February 03, 2005

Crapo Bill Aims To Bring StabilityTo Milk Prices For Producers

Measure Extends Dairy Risk Management Tool

Washington, DC â?? Idaho Senator Mike Crapo introduced a bill in the Senate today aimed at ensuring the continued availability of an important risk management tool for dairy producers. The bill would make permanent the dairy forward contracting pilot program, a program that allows producers and processors to enter into voluntary, long-term contracts for their milk supplies. Idaho Senator Larry Craig is an original co-sponsor of the legislation.â??Without question, dairy producers are subject to a very fickle dairy market,â?? Crapo said. â??Dairy prices can go from all-time highs to all-time lows over the course of a year, making long-term planning extremely difficult. This legislation would enable voluntary agreements for the sale of a specific volume of milk for a set price over an established period of time. 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.â??"This legislation creates another free-market tool for dairy farmers to manage risk,â?? said Senator Larry Craig. â??It will help Idaho dairies survive periods of low prices and maintain the strength and viability of Idaho's valuable dairy industry." The Consolidated Appropriations Act of 2000 authorized the forward contracting pilot project, which is set to expire at the end of 2004. A 2002 U.S. Department of Agriculture (USDA) report to Congress suggested that the daily forward contracting pilot program has been effective in reducing price volatility. Without the pilot project, only cooperatives can enter into forward contracts with producers. Stressing the billâ??s importance to Idaho, Idaho Dairymenâ??s Association Executive Director Bob Naerebout said: â??Over 60% of the dairy producers in Idaho sell their milk directly to a processor and not through a cooperative organization. This no doubt accounts for the fact that Idaho ranks third among states participating in the forward contracting pilot program. It has given all dairy producers in Idaho access to a reliable risk management tool.â??# # #