Monthly Archives: December 2022

Measure every decision by cow comfort and know your numbers: ‘That’s how you fight inflation’

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By Sherry Bunting, Farmshine, December 23, 2022

NEW HOLLAND, Pa. – “Too much money chasing too few assets,” that’s the definition of inflation, said Gary Sipiorski, ag lender and financial consultant from Wisconsin.

He didn’t have to tell the over 250 dairy farmers attending Homestead Nutrition’s dairy seminar at Yoder’s Restaurant in New Holland on December 7 that inflation is real, because they are feeling it.

His bottom line is to measure every decision by its impact on cow comfort and manage the net income the cows generate.

As president and CEO of Citizens State Bank of Loyal, Wisconsin, Sipiorski is also an advisor to the Federal Reserve Board of Chicago. He expected the Fed would raise interest rates another half a percent, and several days later, that’s what they did.

Raising interest rates is meant to slow things down enough to curb that inflation, and as farmers, “you’re feeling the effects of both,” he said.

Sipiorski described the effects of both the disease and the cure as something that creeps up gradually to squeeze the margin.

“You can be taking good care of things and don’t see this happening, as the temperature gradually increases. It sneaks in slowly,” he said. “The war on inflation will continue for at least the next 12 months, and we are likely to see interest rates continue higher before stabilizing around the middle of next year.”

The good news for dairy, he said, is that even though consumers are drinking a little over half as much milk per capita as they did 50 years ago (18 gallons vs. 30 per person per year), they are eating more than double the gallons of milk in the form of all dairy products, combined.

In 2021, Americans consumed 667 pounds (77 gallons) of dairy products per capita. That’s 12 more pounds per capita than in 2020.

“We didn’t drink the 77 gallons, we ate it,” said Sipiorski, adding that dairy exports have also become crucial.

“By the end of this year, 20% of your milk production will be going elsewhere,” he said. “That shows the faith the rest of the world has in the superior product you make.”

Inflation, rising interest rates and supply disruptions are slowing the rate of dairy expansion, as the industry focus turns inward to manage margins even more tightly as feed costs have doubled, cropping costs have quadrupled, lines of credit cost more and are harder to get, machinery and parts cost more and are harder to find, and some farms must deal with a milk base program from their milk co-op or buyer — putting penalties on overbase milk in the output side of that margin equation.

Sipiorski shared his insights on the most important things the top 30% of dairy producers do in a talk he titled ‘Chasing inflation with a cow.’

The top third of dairy producers double-down on managing these primary areas: feed, debt, labor, cow comfort, and knowing their numbers.

Minimize feed shrink

With feed and cropping costs so much higher, Sipiorski told dairy farmers the 10 to 20% they can be losing in feed shrinkage is a significant area to manage.

“Losing 10 to 20% of the feed from field to rumen is a big cost to the dairy,” he said. “We are seeing more investment in feed storage sheds, bringing the mixing indoors and thinking about how you mix the feed, in what order.”

Pay down lines of credit, not term debt

Choosing carefully what debt to pay down at this time of rising rates is also critical. Paying down lines of credit that have adjustable interest rates and keeping some of that cash liquidity may make more sense than paying additional principal on longer-term fixed rate loans.

“Your thought process may be to pay down that term debt, but if the rate is locked-in, and you pay it down, that money is gone, and you may need that money later, and then pay a higher interest rate for it,” Sipiorski explained, advising farmers to talk with their lenders about their debt structure.

Push pencil on machinery

“Do the math on whether to lease or buy machinery,” Sipiorski urged. “If it is something you use three months of the year, can you afford it? Can you afford the cost to have and maintain that piece of equipment?”

He noted that the top dairy farms push the pencil to compare costs of owning new equipment, leasing it, or hiring custom operators for segments of their field work.

Time is money, spend it wisely

In addition to dealing with hired labor cost and availability, Sipiorski advised farmers to “count your steps and measure your time.”

In other words, know what your time is worth and find ways to streamline chores for yourself and your employees. One example he gave was to put tools around where they will be used to minimize time spent going back and forth for tools needed.

Keep improving cow comfort

“Cow comfort is a place to keep improving to fight that inflation with that dairy cow,” Sipiorski declared.

