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Talk Of A Dairy Buyout Again Surfaces

The National Cattlemen’s Beef Association and others pushed back hard and quick last week when dairy interests began talking about another federally funded dairy buyout. Memories are still sharp and backsides still raw – among both beef-cattle interests and politicians – from the catastrophe created by the 1986 dairy buyout debacle. Thus, the idea seemed to fade into oblivion quickly.

However, there’s no doubt that losses in the dairy industry are mounting. The common thought seems to be that 300,000 head of dairy cows need to be removed from production in order to return the dairy industry to profitability in today's economic environment. And it appears the dairy industry is moving forward with a proposal that would be implemented not by Washington, D.C., but rather by the industry and outside funding sources.

While there isn't a cattlemen around that doesn't shudder a little at the prospect of 300,000 additional cows coming to town in short order, dairy-cow liquidation has been occurring at a substantial rate already. While plans are being made for an industry-based buyout program, it’s doubtful any program would remove the kinds of numbers being targeted. But it certainly has the potential to reduce numbers, hopefully in an orderly fashion.

It’s pretty hard to argue with an industry-based or privately funded program, but the key will be for the beef and dairy industries to work together to assure that any negative impacts are minimized and that major disruptions in an already fragile market are avoided.

But the bottom line is pretty clear; like the feeding industry, which is suffering from too much capacity, the dairy industry will have to downsize in order to return to profitability.