Analysis: Dairy Security Act better for farmers, taxpayers

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A new analysis of the key Farm Bill dairy proposals under consideration in the House Agriculture Committee finds that the Dairy Security Act (DSA) is better for farmers – as well as taxpayers – compared to the Goodlatte-Scott alternative proposal that will be offered in the committee deliberations tomorrow.

The new report, prepared by University of Missouri agricultural economists Scott Brown and Daniel Madison, assessed how the Dairy Security Act would have affected farm-level economics during the period 2009 through 2012 compared with the impact of an alternative plan offered by Reps. Goodlatte and Scott (G-S). The DSA program offers dairy farmers margin insurance, coupled with a market stabilization mechanism that improves farm prices during low periods while also controlling the program’s cost. The Goodlatte-Scott amendment lacks the market stabilization feature.

According to Brown and Madison’s economic modelling, the DSA would have increased net farm revenues by $0.55 per cwt. over the period studied, while the Goodlatte-Scott amendment would have raised farm revenue by only $0.48 per cwt. More important from a budgetary standpoint, the Goodlatte-Scott proposal would have hiked government expenditures by $1 billion over the 2009 to 2012 period compared to the DSA, because G-S would encourage more milk production – even at lower margins.

“This new analysis gets to the heart of the question that our lawmakers must answer: do they support a plan that will save the government money while helping farmers, or will they instead endorse an alternative that results in the worst of all worlds -- lower farm milk prices and higher taxpayer outlays?,” said Jerry Kozak, President and CEO of NMPF. “Regardless of your politics, the Dairy Security Act is the more fiscally responsible choice.”

Contrary to claims that the DSA would short the market of milk, affecting both the domestic and export aspects of the U.S. dairy sector, the Missouri report found that “Milk production on average is virtually unchanged under either option.” Brown’s report did note that the DSA’s market stabilization program would slow milk output in response to market signals, but that it would not have been in place frequently enough to produce long-term changes in milk production.

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MA  |  May, 14, 2013 at 10:52 PM

Both of these run a distant 3rd to the MILC that NMPF didn't have the guts to endorse...Cost of production could have been paid out of the Federal Order pool on the first 2.4 million pounds and paid for by the processors that continue to profit from an oversupply of cheap milk!!

new york  |  May, 15, 2013 at 07:35 AM

If the payout is anything like LGM dairy it bad for both farmer and tax payer. LGM has collected nearly 55 mil in premiums and paid out 1.5 mil.

WI  |  May, 15, 2013 at 08:24 AM

Maybe neither program would be better! We might be all better off if the we could just get the government out of our business. It seems whatever program that gets dreamed up always creates more problems than it solves with minimal benefits to whoever it was supposed to help. NMPF could just go away also because they do not listen to there farmer members, only the big coop leadership. The big coop leadership does not listen to its members either because they are to busy fending off lawsuits from corruption in years past.

MI  |  May, 15, 2013 at 05:34 PM

I'm pretty sure the free market has done its job

Tom Van Nortwick    
Fresno, Ca.  |  May, 15, 2013 at 06:53 PM

Neither of the proposals being offered as dairy policy in what will likely be the 2013 Farm Bill and being touted as the solutions for the industry by NMPF and IDFA respectively will provide any real benefit to dairy producers in California or the entire country. Neither of the proposals have the ability to improve needed profitability for dairy producers and thereby the needed long term fiscal sustainability vital to the survival of the remaining producers in this country. There is however a very viable alternative plan being offered by the Dairy Producer Board of Directors from the National Dairy Producers Organization, Inc. It is called the Dairy Stabilization and Sustainability Act of 2013, DISSA 13. DISSA-13 proposals de-link the domestic milk market from the global international milk markets and thereby gives stability to the domestic milk supply and profitable milk prices while at the same time allowing dairy producers to supply milk for the highly volatile global market should they choose to do so. This market separation is critical if stable, profitable domestic milk prices are to be achieved in an ever increasing volatile global market caused by large fluctuations in global populations, politics, economics and climate. DISSA-13 will allow us to maintain our existing milk producing infrastructure and our ability to feed ourselves while at the same time allow us to help feed the world. We do not have to choose one or the other----we can do both. The “No Cost to the US Tax Payers”, feature of the plan, makes the Dairy Industry Stabilization and Sustainability Act of 2013, DISSA as it is called; offered by the National Dairy Producers Organization not only the best plan for producers, but the right pl

Tom Van Nortwick    
Fresno, Ca.  |  May, 15, 2013 at 06:59 PM

The “No Cost to the US Tax Payers”, feature of the plan, makes the Dairy Industry Stabilization and Sustainability Act of 2013, DISSA as it is called; offered by the National Dairy Producers Organization not only the best plan for producers, but the right plan for the country based on the current fiscal crisis Washington finds its self in. On this point alone every elected representative who truly does have the best interests of their voters as well as the dairy producers they represent, should instinctively and without hesitation seek out sponsor and support the plan. No other plan will provide an opportunity for producers to earn a profit from their efforts. No other plan will balance domestic production with profitable domestic demand. No other plan will uncouple domestic production for global demand from all domestic milk production needed to meet profitable domestic demand. No other plan supports producers who want to remain profitable in the industry at their current production levels and also provides a plan for producers who want to expand their herds and total milk production. The DISSA plan, supports and allows for these two divergent business models. Every other plan will not allow for both types of producers to survive and prosper at the same time. Every other band-aid attempt should be rejected by Dairy Producers. Those plans have never worked. They do not provide viable solutions to the real problem of profitability. In reality they are offered only as a means to perpetuate the status quo. Producers do not need permission from government to properly manage their industry. They simply need to become involved in and perpetuate good management practices that begin with Producer Controlled Profitable Production of Milk in America.

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