Farm Bill 2014 – What it means to the food industry

The Agricultural Act of 2014 was signed into law on February 7, 2014. There are a number of different perspectives on how this bill will impact the food and beverage industry over the next five years. The following are some preliminary thoughts from the dairy industry.

The general consensus is that the bill is positive for the dairy industry. First, it provides for a new margin insurance program for dairy farmers.  According to John Umhoefer, Executive Director of the Wisconsin Cheese Makers Association, “This new program allows farms to choose a custom level of profit margin protection for their farm in exchange for a premium payment. This tailored approach replaces a decades-old program of government purchases of commodity cheddar, nonfat dry milk and butter – a program with little relationship to or influence over the domestic marketplace and certainly no relationship to our industry’s skyrocketing sales in global markets. The dairy margin insurance program will directly assist dairy farms when they need help the most.”

Second, the final bill passed by Congress removed provisions that would reduce the milk price when the USDA determined that there was a surplus. Umhoefer explains “This milk price reduction program was dairy old-think – government intervention rather than a marketplace reaction to supply and demand.  Processors, and many dairy farms around the nation, fought hard against this sort of supply management and Congress listened.  The U.S. dairy industry is entering a period of extraordinary opportunity in international markets and a government program to clip milk supplies would have been unnecessary and chilling to world markets seeking a steady, reliable trade partner. ”

Dairy faces strong prospects for growth in 2014, providing that the weather cooperates. “U.S. dairy exports broke records in 2011, 2012 and in 2013 exports will reach a record value of $6.6 billion.  Today, nearly 16 percent of all U.S. milk moves overseas in the form of whey and milk powders, cheese, butter and other products.  The new farm bill will assist, rather than impede, this growth.”