A pending dairy bill designed to provide a safety net for dairy farm families would provide increased support when market prices are low, according to a study by two dairy economists from Penn State’s College of Agricultural Sciences. The study also suggests that the bill would provide greater support to small and medium-sized dairy farms.

The National Dairy Farmers Fairness Act of 2001 was proposed by U.S. Sens. Rick Santorum, R-Pa., and Herb Kohl, D-Wis., to create a sliding scale of financial assistance for small and medium-sized dairy operations.

“The bill provides for a supplemental payment to dairy farmers when the national average price of Class III milk — milk used to make cheese — falls below a certain level,” says James Dunn, professor of agricultural economics at Penn State University. “The program essentially provides some price protection to small and medium-sized dairy producers when milk prices are low.”

“The bill has two unique features,” points out Ken Bailey, associate professor of dairy marketing and policy at Penn State. “First, the size of the supplemental payment is tied to general market conditions. That means producers in the Northeast and Southeast, where most milk is used for bottling purposes, can benefit as well as producers in the Midwest and West, where more milk is used to make cheese.”

“Second, the bulk of the payments are targeted to small and medium-sized dairy operations that have fewer than 150 cows. That’s beneficial to many states that have large numbers of small family farms, like Pennsylvania,” Bailey says.

Penn State University