03042020_tct_bb_DairyStephenson

Dr. Mark Stephenson spoke to about 40 legislators and their staff, along with members of agricultural organizations and dairy producers, about the potential benefits of three proposed federal dairy policies he’s studied over the course of several years.

MADISON — Last week, Wisconsin legislators and their staff were invited to a special educational presentation sponsored by the Wisconsin Farmers Union, Wisconsin Farm Bureau Federation, National Farmers Organization–Wisconsin and the Professional Dairy Producers of Wisconsin. A handful of legislators also agreed to host the briefing, with Rep. Travis Tranel, R-Cuba City, commenting on the fantastic crowd that had gathered for the occasion during an opening statement.

While these agricultural organizations have supported ag-related bills together in the past, this was the first time both the Wisconsin Farmers Union and Wisconsin Farm Bureau Federation had come together for an educational event at the state capitol.

“Having both groups be part of something like this is a step in a direction,” Tranel said.

The presentation was led by Dr. Mark Stephenson, a dairy economist and director of the University of Wisconsin Center for Dairy Profitability, and explored three proposed federal dairy policies to reduce variability in milk prices and farm income. Stephenson and a colleague began looking at these three programs in 2012, searching for solutions to increase farm profitability, lower income uncertainty, decelerate dairy farm exits and allow for a slow adjustment of milk production.

“We’ve been losing farms since the 1930s when we hit our peak, but it can’t happen at this kind of pace. It’s just too much — we have to do something to slow it down,” Stephenson said.

Two of the three programs studied by Stephenson aimed to implement a “market access fee,” meaning a fee is collected for each hundredweight of milk produced and put into a collective pool each year. That fee is returned to the dairy farmer if they do not exceed an allowable growth level in any given year; the dairy farmer would not receive that fee back if they exceeded the hypothetical allowable growth level.

“You’re not telling people they can’t grow, but you are saying there will be a cost in that one year you’re doing it,” he said.

One of these market access fee programs is continuous, meaning the level of allowable growth and the fee were the same over the whole time period studied, while the other market access program worked with the milk-feed price ratio to give an indication on how much milk the market actually wanted.

The third program required reductions in milk marketings when a margin level trigger is reached, as dictated by the milk-feed price ratio.

Displaying several graphs that gave projections from 2014 to the end of 2020, Stephenson said he and his colleagues were able to find that these programs generally reduced variation and enhanced prices; increased net farm operating incomes; reduced the rate of farm exits; and reduced government expenditures; but also saw some decrease in domestic consumption and export sales of dairy products.

“These programs can certainly have benefits,” he said. “What programs like these are trying to do is send stronger signals to producers about just how much do we need and how much is too much.”

Stephenson added that a program would need to be implemented at a national level and that it would be impossible to implement at a state level.

“You can encourage other states and locations to take a look at this,” he said. “I think you can find sympathy in different locations but it’s by no means uniform. But I hear more people talking about or being willing to think about or listen to programs like these at this point in time.

“We aren’t talking about a Canadian-type quota system here,” he continued. “This is a program that says if you need to grow, if you want to grow, if you have a reason to grow, you’re very welcome to. It may cost you in one year to do that, but I think it also means that we allow growth to happen that keeps pace with productivity.”

After hearing the presentation, one legislator in attendance wanted to know where the pushback is as the models show these programs could work. Stephenson said while Wisconsin is blessed to have many legislators that are dairy aware, legislators in Washington, D.C., tend to think dairy is too complicated.

“They’ll say if you can come and speak to us with one voice and say ‘this is what we want in the dairy industry,’ they’d give it to us. That wouldn’t be a big issue,” Stephenson said. “But we can’t speak with one voice. We’ve never been able to do that. And it’s harder than I think ever, but we can speak with at least a strong majority and introduce ideas and topics and have that begin to become part of the conversation.

“It’s possible to do, but it won’t be easy.”