It’s the accumulation of a lot of simple little things the top third of producers do, such as providing enough space at the feedbunk, waterer and in the dry cow area.

“The dry cows are working just as hard for you, so don’t cheat them” he said, adding that top producers are absolutely passionate about cow comfort.

The cows require a lot of investment, and the top producers benchmark the investment per cow at $8,000 to $20,000, while benchmarking gross income per cow at $5,000.

“Cow comfort is an area of investment that brings you the most return. Every decision you make, ask yourself, are you making money with that decision?” he said. In other words, “are you making cows more comfortable with that decision?”

Keep improving milk components, quality

Producing milk with higher component levels and lower somatic cell counts (SCC) is what the top third of producers are doing, said Sipiorski.

“This is even more important if your co-op has a base program. If you can’t produce more milk, make the milk you are producing better,” he said, noting that components drive value.

Quality as measured in SCC will also increasingly drive value and market access. Sipiorski sees the industry getting to the place where milk will eventually have to be under 150,000 SCC.

While he didn’t specifically mention transformation in the processing sector, it’s becoming clear that ultrafiltration and microfiltration in some of the newer dairy plants is aimed at removing the lactose from the milk to be used in making cheese, other dairy products and lactose-free high protein milk beverages.

Those working with this technology have repeatedly said it requires farm-level SCC thresholds to be even lower because, as the water and lactose are removed through membranes and reverse osmosis, the remaining solids are condensed. This includes the SCC being concentrated with those valuable solids, so those processors expect a lower-SCC limit at the starting point.

Get educated on marketing

Sipiorski advised farmers to be “educating yourself on marketing and risk management.”

He noted that milk markets are volatile, and marketing through a broker or a cooperative program or other risk management can be good or bad.

“You won’t know if it’s a good deal or not, if you don’t know your cost of production, your margin,” he said.

Know the numbers, focus on high quality forage production, and look at areas where changes and investments can help fight inflation, he advised.

One thing he has seen more farms moving toward – to reduce marketing costs – is to increase milk storage to go from once a day to every-other-day pickup to reduce fuel costs, transportation and ‘stop’ charges.

This is something that has been occurring at the retail end for years, with less frequent deliveries from processors to retailers becoming the norm today.

Benchmark against industry or self

Benchmarking the dairy to itself year over year or to industry averages is important financial management, according to Sipiorski.

The numbers that are needed to do this are found on the balance sheet, income statement, and accrual accounting of yearend income – not the IRS tax return. 

He said that doing a business plan with projected cash flows helps make better financial decisions.

Sipiorski gave farmers some financial benchmarks to keep in mind, noting again that the numbers need to be based on accrual accounting, not the year end IRS tax return.

“In that tax return, you have prepayments and depreciation,” he said. This skews the cost of production calculation, for example, because the cost of inputs are not directly aligned with the output revenue.

Sipiorski ticked through some industry benchmarks to be aware of: Equity position (50%), liquidity (2:1), net profit margin (10%), cost of production ($17-22.00/cwt), operating expense as a percentage of gross income (65-80%), and debt to revenue ratio (1:1).

The bottom line, he said, is “you need to produce 100 pounds of milk for less than you sell it for.”

On that point, he noted the most recent USDA forecasts at the end of November are for Class III milk to average $19.80 in 2023 with the All-Milk price next year forecast to average $22.70, while the cost of production in 2022 is averaging $20 to $22.00 across the industry, but the range is wide.

“Pennies (per hundredweight) are a big deal,” he said, showing that the 47-pennies per hundredweight difference in a Q2 2022 comparison of the net margin per hundredweight of $6.64 for all herds vs. $7.11 for the ‘top 30% of herds’ amounts to just shy of $113 per cow annually.

“That’s $2800 on 25 cows, $11,280 for a 100-cow dairy. That’s how we fight inflation with a cow,” he said. “Who in this room wouldn’t want another $11,000 in the pocket to fight inflation?”

Sipiorski described dairy as a dynamic business full of chaos and volatility, but with that comes lots of opportunities.

