Senators from two leading dairy-producing states have introduced bipartisan legislation that would allow dairy producers to establish federal savings accounts to help manage revenue risk and market fluctuations. The Dairy Augmentation for Increased Retail in Yogurt (DAIRY) Act, introduced by Senators Charles Schumer (D-NY) and Mike Crapo (R-ID), would structure the accounts to encourage savings during periods when business is strong and defer taxes on the savings until farmers withdraw funds to cover expenses or manage cash flow.Following the recommendations of the U.S. Department of Agriculture's Dairy Industry Advisory Committee, IDFA endorsed farm savings accounts as part of its farm bill policy statement.
The DIAC report said, "In transferring taxable farm income across years, this program is intended to mitigate cash flow volatility, both for the individual participant and for the industry as a whole." The report also noted that the impact of farm savings accounts on milk price volatility would be comparable to reductions anticipated from other programs, such as Foundation for the Future.
"IDFA commends Senators Schumer and Crapo for introducing this proposal as recommended by the Dairy Industry Advisory Committee," said Ruth Saunders, IDFA vice president of policy and legislative affairs. "This type of farm support ensures that dairy farmers can expand their operations when the demand for milk is increasing without being penalized as they would be under the Dairy Market Stabilization Program in the proposed Dairy Security Act."
Idaho and New York are the third and fourth dairy-producing states, respectively, and each state is home to significant yogurt production facilities. According to the New York Farm Bureau, New York dairy farmers will need to increase their milk output by 15 percent to meet the demands of the state's rapidly expanding yogurt industry. The Bureau estimates that New York farmers would have to produce 1,879,860,000 additional pounds of milk each year to keep up with demand.
