Another point of contention is what government costs would be under the two programs. Secretary of Agriculture Tom Vilsack argues that supply management will be required. “Every time we get good prices, farmers increase production and we create greater stocks on the supply side,” he says.
But the Wisconsin analysis suggests otherwise. Yes, producers will make more milk under Goodlatte because they are assured of slightly better prices and indemnity payments during low periods. “But because low prices are not as low, you don’t have as many producers falling out of business during the trough,” says Stephenson. “As a result, the following highs are not as high because you have more milk production during recovery.”
The Congressional Budget Office, who scored the programs, pretty much agrees. Under current programs (dairy prices supports, Milk Income Loss Contract payments), the CBO budget score is $248 million over five years. CBO scored the Dairy Security Act at $107 million, and Goodlatte at $60 million.
So here’s what it boils down to:
• The Dairy Security Act offers higher milk prices, higher net returns, greater volatility, higher government costs and lower exports.
• Goodlatte offers lower prices and lower returns, lower government costs, higher exports but no intrusive market stabilization program.
