Editor’s note: Due to space limitations, this article was divided up and run over the past several weeks, or it can be viewed in its entirety at www.thecountrytoday.com. This is the last installment.
SHEBOYGAN — Wisconsin Dairy Task Force 2.0 members passed 49 of the 51 recommendations on which they voted during the group’s full meeting on March 15 in Sheboygan County.
The recommendations were developed by task force members with the intent of maintaining a viable, profitable dairy industry in the state.
Wisconsin Dairy Task Force 2.0, with nine sub-committees, was created in June 2018 as a joint effort between the Department of Agriculture, Trade and Consumer Protection and the University of Wisconsin System.
Here are more summaries of some of the approved recommendations (more to be published in coming weeks), including the sub-committees that presented them, the vote totals, and the problem statements and recommendations as presented by members (some summaries are condensed due to space):
ACCESS TO CAPITAL SUB-COMMITTEE
Topic: Establishment of a Farm Savings Account for farmers.
Problem statement: Milk price volatility has become greater over the past several cycles. In high price years, like 2014, farmers seek to avoid income taxes by investing in productive assets, many of which can be expensed in the income-earning year. These assets can contribute to excess milk production in subsequent years, causing deep and/or prolonged downturns in milk prices.
Recommendation: The Farm Savings Account would allow farmers to save income in good years and use the income in years when farm income is down. Taxes would be deferred on the funds in the FSA until the funds are needed as income or the time limit has been reached for having the funds in the tax-deferred account. Vote: 20-5.
Topic: Support the Access to Better Credit Act.
Problem statement: With current dairy economics farm margins are strained, resulting in additional risk to lending institutions providing credit to dairy producers. This additional risk adds cost to the lending institution, which could result in less willing creditors in the agricultural lending space, or an increase in cost passed on to producers that will further decrease margins for dairy farmers.
Recommendation: The Wisconsin Bankers Association has proposed a bill to address the taxation of interest earned on loans made for primarily agricultural purposes. The Access to Better Credit Act will incentivize greater credit access to farmers. Patterned after a federal bill, this provision will provide an opportunity for increased access to cheaper credit for farmers in an increasing interest rate environment. It also provides parity in the tax code in relation to the treatment of tax on agricultural loans — it treats credit unions, banks in a similar fashion for agricultural loans under $10 million. Specifically, the provision creates an income and franchise tax deduction for the income of a lender derived from a commercial loan of less than $10,000,000 to a person residing or located in this state and made primarily for an agricultural purpose. Vote: 23-3.
REGULATORY CERTAINTY COMMITTEE
Topic: Create an app for dairy producers and associates on major topics.
Problem statement: Dairy producers are often asked by neighbors, their community or the media about topics pertaining to the industry. Accessing pertinent facts and supporting material can be time consuming and difficult. And the message should be audience specific.
Recommendation: Dairy Farmers of Wisconsin would create an app for phones and tablets where timely messaging can be accessed. Producers and associates would use the messaging and data found in the app to enhance the dialogue within their own network. Vote: 25-1.
Topic: Address regulations impacting milk haulers.
Problem statement: The dairy industry relies on efficient milk hauling across its road network to assemble milk from farms to plants and to move liquid ingredients between plants. There are many places where Wisconsin regulations do not align with neighboring states, or the dairy industry is treated differently from other industries operating in the same geography within the state. These regulations should be harmonized.
Recommendation: Currently, the Wisconsin Motor Carrier Safety Regulation-Trans 325.01 definition states: “In this chapter, ‘planting and harvesting season’ means the period of time beginning March 15 through December 15 of each year.” Modify the definition to say Jan. 1 (not March 15) and Dec. 31 (not Dec. 15). Also, in the Wisconsin Department of Transportation–DTSD Condition Sheet for Oversize/Overweight Permits, “fluid milk product” (FMP) is defined by 7 CFR 1000.15 and currently states “… any milk products in fluid or frozen form that are intended to be used as beverages…” Modify that to say “…any milk products from the point of production to another point of production or the first point of processing …” In addition, increase FMP legal weights on Class A highways from 75,000 pounds to 82,500 pounds for vehicles not in combination. This can be accomplished by adding FMP to Wisconsin Statute s348.27(9m) covering Raw Forest and Agricultural Products Weight Limitations. Also, exempt trucks transporting FMP from spring thaw frost laws on Class A highways, which would be similar to the forest products exemptions. In addition, support potential new legislation that would create a new annual permit allowing an increase in weight of CMVs up to 91,000 pounds on six axles on roads up to 15 miles departure off of the state highway system. And require local municipalities, towns and counties to determine safe, efficient routing with businesses transporting products to and from the farms. Vote: 26-0.
Topic: Bulk milk weighers and samplers license reciprocity.
Problem statement: Currently licensed bulk milk weighers and samplers must have licenses in multiple states. This imposes an unnecessary regulatory burden of paperwork on milk haulers moving product across multiple states.
Recommendation: Have Wisconsin recognize and pass occupational licensing reciprocity dealing with agricultural services that would include, but not be limited to, bulk milk weighers and samplers. Vote: 25-0.
Topic: Support for public and private partnerships.
Problem statement: For Wisconsin to remain the leader in milk production and dairy processing, it is essential that industry challenges are addressed on a timely basis and our state’s resources are properly aligned to the problem at hand. Coordinating and advancing disparate interests of our common industry will assure a leading position in the dairy world.
Recommendation: In order to meet this goal, private industry, cooperative networks, educational institutions and government at each level must communicate and work collectively. DATCP could be the lead facilitator to unify and coordinate the parties. Vote: 26-0.
