Quick question. What's Idaho's top farm product?
With apologies to those growing potatoes and raising cattle, it's milk, and it has been since at least 2004. In fact, Idaho today produces more milk than all but two other states, California and Wisconsin.
Unfortunately, that doesn't mean Idaho's dairy farmers are thriving. On the contrary, despite rising milk production, the last few years have been particularly tough on us. The recession was very difficult, with feed costs soaring just as farm milk prices crashed. Red ink spread quickly across our balance sheets.
Milk prices were better last year but the drought sent feed costs through the roof once again. The result? Our profit margins flat-lined. Nationwide, the average dairy farmer lost money in three of the last seven years. That's hardly a recipe for success.
We do have a safety net called the federal dairy program. But for a variety of reasons, that program hasn't been much help in recent years.
For starters, it's focused on propping up milk prices when the problem we face most often today is tight margins, due to those high feed costs. It's a sad fact of life now that dairy producers can receive high milk prices and still lose money on every gallon of milk they produce if feed costs are high enough.
With its roots in the 1930s, the federal program also doesn't recognize that more than 10 percent of all our milk production today is exported.
As a result, four years ago dairy farmers nationwide set out to design a new program, one that shifts away from propping up prices and focuses instead on insuring adequate margins.
The good news is Congress is close to approving that new program as part of the 2013 farm bill. The bad news is that one big hurdle remains: some in Congress see one aspect of the new program as government intruding into private enterprise. That's because the new program encourages farmers, in rare circumstances, to trim their milk production.
Well, whether it's milk or cattle or wheat or potatoes, no farmer likes to be told how much he can produce. That includes me.
But critics are overlooking one thing about the new dairy program. It's voluntary. So those farmers who don't want to be told how much milk to produce can generate as much as they want. Frankly, that doesn't sound like big government to me.
Of course, dairy farmers who don't agree to trim their production don't get the benefit of margin insurance either. But that's only fair. The alternative is to give some farmers a free ride.
Like it or not, keeping a lid on milk production when economic conditions deteriorate simply makes sense. It helps keep the cost of margin insurance down, and it means farmers bear some of the responsibility for the program. In fact, one study suggested taking the so-called market stabilization plan out of the new dairy program could cost taxpayers hundreds of millions of dollars a year.
Despite all that, later this month, during the House farm bill debate, opponents will attempt to strip the market stabilization provisions out of the new dairy program. They've tried this twice in committee and lost both times. But apparently the way Congress works that doesn't mean anything.
Dairy farming is extremely important to Idaho's economy. It generated $2.4 billion in income in 2011 and employs more than 9,000 people. Idaho's congressional delegation, including our own Rep. Raul Labrador, needs to side with both dairy farmers and taxpayers when the vote comes up on removing market stabilization provisions from the new dairy program.
Randy Lindley has operated Lindley Dairy in Meridian since 1983.