NMPF calls for restructuring of federal dairy policy.

The National Milk Producers Federation is proposing a new and considerably different approach for dairy policy as Congress prepares to begin writing the next farm bill. Among other things, NMPF is recommending a system of direct payments to dairy producers. That support would come in the form of decoupled income support payments to dairy producers that NMPF says would be compatible with U.S. commitments under the WTO Agreement on Agriculture.

The proposal also calls for changing the current dairy program from one that supports the price of milk to one that supports prices of specific dairy products, such as butter, nonfat powder and cheese. NMPF also wants Congress to clarify that dairy checkoff money is to be collected from importers, not just the domestic industry.

Outside the area of price support, NMPF wants more money devoted to implementing the environmental quality incentives program, conservation security program and conservation innovation grants. The organization also wants increased funding for the market access and foreign development programs, reauthorization of the dairy export incentive program and a provision to allow for forward contracting under the federal milk order program.

While the NMPF package likely would mean more actual funding and budget outlays than the current approach, it does have some Doha Round negotiating implications in that the current U.S. dairy policy accounts for around $4.5 billion in trade-distorting amber box payments.

Thus, the proposal will be one to watch in the future, including the coming farm bill debate. But (and this could be a key factor), it likely will come with a significant price tag at a time of a tight farm bill funding baseline and an increased focus on budget deficits.