dairy policy & directors’ leadership conference april 5, 2011
TRANSCRIPT
Dairy Policy & Directors’Leadership Conference
April 5, 2011
DIAC Mission
Review issues of:
• Farm milk price volatility
• Dairy farmer profitability
AMPI Perspective
Construct dairy policies that support family farms, not milk volume.
Top Upper Midwest issues
• Price support and DEIP
• MILC and Margin
• Growth management
• Federal milk market orders
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
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
Structure, U.S. Dairy Herds
MILC
% of herds % of milk
Year fully covered eligible
2002 87.9% 54.9%
2008 83.3% 40.6%
2010 81.8% 37.8%
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)
Margin
Year Margin (cwt.)
2008 $6.85
2009 $3.89
2010 $6.97
2011 $6.52
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 --
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
Growth management
Adopt a growth management program
Growth Management Plans
• Reduce milk price volatility
• Reduce cost of counter-cyclical dairy programs
• Allow for continued growth
• Not significantly enhance milk prices
Growth Management
What is the farm bill going to cost?
• CBO scoring
• Subsidies
Federal milk market orders
Review federal milk marketing orders
Why revise FMMOs?
• End-product pricing formulas, make
allowances
• Class I differentials
DIAC Mission
Review issues of:
• Farm milk price volatility
• Dairy farmer profitability