Dairy Supply Management Would have Started in May
US - A new analysis has found that the dairy supply management provision in the proposed Farm Bill passed by the Senate and House Agriculture Committee would have gone into effect last May 2012 and would still be in effect now using the most recent month for which data is available.
3 August 2012
3 minute read
Dr Brian Gould of the University of Wisconsin's Department of Agriculture and Applied Economics has calculated that the dairy margin was below $6.00 beginning in February 2012 through the most recent month for which data is available, June 2012, based on the dairy provisions in the proposed Farm Bill.
According to Dr Gould, since the Dairy Market Stabilization Program (DMSP) must be implemented by USDA any time the margin falls below $6.00 for two consecutive months, which it did in February and March, the USDA would have announced the program in April requiring dairy producers to either reduce their milk marketings by a minimum of two per cent from their base production history or have money deducted from their milk check and sent to the government beginning in May 2012.
Dr Gould found that the average margin was below $5.00 for the months of March and April, which would increase the required DMSP deductions beginning June 1st to a minimum of three per cent of a dairy producer's base production history. The DMSP production penalties would have continued to increase as the average margin was below $4.00 for the months of April and May, which would have led to another reduction beginning July 1st to a minimum of four per cent of a dairy producer's base production history.
"We find it unacceptable that dairy farmers are being forced to participate in a supply management program in order to receive margin insurance," said Laurie Fischer, Executive Director of the Wisconsin Dairy Business Association. "Dairy producers should join us in supporting the Farm Bill amendment sponsored by Rep. Bob Goodlatte (R-VA) and Rep. David Scott (D-GA) and supported by Rep. Reid Ribble (R-WI), that will provide margin insurance for Wisconsin's dairy farmers without forcing them to participate in a supply management program. "
The Goodlatte-Scott amendment was supported by the majority of Republicans on the House Agriculture Committee but lost in committee and is expected to be offered when the Farm Bill comes to the House floor. Both the House and Senate versions of the Dairy Market Stabilization Program require a $250 annual fee per 100 cow farm. The Goodlatte-Scott amendment rejects the new fees and allows producers to change their base and calculation method every calendar year.
Under the provisions of the Goodlatte-Scott amendment, catastrophic $4.00 coverage is free, with no fees, and covers 80 per cent of a producer's base production history, the same level as House and Senate versions. For a typical 100 cow farm, the cost to the producer for margin insurance is lower under the Goodlatte-Scott amendment for nearly all levels of coverage compared to the Senate and House proposals with supply management.
"We urge dairy producers to join us in supporting the bipartisan, common sense solution in the Goodlatte-Scott proposal," Fischer concluded.
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