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Dairy farmers eye labor, policy and trade at Central Plains Dairy Expo

South Dakota Dairy Producers Association President Marv Post speaks at the Central Plains Dairy Expo in Sioux Falls, S.D. Michelle Rook / Special to Forum News Service1 / 2
Dairy producers browse the booths at the Central Plains Dairy Expo in Sioux Falls, S.D. Michelle Rook / Special to Forum News Service2 / 2

SIOUX FALLS, S.D. — The last year has been rough for dairy producers in the region with a milk surplus driving prices below the cost of production.

But dairy producers attending the Central Plains Dairy Expo in Sioux Falls, S.D., March 27-29 were focused more about the other challenges they are currently facing, including a labor crisis and a possible trade war.

South Dakota Dairy Producers Association President Marv Post said the labor crisis has become dire lawmakers have failed to provide a workable solution to the nation's failed immigration policy. However, he said dairy industry groups are currently backing the AG Act or H-2C Program offered in the House by Congressman Bob Goodlatte, who chairs the House Judiciary Committee.

"The Goodlatte bill is going to be an improvement. It's something we hadn't had for many years," Post said.

Rock Rapids, Iowa, dairy producer Evan Metzger agrees and said the legislation would solve their biggest problem, which is retaining employees in the milking parlor.

"We're trying to get that H-2C program passed through which would allow us to employ full-time labor throughout the whole year," said Metzger.

Passage will be tough in an election year, and it doesn't have a Senate companion bill, but it may be the only legislative option.

"It seems to be gaining some strength. I'm not going to tell you that anything's possible to get through this Congress, but I think it has the best chance of anything," said Post.

To help with low milk prices, dairy producers are eyeing a fix to the Margin Protection Program that was included in the recent Bipartisan Budget Act. Most producers have not received a payment with the original insurance program during this low milk price cycle and feel this risk management tool has been a complete failure.

Marin Bovic, assistant professor in the University of Minnesota's department of applied economics, believes the improvements to the program will make it effective for producers.

"We reduced the premium substantially for the first 5 million pounds, which will help producers to about 24 million pounds because they don't have to protect everything. They can protect just a quarter of their production," Bovic said.

Plus, he said the payments were accelerated.

"Instead of having payments figured on a two-month period like January and February, now every month there can be a new check coming out if the prices are low enough," Bovic said.

The $100 enrollment fee has also been waived for some producers, like those who are just getting started in the business.

Bovic does anticipate there may be additional changes in MPP in the new farm bill, and some lawmakers have offered alternatives that will recalculate and lower the margin level needed to trigger payments.

Dairy producers at the show also were talking about trade concerns with China and the need for a successful outcome on the North American Free Trade Agreement renegotiation talks.

"Just looking at the NAFTA situation to begin with — Mexico is the country's largest export destination for dairy products, and we want to make sure we preserve that," said Rod Johnson, Nebraska Dairy Producers Association executive director.

However, Johnson said looking to their trading partner to the north, they admit there are changes needed.

"We've had a lot of issues over the years with Canada, and their Class 7 milk program up there is really making an impact. So, we need to make sure we preserve what we have and make sure we fix some of the problems," Johnson said.

A possible trade war with China is also a looming concern for U.S. agriculture on more than just one front. Tariffs on steel and aluminum are already impacting the cost of agricultural equipment, from tractors to milking equipment. Greg Moes is co-owner of MoDak Dairy near Goodwin, S.D. He said he talked to many exhibitors at the Expo who are having to raise their prices.

"Suppliers are on a 24-hour account. They have to know within 24 hours if they're going to buy anything because everything is changing that much, and that's just on the steel prices," said Moes.

Trade disruptions with China are also possible, and even though dairy is not on the current retaliation list they could be targeted for future tariffs. Plus, the trading relationship between the two countries will undoubtedly be strained.

"China is always a moving target," said Allen Merrill, a Parker, S.D., dairy producer. "They buy in such large volumes, and when they quit buying it dramatically affects our price."

Dairy farmers said the key is to avert a trade war or disruptions in an already depressed dairy market.