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Farm bill clash centered on retooled insurance program for dairy farmers

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With the overdue farm bill festering again in Congress, Republicans and Democrats have resumed clashing over whether the government should regulate the milk supply by penalizing farmers who produce too much.

Farmers will need to enroll in that supply management program if they wish to participate in a retooled margin insurance program, included in House and Senate versions of the bill approved this week by each chamber’s agriculture committee. The Senate version calls for roughly $23 billion in cuts to farm and nutrition programs over the next decade, while the House bill calls for cuts of about $40 billion.

The margin insurance program for dairy farmers was part of the farm bill that failed in 2012 amid election-year politics; though it passed in the Senate, it never made it to a full vote in the House. Resuming the debate this summer, lawmakers will seek to get a final bill approved by Sept. 30, when an extension of the 2008 farm bill expires.

The new margin insurance program is expected to be hotly contested in the House, even though it is included in versions of the farm bill passed by committee, according to U.S. Rep. William L. Owens, D-Plattsburgh. The free, voluntary insurance program is designed to help dairy farmers combat low milk prices and high feed costs. It would reimburse farmers when the difference between their costs and milk prices surpasses a certain threshold.

The margin insurance program would replace the current Milk Income Loss Contract program, a safety net that reimburses farmers when milk prices fall below a federal target.

Mr. Owens said the margin insurance program could be put on the chopping block in the House because of opposition to its supply management program that farmers would have to participate in. By penalizing farmers when they produce too much milk, the program aims to control the national milk supply to keep prices high.

To avoid the potential harm of that program — which some say could restrict farms from expanding — an alternative option called the Dairy Freedom Act was recently introduced in the House that could garner broad support on the floor, Mr. Owens said. That policy would still provide a safety net to reimburse farmers when profit margins are low, but the government would not regulate the national milk supply as a means to stabilize milk prices; markets would be allowed to set milk prices on their own.

Mr. Owens, who supports the supply management program, said the government needs to regulate milk production to ensure there isn’t an oversupply, which causes milk prices to fall.

“If the government is going to provide permanent assistance to farmers to get margin insurance, we have to ensure there isn’t an overproduction of milk that the government will have to pay for,” Mr. Owens said. “Because if there’s an oversupply of milk, the (profit) margin shrinks and therefore the margin insurance kicks in.”

Because the Dairy Freedom Act is supported by House Speaker John A. Boehner, Mr. Owens said, it has a strong chance of being approved on the floor. If that happens, he said, the fight over that policy would then be waged between the House and Senate before a final bill is sent to the president.

A clash among Republicans and Democrats over cuts to Supplemental Nutrition Assistance Program — aka food stamps — will be the second main source of debate on the farm bill this summer, Mr. Owens said. That food stamp divide was made obvious by the huge gap in spending cuts between the House bill, which puts forth a $20.5 billion cut over the next decade, and the Senate bill, which would cut about $4.1 billion.

Mr. Owens said the cuts in the House bill are dramatically higher than what was pegged last year, when he was a member of the House Agriculture Committee.

“It’s over $20 billion in cuts, and you have the Senate at $4 billion. Clearly there’s a great distance there,” Mr. Owens said. He said the figure being mulled in the House last year was much lower. “Everyone believed food stamps were going to be in the six- to eight-billion range after negotiations,” he said.

Because of partisan differences, negotiating a final bill between the Republican-controlled House and the Democratic-led Senate could be difficult, Mr. Owens said. He contends the proposed $20.5 billion cut in food stamp benefits would affect the quality of life of senior citizens, veterans and children by pushing millions off the rolls.

“People always assume the picture of recipients of food stamps, but those stereotypes they’re given aren’t accurate,” he said.

Sen. Kirsten E. Gillibrand, D-N.Y., a member of the Senate Agriculture Committee, was one of five senators who voted against the bill in committee Tuesday. In her view, the $4.1 billion cut in food stamps is unwarranted.

“Losing $90 a month in food assistance may not sound like a lot to some people,” she said in a statement. “But if you’re a parent who’s trying to protect your children and feed them good, wholesome, nutritious food, or a senior on a fixed income, it means everything in the world. I am deeply concerned with the drastic cuts this bill makes to SNAP that will literally take food away from hungry children.”

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