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Study Pits Dairy Security Act Against Goodlatte-Scott Approach

19 April 2013

US - A new analysis released today by a group of university economists demonstrates that the Dairy Security Act (DSA) – the farm bill proposal advocated by the National Milk Producers Federation (NMPF) – provides the most effective economic safety net for farmers.

The DSA provides catastrophic risk insurance, helps enhance farmer revenue, and does so in a way that minimizes government outlays.

The Goodlatte-Scott approach was compared with the DSA with both packages being confirmed as effective way of safeguarding the sector.

This assessment was generated by the Midwest Program on Dairy Markets and Policy, a team of six economists who specialize in farm bill analysis. It includes doctoral student John Newton (in the photo) and Dr. Cameron Thraen of Ohio State University; Dr. Marin Bozic of the University of Minnesota; Drs. Mark Stephenson and Brian Gould of the University of Wisconsin; and Dr. Christopher Wolf of Michigan State University.

“This new report provides independent corroboration of why the DSA is the best choice for saving dairy farmers while protecting taxpayers. Congress needs to heed this report and pass the Dairy Security Act in 2013 as part of the farm bill,” said NMPF President and CEO Jerry Kozak.

In particular, the report “debunks any concerns that the DSA’s market stabilization element will hinder the growth of our industry or detrimentally affect the future of the dairy business. This says those fears are unfounded,” Kozak said. “In fact, we need the DSA in order to give our farmers a future.”

The study confirms what the Congressional Research Service has reported – the Dairy Security Act's Dairy Market Stabilization Program (DMSP) will raise milk prices and force consumers to pay more for dairy products.

According to the authors, “DMSP is a supply management-type program designed to enhance milk prices…the DMSP aims to reduce the milk supply and thereby enhance milk prices by imposing income penalties on dairy farmers shipping milk over their assigned production level.”

“Goodlatte-Scott is a more responsible approach to a government-funded Farm Bill,” said Jerry Slominski, IDFA senior vice president of economic and legislative affairs.

“It provides an effective safety net, according to the Congressional Budget Office, without also imposing an anti-consumer ‘growth management’ program on the dairy industry. The reality is that farmers can have effective risk management tools without the government getting involved in limiting production and forcing consumers to pay more for dairy products, a key provision of the Peterson plan.”

The authors conclude that:

  • Both Goodlatte-Scott and DSA offer effective catastrophic risk for stable and moderately growing farms;
  • DSA takes away too much risk in the aggressive growth model, promising subsidized insurance at very high levels. Goodlatte-Scott would require that very large, aggressively growing farms cover more of the increased growth through private risk insurers; and
  • Goodlatte-Scott performed better than the DSA in removing more of the catastrophic risk losses (71 per cent for Goodlatte-Scott and 66 per cent for DSA).

TheCattleSite News Desk

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