The dairy industry is no stranger to the relentless cycle of “low prices cure low prices,” a brutal reality where dwindling profits force producers to consider exiting the business. The rearview mirror of history reveals a pattern: When milk prices plummet, the government intervenes.
From the 1980s to more recent times, various assistance programs have attempted to curb milk supply and stabilize prices with mixed results. Now, as dairy producers once again grapple with challenging margins and low milk prices, a new farmer-driven proposal is emerging.
Voluntary Program to Cull Dairy Cows
The Make America More Ground Beef (MAMGB) initiative is designed to help dairy farmers monetize surplus dairy-origin cattle, increase domestic beef supply and help lower grocery prices for American families. Bolstered by Western United Dairies, it is not a mandate but a voluntary program open to all U.S. dairy operations, potentially launching as early as this spring.
Anja Raudabaugh, CEO of Western United Dairies, a trade organization that represents more than 75% of milk produced in California, says they’re answering the Trump’s administration’s call to make real food affordable while putting American farmers first.
“This plan is something new and different. We don’t have to choose between America’s affordable access to high quality nutrition and farmers’ bottom lines,” Raudabaugh says. “Incentivizing farmers to cull only what’s needed to generate affordability for the American consumer is a win-win. It is not a herd buyout, and there are guardrails to ensure the cows end up in slaughter. We want to ensure the U.S. dairy industry stays strong and resilient in the future, and that we have a long-term, reliable supply of American-grown beef in our feedlots.”
Recently, the American Farm Bureau Federation (AFBF) has been vocal in opposition to such government interventions. During the organization’s recent annual convention, an amendment was made from the floor because “USDA started having talks about a dairy buyout program to bring down beef prices,” said Mike McCormick, Mississippi Farm Bureau president, when introducing the amendment.
AFBF delegates added language by unanimous consent opposing “any federally funded dairy buyout program that has the potential to create further market volatility in livestock market sectors.”
“Discussions of such a program are deeply concerning. We need solutions that benefit all of agriculture, not solutions that benefit one ag sector at the expense of another,” says John Newton, vice president of public policy and economic analysis with AFBF. “Solutions to help farmers should be market-driven and lasting, not short-term actions that could potentially damage the long-term strength of agriculture. We recognize the challenges facing dairy farmers and look forward to partnering with them to find solutions that work for all of agriculture.”
A Legacy of Government Intervention
The MAMGB proposal follows a long history of interventions, starting with the first significant federal effort to address milk surpluses in 1984-1985 with the USDA-Administered Milk Diversion Program. Responding to a surge in surplus dairy product purchases that cost USDA $2.7 billion in 1983, Congress enacted a temporary program. Farmers were paid $10 per cwt. to reduce their milk marketings by 5% to 30%, funded by a farmer assessment.
While $955 million was paid out and milk production was reduced by an estimated 3.74 to 4.11 billion pounds in 1984, the program suffered from “adverse selection” and “moral hazard” issues. Many participants had already reduced production, and non-participants expanded, leading to no measurable impact on national average milk price or overall production trends. Milk supply quickly rebounded, prompting further intervention.
This led to the more drastic 1986-1987 Milk Buyout Program (Dairy Termination Program - DTP), part of the 1985 farm bill. The goal was ambitious: Reduce U.S. milk production by 12 billion pounds annually by paying farmers to permanently exit production. Approximately 15,000 farmers accepted bids, removing about 1.55 million cows at a cost of $1.8 billion. However, like its predecessor, the DTP faced “free-rider” problems; non-participating farms increased their output, offsetting the intended reduction. While growth remained flat, national milk production did not decline as significantly as intended.
“The Dairy Termination Program, or Whole Herd Buyout, legislated in the 1985 farm bill, was a response to the now discontinued dairy price support program that had ratcheted milk prices to a level that was generating very costly surpluses of government dairy product purchases under the program,” says Peter Vitaliano, long-time chief economist of the National Milk Producers Federation. “Our analysis suggests that DTP and support price reductions during 1986-90 have proven to be a cost-effective means of reducing the quantity and expense of government purchases under the price support program.”
According to Vitaliano, the beef cattle industry strongly opposed any future legislated programs due to the impact on the cattle market and prices.
“The current political sensitivity about food affordability could also attract a wider focus on any legislated program to ‘elevate milk prices,’ he says.
