Milk Producers Council
"Serving
the Dairy Industry for more than 60 Years"
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From The MPC Newsletter Cornell University Releases Updated Analysis
of the Growth Management Plan This week, the Cornell University Program on Dairy Markets and Policy (CPDMP) released an updated economic analysis of the Growth Management Plan (GMP). The analysis was done by Drs. Mark Stephenson and Chuck Nicholson. If you recall, the Growth Management Plan is a concept conceived by Milk Producers Council in the Spring of 2007 (at a time when the dairy industry was nearing the end of the devastating economic wreck of 2006) as a tool to minimize the massive volatility in the national milk price. The program creates a financial incentive for dairy producers throughout the U.S. to manage their milk production. CPDMP originally analyzed the program in April 2007, and their analysis showed that if implemented, the GMP would be effective in minimizing the volatility that seems to be getting worse with each cycle. With U.S. dairies again facing massive losses in equity, MPC recently asked CPDMP to once again analyze the program. Drs. Stephenson and Nicholson were able to model how the program would react to certain price "shocks," such as the rapid escalation of feed costs and the sudden loss of demand due to the world economic slowdown. Their updated analysis showed that in fact, the program would be very effective - not only in minimizing the volatility during "normal" times, but also in recovering from "shocks" like the economic slowdown much more quickly. On February 19, 2009, Dr. Nicholson presented the results of CPDMP's analysis at an industry forum hosted by Western United Dairymen in Modesto. Producer response at the forum was very positive, and MPC will continue to work with our fellow industry groups to promote this simple, yet effective program. You can see Dr. Nicholson's powerpoint presentation by clicking HERE. |
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