dairy policy & directors’ leadership conference april 5, 2011
TRANSCRIPT
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Dairy Policy & Directors’Leadership Conference
April 5, 2011
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DIAC Mission
Review issues of:
• Farm milk price volatility
• Dairy farmer profitability
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AMPI Perspective
Construct dairy policies that support family farms, not milk volume.
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Top Upper Midwest issues
• Price support and DEIP
• MILC and Margin
• Growth management
• Federal milk market orders
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Explore elimination of the dairy product price support program and the dairy export incentive program and use budget savings to enhance the safety net for producers.
Price Support and DEIP
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Modify Milk Income Loss Contract program and provide a margin insurance option using funds from the elimination of the Dairy Product Price Support Program and DEIP.
MILC and Margin
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Structure, U.S. Dairy Herds
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MILC
% of herds % of milk
Year fully covered eligible
2002 87.9% 54.9%
2008 83.3% 40.6%
2010 81.8% 37.8%
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Measuring margin
• Margin defined as:• All Milk Price – Total Feed Cost Per CWT• New NMPF- developed feed cost ration
includes all cattle (dry cows, hospital cows, replacement heifers, calves)
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Margin
Year Margin (cwt.)
2008 $6.85
2009 $3.89
2010 $6.97
2011 $6.52
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MILC vs. Margin
Payment Rate Payment Rate
Year MILC (cwt.) DPMPP (cwt.)
2002 $1.21 --
2003 $1.09 --
2004 $0.22 --
2005 $0.22 --
2006 $0.01 --
2007 $0.61 --
2008 $0.01 --
2009 $1.15 $1.35
2010 $ .02 --
2011 $ .00 --
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MILC v. FFF $4 Margin Target
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
3.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$/C
wt
MILC
$4 FFF Margin
MILC vs. FFF $4 Margin Target
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Growth management
Adopt a growth management program
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Growth Management Plans
• Reduce milk price volatility
• Reduce cost of counter-cyclical dairy programs
• Allow for continued growth
• Not significantly enhance milk prices
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Growth Management
What is the farm bill going to cost?
• CBO scoring
• Subsidies
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Federal milk market orders
Review federal milk marketing orders
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Why revise FMMOs?
• End-product pricing formulas, make
allowances
• Class I differentials
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DIAC Mission
Review issues of:
• Farm milk price volatility
• Dairy farmer profitability