In a potentially explosive debut, a study commissioned by the International Dairy Foods Association suggests dairy producers in the Midwest and Northeast would “pay” the biggest price for the National Milk Producer Federation (NMPF) proposed growth management program. The study was presented at the Dairy Forum here in Miami, Fla. this morning.
The study, conducted by Informa Economics, suggests Wisconsin producers would have paid in $150 million between 2000 and 2009 had the NMPF’s Dairy Market Stabilization Program been in effect. New York producers would have taken the next biggest hit, at $63.6 million, and Minnesota, at $51.3 million. California producers, even though they produce a fifth of the nation’s milk, would have paid in only $28.2 million.
States that purchase more of their feed, like California, New Mexico and Texas, would pay in less because they are more likely to cut back production faster as feed prices escalate. So by the time the DMSP kicks in, which requires the milk-feed price margin to be below $6 for two consecutive months, producers in states with high purchased feed costs would have already begun to cut back. Midwest and Northeast dairy farmers, which produce most of their feed at lower cost, would be less likely to cut back production early.
“This report shows that the NMPF growth management plan will take money out of dairy farmers’ pockets when they need it most,” says Connie Tipton, IDFA CEO. “And the regional differences highlighted by the study show that this policy would impose greater penalties on some regions….”
Jerry Kozak, NMPF president and CEO, declined to comment on the study because this morning’s unveiling was the first time he saw the report. But he pledged to have NMPF economists thoroughly examine the Informa study. And he says other economists at the Food and Agricultural Policy Institute and the University of Wisconsin have given DMSP high grades for reducing milk production quickly and bringing milk prices back above $6 milk-feed margins.
Privately, Foundation for the Future advocates also bristled that the report was a “divide and conquer” strategy, pitting the Midwest and Northeast against Western states. Rest assured, the report will generate more heat in the coming weeks.