February 23, 2017

Dairy Safety Net Requires Increased Federal Spending

 |  By: Anna-Lisa Laca

Legislators met this week for their first meeting regarding the 2018 farm bill. Legislators are encouraging producers to express their opinion on the current farm bill – both the good and the not-so-good.

“We need clear direction on what is and is not working in farm country,” says Chairman Pat Roberts of Kansas.

There’s one piece of the current farm bill about which dairy farmers have been vocal: the Margin Protection Program (MPP). Many farmers were unhappy with MPP in 2015, and that showed in anemic 2016 participation.  According to Scott Brown, an economist at the University of Missouri, cash receipts were down in 2016, but signups were much lower than the industry expected. Brown credits an ongoing concern throughout the industry that MPP does not provide a strong enough safety net. Many lawmakers have discussed improving MPP before the next farm bill, but Brown warns that will cost money.

“It is extremely difficult to construct a strong enough safety net program for dairy while reducing federal spending,” he says. “There’s a high correlation between government expenditures and the effectiveness of the safety net.”

Brown says MPP or any alternatives that are brought up for discussion in during farm bill talks will only result in a more effective safety net if the costs of the program rises.

Learn more in the AgDay video below: