Mulhern also said that the market stabilization element will not adversely impact consumer prices for dairy products, contrary to bogus claims made by those opposing the Senate’s Dairy Security Act.
“If the market stabilization program ever kicked in – and that’s a big if – it would only be when farm milk prices are in the tank. The Senate plan would simply put a floor under the price to keep it from falling further and would not have a noticeable impact on the cost of milk to consumers. Nor would it affect the milk bought through government food assistance programs,” he said. “The purpose of market stabilization is to keep farmers’ milk prices from staying too low, for too long a period. Any suggestion that it will spike retail prices to abnormally high levels is a deceitful and deliberate misinterpretation of the studies done on the impact of the DSA.”
Mulhern was referring to efforts to distort the analysis done by University of Missouri agricultural economist Scott Brown, who has examined the impact of the Senate’s Dairy Security Act versus the processor-backed House plan (which would retain margin insurance but eliminate market stabilization from dairy reform). In Brown’s analysis of the DSA, if it had been in effect from 2009 to 2012, the market stabilization element would have been activated for only four out of 48 months.
Also, the average difference in farm milk prices between the two approaches was only two cents per gallon over four years. “That’s one half of one cent per year, a tiny amount compared with the monthly price swings currently experienced by farmers and hardly a major impact on consumers,” Mulhern said.