Statements on Introduced Bills and Joint Resolutions

CONGRESSIONAL RECORD
SENATE
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. CRAPO (for himself, Mr. Fitzgerald, Mr. Lugar, Mr. Smith, Mr. Wyden, Mr. Craig, and Mr. Roberts):

S. 2565. A bill to amend the Agriculture Adjustment Act to convert the dairy forward pricing program into a permanent program of the Department of Agriculture; to the Committee on Agriculture, Nutrition, and Forestry.

Mr. CRAPO. Mr. President, I rise to introduce the Milk Forward Contracting Act, a bill to make permanent the dairy forward pricing pilot program.

Without question, dairy producers are subject to a very fickle dairy market. Dairy prices can go from all time highs to all time lows over a course of a year, making long-term planning extremely difficult. This legislation will ensure the continued availability of an important risk management tool for dairy producers and enable their long-term business planning.

Over the pat 4 years, dairy producers and processors have been able to voluntarily enter into agreements for the sale of a specific volume of milk for a set price over an established period of time trough the dairy forward pricing pilot program. Many producers in my home State of Idaho and nationwide have used this voluntary program to reduce marketing risk by securing stable prices. Unfortunately, this program expires in December of 2004, and dairy producers want to be able to continue to utilize this program.

Forward contracting is a very useful tool for dairy farmers. In fact, a 2002 U.S. Department of Agriculture USDA report to Congress demonstrated that the program has been effective in reducing price volatility. According to USDA data for the September 2000 through December 2002 period, contracted milk averages $14.06 per hundredweight with a range of $1.63 between high and low prices, while non-contracted milk averaged $13.68 per hundredweight with a range of $6.69. Additionally, the U.S. General Accounting Office GAO reported that forward contracting is a risk management tool most frequently used by producers of other farm commodities.

Likewise, dairy producers should also have access to this important tool. There is no reason that dairy farmers should be forced to ride a dairy price roller coaster, when the extension of this sensible program would provide farm families with an option to help plan for their futures.