Following these federal efforts came industry-funded voluntary herd buyouts from 2004 to 2011 through the National Milk Producers Federation Cooperatives Working Together (CWT) program. Dairy farmer cooperatives collectively aimed to reduce the milk supply by more than 1 billion pounds annually, ultimately removing an estimated 510,000 milking cows over seven years, with a notable 250,000 in 2009.
“The CWT program, a consortium of dairy cooperatives, initially operated a herd retirement program, loosely modeled on the DTP, in addition to an export assistance program,” Vitaliano says. “It attracted some class-action lawsuits brought under various state antitrust-type laws that resulted in a large legal settlement. This has established some legal precedents that would doubtless prove cautionary to undertaking a similar program in the future.”
A more recent concept, the Dairy Market Stabilization Program (DMSP), was debated in the 2014 farm bill. This proposed program would have been coupled with the Margin Protection Program (MPP), levying penalties on dairy farmers who didn’t reduce supply when MPP margins fell below certain thresholds. Though not enacted, historical analysis shows DMSP would have been infrequently triggered, highlighting the challenge of effective supply control.
How Make America More Ground Beef Would Work
Western United Dairies shares the MAMGB program aims to divert 800,000 to 1 million additional dairy-origin cattle in spring 2026, injecting an estimated 900 million to 1.1 billion pounds of lean trim into the ground beef market. This added supply is projected to:
- Lower retail ground beef prices by 18% to 25%.
- Increase overall beef demand.
- Support packing plants and rural jobs. This aligns with national dietary guidance encouraging affordable, high-quality protein.
MAMGB offers two voluntary tracks with payments on top of normal market sale prices:
- Immediate Cull Track. For culling dairy cows of any age or condition, this track offers $1,600 per head, plus a $200 early-delivery bonus, for a total potential payment of up to $1,800 per head, paid upon proof of slaughter within 30 days.
- Feedlot Beef Track. For dairy heifers over 400 lb. shipped to approved feedlots for a minimum finishing period, this track offers $1,800 per head, plus a $200 early bonus, for a total potential payment of up to $2,000 per head.
MAMGB is designed with guardrails to protect long-term dairy viability:
- Above-Baseline Rule. Incentives apply only to additional animals beyond a farm’s normal culling levels.
- Strict Dairy-Only Verification. Ensures only dairy-origin animals qualify through breed checks, RFID and packer attestations.
- Capacity Safeguards. Real-time monitoring can pause regional signups if packing plants near 90% capacity, preventing bottlenecks.
- USDA-Aligned Caps. Per-entity payment caps adhere to standard USDA program limits.
Dairy Industry Optimism and Growth
Michael Dykes, CEO of the International Dairy Foods Association, stresses the industry’s eagerness for growth among both dairy producers and processors.
“The U.S. dairy industry is growing thanks to record domestic demand and exports and innovation from the farm to the plant. Dairy is meeting the moment because it delivers what matters most today — flavor, affordability and complete nutrition,” he says. “That growth has led dairy processors to invest more than $11 billion in new processing capacity to come online by 2028. We’re optimistic that our industry will continue to grow with the passage of the Whole Milk for Healthy Kids Act and the recently released Dietary Guidelines that recognizes the nutritional benefits of dairy in all fat levels. Our industry continues to produce innovative new products that meet the evolving consumer interests, and we’ll continue to grow dairy’s market share at home and abroad in the coming years for the benefit of the entire industry.”
This excitement has spread from boardrooms to barns, driving remarkable growth in milk production across the U.S. The latest USDA Milk Production Report details a vigorous increase in milk output. November’s milk production in the 24 major states reached a total of 18.1 billion pounds, reflecting a 4.7% increase from the previous year.
Phil Plourd, president of Ever.Ag Insights, says he looks at cow numbers first and with 211,000 more cows year-over year, he says it will be a while before we see a dramatic slowdown in milk production.
“We’ve got over 200,000 more cows, and those cows are producing around 20 pounds more milk than last year,” adds Robin Schmahl of AgMarket.net. “We have a lot of milk.”
As the dairy industry continues its perennial battle against the “low prices cure low prices” cycle, the landscape of intervention remains complex and ever-evolving. History shows a clear pattern of attempts, from direct government payments to voluntary buyouts and proposed stabilization programs, each with its own set of challenges and limited long-term success in fundamentally altering market dynamics. What remains constant is the dairy producer’s pursuit of resilience and profitability. Whether through farm diversification, such as the strategic growth of beef-on-dairy, or through collective industry efforts, the quest for stable margins and a sustainable future continues to drive innovation and adaptation.
