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From the NODPA Desk: July 2018

By Ed Maltby, NODPA Executive Director. September, 2018

The NODPA Field Days and Annual meeting are this month and feature two farm tours, a keynote speech from Mark Kastel of the Cornucopia Institute and workshops which we hope will provide some ideas about how to survive in this unhealthy economic climate. Times are tough for all organic dairy operations but the toughest for those that have high overhead and limited opportunities to diversify their income stream. The Field Day workshops will show how to develop an understanding of the economics of farm operations to be able to make clear decisions about the best use of limited income and making decisions around refinancing long and short term debt. We hope to see as many as possible of you at the Field Days and get your opinions about what NODPA’s next priorities are for the work in 2019.

It has been said that trying to get farmers to agree on dairy policy is like herding cats – they just always splinter off in all directions. But I am happy to say that I witnessed dairy farmers coming together with a united voice during the Dairy Summit in Albany, NY back in mid-August. The meeting was sponsored by Agri- Mark Dairy Cooperative, CoBank, and Farm Credit East; it drew over 400 conventional and organic dairy farmers, representatives from other coops, ag lenders, and even a few politicians. A few were from as far away as California and Maine. A group of farmers from Wisconsin chartered a bus for the 18-hour trip. Most drove in from New York, Pennsylvania, and New England. There was real consensus that farmers must control the supply through their coops to effectively stabilize the price. Some well thought-out proposals were presented to the group. I am not sure that one proposal won out over the others that day; farmers were energized to think of a fair system that would allow the survival of their farms, and most of the plans would do that. Most of the farmers there were conventional, now in their 4th year of low prices; the fear and desperation were palpable. They would agree because they had to do something together.

Declining farm income and rising debt are making it difficult for all producers to qualify for loans. This problem is exacerbated for organic dairies because of the lack of transparency in how pay price is developed and data around the future strength of the market for organic. The extensive consolidation of agriculture lenders, as reported by the Open Markets Institute, can be traced to the 1980s farm crisis that led to local banks needing to be bought up by larger institutions in order to survive. The Farm Credit Service, a government enterprise, has shrunk from nearly 900 lending associations to 80, today. On the commercial side, the number of commercial agriculture banks available to farmers has been cut in half since 1979, from 4,365 to 2,316, according to FDIC. With consolidation and mergers of banks, there is very limited opportunity to build relationships with loan officers that can help weather the financial pay price troughs which are apparently now part of the organic dairy market. As the number of farm operations drop, there are fewer support services and the number of loan officers that understand the economics of farming are getting fewer and fewer. At the time of writing, we do not know the details of the Trump administration’s $12 billion aid package for farmers harmed by tariffs. USDA Secretary Perdue said during an appearance at a New York dairy farm that, “We will acknowledge that dairy and pork and soybeans will be the commodities that are most dramatically affected by the tariffs,” noting the department is still on course to “roll out the program right after Labor Day.” Remarkably little has leaked out about the USDA’s trade aid plan, which is expected to include three prongs: payments to farmers, commodity purchases and trade promotion. Commodity groups are on edge as they await details from USDA on how payments will be determined, particularly after a report that soybeans could get $1.65 per bushel, while corn could get a penny per bushel. Pay attention to any information that is released as the administration is projecting that they will have the aid package in operation from Labor Day forward.

The conference committee for the Farm Bill, which brings together the House and Senate version of the Farm Bill to make one Bill that can be signed by the President, will hold its first meeting on September 5th 2018. Forty seven House members and nine Senators will have less than a month to finalize the 2018 Farm Bill before current legislation expires. The major differences are on the nutrition title and conservation which most observers think will not be easy to overcome. The current farm bill expires at the end of September 2018. Closer to the deadline, House Agricultural Chairman Conaway will have to determine if he can pass his proposal before programs expire or he will need to extend current farm programs. Congress does not want the Farm Bill to expire as farm policy would return to the policies of the 1930s as we nearly saw with the last Farm Bill. Chairman Conaway’s decision could have a significant impact on programs organic farmers utilize like organic research. Thirty-nine so called organic “orphan” programs lack baseline funding and would not be funded if the current farm bill is extended.

NODPA does not align with any one political party, processor or milk buyer. The US has elections coming up this fall that will likely affect the make-up of the House and Senate which will affect both the Farm Bill and the subsequent appropriations that allocates money to different programs. Legislators are also able use the power of appropriations to influence how agencies spend their money by inserting manager language into the various bills. Producers have the opportunity to use their electoral vote to ensure the economic future of their businesses and should question their Senators and representatives on how they view the issues around DOMESTIC organic integrity, Origin of Livestock, Organic Animal Welfare plus many areas of funds for research and conservation.

In the past we were able to work directly with milk buyers on policy questions to influence organic regulations. We are slowly working to reestablish that level of cooperation with both national and regional buyers. The USDA NOP is not willing to publish regulations to ensure domestic organic integrity. We need the political and economic power of our milk buyers to support the publication of regulations that have already been through the legal progress prior to publication. More discussions with the buyers will be an opportunity to educate them on the expectations of consumers which have recently been recognized by the courts as giving them legal standing in decisions around organic production practices.

Working together we can become active in the survival of organic dairy family farms. If we do not do it, nobody will.