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Dynamic Market Impacts of the Dairy Margin Protection Program

Author

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  • Nicholson, Charles F.
  • Stephenson, Mark W.

Abstract

The U.S. Agricultural Act of 2014 creates a new Margin Protection Program for Dairy (MPP-Dairy) under which dairy farmers can receive indemnity payments from the U.S. government if the margin falls below the insured level. The design of MPP-Dairy suggests that the program has the potential to weaken processes that would adjust milk production, prices and margins if the proportion of milk covered by insurance is large. This paper describes potential impacts of MPP-Dairy using a conceptual analysis (feedback loop diagram), then uses an empirical system dynamics (SD) commodity model for the U.S. dairy industry to assess the impacts quantitatively.

Suggested Citation

  • Nicholson, Charles F. & Stephenson, Mark W., 2014. "Dynamic Market Impacts of the Dairy Margin Protection Program," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 32(2).
    • Handle: RePEc:ags:jloagb:311256
    DOI: 10.22004/ag.econ.311256
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    Cited by:

    1. MacDonald, James M. & Cessna, Jerry & Mosheim, Roberto, 2016. "Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry," Economic Research Report 262200, United States Department of Agriculture, Economic Research Service.
    2. Jingjing Wang & Xiaoyang Wang & Xiaohua Yu, 2023. "Shocks, cycles and adjustments: The case of China's Hog Market under external shocks," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 703-726, July.
    3. Charles F. Nicholson & Mark W. Stephenson, 2015. "Milk Price Cycles in the U.S. Dairy Supply Chain and Their Management Implications," Agribusiness, John Wiley & Sons, Ltd., vol. 31(4), pages 507-520, October.

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    Keywords

    Agribusiness;

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