Reaction to Milk Marker Order Reform Mixed

A proposal to revamp the federal milk market order system, announced March 31 by the U.S. Department of Agriculture, makes clear that separate action is needed to stabilize the volatile dairy market and protect farm income, according to the Texas Farmers Union (TFU).

The proposed reform consolidates the current 31 orders to 11 and sets new pricing formulas to even out prices paid to producers in different regions The changes will lower farm prices in Texas by at least 50 cents per cwt. because of the lower Class I price deferential for Texas. The reform will have little impact on consumer prices.

"Market orders are an important tool to ensure producers get paid for their product and protect them from fraud. We support market orders and appreciate the work USDA has done on this major revision," said TFU President Wes Sims. "However, producers who hoped reform would increase their profitability may be disappointed. While a few areas will gain, the reforms will erode income in many regions. Dairy producers across the country are already reeling due to a record plunge in prices last month. Unde these circumstances, we should level prices up instead of down," Sims stated.

"Because the reform does nothing to stabilize prices, Congress must take separate action to re-establish a dairy support price at a meaningful level," Sims added. Sims said without a support price at the federal level, efforts to establish regional compacts will increase.

TFU also expressed concern with a provision in the reform that increases the "make allowance" for the nation's dairy processors because it will further reduce prices paid to producers.

Congress has 60 days to object to USDA's proposal. Producers will vote on the new market orders in August, which will take effect October 1, 1999, if approved by a two-third majority. If the order fails to pass, the region becomes unregulated. While bloc voting is allowed by law, TFU will encourage co-ops to permit individual voting.

Producers in California must file a new petition by the end of April if they wish to be included in the federal order system. National Farmers Union has supported the effort by the Califonia Dairy Campaign to be included in the federal order reform and give the state's producers the right to vote on whether to join the system. "We will carefully review the proposed reforms to determine whether to ask Congress to make any changes," said Sims.

Texas Farmers Union, P.O. Box 738, Sweetwater, Tx 79556