Two studies find milk stabilization benefits producers

Hoard's Dairyman: 

Two studies find milk stabilization benefits producers

Mon, 03/07/2011

The financial divide stands at nearly $3.8 billion. That is a substantial pay gap when it comes to milk checks for the nation’s dairy producers during 2009.

In a study released in late January, Informa Economics, a research firm retained by the International Dairy Foods Association, predicted that the nation’s dairy producers would have lost an additional $390 million in milk revenue if the National Milk Producers Federation’s proposed Dairy Market Stabilization Program (DMSP) were in place that year. Over the past decade, Informa further predicted that producers would have lost out on $626 million in revenue.

As we pointed out in our February 25 editorial on page 134, most of the nation’s processors want cheap milk, and plenty of it. In its January study, Informa made no attempt to estimate how producers would have altered milk output if DMSP had been in place during the past decade. In addition, they did not properly evaluate how California producers reacted to processor-induced production caps, extreme feed prices, and high transportation costs which restricted milk production for the first time in decades.

Just last week, the National Milk Producers Federation (NMPF) released a study that found dairy farmers would have received at least $3 billion more in revenue had DMSP been in place in 2009 alone. That doesn’t even factor in the entire decade Informa had invested in their analysis. At the same time, the Food and Agricultural Policy Research Institute at the University of Missouri, the same institute that has completed studies for Congress, found that producers would have received $3.4 billion in cash receipts if the DMSP program had kicked in during 2009. The combined $3.4 billion from the FAPRI study and the $390 million lost based on the Informa study gives us the $3.8 billion pay swing.

At the end of the day, we put more faith in the NMPF and FAPRI studies than those from the nation’s dairy processors. Check out the studies for yourself at: