DBA: Dairy producers better off with with Goodlatte-Scott


Source: Dairy Business Association

Hold on to your wallets – the government may soon have another way to tap into your milk check. The so-called "Dairy Market Stabilization Program" allows USDA to reduce your milk check periodically, and unpredictably, requiring you to either discard a portion of your milk production in excess of your base or not get paid for the portion of your milk delivered larger than your base.  

Dairy economists from leading universities released a new study comparing the short-term impacts for dairy farmers of two dairy safety-net programs now being debated in Congress – the Dairy Security Act (DSA) and the Goodlatte-Scott amendment to DSA.   A key difference between the two proposals is DSA requires the DMSP supply management deductions, while Goodlatte-Scott does not.  

The reports show that farms of all sizes can be protected without requiring new milk check deductions. A comparison of the study results for a 360-cow farm shows that margin insurance by itself has higher net benefits than margin insurance that is tied to supply management and subjects farmers' milk checks to payment reduction.  

The report also shows that smaller farms – based on a hypothetical 150-cow farm – can be better off with less out of pocket premiums and fees and higher projected net revenue.

Proponents have promised that the DSA's supply management program will deliver higher prices and will not hurt dairy markets.  But the reality is that the new research did not measures these impacts, and can't tell us what the effect of supply management will be on the growth of milk supply, market prices, or dairy exports.

DBA advises farmers to reject the promise that supply management will bring about bigger returns and higher dairy prices.  The question we should ask is, 'Do we want government to manage our milk production, our markets, and the next generation of our children's future?'  DBA believes the answer is “no” – margin insurance on its own is our best policy for today and the future.