of the Dairy PriceStabilization Act can be viewed here.

Costa was joined by four other Membersof Congress from across the country in introducing the bill, includingCongressmen Peter Welch (D-VT), Joe Courtney (D-CT), Rick Larsen (D-WA), andJohn B. Larson (D-CT).

"Afterthe worst year in recent memory, the time for comprehensive dairy reformlegislation has arrived," said Rep. Joe Courtney. "I am pleased to join withCongressman Costa and others on this effort that will help stabilize dairymarkets and protect our farming families."

"The Washington state dairy industry isthe tenth largest in the nation. The 128 dairy farms in Whatcom County, in mydistrict, produce the 2nd greatest amount of milk in the state,"said Rep. Rick Larsen. "This means many local jobs and hardworking familiesdepend on stability in the dairy industry. Every day, countless farmers andfamilies throughout my district suffer through the roller coaster that is thedairy market.

"Rep. Costa's bill makes important stepstoward stabilizing the price of milk, which is a top priority for dairyfarmers. While I recognize this is only a first step in responding to theconcerns that dairy farmers have around the country, this is an important step,and I am happy to support Rep. Costa's legislation today."

"Continuingvolatility within the dairy industry has devastated Vermont's hardworkingfamily farmers and their counterparts across the country. We have respondedwith important short-term support measures, but we must not delay in finding apath to long term reform," said Rep. Peter Welch. "This bill sets an importantmarker as we find consensus within the industry about how to ensure thesurvival and prosperity of dairy."

Added Rep. John B. Larson, "I believe in reward for a hard day's work. But, because of the volatility in milk prices, small dairy farmers in Connecticut, New England, and throughout our nation have been denied a decent living. We need to bring commonsense reform to the market that protects the livelihood of our small dairy farmers, and the food that average Americans put on their table."