He sees a ‘barbell-shaped’ future for dairy, where there will be opportunities for small and mid-sized family dairies even if a large portion of the milk supply comes from much larger dairies.

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Gary Sipiorski, a lender from Wisconsin, talked about dairy financial management in these inflationary and volatile times. Despite the chaos and consolidation, he sees opportunities for small and mid-sized family dairies in the future, even if a large portion of the milk supply comes from much larger dairies. Photo by Sherry Bunting

Dream in progress at BAD Farm, where they DON’T live up to their name

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‘Tis the season for something special. Their story began with raw milk sales over 10 years ago, today it is becoming so much more.

By Sherry Bunting, Farmshine, December 16, 2022

KEMPTON, Pa. — ‘Tis the season for something special. It’s Christmastime, and diversified consumer-facing dairy farms are featuring special products, memories and events, complete with decorations, milk (or hot chocolate) and cookies, wagon rides, Christmas settings and on-site photographers for on-the-spot family Christmas portraits – you name it, and dairy farmers are doing it.

Recently Jason and Kacey Rice (and sons Emmit, 6, and Ellis, 4) had such a “Christmas on the farm” event at their BAD Farm near Kempton, Pennsylvania. Delicious dairy products, made with the milk from their 60 cows, were combined with holiday festivities, opportunities to see a working farm, visits with Santa, and, yes, portrait sessions with a holiday setting, a festively outfitted calf and a photographer.

Almost 100 people dodged the raindrops on the first Saturday in December to attend the event at the store the Rice’s built on the farm in 2020 as they began offering more products.

But their journey began with selling just raw milk and eggs more than a decade earlier.

In addition to the store, BAD Farm products are sold at pop-up farmers markets in Emmaus and Lehighton. Jason’s dad manages the meat sales. His mom is the point person for the farmers markets, staying in touch with Kacey, who runs the on-farm processing of the items they do on-site and ordering those products that are processed for them elsewhere — all using the milk from their own cows.

The farm’s name gets some attention, notes Jason during a Farmshine visit Monday (Dec. 12).

His parents, Beth and Dave Rice (the original B and D Farm) found themselves and others abbreviating the initials BAD. Jason’s middle name is Dave and his wife Kacey’s middle name is Beth – so they kept the acronym after transitioning the farm.

Today, BAD Farm milk and dairy labels state the motto: “Where we DON’T live up to our name.”

“It’s a conversation starter at the farmers’ markets,” says Jason. “People remember it.”

When he came home from SUNY Mohrsville in 2009, it was a rough time for dairy farms. He already had a vision for the farm to get closer to consumers, and his parents already had done the work for a raw milk permit.

For more than 10 years, they sold raw milk and eggs in a tiny outbuilding by the barn and did freezer beef as well. Today, the coolers in the new farm store hold fruited regular and Greek yogurts as well as aged cheeses and cheese curds in some popular flavors — all made with their farm’s milk by two different processors. 

The beef in the freezer is from their own Holstein calves that are fed out at another location. The eggs are from their own chickens, cage-free but in a poultry building on the farm due to their location at the base of Hawk Mountain. The prepared meals are made for them by a commercial kitchen, featuring items like shepherd’s pie, meatloaf, quiche Lorraine – all dishes that use the dairy, eggs and beef produced at BAD Farm.

This year, they realized a dream making their own ice cream and chocolate milk.

In Pennsylvania, raw milk can be sold with a permit, but raw milk cream cannot. Jason’s ultimate dream of making their own chocolate milk and Kacey’s dream to make their own ice cream, from scratch, became reality when a Pa. Department of Agriculture innovation grant helped them invest in this processing infrastructure.

Previously, these products were made for them elsewhere. They have also started a line of coffee creamers, with peppermint in the cooler for the holidays, pumpkin spice in the fall, and traditional vanilla and salted caramel. They now do pasteurized creamline milk in addition to raw milk, and they offer yogurt sMOOthies, which are a big seller in fruit flavors, mocha, and a peppermint for the holidays.

For Jason, the chocolate milk is the big one. His enthusiasm about it is clear. It’s an area he has always believed the industry can do better. 

“We wanted to make a really good chocolate milk — something people can be proud to put on their dinner table,” he says.

