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Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry

by James M. MacDonald, Jerry Cessna, and Roberto Mosheim

Economic Research Report No. (ERR-205) 72 pp, March 2016

Cover image Congress created the Dairy Margin Protection Program (MPP-Dairy) in 2014 to provide farmers with financial protection against risks from increasing volatility in milk and feed prices. This report focuses on the interrelated topics of structural change in dairy production, changes in dairy product markets, growing price volatility, and dairy policy.

Keywords: Farm structure, Margin Protection Program, dairy policy, dairy trade, ARMS, dairy farm finances, milk prices, dairy exports, dairy structure

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Errata: On May 17, the following corrections were made to ERR-205, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry. Three cells in Table 3 were updated as follows: “Western States, 3,000-3,999 head in 1992" (19), “Traditional States, 1,000-1,999 head in 1997" (54), and “Other States, 1,000-1,999 head in 2002" (56). On page 10, the State in which Shamrock Farms is located was corrected. In addition, Appendix table A-2 was updated to reflect return-on-equity calculations for the full rather than a restricted sample of dairy farms.

Last updated: Tuesday, May 17, 2016

For more information contact: James M. MacDonald, Jerry Cessna, and Roberto Mosheim