Should our industry consider "supply management"?

There has been more talk that our industry should implement some form of supply management. Here is a brief discussion of some plans.

Dairy Price Stabilization Program. This is a national, mandatory supply management program administered through USDA-FSA offices that is being presented by Holstein Association USA. An industry panel would determine milk production needs for each quarter and establish “allowable milk marketings” for each producer. Those who expanded production above their base would pay a “market access fee”, perhaps, $2 to $3 per hundredweight on all milk sold. Developed by Gordon Cook, a Massachusetts Holstein breeder and John Meyer, CEO of Holstein USA, with input from University of Wisconsin dairy economist Bob Cropp. Supporters of this plan include Milk Producers Council, a southern California producer group, which had developed a similar plan.

Market impacts of a growth management plan. This is an analysis of the Dairy Price Stabilization Program mentioned above.

Enhanced Demand through Price Stability. More of a marketing concept than a policy plan, EDPS would involve dairy co-ops (or other groups representing dairy producers) establishing long-term supply contracts (at least three years) with milk buyers. The contracts would be for a specific amount of milk, with some flexibility) and the milk price would be adjusted every 6 or 12 months based on the cost of inputs (corn, soybean meal, diesel, and interest rates). The architect of this concept is Jim Stewart, an Idaho dairyman.

Dairy Pricing Association. Proposed by a southwest Wisconsin group, DPA would be a farmer-formed business entity that would purchased excess milk from plants, when wholesale dairy product prices were below a certain level. Excess milk would be used to make powder for feeding programs or disposed of to maintain stable prices.

The Federal Milk Marketing Act of 2009. Reintroduced by Senators Spector (D-Penn.) and Casey (D-Penn), U.S. Senate Bill S-889 would establish the value of all manufacturing milk based on the national average cost of production as determined by USDA-ERS. A lower price is received for “excess” production, especially for those shipping more than 3 million pounds per year. Includes 1-year, new producer exemption.

What do you think? Do any of the plans appeal to you? Let us know your thoughts on the pro’s and con’s of supply management for our industry.