Topic: Need for regulatory certainty and consistency.
Problem statement: Regulation and enforcement of regulations are necessary to protect the natural resources of Wisconsin and the public health while serving the public good. Regulations should be based on sound science and actual issues rather than perceived issues or opinions. Regulations requiring a change of practice often result in a cost of compliance to existing operations. Inconsistent enforcement of regulations between jurisdictions adds confusion and can unfairly add costs where compliance is non-uniformly imposed.
Recommendation: Create a state-level regulatory clearinghouse including membership from all impacted stakeholders to ensure that all new regulations are science-based and to determine the appropriate enforcement agency to insure consistency across jurisdictions when state level consistency is warranted. Also, conduct a financial impact study on each new practice required by a new regulation to ensure financial feasibility for the dairy producer or processor. Where that financial feasibility is limited, a funding source or cost-sharing source must be identified to support the implementation of the new practice. Also, create an environmental and clean water “super fund” at the state level in order to provide support for implementation of all environmental and clean water regulations not found to be financially feasible but viable. Vote: 25-1.
Topic: Remove the annual requirements for the rBST affidavit.
Problem statement: Currently, dairy cooperatives proprietary handlers and milk contractors must obtain a signed and notarized affidavit every 12 months or less from every producer shipping milk identified as rBST-free. Many dairy cooperatives and processors in Wisconsin now require 100 percent rBST-free milk. The requirement to obtain a signature every year adds cost and record-keeping challenges for the industry.
Recommendation: Remove the annual requirement for the rBST affidavit under Administrative Rule ATCP 83.02. Vote: 26-0.
PRICE VOLATILITY AND PROFITABILITY SUB-COMMITTEE
Topic: Increasing milk quality standards.
Problem statement: The current upper legal limit of 750,000 somatic cells (SCC) per milliliter of milk has been in place since 1993. This is a limit that every dairy farm must meet to be able to sell Grade A milk under the Pasteurized Milk Ordinance (PMO). The legal limit for milk in the European Union is currently 400,000 SCC, and dairy products exported from the United States to the EU must meet this more restrictive level of quality. The current actual average SCC in the Upper Midwest is below 200,000 SCC.
Recommendation: Change the PMO to harmonize the U.S. legal SCC level to that of the EU standard of 400,000. This would mean that exporters would not have to individually certify that each farm from which they procure milk meets the lower limit. Vote: 26-0.
Topic: Understanding marketing tools available.
Problem statement: Price volatility and low milk prices through the bottom of the cycles threaten the viability of dairy farmers who are “self-insuring.” Dairy producers need to understand the marketing tools available to them and make choices congruent with their individual business needs.
Recommendation: Have dairy producers work to understand the marketing tools that are available, such as Dairy Revenue Protection, Dairy Margin Coverage, Livestock Gross Margin, cash forward contracts, futures and options, etc. Also, Farm Service Agency personnel, agricultural lenders, insurance providers, UW-Extension agents and marketing specialists should work together to provide learning opportunities for Wisconsin dairy producers to deepen their knowledge of existing and new risk management and marketing tools available. Vote: 26-0.
Topic: Increasing demand for fluid milk consumption in schools.
Problem statement: Fluid milk consumption continues to decline. While the problem is multifaceted, making milk readily available in schools for after-sports consumption and refreshment breaks may bolster current demand for the product and reinforce a life-long pattern of consumption.
Recommendation: Have the Dairy Farmers of Wisconsin, Wisconsin FFA chapters, dairy processors, dairy producers, dairy product distributors, the Wisconsin Association of School Boards and Wisconsin schools work together to put dairy product vending machines in every school in the state (including universities) for students to purchase milk from Wisconsin dairy farms. The state could offer grants to schools or FFA chapters to purchase the vending machines. Also, it’s recommended that Wisconsin processors be eligible for economic development grants or milk checkoff dollars be used to convert or enhance their product lines to be able to produce bottled milk containers for school vending machines. Vote: 26-0.
Topic: Need to understand milk pricing and provide training.
Problem statement: Dairy farmers need to understand how milk is priced to better anticipate price movements and to have input into changes to the Federal Milk Marketing Orders.
Recommendation: Have all dairy farmers develop a general understanding of how Federal Milk Marketing Orders work, and have the UW Center for Dairy Profitability hold seminars to educate farmers on this topic. Vote: 26-0.
Topic: Support H.R. 832, Whole Milk for Healthy Kids Act of 2019.
Problem statement: In 2010, lawmakers passed The Healthy, Hunger Free Kids Act, which mandated all milk served in the National School Lunch Program and School Breakfast Program had to be skim or low-fat, and any flavored milks had to be skim. This was followed by a significant decline of milk consumption in schools — 28 percent in five years. In 2018, Secretary of Agriculture Sonny Purdue allowed skim, 1 percent and 2 percent milk options to again be offered in schools, but whole milk products are still not available.
Recommendation: Support congressional passage of the Whole Milk for Healthy Kids Act of 2019 (H.R. 832), which would allow flexibility of school lunch programs to offer a variety of choice in flavored and unflavored milk, including whole milk. The task force also supports that change in the National Dietary Guidelines. Vote: 26-0.
Topic: Mandatory pooling.
Problem statement: As milk has become long on the Upper Midwest market, manufacturing plants have depooled or partially depooled their milk from the Federal Milk Marketing Order, allowing them to pay less than regulated minimum prices to producers.
Recommendation: Support mandatory pooling of all classes of milk in a Federal Milk Market area. Vote: 9-8 (9 abstain).