WDA: Minnesota dairy producers light the way to industry recovery

There’s the dairy industry recovery plan everyone is talking about, and then there’s the plan everyone should be talking about.

This week, the National Milk Producers Federation-International Dairy Foods Association captured the lion’s share of headlines by offering a crisis remedy that, at its core, asks dairy farmers to cut their production 10 percent during the next six months in exchange for a guaranteed compensation level on the remaining 90 percent.

While we applaud the NMPF-IDFA for the urgency they have brought to the current crisis, the Wisconsin Dairy Alliance finds a stronger proposal originating from our neighbors to the west. The Minnesota Milk Producers Association are pitching the Dairy CORE Program, which preserves the best parts of the NMPF-IDFA plan (direct relief payments to producers) while eliminating serious, baked-in flaws that threaten to undermine that effort’s success.

The Minnesota plan would instruct the USDA to pay U.S. dairy producers $3/cwt for 100 percent of their March 2020 baseline, for April, May and June, irrespective of market prices. The payment would be made as a single lump sum in April.
This idea effectively resolves the issue of “regionalization,” or — stated more simply — it does not unduly place burden of production cuts on half the nation’s dairymen simply because of their location. Cows in the northern half of the nation produce much more milk during the summer months than those in the south, due to heat stress and seasonal calving patterns.

Furthermore, the Minnesota program does not condition direct payments on rigid, strictly uniform production cutbacks. Instead of putting the government in a position to pick “winners” and “losers,” it gives coops and milk buyers more discretion to manage inventory. If creameries are assured their producers have received a large direct payment, they will be more empowered to implement situationally adjusted, effective marginal incentives to right-size their milk supply.

Finally, instead of reopening 2020 signup for Dairy Margin Coverage or compensating processors for disposed milk, the Minnesota option concentrates stimulus funds to a single, large lump sum paid directly to each U.S. dairy producer.

In the shadow of the COVID-19 pandemic, there will be no “magic bullets” that resolve the dairy sector’s woes overnight. The USDA has $9.5 billion in discretionary funding to invest in our struggling industry. Its impending challenge is to find a way to do the “most good.”

That’s why the Wisconsin Dairy Alliance urges sister dairy associations, industry advocates and lobbying organizations in other states to join in supporting the MMPA Dairy CORE Program. Contact your Congressional delegates and ask them to advocate to the USDA in support of the Minnesota option.