Crapo Introduces DAIRY Savings Legislation
Dairy state Senators plan new management tool for producers
Washington, D.C. - Senators from the nation's leading dairy producing states have introduced bipartisan legislation to encourage dairy producers to invest in risk reducing farm savings accounts. The Dairy Augmentation for Increased Retail in Yogurt (DAIRY) Act, introduced by Senators Mike Crapo (R-Idaho) and Charles Schumer (D-New York), would give dairy producers a new tool to manage increasing demand while providing a safety net for volatile market downturns. Idaho and New York are the top third and fourth dairy producing states,respectively, and also home to significant yogurt production facilities. The bipartisan bill, written by the two Senate Finance Committee Members, would give producers personal responsibility to manage their savings and withdrawals to suit tailored needs similar to a 401(k). The Idaho Dairymen's Association is supportive of the legislation.
"Many Idaho producers and the U.S. dairy industry as a whole have been struggling to recover from the 2009 crash in milk prices that crippled income for producers who have large overhead costs," Crapo said. "The government's provisions for a price-based system fail to reflect the sharp increases in milk production costs and market oversupply. This legislation provides a commonsense financial risk management tool to reward savings, hedge risk and encourage future reinvestment."
"The proposal would allow operators to make deposits in the accounts during high-income periods and hold it until leaner times, when additional revenues are needed," Schumer said. "Tax liability on deposits would be deferred until contributions were taxed at the marginal rate upon withdrawal, similar to the way that education and retirement savings accounts operate."
The bill also benefits consumers by helping to reduce variability in milk prices by mitigating oversupply with more organized growth. An organized, tax exempt savings account would provide an avenue to take some of the extremes out of high and low price cycles while providing a much needed mechanism to tap into the nation's increasing demand for dairy. Senators Crapo and Schumer look forward to discussing this legislation with their colleagues on the Finance Committee.