As the industry keeps changing, it's important to know a company's "pedigree."
WOOSTER -- To manage supply or not? That is the question.
Or, more exactly, it was a topic that arose during a recent update about the pending farm bill organized by Sen. Sherrod Brown's office at the Shisler Center on the campus of the Ohio Agricultural Research and Development Center.
Joe Shultz, a senior economist for the U.S. Senate Committee on Agriculture, Nutrition & Forestry and a former legislative aide to Brown, spoke about some of the farm bill's provisions and why it has been delayed.
When Shultz opened the floor up for questions, he mainly received suggestions to make the farm bill better.
When Alan Kozak, a Millersburg-area dairy farmer, spoke about a dairy safety net included in the Senate version of the bill, he suggested it probably would not work and then introduced the topic of supply management.
The goal would be to limit the amount of milk so dairy producers would get a better price.
As Kozak sees it, the dairy safety net would not be of much help. "It is $5 a cow; what kind of safety net can you build for $5 a cow?"
Additionally, if dairy producers want that safety net, then they will have to cut production anywhere between 4 percent to 8 percent.
"No other commodity has to do that," Kozak said. Supply management is not a part of the crop insurance program, and "dairy shouldn't have to put up with that."
The way the bill is written, Kozak is skeptical enough farmers will sign up for the program for it to be effective. If about 25 percent of dairy producers sign up for the program, then the burden will be on them to try to balance milk production in this country.
Shultz spoke earlier about some of the risk management tools in the Senate version, which would include some type of assistance for dairy farmers based on the price of feed compared to the price of milk. The policy has been to provide help when milk falls below a certain price.
With drought conditions affecting much of the country this summer, the cost of feed has increased, and it is hurting producers who have to buy their feed and do not grow any, Kozak said.
A House Agriculture Committee defeated the Goodlatte-Scott amendment that would have offered dairy producers some protection on the margins if prices dropped below $4. It would have applied to the first 4 million pounds of milk. It would not set production limits.
Kozak said he hopes there is some way the amendment becomes part of the House bill. While the provision is not perfect, he said he believes it was the fairest to dairymen.
"It's better than anything else out there," Kozak said.
Shultz agreed with Kozak that over the past few years the pressure has switched from crop producers to livestock producers. "I don't think there is any disagreement about the protection on the margins," Shultz said, adding the supply argument will be one that will continue to be debated.
The National Milk Producers Foundation strongly favors supply management because it was how it was able to build consensus among California's dairy producers.
Kozak contended most producers do not want supply management. National Milk, which represents co-ops, wants it, not individual producers, he added.
"I'm a dairy producer, and I support supply management," Chester Stoll told Shultz. "I just wanted you to know both opinions are in this room."
National Milk opposed the Goodlatte-Scott amendment, arguing it would "undo the significant dairy policy reforms proposed for the 2012 Farm Bill."
National Milk favored the Dairy Security Act, which would provide a basic level of margin protection and those who wanted supplemental insurance to cover a wider gap between the cost of feed and the milk price would have to temporarily cut back on milk production when margins are poor, according to a statement on its website.
Tom Noyes, a dairy farmer and former Wayne County Extension agent, also opposes efforts to limit milk production, mainly because in 2011 the industry had the opportunity to export 12-13 million pounds of milk, which helped prices.
"I don't want to see that end because we put in a supply management program," Noyes said. "I don't want to just produce milk for this country and lose opportunities corn and soybean producers have. I want to capture that opportunity as this world population and economy grows. There's tremendous opportunity."
While dairy producers need some margin insurance, they do not need supply management, Noyes said.
Joe Logan, a farmer from Trumbull County, said the discussion in the room got at the huge challenge facing those coming up with the farm bill.
"Supply management has been an effective tool," Logan said. "Nobody wants to see us limit supply so that we become a deficit nation, but to the extent supply is managed on a global scenario, it is necessary to establish some stability in the marketplace. I don't know how you do it.
"Enticing farmers to produce, produce and produce is counterproductive. American farmers have shown they can out produce themselves."
"I think it is still an open question," Shultz said. I think it could change. It's up for grabs."
Reporter Bobby Warren can be reached at 330-287-1639 or email@example.com. He is @BobbyWarrenTDR on Twitter.