The two competing margin insurance programs being debated as part of the dairy subtitle of the 2013 Farm Bill both offer pros and cons for dairy farmers, based on the individual farm characteristics, according to a pair of Ohio State University agricultural economists.
In a new report released last week, Cameron Thraen, an associate professor in the Department of Agricultural, Environmental and Development Economics (AEDE) in Ohio State University's College of Food, Agricultural, and Environmental Sciences, and doctoral student John Newton, discuss the two programs to provide clarification and insight into both without taking a side on either.
The report takes an in-depth look at the Dairy Security Act, with its margin insurance paired with a dairy market stabilization program, and the Goodlatte-Scott Amendment, which offers a margin insurance program without the dairy market stabilization program.
The goal is to provide a detailed look at a highly complex topic as a way to offer advice to producers, stakeholders and policy leadership, said Thraen, who also holds an appointment with the Ohio Agricultural Research and Development Center (OARDC).
OSU Extension and OARDC are the statewide outreach and research arms, respectively, of the college.
The report takes into consideration a number of factors, including a dairy farm's anticipated growth pattern and expected market prices for milk and feed. It then evaluates each program regarding which would be best for different dairy operations, he said.
"The dairy industry is not homogenous at all, so we're not trying to settle the debate on which program is best overall because you're not going to," Thraen said. "The language in both programs may appear to be very straightforward, but interpreting the programs, each with its unique set of rules and triggers operating within a complex dairy economy is a challenging assignment.
"The report seeks to disentangle the devil in the details for both programs."
Thraen and Newton released the report with a group of agricultural economists as part of an ongoing research and extension education program known as the Midwest Program on Dairy Markets and Policy: 2013 Farm Bill Dairy Analysis Group. The program is supported by a consortium of dairy economists from Midwest U.S. universities who specialize in dairy policy.
In addition to Thraen and Newton, also contributing to the report were Marin Bozic of the University of Minnesota; Christopher Wolf of Michigan State University; and Mark Stephenson and Brian Gould from the University of Wisconsin.