Dairy economists from leading universities released a new study that compares the short-term impacts for dairy farmers of two dairy safety-net programs now being debated in Congress — the Dairy Security Act (DSA) and the Goodlatte-Scott amendment to DSA.
The report, Shared Potential, Shared Concerns and Open Questions, states that both Goodlatte-Scott and DSA are “effective in providing catastrophic risk insurance” for stable and growing dairy farms. This means that both proposals offer farmers the option to enroll in margin insurance at various coverage levels. A key difference between the two proposals, however, is that the Dairy Security Act requires a supply management provision called the dairy market stabilization program (DMSP), while Goodlatte-Scott does not.
The way the supply management program works is that it reduces farmers’ milk checks periodically, and unpredictably, requiring farmers to either discard a portion of their milk production in excess of their base or not get paid for the portion of their milk delivered larger than their base.
The Goodlatte-Scott amendment allows milk margin insurance protection without the negative consequences of government-mandated market interventions like supply controls and dairy product purchases. The DSA on the other hand forces the government to limit the amount of milk individual farmers can sell as well as intervene in the marketplace to buy dairy products.
Source: Dairy Business Association