By Michael Marsh, CEO - - Ivan Pavlov was a Russian physiologist who won a Nobel Prize in 1904. Pavlov is credited with discovering “conditioned response”. Pavlov performed experiments with dogs in his native Russia. He found that when he presented the dog with food, the dog would start salivating before ingesting his victuals. Pavlov also found that if he rang a bell at the same time he presented food to the dog that, over time, he could condition the dog to salivate by simply ringing the bell.

Interestingly, we seem to witness something akin to a “pavlovian response” from time to time when we have pressed our case for a dairy title in the next Farm Bill, as we try to provide a safety net for California dairy families that is not buried six feet underground.
We say we need a fix to the feed cost used in the margin insurance proposal in the Senate version of the Farm Bill to mitigate negative impacts against California dairy families. Representatives of Midwest cooperatives hear our plea for fairness and they say we need a higher price. While we don’t disagree that Californians need a higher price for our milk, as evidenced by our 2 petitions and 1 alternative proposal provided to CDFA in the past year, we recognize that a milk price change is outside the scope of this bill.

We reiterate that we need some equity in the feed cost used, Midwest representatives yap, “Price”!  We say (more slowly this time because apparently Midwesterners have a hard time discerning our fast-paced Western accent) f-e-e-d c-o-s-t. The Midwest interests bark, “Price”!  
Geez! Maybe Pavlov was onto something.

As informed dairy producers know, the Senate version of the Farm Bill does not use California feed prices in its margin insurance calculation. The Senate version uses feed costs dumbed down from the costs used in the Dairy Security Act (DSA) introduced by Mr. Peterson (D-MN) in the House last fall.

The only feed costs used in both the Senate Farm Bill and the DSA are the national and Midwestern prices paid for corn, soybean meal and alfalfa hay as determined by USDA. The table below summarizes the USDA costs for those commodities for May 2012 as included in the Senate Farm Bill and contrasts them against the same USDA costs specific to California for the same period.

We understand that next week members of our state’s largest dairy cooperative, California Dairies, Inc. (CDI), will be headed to Washington, DC to press the case for changes in the House version of a Farm Bill scheduled to be marked up. CDI, headquartered in the Golden State and comprised of only California members, has analyzed the feed cost included in the margin insurance being proposed utilizing CDI’s own economic expertise and have come to the same conclusion as Western United Dairymen’s board of directors–the feed cost as presently developed in the Senate version of the Farm Bill unfairly discriminates against California’s dairy families and must be fixed!

Similar to Western United, CDI’s California producers witnessed the horrific toll the last economic downturn had on the dairy families in our state. They likewise recognize the safety nets included in the last Farm Bill crafted by interests outside California were not safe at all. CDI will urge members of Congress to fix the feed cost in the House’s margin insurance proposal.  They will advocate using the average feed costs of the top ten dairy producing states in the margin insurance calculation. CDI, the second largest dairy cooperative in the US, agrees that feed costs should be reflective of where milk is produced as opposed to where feedstuffs are grown.

Safety nets, which one hopes are never used, should never be buried underground. July 6, 2012 WUD Friday Update