The Dairy Revitalization Act: How It Works

Jay Nixon addresses the crowd at a 2012 event. | Photo courtesy of Creative Commons
Gov. Jay Nixon must decide by July 14 whether to sign or veto the Dairy Revitilization Act. | Courtesy of Creative Commons

The Missouri General Assembly passed the Dairy Revitalization Act in May, and Gov. Jay Nixon must decide by July 14 whether to sign it into law.

The act relates to the recently passed national Farm Bill, which includes a voluntary insurance program that provides coverage for farmers when they’re hit by droughts or other natural disasters. Farmers pay a premium on a sliding scale; the more expensive options have higher payouts. The insurance program takes the place of direct disaster assistance.

The Missouri Dairy Revitalization Act includes a provision that would use state funds to pay most of the premium costs for milk producers. For example, the state would pay up to 70 percent of the highest premium cost. The fund would cover up to 34 cents per hundred pounds of milk, or 11.6 gallons.

The subsidy is designed to be an incentive for dairy farmers to enroll in the new insurance program and choose the high-reimbursement option. By enrolling in a higher bracket, they would receive a larger reimbursement for feed costs, and be more likely to survive a spike in feed costs caused by a natural disaster.

For example, if a farmer usually produces 4 million gallons of milk a year, and chooses the highest insurance bracket, the farmer would pay $5,400 with the state subsidy, and $19,000 without the subsidy.

Read more: “Dairy Farms, Milk Production Declining In Missouri

The funding for the bill would come from the state’s general fund. The maximum amount of funding was capped at 40 percent of what the dairy industry brings into the state in sales tax revenue. The funding for the bill would have to continue to be approved each year.

An additional part to the bill would introduce a college scholarship program to draw young farmers into the business. The scholarship would make available 80 annual scholarships worth $5,000 each for Missouri residents enrolled in an agriculture program at a college or university in the state. For every year that the student accepted the scholarship, he or she would be required to work on a dairy farm for three months.

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