News
Articles and Presentations by Coalition Members
Articles
* Note: Some of the articles below reference the Growth
Management Plan, or GMP. The GMP, which was the name of the program
initially developed by Milk Producers Council and modeled by Cornell
University's Program on Dairy Markets and Policy is identical in concept to the
Dairy Price Stabilization Program.
The Dairy Price
Stabilization Program: Bringing it Back to Basics
(Milk Producers Council, November 20, 2009)
Since the Spring of 2007, Milk
Producers Council has been publicly advocating for a program that would give
dairies an incentive to manage their growth in milk production. The program has
been called several things – Refundable Assessment, Growth Management Plan, and
Dairy Price Stabilization Program – but the concept remained the same.
Are Dr.
Sexton's Arguments Credible? (Milk Producers Council, September 11,
2009)
It’s been a more than a month since I’ve written in this newsletter with any
detail about the Dairy Price Stabilization Plan. However, behind the scenes
there has been much activity.
The U.S. dairy industry is in the midst of a national debate. Everyone – from
producers to processors – recognizes that the growing milk price volatility
that has become commonplace in our industry is extremely harmful. However,
when it comes to potential solutions, there is a battle of ideas and
ideologies circulating.
Cornell
University Report Highlights the Continuing Threat of Milk Price Volatility
(Milk Producers Council, May 29, 2009)
This week, Cornell University’s Program on Dairy Markets and Policy
released the full report on their analysis of the Growth Management Plan.
Drs. Mark Stephenson and Chuck Nicholson included an expansive discussion of
milk price volatility and how it has gotten dramatically worse with each
boom/bust cycle. The readers of this newsletter have heard it before, but it
bears repeating: volatility is undoubtedly the single largest threat to
this industry.
A Big Week for
the Growth Management Plan (Milk Producers Council, May 15, 2009)
This week brought some very big
developments in our continuing efforts to build national support for a program
like the Growth Management Plan (GMP).
Major Development
for the Growth Management Plan (Milk Producers Council, May 1,
2009)
This week, the Holstein Association USA, which boasts 30,000 members
nationwide, unveiled the “Dairy Price Stabilization Program.” This program is
virtually identical to the Growth Management Plan (GMP), which readers of this
newsletter have been hearing about for quite some time (and for those that
haven’t, I would encourage you to check out
http://www.milkproducerscouncil.org/q&a_gmp.htm). Like the GMP, the
“Dairy Price Stabilization Program” would create a tangible financial
incentive for dairies to manage the amount of milk they produce, thereby
keeping a better balance of supply and demand.
Cornell
University Releases Updated Analysis of the Growth Management Plan
(February 20, 2009)
This week, the Cornell University Program on Dairy Markets and Policy (CPDMP)
released an updated economic analysis of the Growth Management Plan (GMP).
The analysis was done by Drs. Mark Stephenson and Chuck Nicholson.
Was This Wreck
Predictable? You Be The Judge (January 16, 2009)
Almost two years ago, on April 27, 2007, Geoffrey Vanden
Heuvel published an article in this newsletter entitled, “Staying Profitable –
An Idea.” The article opened with the following introduction:
“The dairy industry has gotten into a Boom and Bust cycle, which is getting
increasingly violent with every passing turn. We had a downturn in the year
2000 and recovered in 2001. We had a downturn in 2003, that was, at least for
me, twice as severe as the year 2000 downturn. We recovered in 2004/05 and
went into another downturn in 2006, which we are just starting to recover from
in 2007. The approximately 16 months of downturn in ‘06 and early ‘07 has been
twice again as severe in terms of equity lost as was the 2003 downturn.
Realistically we are probably looking at about 12 - 24 months of prosperity
before we go back into the soup again. If nothing changes it is likely that
the 2009 downturn will be horrific.” (Geoffrey Vanden Heuvel,
04/27/2007)
More Comment
on "The Magic of Pooling", By Geoffrey Vanden Heuvel, MPC Vice-President
(November 28, 2008)
Syp Vander Dussen, in his outstanding articles the last couple of weeks,
explained the “magic of pooling” concept. He wrote, “If I produce
one extra load of milk, which of course will go to powder (and possibly to the
CCC), it will have a value of less than $10 to the pool, but I will receive a
blend value of approximately $16.00 cwt for that load. But remember, the
income to the pool bucket is about $10.00! That $6.00 loss is shared by all!
Stated in again another way, it is in the best interest of every producer
to produce as much milk as he can, always, because the lower value for that
excess product is borne by everyone.”
What Syp is pointing out is the fatal flaw in our milk pricing regulation:
the price risk associated with increased production is not borne directly by
the person making the production increase; it is transferred to the group at
large. Basic economics tells us that supply and demand for any product is
kept in balance by each individual participant’s calculation of risk verses
reward. The “magic of pooling” transfers the risk to the entire group
and the individual is left with the “reward.” Because of this reality, it is
perfectly rational for each individual producer to grow production
indiscriminately, while at the same time it is obviously irrational for
dairy farmers collectively to produce more milk than can be profitably
marketed.
My View on Milk Production Increases, By
Sybrand Vander Dussen, MPC President
(November 14, 2008)
The dairy industry in California continues in its addiction of
over-production of milk. Dairy producers seem to have only one clear focus;
produce more milk. As costs go up, as milk prices decline, we produce more
milk. As coops battle to place milk and milk products, we produce more milk.
With 3x milking, rBST, advancing genetics, gender-specific semen, we produce
more milk.
In a perfect world, where the milk we supply and the demand for those products
remained somewhat in balance, this would be a strong sign of a vibrant and
healthy industry. But the reality is, dairymen produce in an unrestrained
fashion with no consideration of demand, leaving the industry in a perpetual
state of overproduction which causes a myriad of problems, all of which should
be unnecessary.
Presentations
