Attachments 3m, 3n and 3o provide an assessment of the price regulation’s effect on farm viability, which result from the above assessments on farm earnings. The price regulation has affected both the relative degree of financial stress confronting a farming operation and the absolute degree of financial stress resulting in a farmer’s decision to cease operating the farm. The latter is of course a function of the former—the less financial stress confronting a farm, the less likely the farmer will be compelled to cease operation.
New England dairy farms were ranked by net earnings per hundred pounds of milk, with and without application of the price regulation, and characterized by their degree of financial stress. Farms that have net earnings greater than $1 per hundred pounds are characterized as having no financial stress. When net earnings turn negative, farms begin to experience financial stress as they build open accounts, and defer debt payments. When farms are losing $1.50 per hundred pounds, they are unable to make any debt principal payments and have a severe degree of financial stress.
Attachment 3o, estimates in summary that the price regulation had two significant impacts on farm viability: 1) the number of the most stable farms, or those experiencing no financial stress was increased from thirty to fifty percent; and 2) the most vulnerable farms, or those experiencing severe stress, was reduced in half, from thirty four to seventeen percent. In total, according to the estimate, application of the price regulation meant that about 470 fewer farms would be characterized as having severe financial stress.