As dairy farmers struggle with low milk prices, U.S. Sen. Kirsten Gillibrand is proposing a solution that could provide some support for farms.
Gillibrand, D-N.Y., unveiled legislation Tuesday that would establish $23.34 per hundredweight as the price floor for milk. It would be modeled after the U.S. Department of Agriculture's Price Loss Coverage program for corn and soybean farmers.
Under Gillibrand's bill, if milk prices drop below the floor it would ensure insurance payments are made to help struggling dairy farmers. Farmers would eligible to receive 45 percent of the difference between the price floor ($23.34 per hundredweight) and the current all-milk price.
As of January, the all-milk price was $16.10. If Gillibrand's plan was in place, the difference between the price floor and the all-milk price would be $7.24. The payment for farmers would be $3.26 per hundredweight. The maximum payment for one month of production would be $13,583, according to Gillibrand.
The price floor would be linked to inflation. If the cost is up for farmers, Gillibrand said, the floor price would go up.
"That would make a huge difference for any dairy farm that is running their business now and gets no money back from their insurance plan," said Gillibrand, a member of the Senate Agriculture Committee.
Declining milk prices have presented challenges for many dairy farms. Farmers are operating below the cost of production and some farms are at risk of closure.
The decrease in milk prices has a significant impact on New York, which is home to more than 4,000 dairy farms.
Another factor in Gillibrand's decision to introduce this bill is the ineffective Margin Protection Program. The program was created in the last farm bill to improve pricing protections for dairy farmers.
But farmers reported that they have received little or no payments despite paying insurance premiums for coverage. Gillibrand sponsored a bill that would allow farmers who aren't receiving any dairy insurance payments to obtain refunds.
There were improvements to the Margin Protection Program in a spending bill approved by Congress in February. The changes included calculating payments on a monthly basis instead of bimonthly and eliminating premiums for farms at lower insurance coverage levels.
Gillibrand once again criticized the Margin Protection Program, which she said is "poorly designed." She believes her proposal could help struggling dairy farmers.
"We owe it to our farmers to help close that gap and with this bill our dairy farmers will be guaranteed a minimum payment on the milk that they produce to actually help cover their costs," she said.
Gillibrand outlined her bill as congressional leaders are drafting the next farm bill. The current farm bill is due to expire at the end of this year.