$290 million is coming to producers, but how?

OK, so the federal government has decided to throw piles of money at the dairy industry to help rescue it from financial catastrophe. Milk producers can certainly use all of the help they can get, even if it comes with a high public relations cost.

A simple question, however, remains oddly unanswered about the $350 million emergency ag appropriation package that President Barack Obama signed into law on Wednesday. Namely, how is the $290 million that is earmarked for direct payments to producers going to be distributed?

Since the government is involved, it’s a question worth asking. It’s also one that sparks imagination about multiple possible answers, all of which involve added questions like, what date must dairies have been in business in order to qualify, and will payments be made to dairies of all sizes? Here are three that come to mind:

Will payments be divided equally among all producers? Using USDA data for the number of licensed dairies in 2008 (57,127), that works out to about $5,076 each.

Or will payments be made on a per-cow basis? Based upon 9.315 million head in the U.S. in 2008, that works out to about $31.13 per cow. But, that would mean the average dairy in Rhode Island (55 cows) would get about $1,712, while the average dairy in Arizona (1,550 cows) would get about $48,251.

Or might payments be made on a per-hundredweight basis? If so, that works out to 15.26 cents per hundredweight based upon 2008 production totals. That approach would mean the average dairy in Missouri would get about $1,400, while the average dairy in New Mexico would get about $75,011.

Maybe there are another possibilities we haven’t thought of yet, and perhaps they would not result in bickering throughout the industry like we suspect all three of these would produce.