(Yes, they succeeded. BAD Farm’s chocolate milk is super GOOD. I brought some home, and found it has a really smooth and silky finish to go with that creamy texture. I also took along a Mocha Morning yogurt sMOOthie, which was quite a treat, finishing it before I was 5 miles down the road.) 

As for the BAD Farm chocolate milk, it is a pasteurized non-homogenized creamline chocolate milk. It is 90% whole milk with 10% heavy cream added. They don’t standardize the whole milk, and their herd test is right around 4.0 butterfat.

“We found we could really pull back on the added sugar this way,” Jason reports.

With the processing infrastructure, Kacey was able to start making old-fashioned ice cream. “I always wanted to do ice cream from scratch, and the innovation grant helped with that,” she says. 

Kacey works with seven ice cream flavors, rotating in some seasonal specials. Her philosophy is to focus on quality and marketing and “getting the products to the people,” rather than trying to make every flavor under the sun. 

They shoot for memorable ice cream experiences. Their chocolate blast uses three kinds of chocolate for a signature blend. They work with orchards on custom flavors. They offer peaches and cream in the summer and apple pie ala mode in the fall. They rotate core flavors to keep it interesting. 

Neither Jason, nor Kacey, studied dairy processing specifically in college, but they learned concepts that contributed to their vision. They read, and ask questions, talk to peers and seek advice from those who’ve done it. They are constantly learning and looking for trends and ways to extend what comes from their farm — milk, eggs and beef – and turn it into what consumers are looking for. 

“We don’t have hired help except one high school employee to help milk,” says Kacey.  “Instead, we pay people to process some of the products we offer that are made with our milk while we are focusing on building our connection to consumers.” And they are gradually doing more of their own processing also.

“To do this, you have to want to talk to people. You have to want to have those consumer conversations. Our store is right in the middle of everything on the farm. People can see the cows as they walk down to the calf barn. They can see the farm tractors coming and going through the seasons. They see it all,” says Jason, noting that they don’t do group tours, as such, but “we’re here, and we’re available. We could be in the middle of doing corn silage and someone stops and has a question. We need to stop what we’re doing and talk to them. It’s a priority. That’s the commitment we make.”

And that’s okay with Jason and Kacey because connecting with consumers has been part of their vision for the farm since the transition began. 

With their on-farm self-serve store completed in April 2020, just as the Covid pandemic hit, the couple had to pivot quickly to meet customer demand for more staples and more products as consumers were faced with shortages in stores and became more tuned-into where their food comes from and were looking for things to do, places to go.

Being somewhat off the beaten trail, BAD Farm is a destination, not a quick stop on the way home from work, but the raw milk sales on the farm and the connections made at the farmers’ markets off the farm give the Rices core customer bases to build on.

The store is built on the other side of the barn toward the house. The dairy innovation grant helped the Rices add processing with three uniquely incorporated trailers.

Jason’s grandfather David Rice, an electrician and retired contractor, came back for a long visit from Nebraska where he had moved many years ago (helping Jason’s uncle, Dan Rice, when he was still a partner in Prairieland Dairy, before the processing part of that business was sold).

The Rices had purchased a ‘processing trailer’ and revamped it with some new equipment to do the pasteurized creamline milk, chocolate milk and ice cream. They purchased a frozen foods trailer and turned it into their refrigerated storage cooler and another trailer for their storage freezer. The infrastructure adaptations are smart and practical. The three trailers back up into the back of the store building, with a buffer area for storage in between — and each with its own sets of sealed entry doors.

While grandfather David helped with the electrical work and mapping out the flow in processing, storage and retail, grandmother Gloria painted country art for the vintage displays of old farm and dairy equipment interspersed between coolers — giving the space that country store feel. 

Jason and Kacey have known each other since high school. He went to SUNY Mohrsville for animal science and ag business management. She went to Penn State for ag education. For the past 10 years, Kacey was an ag teacher, until August 2022. Now she is full time at the farm, where she enjoys the processing and marketing. They have two young boys, Emmit, 6, and Ellis, 4, keeping them busy as well.

