A "Growth Management Plan" for the dairy industry has been proposed by the Milk Producers Council of California. Here's a brief overview of the plan.
All dairy farms already track their milk production. Each quarter, production would be compared to the same quarter the previous year. If production increased by more than the "Allowable Growth," the farmer would pay a "Market Access Fee" on the farm's entire production that quarter. The total sum of money collected from the Market Access Fees would be distributed to those farms whose production did not exceed the Allowable Growth.
The Allowable Growth and the Market Access Fee would be determined from time to time by the U.S. Secretary of Agriculture in consultation with an advisory board. The Milk Producers Council estimates that Allowable Growth would be 1.5-3% and that the Market Access Fee would be $0.50-0.75/cwt.
The GMP is not intended to increase average milk prices over the industry cycle. It is intended to make the cycle less volatile.
This plan, or a close variation of it, is supported by Dairy Farmers Working Together and the Holstein Association USA (they both call it the Dairy Price Stabilization Plan). The plan calls for compulsory participation by all dairy farmers in the U.S., and therefore would require Congressional action to implement.
Rob Vandenheuvel, General Manager of the Milk Producers Council, explained the GMP at the NEDLT meeting earlier this month. Click here for his presentation. I found interesting Rob's comments on slide 13 ("this is not a supply management program") and slide 18 ("the GMP would actually get us CLOSER to real market signals").
The GMP was also discussed at the Northeast Dairy Summit in March. The plan has been analyzed by Cornell University (click here).
