The CRS report points out (p. 10) that the margin insurance program creates “a timely and transparent measure of a dairy production margin that will be useful across all dairy production regions.” The margin’s feed costs are calculated comparing the national all-milk price with national average costs for corn, soybean meal and alfalfa hay.
In reviewing other empirical studies of the provisions of the Dairy Security Act, CRS highlighted (p. 23-24) several major improvements compared to current programs:
- The combination of the margin insurance and market stabilization programs “appears to substantially mitigate the dairy operating margin volatility.”
- The Dairy Security Act “will provide a stronger safety net in extremely low margin events.”
- An analysis by agricultural economist Mark Stephenson found that net milk exports actually expand under the Dairy Security Act.
The congressional analysis of the Dairy Security Act also notes that the proposed Farm Bill programs are voluntary. Farmers would elect to participate in the margin protection and market stabilization programs, rather than choose private insurance that is already available.