March 22, 2017

Mulhern to House Ag Committee: Fix MPP

 |  By: Anna-Lisa Laca

As discussions heat up for the 2018 Farm Bill, the House Agricuture Committee held a series of hearings this week. The Committee is preparing to renegotiate the bill that expires in 2018. As part of those hearings, Jim Mulhern, president and CEO of the National Milk Producers Federation, testified on behalf of dairy farmers on the importance of fixing the Margin Protection Program for Dairy (MPP).

“While MPP was, and is, the right approach for the future of federal dairy policy, the program in its current form does not provide meaningful safety net support to the nation’s dairy farmers,” Mulhern said.

The MPP was put in place as part of the 2014 farm bill and was intended to serve as a safety net for dairy producers, insuring the margin between milk price and the cost of feed. However, over the lifetime of the program, several flaws have been pointed out including the inaccuracy of the feed calculations.

In 2014, during debate of the program, lawmakers implemented a 10% cut to the weightings of all three feedstuffs used in the feed cost formula at the recommendation of the Congressional Budget Office. That turned out to be an inaccurate budget score. As a result the feed formula is lower than what would accurately reflect what producers pay.

“[The current feed formula] understates the price to farmers of producing 100 pounds of milk, thereby overstating the actual margins farmers are experiencing,” Mulhern said, adding that the Agriculture Committee “got the calculation right the first time.”

He urged the Committee to restore the feed formula to its original level. According to NMPF, margins using the current formula are approximately $1 per hundredweight higher than they would be if the original feed formula were in place.

Another recommendation from the NMPF board of directors to fix MPP is for USDA to obtain more precise data for the prices dairy farmers are paying for corn, soybean meal and hay, while also collecting better data for the price farmers receive for milk.

These changes will more accurately reflect the true margin dairy producers are experiencing, Mulhern said.