In this episode of The Milk Check, Ted, T3 and Anna tackle a persistent question in the dairy industry: Would it be feasible to set a minimum milk price for producers?

We want to know what you think, too: Can a minimum milk price work? Why or why not? Email us at [email protected].

Anna: Welcome to The Milk Check, a podcast from T.C Jacoby & Co. where we share market insights and analysis with dairy farmers in mind.

Today is January 25 and we'll start with Ted's impressions coming out of Dairy Forum. Then, as we hoped, we'll dive into the discussion about minimum pricing that we've been planning to have. Before we get started on the minimum pricing discussion we want to say that we know that some of what you'll hear may be unpopular. We're not trying to tear down any of the ideas we discuss but rather further the dialogue.

T3: So we just got back from the Dairy Forum. And usually, the Dairy Forum is a gathering where it's put on by the IDFA, the International Dairy Foods Association which is more processor-based than farmer co-op based though admittedly there's a lot of co-ops and a lot of farmers that attended, most or all the processors are there. Sometimes there's a lot of exciting things to talk about in the marketplace and sometimes the market has already digested, you know, what's gonna happen next by the time you arrive. I would put this year's Dairy Forum in the latter category. There were no surprises coming out of the Dairy Forum.

Ted: Well, the Dairy Forum was not that big of an event this year.

T3: Not this year. But it was nice to be in Florida with 60, 70-degree weather when it was -8 in northern Wisconsin.

Ted: All right, shall we move into the issue of minimum prices? Guaranteed minimum prices?

T3: Why don't you lead us off, Anna, with the questions.

Anna: Well, there's two of them. Two proposals that we're sitting looking at right now. And the first is just a call for a minimum price that sustains a farm. And the second is for minimum prices, but set in a tier system so that you have, you know, some baseline set. And I think most people who have thrown this out there have set a pretty low volume to that baseline, it's basically to support a family farm. And then anything above that production gets paid a discounted rate, basically by the co-ops. You would have a set price for that first tier of volume, and then you would have whatever's left gets divided out among all the remaining volume and paid out.

T3: You want to attack it first?

Ted: I think I can attack it as well as any. So repealing the laws of supply and demand are probably not gonna work.

T3: Why?

Ted: I believe that we have had a cultural aspect to the dairy industry for 100 years that generations were raised with the dairy industry and we can remember when 200 cows was a large dairy. Bear in mind that a truckload is about 350 cows to produce roughly a load of milk every other day. So we had back in the 50s and 60s, you know, you would have six or eight producers on a truck of milk. And those producers basically probably were second or third generation. And they would take their milk check and often go to the grocery store and spend it and they didn't really have an aspect as to whether they were doing poorly or great, it depended on how much money they had left when they bought tractors and when they bought groceries, and so on.

And so, that was a cultural way of life. And it continues even to some extent today, but it's diminished. And the people who are proposing these two-tiered systems and minimum prices basically are, I hate to use this word but basically the remnants of that. And of course, our heart goes out to them. But the reality of it is that their cost of production in that environment are much...