The Dairy Security Act (DSA) proposal has become one of the most thoroughly analyzed and studied farm programs in history. Research by agricultural economists has confirmed that the DSA will provide an effective safety net for farmers, while minimizing taxpayer costs and protecting consumers as well.

Here are two of the most significant such reviews.

Midwest Program on Dairy Markets and Policy

A group of Midwestern university economists found that the DSA provides the most effective economic safety net for farmers. The DSA provides catastrophic risk insurance, helps enhance farmer revenue, and does so in a way that minimizes government outlays.

That assessment was generated by the Midwest Program on Dairy Markets and Policy, a team of six economists who specialize in farm bill analysis. It included doctoral student John Newton and Dr. Cameron Thraen of Ohio State University; Dr. Marin Bozic of the University of Minnesota; Drs. Mark Stephenson and Brian Gould of the University of Wisconsin; and Dr. Christopher Wolf of Michigan State University.

The paper compared the dairy farmer-backed DSA, a voluntary program featuring margin insurance paired with a Dairy Market Stabilization Program, with an alternative approach that offered a smaller-scale, limited margin insurance program alone. The paper addressed four critical questions comparing the DSA to the margin insurance-only proposal offered last year by Reps. Bob Goodlatte and David Scott (G-S), members of the House Agriculture Committee. After running a variety of milk price, feed cost, and participation scenarios, the academic report offered several conclusions:

• The Dairy Security Act does provide effective risk insurance, removing 66.6% of the catastrophic risk a typical farm would face in the future. It noted that the Goodlatte-Scott measure would force farms with growth plans to rely more on private markets, rather than the farm bill, to effectively protect against catastrophic risks, because the G-S does not provide a means to insure future milk production;
• The DSA’s market stabilization plan helps reduce the frequency and severity of insurance indemnity payments, generating higher milk prices for farmers and reducing the taxpayer burden. The report notes that the main limitation on government financial liability in the G-S measure is achieved by limiting farmers’ ability to insure their production to 80% of a farm’s production history.
• The DSA’s market stabilization plan does not present a long-term obstacle to farm growth, even for those operations with a very aggressive farm growth plan.

Goodlatte‐Scott vs. the Dairy Security Act: Shared Potential, Shared Concerns and Open Questions (PDF )

University of Missouri Food & Agriculture Policy Research Institute

In addition, a 2012 University of Missouri Food & Agriculture Policy Research Institute (FAPRI) analysis found that the DSA reforms will help farmers, while having a minimal effect on milk production and dairy product exports. The analysis was prepared by Dr. Scott Brown of the University of Missouri and FAPRI and commissioned by the House Agriculture Committee. Brown’s report analyzes the Dairy Security Act that the Senate Agriculture Committee included in its Farm Bill draft.

FAPRI Analysis - The Effects of a Modified Dairy Security Act of 2011 on Dairy Markets (PDF )