POTENTIAL ECONOMIC IMPACTS OF THE NORTHEAST INTERSTATE DAIRY COMPACT ON VERMONT DAIRY FARMS

The Northeast Interstate Dairy Compact has been established to regulate milk prices. Simulation models show impacts on Vermont farms of alternative milk prices and accelerated productivity growth. Enhancing prices (by $0.85/cwt) improves financial performance the most, while impacts of doubling growth in milk production/cow (to 2.6% per year) and setting a price floor (which reduces the standard deviation of the price by 19% and raises prices $0.12/cwt) are substantially smaller. These impacts are inversely related to farm profitability. However, impacts on larger farms are not proportionately larger than those on smaller farms. Reducing price variability has smaller impacts than the $0.12/cwt price increase