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BELLEFONTE — As part of his administration's efforts to strengthen the agricultural industry through state spending, Democratic Gov. Josh Shapiro wants to use millions of dollars to connect more Pennsylvania farmers to the federal dairy program. There is.
The governor's budget proposal includes $5.6 million to create a state grant to reduce enrollment costs for the federal Dairy Margin Compensation Protection Program, which provides direct payments to farmers to address volatile milk and feed prices. It is.
The dairy industry is difficult to turn a profit because it requires a large initial capital investment and there is no guarantee that market prices will remain the same from month to month, said Jane Sebright, executive director of the Pennsylvania Center for Dairy Excellence. The center is operated within the state Department of Agriculture.
William Seal, a sixth-generation dairy farmer in Butler County, described the price fluctuations as a roller coaster ride. He enrolled in a federal program that works like an insurance program to limit some risks.
The program, funded by the 2018 federal Farm Bill, would pay farmers if the difference between national milk prices and average feed costs falls below a certain threshold.
Coverage ranges from $4 to $9.50 per 100 pounds of milk. The most basic protection is free except for a $100 administration fee required for all participants.
Annual premiums range from $118 to $7,000, depending on a variety of factors, including the level of coverage and the percentage of coverage desired by the participant.
In such a changing market, cost is a barrier to participation, Sebright said.
“It's a tough business we're in,” Ed Hartman, a dairy farmer in Berks and Lancaster counties, told Spotlight Pennsylvania. “Every dollar has to be taken care of.”
Thiele said some farmers choose not to participate because they don't want government support. Others may not know it exists, he added.
There are 4,940 dairy farms in Pennsylvania, according to state data. Of those, 1,778 are enrolled in the federal program, which resulted in $102 million in payouts across the state last year.
Christopher Allen Wolf, a professor of agricultural economics at Cornell University, said participation in the federal program provides farmers, especially small farmers, a safe way to reduce risk.
“We hope that by sharing the cost, more dairy farmers will be able to take advantage of federal programs,” said Pennsylvania Department of Agriculture spokeswoman Shannon Powers. the official told Spotlight PA.
Minnesota encourages participation through dairy aid, investment, and relief initiatives. The state's $8 million program, launched in 2019, paid out to businesses that produced less than 16 million pounds of milk and enrolled in federal compensation for five years.
Before DAIRI, the dairy industry was in crisis due to low milk prices and high feed costs, said Paul Hugunin, director of the Minnesota Department of Agriculture.
Hugunin said state subsidies are a way to give farmers direct cash with long-term benefits. Since 2020, Minnesota has received more than $245 million in federal dairy margin compensation.
“We got a pretty good deal for $8 million,” Hugunin said.
State Rep. Emily Kinkead (D-Allegheny) and Rep. Marcy Mutelo (R-Butler) are using Minnesota as a model in crafting legislation that would enable the governor's proposal.
“There's no point in trying to reinvent the wheel,” Kinkead told Spotlight Pennsylvania.
The 2018 Farm Bill expired in December, but after Congress was unable to agree on an updated version, lawmakers extended the provision until the end of 2024. The bill creating the subsidy in Pennsylvania also applies to future dairy margin compensation cycles, Mutelo said.
Investments in agriculture have bipartisan support in the General Assembly, but total spending faces an uphill battle in legislation. Republicans, including the state Senate majority, say the governor's entire budget proposal is fiscally irresponsible.
State Sen. Elder Vogel (R-Beaver), chairman of the chamber's Agriculture and Rural Affairs Committee, said the proposed total of $599 million in agricultural spending is “a pretty reasonable budget.” Mr Vogel, who is also a dairy farmer, told Spotlight PA that he supports efforts to stabilize the dairy industry amid price fluctuations.
In addition to the proposed grant program, Shapiro wants to use some of the $5.6 million to create a specialized position in the state Department of Agriculture to advocate for the industry and farmers.
State Rep. Dan Mohr (R-Adams) previously told Spotlight PA that all of the proposed investments, including the grant program, a $10.3 million grant program for innovation, and additional agriculture department personnel, He said he was not convinced it was necessary. He would rather the money be used to expand farmers' access to broadband.
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