President and chief executive of the of the National Milk Producers’ Federation of America Jim Mulhern told the Managing Dairy Volatility conference spikes in dairy markets had ‘more than made up for the downturns’ over the past decade.
Mr Mulhern, who was speaking at the event hosted by the Ulster Farmers Union and Dairy UK, said: “These trends have been linked to movements in feed markets and international oil prices. But it was the downturn in milk returns, experienced in 2009, that forced the US dairy farming sector to face up to the challenge of establishing effective tools to deal with volatility.”
INSURANCE SCHEME
Mr Mulhern went on to point out it took almost six years for milk producers to get US Government support for a form of insurance scheme, named the Dairy Margin Protection Programme.
“It was launched in 2015 and constitutes a partnership arrangements involving farmers and the government,” he added.
“In essence, producers can buy insurance cover, up to a maximum level of $8 per hundredweight of milk. The scheme triggers in once milk prices fall below an agreed level.
“It is then up to the US government to pay out, once the scheme goes live. Up to 80 per cent of US dairy farmers signed up for the measure last year. But, as it turned out, price levels were sufficiently high so as not to trigger the support mechanism during that full 12-month period.”
As a consequence, sign-up levels for the measure had fallen back to some degree in 2016.
However, Mr Mulhern added: “There remains general agreement that the principled enshrined in the Margin Protection Programme will work over the long term.
“There is also recognition that the measure cannot be used to promote milk output.”
Source: FGInsight
