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Dairy farmers seek refunds with new legislation

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    Pictured are Hudson Valley Fresh dairy cows with a glass pipe above them that carries the milk to a tank in another part of the barn for storage and refrigeration.
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    At many dairy farms, cows go to a separate room called the milking parlor where many are milked at one time. As pictured, 15 cows can be milked at the same time. After being milked, the cows can return to the barn with their stalls and food.
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    The milk tank is a sealed unit that is refrigerated on every Hudson Valley Fresh dairy farm. The front of the tank has a control panel to ensure milk remains below 40 degrees, but above 32 degrees. Paddles stir the milk every 15 minutes inside the tank.
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    U.S. Sen. Kristen Gillibrand meeting with farmers and agricultural organizations at A. Ooms & Sons Diary Farm in Valatie. Gillibrand is introducing legislation that will refund dairy farmers money they put into a federal insurance program, the Dairy Margin Protection Program, which has failed to help many farmers during a rough two years for the industry. Eric Ooms, who runs the Ooms Dairy Farm with his family, said refunding the money is a good step but the insurance program needs to be fixed or replaced.
February 6, 2018 11:30 pm

The past two years have been tough for Columbia County dairy farmer Eric Ooms’ business, but the next year will be even more difficult with prices plummeting below the cost of production and no government support on the horizon.

Ooms, who took over A. Ooms and Sons Dairy Farm in Valatie with his brothers in the 1990s, said he is not the only farmer facing tough times, but is better off than others.

“I bought lots of feed in 2014, which was a good year, and we had reserves the past two years,” Ooms said. “Now we do not have any reserves, but we have good credit with the bank still. A lot of farmers do not have that.

“I worry about bankruptcy for other farmers,” he said. “For us it isn’t bankruptcy, but it isn’t fun.”

Ooms has been contributing $100 a year — less than lots of farmers pay — into federal insurance program the Dairy Margin Protection Program, which was created during President Barack Obama’s tenure to help dairy farmers in such difficult situations.

The problem? The program doesn’t work, and farmers have yet to see relief from the insurance program.

“The DMPP is failing to pay out and many dairy farmers have been stuck paying into the program for the past tough two years,” said U.S. Sen. Kirsten Gillibrand, D-N.Y. “All that money is just sitting in the treasury right now.”

Gillibrand announced Monday she is introducing the Premium Refund Act to give dairy farmers who did not receive relief from the Dairy Margin Protection Program their money back. She first proposed the legislation last year.

The program is the primary insurance option for dairy farmers when the price paid to them falls or feed costs rise, according to Gillibrand’s office. When milk prices and feed prices fall at the same time as they did last year, farmers often lose money on every pound of milk they sell and few farmers receive an insurance payment.

“The program only paid out a couple of thousand dollars in 2015, and less that $1 million in 2016,” Gillibrand said during a telephone press conference.

The program paid out $403,859 to 180 farm organizations in the state in June 2016.

It’s a possibility farms could go bankrupt in the future because of the lack of insurance payouts, Gillibrand said.

“Refunding premiums is the next step in the process, and may help farmers,” Ooms said. “There really needs to be either a new program or the DMPP needs to be improved. The program was well intentioned, but it did not work the way it was supposed to.”

Ooms bought catastrophic coverage under the Dairy Margin Protection Program that required a $100 a year premium, but he said lots of farmers bought much more than he did.

“We were skeptical about the program to begin with,” Ooms said. “A lot of people thought it would be a lot more generous than it was.”

Catastrophic coverage provides payments to participating producers when the national dairy production margin, which is the difference between all-milk prices and the average cost for feed, is less than $4 per hundredweight, according to the U.S. Department of Agriculture’s website.

Under the program, farmers can pay between $100 and $5,739 in administration fees and premiums, with coverage ranging from payments for margins lower than $4 per hundredweight to margins less than $8 per hundredweight.

In May 2017, 1,862 state organizations paid for catastrophic coverage, with the majority of the 1,922 organizations using the program at that time.

The national dairy production margin was 9.87485 in December with the average whole milk price at 3.155 per gallon in the Northeast, according to the U.S. Department of Labor’s Bureau of Labor Statistics.

Gillibrand’s legislation is meant to ensure dairy farmers automatically receive a check in the mail at the end of the production year for any insurance premium funds not used to pay claims to them during the previous year.

The bill proposes no new spending, would provide payments retroactively since the Dairy Margin Protection Program was implemented in 2015 and would apply to all future years of the program.

The state Farm Bureau supports Gillibrand’s legislation, Public Affairs Manager Steve Ammerman said.

“Her proposal underscores the bigger picture of needing to reform the Margin Protection Program,” Ammerman said. “It is clear by low participation numbers that [D]MPP is not an effective safety net during these difficult times, nor has it addressed regional differences across the country.

“New York Farm Bureau will continue to work with [Gillibrand] and her staff on improving the safety net for dairy farmers as the 2018 Farm Bill is negotiated in Washington,” he said.

Because of the bad experience farmers had with the Dairy Margin Protection Program, they may not participate in a reformed program, Ooms said. Instead, farmers supported lifting the cap on another federal insurance program — the Livestock Gross Margin Insurance for Dairy Cattle, which was proposed in the House of Representatives’ farm bill.

“A long-term fix to the Margin Protection Program is a concern that I hear from dairy farmers around my district,” said U.S. Rep. John Faso, R-19. “I agree that we need substantial changes to the MPP program to better reflect the cost of dairy production. I will support any measure that will enhance our dairy industry and the family farms throughout upstate New York.”

The program has a $20 million cap, but even if the cap is removed, farmers who are already under the MPP cannot switch over to Livestock Gross Margin Insurance for Dairy Cattle.

House Republicans have said they want to pass the 2018 Farm Bill before March, but Ooms said he has come to expect the annual bill package to pass late.