As their dream progresses, the Rices are methodical, taking incremental steps with eyes on how they invest and where they put their focus to continue diversifying, while staying rooted in using the dairy, eggs and beef produced on BAD Farm, where they DON’T live up to their name. To be continued.

Live Nativity performed at Dryhouse Farm Dec. 22-23

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The ‘realness’ draws crowds as Christmas, cows, farming, fellowship are shared. Yoder family has been providing this free community experiences for 7 years.

By Sherry Bunting, Farmshine, December 16, 2022

BELLEVILLE, Pa. – “As long as they keep coming, we’ll keep doing this,” says Mike Yoder about the Live Nativity in its seventh year at Dryhouse Farm near Belleville, Pennsylvania.

It’s always on the Thursday and Friday evenings before Christmas, with this year’s Live Nativity falling on December 22 and 23 leading right up to Christmas Eve and Christmas Day. The times both evenings are 5:00 to 8:00 p.m. (Update: Dec. 23 showing is canceled due to the storm on its way, Dec. 22 going on as planned)

“We like that we are bringing the public to the farm and have the chance to share part of our world with others,” says Mike in a Farmshine phone interview this week. “We also like that this is becoming part of the family Christmas traditions for many people. We get calls weeks and months ahead from people wanting to get the dates on their calendars.”

For Mike and Maria Yoder and their four children Natalie, Paul, Grant and Cade, the preparations are underway this week. They’ve started moving bales, sweeping and cleaning the bank barn, recruiting volunteers to take shifts being shepherds and cast, and there’s a lot of coordination with the refreshments – mainly cookies, hot cocoa and coffee, plus kettle corn this year.

Mike makes a ‘show pack’ for the scene with a cow tied behind Mary and Joseph and several calves and the cast. They use a show cow that is accustomed to being handled on a show pack with crowds.

The main Nativity scene has a 3-foot wire fence around it, but people can reach in to pet the animals.

“We’ve added a petting area where kids actually get in with the animals, and we try to add some different animals every year,” says Mike, noting that last year, they had rabbits. “We also have a straw pit to play in.”

Christmas music plays in the background, some tables are set up for visiting, and the walk-through flow leads to refreshments at the welcome tent.

Of the nearly 700 people of all ages and backgrounds who attended last year, many were families with young children, and many come from the nearby retirement village and nursing home.

“The nursing home is close to us here, and we get a lot of older people from the cottages,” Mike confirms. “We have extended families coming together here, and we expect to have more of that this year. We have people come from two hours away, from southwest Pennsylvania, and we even had a family come down from New York to see it. We never know who is going to pop in.”

For the first few years, the Yoders advertised the Live Nativity in newspapers and on the radio, but now it is by word of mouth and through social media.

The event is free, and Mike says they firmly want to keep it that way.

“We have some that want to make donations, and in 2020, we gave those donations to the nursing staff at the local nursing home because we didn’t start this to charge for it,” he said.

What better celebration of the meaning of the season than with a Live Nativity — in a real barn on a real farm?

“It’s real for people in a barn. It’s cold, and there’s cobwebs, and there’s animals below us, and it smells like a barn, so it’s that realness,” says Mike.

People respond to this. It makes an impression. While the 190 milking and dry cows are housed in newer facilities, the youngstock are housed in the bank barn just below the event.

“The other part of this is the educational factor, getting people onto a farm,” Mike explains, “It’s amazing how many of these kids have never been up close with a cow.”

He makes another important observation, that the farm-to-consumer disconnect is not just an urban phenomenon, it’s within rural communities also.

“We don’t have big cities close to us,” Mike relates. “But even rural kids grow up without contact with cattle and other animals that we take for granted.”

While the family is busy running the dairy farm, and all four children play basketball at school, everyone knows “this is just what we do,” says Mike. “The kids’ friends often like to help and dress up, and we have people from our church wanting to help too.”

Everyone has a role and a job. The ‘angel’ sitting up high on stacked hay bales, for example, is the ‘counter’ to help keep track of attendance so they can plan each year for the growth in the number of people drawn in.

Why did the Yoders start doing the Live Nativity in 2016?

“At that time,” Mike recalls, “we had a donkey, a llama, some goats and a pony. Someone made a joke that we should do this, and that’s where it all began.”

