Bill Simplifies the Pricing System, Provides Risk Management and Encourages New Product Development
WASHINGTON, DC - U.S. Senator Bob Casey (D-PA) today introduced the Dairy Advancement Act to ensure Pennsylvania dairy farmers are well positioned to compete in the global dairy market. The bill encourages development of new dairy products, improves producer revenues and makes milk pricing easier to understand.
“This is a common-sense measure that will help Pennsylvania dairy farmers better meet consumer demand while providing farmers with choices to manage risks,” said Senator Casey. “By simplifying the system and rewarding innovation, our farmers will be better prepared to compete in today’s marketplace.”
"This bill encourages milk pricing reform by simplifying the way our milk is priced. A two-class system, along with improved reporting, brings transparency to the marketplace and encourages competitiveness, so all market participants know where the true market is. In short, our dairy markets are more volatile today and in need of accountability," said Cliff Hawbaker of Hamilton Heights Dairy in Chambersburg, Pennsylvania and chairman of the grassroots Dairy Policy Action Coalition.
The Dairy Advancement Act would give dairy producers a choice in risk management tools by allowing them to continue to participate in the Milk Income Loss Contract (MILC) program or to receive support for Livestock Gross Margin-Dairy (LGM-Dairy) program by insuring their revenue margins for future months.
This bill repeals the Dairy Product Price Support Program. This move will save taxpayer dollars and encourage production of products based on market demands. The bill also makes available low interest loans to manufacturers so they can retrofit their plants to help adjust to changes to the price support system and shift their focus to products that have broader demand.
The bill also directs the Secretary of Agriculture to establish a two-class system for classifying milk under the federal milk marketing orders. Simplifying classification with two classes -- fluid milk and manufactured products -- will allow market forces to work and put competition back in the federal order system for milk used for manufactured products. The competition will result in improved producer revenue and encourage new product development.
This bill also enhances market transparency by increasing the frequency of dairy price reporting.
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