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  September 22, 2010

'Volatility' report released

After many months of study, discussion and input, economists Mark Stephenson, University of Wisconsin, and Chuck Nicholson, Cal Poly, released their Analysis of Proposed Programs to Mitigate Price Volatility in the U.S. Dairy Industry late Wednesday (Sept. 22).

The report was funded by stakeholder organizations, including: AMPI, Agrimark, DFA, Dairy Farmers Working Together, DPAC, Darigold, Family Dairies USA, Holstein USA, Milk Producers Council, NFO, St. Albans Co-op, Northeast Dairy Leadership Team (H.P. Hood, Dairylea, Jefferson Co. Ag Dev Corp., PA Center for Dairy Excellence, NY Center for Dairy Excellence, NODPA, Upstate Niagra Co-op), Upper South Milk, and Western United Dairymen.

The 59-page report was discussed by representatives of the funding organizations on a conference call Wednesday. Drs. Stephenson and Nicholson, along with Dr. Scott Brown from the University of Missouri, will attend the Dairy Industry Advisory Committee meeting in Washington D.C. on Sept. 23 to answer questions.

Dr. Stephenson will also provide a presentation of the information at World Dairy Expo in Madison, Wis., on Sept. 29 from 1:00 to 3:00 p.m. in Mendota Room 3.

The Report compared three dairy stabilization programs to a baseline for 2013 through 2018 using a sophisticated model with literally thousands of equations and parameters to predict interactions and behavior in the marketplace.

The three programs analyzed were: National Milk Producers Federation Foundation for the Future, Agrimark's Marginal Milk Program and the Dairy Price Stabilization Program (Costa/Sanders Bill).

The bottom line is all three programs mediate the volatility (trim the peaks and troughs) under normal conditions and when “shocks” were introduced. But none of the programs impact anything very much in the long range cumulative picture of the all-milk price or total milk production.

There were interesting thoughts to draw from this report, and the funding groups will evaluate it and get feedback from their memberships before having a follow up conference call in a couple weeks to discuss next steps.

Stay tuned for more detailed information from this report.

To view the executive summary, click here

The full report is available at the Univ. of Wisconsin website

On a different, but related note, USDA released its Overview of the U.S. Dairy Industry on Sept. 22 showing large operations increase their share of both product inventory and milk production. Click here to read more.



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