Dairy Policy Issues
for the
2012 Farm Bill
Dairy Policy Analysis Alliance
Dairy Policy Issues for the 2012 Farm Bill
Dairy Policy Analysis Alliance
Table of Contents
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Dairy Price Supports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Milk Income Loss Contract (MILC) Program . . . . . . . . . . . . . . . . . . . 9 Voluntary Supply Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Mandatory Milk Supply Management . . . . . . . . . . . . . . . . . . . . . . . . . 22 Federal Milk Marketing Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 U.S. Dairy Trade Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Introduction
Since the last farm bill (the Food, Conservation and Energy Act of 2008) was enacted in May 2008, the U.S. dairy industry has experienced major upheaval. The U.S. all-milk price in May 2008 was $18.30/hundredweight; a year later it was $11.60. Given high feed costs, this price was below the cash costs of producing milk for most, if not all, dairies in the United States. Moreover, the 37 percent falloff in the milk price was indicative of the enormous increase in price volatility observed over the last 15 years, putting milk prices and dairy profitability on a more-or-less constant roller coaster ride that nearly all dairy market participants would like to see end. Discussions about the dairy title of the next farm bill have already begun in Washington, DC, with this backdrop of intensified concern among producers about the level and volatility of milk prices. Also relevant to these discussions are anticipated federal spending constraints in the face of record budget deficits and the growing global presence of dairy companies located in the U.S. In addition to proposing alterations in existing federal dairy programs...