Monday, September 14, 2009

Real Numbers

Milk Producers Council, a California dairy organization has been at the forefront of promoting supply management. The Holstein Association joined in and therefore, the idea of supply management has achieved some traction. Supply Management seems to be the one thing those in power are concerned about.

Naturally, land-grant institutions have been enlisted in the cause to demote supply management. After all, land-grants need money too.

Richard J. Sexton is Professor, Department of Agricultural and Resource Economics, University of California, Davis has been called to duty. Milk Producers Council has generously made his thoughts available:

Dr Sexton lays out a claim:

“Both the demand and supply of raw milk in the U.S. are price inelastic in the short run, meaning that small shifts in demand or supply cause proportionally larger changes in price. A rule of thumb for the price elasticity of demand for raw milk is ‐0.5, meaning that a one percent increase in production will cause a two percent decrease in producer price, other factors constant.”

Rule of thumb is no rule at all and “other factors” never remain “constant.” The point is many people believe these experts without questioning the validity of the data. None of the data is precise.

Barbra Martin has a blog:

and she would like to see the data audited. She is asking for support in that effort.


  1. Several points,
    Who is paying most of these "experts"? When the experts say that the price of milk at the farm gate will continue to be below break even for another 11 months, you have to wonder don't you.
    A third party audit is a good idea and when it is decided that we have been being cheated for the last nine months, what then? probably a fine paid to the government and no money to the farmer.
    I was talking to a fellow dairyman the other day and he had a great idea. I know I know hindsight is 20 20 but hear this. when the price of milk was good we all should have put enough money back to pay all our bills for one month. When the price dropped we could have had a one month milk strike and not have been very far behind at the end of it all. Not that it would take a month to begin with.
    Beanmeal price went up because the farmers in argentina thought about a strike, 2000 miles away some farmers thought about a strike and the price of beanmeal in the U.S. went up.
    Imagine the possibilities!
    Robert Lieb

  2. Thank you for your mention of my blog. I too feel the MPC is doing a great job of promoting a supply management program and then out of the blue, a paid "expert"! I mean there is a lot of "rotting" in the wood pile. We must clean up the "stink"! We dairy farmers must take action into our own hands. Many that represent us do not have us in their best interest at all! Sincerely, Barbara Martin

  3. we are behind you!!!!!!