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Madison Co. Virginia | Brown Cow, excellent post. It appears you've thought this through a lot more than I have.
Personally, I'd like to see more of a co-op level of supply management. In some way, the co-op would guarantee a good price for all the current production. If any dairy wants to expand, they will bear the entire financial risk of marketing that additional milk. If a market can be found, they're sitting pretty. If no market is available, they'll probably wish they hadn't expanded. Their neighbor who didn't expand is not affected at all. The most notable difference this would make, is dairies would expand with available cash only, which would significantly slow expansion. No bank will want to lend money for an expansion with no guaranteed market.
I've seen a lot of naïve supply management ideas that propose a tiered system depending on farm size. These basically amount to a "large farm tax," which goes against every tenet of a free-market system. What you and I are both proposing would be completely equal in its handling of large and small farms.
Our co-op is heavily comprised of small dairies in Pennsylvania, Virginia, and neighboring states. They have instituted a very mild form of supply management. Spring milk is compared to Fall milk, and a farm is docked on the difference. The primary market for our milk is fluid, so there's significant desire to avoid the typical Spring overproduction. | |
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Dairy forecast
