Milk Dumping in Federal Orders: Causes, Consequences, and Costs

• Agricultural Economics Workshop

Date and Location

Thursday, May 19, 2022, 4:10 PM - 5:30 PM
Online Meeting, Zoom

Abstract

A small percentage of milk is dumped involuntarily each day between the farm and processing plant. Voluntary milk dumping is a last resort after all viable markets are exhausted. Historically the Federal Milk Marketing Order system has allowed dumped milk to be pooled as long as the reason is beyond the control of the farmer, cooperative or handler. USDA expanded the ability to pool dumped milk following a downturn in milk prices beginning in 2015. In recent years, there has been an increasing amount of milk dumped, particularly in the Northeast and Mideast regions as production outgrew processing capacity. We examine the patterns and costs of milk dumping and examine the use of milk dumping to proxy for broader distressed milk sale impacts. While the pooled cost of dump milk is relatively small, the market wide farm impacts of the underlying market imbalances are significant.