To respond to the on-going and deepening crisis faced by dairy producers, CIAS launched efforts to bring farmer voices to the policy table. Working in partnership with Mark Stephenson at the Center for Dairy Profitability, and Chuck Nicholson at Cornell University, CIAS convened farmers and dairy professionals to explore growth management policies that would improve dairy farm profitability and calm market volatility. Building on earlier work commissioned by Wisconsin Farmers Union, economic modeling developed by the international dairy research network IFCN, and new modeling on grassland dairy from grazing economist emeritus Tom Kriegl, Stephenson, and Nicholson report on findings in their paper “Analyses of Proposed Alternative Growth Management Programs for the US Dairy Industry“. The paper is accompanied by a video explaining the results. Watch this space: we will soon launch an app for your phone or desktop so that you can see how various policies might affect your dairy farming operation.
Key findings are:
- The programs would reduce variation in milk prices, enhance average milk prices and margin over feed costs to varying degrees, and increase average net farm operating income (NFOI) for operations staying within Allowable Production Increases for all farm sizes compared to a Baseline scenario with existing policies. Average annual milk prices were increased between $0.73/cwt and $1.41/cwt depending on the design of the GMP. Including refund payments for farms within API limits, average milk revenue would be higher by $1.15/cwt to $2.13/cwt. Reduction in the average variation in milk prices ranged from $0.16/cwt to $0.21/cwt;
- Compared to the Baseline scenario, Growth Management Programs would slow growth in average annual US milk production (from 2.5% to 2.1% per year for the most restrictive program), increase US retail fluid prices by as much as fifteen cents per gallon, increase average prices for other dairy products by 3% to 11%, slow the average annual growth of US dairy product exports by 2%, reduce domestic dairy product sales by 1% to 3% and reduce US government expenditures on dairy supports by as much as $2.5 billion.
- An average Wisconsin grazing dairy staying within allowable growth is simulated to experience an increase in average annual Net Farm Operating Income (NFOI) of up to 74% ($23,000). NFOI for an average Wisconsin grazing dairy is simulated to increase even with growth above the API for four of the five of the GMP designs analyzed.
- Entry of 60 new farms per year with milk production up to 5 million lbs per year could be accommodated with a three-year grace period without payment of Market Access Fees and without substantive effects on the operation of the GMP (see Appendix A4);
- An initial assessment suggests that GMP would not have mitigated the prices shocks experienced in the first months of the Covid-19 pandemic but would have reduced the number of farms experiencing negative Net Farm Operating Income (see Appendix A5).
The project was funded by the University of Wisconsin Baldwin Wisconsin Idea program, the Grassland 2.0 project, the Wisconsin Cover Crops Research and Outreach Program, and CIAS.