The offhand suggestion got the wheels turning for Mike and Maria. They had the old bank barn where they have had events for church groups and the community. They thought, why not?

For the first couple years, they did the Live Nativity for just one night. As attendance grew, they added a second night.

During the Covid-19 pandemic in 2020, they did it as a drive-through, with stations set up in different themes around the farm, handing out cookies and hot chocolate as the cars went through. The first night was canceled that year due to a snowstorm blanketing the area with a foot of snow. But the next night, they were ready.

“We were surprised. We had 150 cars come through that one night. People were really looking for things to do that year,” Mike recalls.

In 2021, and again this year for 2022, they are back to the walk-through Live Nativity experience inside the bank barn.

The Yoders have been dairying here since they moved to Belleville in 2007, eventually taking over Dryhouse Farm for Ray and Lester Yoder (no relation), who were looking to transition out.

Mike and Maria worked for them for a year and rented the farm for four years. In 2013, they purchased the farm, having already purchased the original herd, which they grew to 190 cows. They also merchandise cattle and have sold bulls to A.I.

The Yoders bought into some good cow families and developed their Dryhouse-M prefix to keep their genetics separate from the original Dryhouse herd. There are several good cow families milking here, including one of cows they bought with the original herd that recently passed away at age 17. She was a 5E 93-point cow with numerous high scoring offspring on the farm today.

In addition to their registered Holsteins, the Yoders have gotten into some colored breeds as their children began showing. They go to the Mifflin County show, where they were premier breeder and exhibitor this year, and to the Central Pennsylvania Championship in Centre Hall, where they were premier exhibitor last year. They also show at Harrisburg every year, and in some years, they show at Louisville and Madison.

Aside from the Live Nativity at Christmastime, the Yoders have hosted other community and farm events.

This year, they had Mifflin County Farm Bureau’s third grade agriculture tour with 500 third graders on the farm all at once in September. They’ve hosted career events for the local school district, and they were a tour stop for the National Holstein Convention when it was in Pennsylvania in 2021.

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On-time farm bill is Chairman Thompson’s top priority, areas of USDA oversight also rank high

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By Sherry Bunting, (Nov. 25 interview has been updated since Thompson’s official caucus election to Ag Committee chairmanship)

WASHINGTON – With Republicans securing a slim majority in the U.S. House after the midterm elections, Congressman Glenn ‘G.T.’ Thompson (R-Pa.) is preparing to move from ranking member to chairman of the House Agriculture Committee when the 118th U.S. Congress is sworn in for the next legislative session on January 3, 2023.

The House Republican Steering Committee made it official December 7, selecting Thompson incoming Ag Committee Chair, the first from Pennsylvania since 1859.

Outgoing Chairman David Scott (D-Ga.) expressed his appreciation to fellow committee members, sharing in a statement: “As I prepare to hand the gavel over to Mr. Thompson… I am encouraged by the bipartisan work we have accomplished together, particularly around our shared interest in broadband and access to USDA programs for our new and small producers. Heading into the 2023 Farm Bill, I am hopeful and prayerful that the collegial spirit will continue and that the Agriculture Committee will be able to deliver a farm bill with strong Republican and Democratic bipartisan support.” 

A first order of business for incoming Chairman Thompson is to host his first official 2023 farm bill field hearing on the first Saturday of the Pennsylvania Farm Show, January 7 in Harrisburg.

Thompson has had a long history of holding listening sessions during the Farm Show and bringing with him some committee members from other states. This time, he’ll be looking at a larger venue at the complex, and he’s inviting all Democrat and Republican members of the House Ag Committee as well as prospects.

“The committees won’t be fully populated by then, but the chairmanship will be confirmed,” said Thompson in a recent Farmshine phone interview.

“The most important priority is the on-time completion of the 2023 farm bill as the current farm bill expires at the end of September 2023,” says Thompson. “Certainly, beyond that, we have oversight functions that are really important too.”

One of those areas of oversight, he explains, is the House and Senate Republican request already sent to USDA Secretary Tom Vilsack asking for an audit on “all the pots of money” in USDA that have come through executive actions and the spending in bills passed by the Democrat majority.

“We are asking for this audit because we believe it will be helpful going into the farm bill process to see those funds outside of the baseline,” Thompson explains. “We’ll be following up and looking forward to getting that information.”

In addition to bringing USDA in for oversight within and outside of the farm bill process, Thompson mentioned the leadership will want EPA Secretary Michael Regan to explain the things EPA has been advancing that are creating uncertainty and problems for America’s farmers and ranchers.

Outside of the funding for USDA conservation programs, Thompson says he is “absolutely opposed to making (the farm bill) a climate bill.”

It’s going to be busy in Washington D.C. after January 3, but he says he remains committed to bringing the Whole Milk for Healthy Kids Act forward again with potential legislative improvements.

“We’ll jump on whole milk right away, but it’s not in the farm bill, and it’s not in the Ag Committee, it’s in the Education and Workforce Committee,” Thompson explains, noting that he will be a senior member of that committee also, and will work with the chairman.

He reports that the Republicans had teed up a version of the childhood nutrition reauthorization last summer in that committee, but their bill and their amendments to allow whole milk and 2% milk in schools and in the WIC program did not make it into the version passed by the House on party lines.

The good news is the House Democrats’ version of the childhood nutrition reauthorization, without the whole milk provisions, also did not advance through the Senate, so it will be a do-over next session.

“Let’s hope the third time is the charm,” says Thompson. “I remain hopeful we can do it through that. My goal is to work hard to get it in as part of that base bill and go from there. We’ll need bipartisan support in the Senate, where the childhood nutrition reauthorization requires 60 votes.”

The Senate remains split down the middle with an edge to the Democrats in terms of committee leadership in the next Congress.

Back to the farm bill priorities, Thompson said protecting crop insurance as well as other crop and livestock protection products like Livestock Gross Margin (LGM) and LGM-Dairy as well as Dairy Margin Coverage (DMC) and support for DRP are front-burner. Enhancing them — where possible — ranks high on his list.

Along with that, he says the committee is learning from the disaster payments that have been made outside of the farm bill baseline to be looking at how to incorporate more of that relief in a way that provides certainty for farmers and ranchers and for the lenders providing them with access to capital.

Another priority will be to look at the Title I reference prices for commodities.

“With record high inflation, the challenge is not what is paid, but the margin left at the end of the day,” says Thompson.

“There’s really no part of the farm bill that’s ‘unimportant.’ The nutrition help is important to give a hand-up to those in need, and to be using this to provide access to career and technology education so people can rise above their financial struggles,” he explains.

When asked about milk pricing reforms in the farm bill, and the change made to the Class I mover in the previous farm bill, Thompson said: “It’s all on the table. No conclusions have been drawn yet. As we do these listening sessions and hearings, this is where we’ll decide what the tweaks will be to areas of the farm bill.”

Asked what he thinks about the talk coming out of the COP27 in Egypt this week, of the U.S. pledging to pay $1 billion in reparations to other countries for climate impacts – noting that China is being exempted from paying such reparations because of still being defined as a ‘developing’ nation — Congressman Thompson was blunt in his response.

“It is absolutely ridiculous. We should not be paying for that. The United States of America leads the way in the reduction of greenhouse gases, and a big part of that is because of our farmers and ranchers. They are our climate heroes, and they’re not getting enough credit for that, for what they are already doing,” he said.

In a follow up question about the ESG scoring and the Securities and Exchange Commission (SEC) proposed rule to track scope 3 emissions back to the farm level, Thompson observes: “Those are political-science driven policies with no place in American agriculture or American finance for that matter.”

When asked about the $11.4 billion in annual funding the President pledged at COP27 for climate transitions in other countries, Thompson added: “We would be funding some of the dirtiest economies in the world. It’s not our role to do that.”

The House controls the ‘purse strings’ so to speak, so this could be a show-down.

Given how CBO scoring of baselines is sometimes a hair-splitting mechanism in a farm bill negotiation, what was implied, without being specifically said by the incoming Chairman, is that some of these climate funds going elsewhere with no accountability might best go to making sure America’s farmers and ranchers have the certainty and backing they need to continue as American food producers. That, in itself, is good for climate and the environment.

Stay tuned.

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