Dairy Talk Managed milk supply

August 12, 2009 07:00 PM
Jim Dickrell
With milk prices in the toilet and recovery not expected for months, supply management talks are ramping up.

Proponents of Holstein USA's Dairy Price Stabilization Program met with the National Milk Producers Federation (NMPF) in June. No word yet whether NMPF will join the bandwagon or simply wave as it rolls by.

In the West, support for the plan is relatively strong. In the rest of the country, there are pockets of support—but a lot more questions. You can see the full plan by following the bonus content link at www.dairytoday.com.

I compliment Holstein USA and the Milk Producers Council for explaining the program. In particular, Geoff Vanden Heuvel, a Southern California producer and one of the plan's architects, has spent countless hours responding to concerns. But big questions remain:
  • Quota capitalization. Once quotas are established, they take on value—whether in cows or facilities or paper. There's simply no way to avoid it.
  • Regionalism. Proponents acknowledge the plan is national: "It does not fix…‘overcapacity, undercapacity, deficit areas or surplus areas.' Those are all issues that need to be addressed locally,” their fact sheet says.
  • Large herds versus small. While all herds would be allowed to grow by the same percentage, say 2% in a normal supply/demand year, a 5,000-cow herd would be allowed to add 100 cows while a 100-cow herd could add two.
  • Federal government control. The plan would be governed by a dairy producer board similar to the National Dairy Promotion and Research Board. But we're not talking 15¢/cwt. here, folks. Such a board will be under intense political pressure and scrutiny from producers, processors and consumers as it tinkers with milk supply.

Supply management is a radical departure from how we do business. Perhaps the industry will take the plunge.

But it should not be done hastily, nor in hopes that it will solve all of the industry's problems. In fact, it could make some of those problems, such as regional supply imbalances, even more intractable. Careful thought and cool heads must prevail.

Bonus content:

Pros, cons of supply management:

Holstein Association USA Dairy Price Stabilization Program

Growth Management Plan from the Milk Producers Council

Minnesota Milk Minute

Wisconsin Demand for Milk Continues to Exceed Supply

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