Tougher banking regulations enacted in response to last year's financial crisis are hitting farmers and ranchers as they apply for operating loans, forcing many to put up more cash right away and give better proof they can pay the loan back.
HR 3935 Floor Price
On October 27, 2009 Congressman Steve LaTourette (R-Oh.)introduced H.R. 3935 which would establish a temporary, one year, minimum floor price under Class II & III milk.
The bill has no cosponsors and was sent to the graveyard of all most all dairy bills, the House Agriculture Committee, headed by Collin Peterson. Peterson has long been a friend of the big dairy players and this is not a bill big dairy wants.
However, the present dairy crisis is essentially a credit crisis. Dairy farmers are now facing massive credit shortfalls and are desperately in need of loans. On the other hand, even if farm milk price rises, banks will be reluctant to loan to dairy farms until they see evidence of price stability. This bill would build banker’s confidence.
The rationale for the price levels is based upon the average production costs for milk in the 23 lead dairy states and the historic relationship between Class II and III. Class I would automatically be affected. Class IV, which is the main class involved in world trade, would not.
Congressman LaTourette is not well known in the DC dairy circle, however, he has been a part of the financial committee and knows the financial and credit issues facing dairy farmers. He is to be commended for the effort.